Can arbitral awards be modified by courts? Constitution bench of Supreme Court to decide

The Supreme Court recently referred to a larger bench the question of whether courts can modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 [Gayatri Balasamy vs ISG Novasoft Technologies Limited]..A bench of Justices Dipankar Datta, KV Viswanathan and Sandeep Mehta noted that the issue is of seminal importance and needed an authoritative pronouncement to bring clarity and guidance.The reference made to a Constitution Bench of the Court focused on the following questions:- Whether the powers of the Court under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, will include the power to modify an arbitral award?- If the power to modify the award is available, whether such power can be exercised only where the award is severable and a part thereof can be modified? - Whether the power to set aside an award under Section 34 of the Act, being a larger power, will include the power to modify an arbitral award and if so, to what extent? - Whether the power to modify an award can be read into the power to set aside an award under Section 34 of the Act?.The three-judge bench of the top court has directed that the matter be placed before the Chief Justice of India for appropriate orders..The case arose out of disputes between a technology company, ISG Novasoft Technologies Limited and a former employee. The employment agreement had been made subject to the provisions of the Arbitration Act. The arbitral award passed in the matter was later challenged by both the former employee as well as the company before the Madras High Court. A single judge of the High Court partly allowed the employee's plea for additional compensation, and modified the arbitral award on this aspect. On appeal (by both parties), a division bench of the High Court upheld the single-judge ruling but reduced the additional compensation payable to the former employee to a certain extent.This High Court ruling was challenged before the Supreme Court by the former employee. .While dealing with this appeal, the top court noted that a question of law in which frequently arises in such cases was whether courts can modify arbitral awards. "While one line of decisions of this Court has answered the aforesaid question in the negative, there are decisions which have either modified the awards of the arbitral tribunals or upheld orders under challenge modifying the awards. It is, therefore, of seminal importance that through an authoritative pronouncement clarity is provided for the guidance of the Courts which are required to exercise jurisdiction under the aforesaid sections 34 and 37, as the case may be, day in and day out," the three-judge bench opined..Therefore, the matter was referred to a larger bench of the Court. Among the questions referred was also whether the Supreme Court's decision in Project Director NHAI vs. M. Hakeem laid down the correct position of law.In the M Hakeem case, the apex court had held that it would be crossing the “Lakshman Rekha” if courts were allowed to amend arbitral awards, since the arbitration regime envisions minimal judicial intervention..Senior Advocate Arvind Datar with advocates MV Mukunda, Hina Shaheen, Mithun Shashank, MV Swaroop, Hredai Sriram, Nishanth Patil, and K Parameshwar appeared for the appellant (former employee).Senior Advocate Siddharth Bhatnagar with advocates Debmalya Banerjee, Manmeet Kaur, Rohan Sharma, Gurtej Pal Singh, Abhishek Rana, Ananya Khanna, and Aditya Sidhra, briefed by Karanjawala & Co., represented ISG Novasoft Technologies Limited..[Read order]