The Supreme Court on Wednesday reserved its verdict on a key legal issue — whether courts could modify arbitral awards under the provisions of a 1996 law on arbitration and conciliation.

A Constitution bench comprising Chief Justice Sanjiv Khanna and Justices B R Gavai, Sanjay Kumar, K V Viswanathan and Augustine George Masih heard a battery of senior lawyers including solicitor general Tushar Mehta and Arvind Datar, Darius Khambata, Shekhar Napahade and Ritin Rai in the hearings, taking place over the course of three days.

Mehta, who commenced his submissions for the Centre on February 13, urged the bench that the issue of modification of arbitral awards should be left to the legislature keeping in mind evolving arbitration requirements of the nation.

Datar, however, said the courts, which could set aside arbitral awards on certain grounds, could also modify it.

Napahade concurred with Datar and said courts should have the power to modify arbitral awards.

A three-judge bench headed by the CJI, on January 23, referred the contentious issue to a larger bench. Arbitration is an alternate mode of dispute resolution under the Arbitration and Conciliation Act, 1996 and it minimises the role of courts to interfere with the awards by the tribunals.

Section 34 of the Act provides for the setting aside of an arbitral award on limited grounds such as procedural irregularities, violation of public policy, or lack of jurisdiction.

Section 37 governs appeals against orders related to arbitration, including those refusing to set aside an award.

Like Section 34, it also aims to minimise judicial interference while addressing exceptional cases requiring oversight.

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