Former Supreme Court Justice S Ravindra Bhat has raised concerns over the Supreme Court’s ruling in Gayatri Balasamy, warning that its application across thousands of courts in India could make some of them “interventionist or adventurist” while dealing with arbitral awards.

Justice Bhat was speaking at a panel organised by the Singapore International Arbitration Centre (SIAC) during Singapore Convention Week.

The discussion was moderated by White & Case Partner Aditya Singh. The panel also included former Supreme Court judge Justice L Nageswara Rao, former Attorney General for England and Wales Lord Peter Goldsmith KC, Senior Advocate Rajshekhar Rao and Shwetha Bidhuri, Director and Head of South Asia at SIAC.

The panel examined recent developments in Indian arbitration law, including judicial intervention, enforcement of awards and policy choices affecting India’s arbitration regime.

The Gayatri Balasamy case dealt with the issue of whether courts have the power to modify arbitral awards while exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

A five-judge Constitution Bench of the Supreme Court, by a 4:1 majority, held that courts have a limited power to modify arbitral awards in certain circumstances. Justice KV Viswanathan dissented from that view.

At the SIAC discussion, Aditya Singh recalled that the panel had discussed about Gayatri Balasamy the previous year. He referred to the majority ruling and what he described as Justice Viswanathan’s “compelling dissent”.

Singh noted that one concern raised at the time was that a limited power of modification might not remain limited in practice. He asked Rajshekhar Rao whether, 16 months later, courts were increasingly being asked to modify awards under Section 34

Singh then referred to a recent speech by sitting Supreme Court Justice Ujjal Bhuyan.

He told the panel that Justice Bhuyan had said Gayatri Balasamy had “opened a can of worms”. Singh then asked Justice Bhat whether he agreed.

Justice Bhat did not directly adopt the “can of worms” terminology. However, he said his concern was how the judgment would operate across the Indian court system.

He highlighted that challenges to enforcement of arbitral awards were not confined to the Supreme Court or High Courts. Such proceedings could come before thousands of courts across the country.

“There could be about 8,000 to 10,000 of these courts. So each one of them potentially could be interventionist or adventurist, as you choose the term. So that is what really worries me,” Justice Bhat said.

He added that the concern was not merely theoretical and the impact of the ruling would depend on how courts across the country understood and exercised the limited power recognised in Gayatri Balasamy.

He also cautioned against treating the experience before the Delhi High Court as representative of the country as a whole.

Justice Bhat said the picture across India remains unclear and would have to be watched as courts begin applying the top court's ruling to individual cases

Rao said there has not been any significant change on the ground and that courts continue to remain circumspect.

However, he expressed agreement with Justice Viswanathan’s dissent.

“I think Gayatri Balasamy, yes. I mean, I would defer to Justice Viswanathan’s dissent and say, let the tribunal do its job.”

Rao said Gayatri Balasamy reflected a stage where India had a functioning arbitration framework but was still moving towards greater maturity.

He also referred to Section 34(4) of the Arbitration Act. The provision allows a court to adjourn proceedings and give the arbitral tribunal an opportunity to eliminate grounds that could otherwise result in the award being set aside.

Rao said the provision has rarely been invoked. He added that Gayatri Balasamy had made its use somewhat easier by recognising that an oral request could be made.

At the same time, he said courts were resisting attempts by lawyers to obtain substantive modification of awards by presenting such relief as severance or correction.

“This entire attempt by lawyers to try and craft what is otherwise a clear modification in the guise of a severance correction is being pushed back,” he said.