Should Courts Modify An Arbitral Award?

Introduction:

One of the long-standing issues concerns the power of courts to modify an award in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") dealing with applications for setting aside an arbitral award. On 20 February 2024, a three-judge bench of the Supreme Court¹, referred the issue of whether the Court's powers under Sections 34 of the Arbitration Act extend to modifying an arbitral award to the larger bench.

The reference to a larger bench was required because of multiple conflicting verdicts of the coordinated benches of the Court. For instance, a 2-judge bench in SV Samudaram² ruled that modifying an arbitral award amounts to "crossing the Lakshman Rekha" and thus the courts should not modify the award. But the 2-judge bench in Vedanta Limited permitted modification to an arbitral award.