Latest news with #1996Act
India Today
26-05-2025
- Business
- India Today
Supreme Court to hear Karnataka's plea against order to pay Mysuru royal family
The Supreme Court of India on Monday agreed to list for hearing a plea filed by the Karnataka government challenging the grant of Transferable Development Rights (TDR) certificates to the legal heirs of the erstwhile Mysore royal family. The dispute pertains to the acquisition of 15 acres of land at the Bangalore Palace certificates are typically issued to compensate landowners who relinquish land for public purposes such as infrastructure projects, allowing them development rights on another parcel of reported by PTI, a bench comprising Chief Justice BR Gavai and Justice Augustine George Masih initially questioned senior advocate Kapil Sibal, who appeared for the state government, on how it could seek a review of an order passed by a coordinate bench. On May 22, another bench comprising Justices MM Sundresh and Aravind Kumar had directed the Karnataka government, in a contempt proceeding, to issue TDR certificates worth Rs 3,011 crore to the royal heirs. In response, Sibal argued that the provision for TDR, introduced through a 2004 amendment to the Karnataka Town and Country Planning Act, could not be applied retrospectively to land that had been acquired under the Bangalore Palace (Acquisition and Transfer) Act of contended that the acquisition took place before the legal provision for TDR existed, and that compensation had already been fixed under the 1996 Act. 'This acquisition occurred under a 1996 law, and compensation of Rs 11 crore was fixed. The concept of TDR didn't exist at that time. Section 14B, which permits TDR, was introduced only in 2004, and applies only where landowners voluntarily surrender their land and not where the State acquires it compulsorily,' he matter has a long legal history. In 1997, the royal family challenged the validity of the 1996 Act before the Supreme Court, and that petition remains pending. Meanwhile, the state's move to develop a road on a section of the palace grounds led to further litigation, eventually culminating in the contempt told the bench that the contempt judgment had overlooked legal objections based on Section 14B. 'You cannot amend a final judgment or introduce new rights via a contempt proceeding,' he bench expressed doubt over whether it could 'sit in appeal' over an order passed by another bench of the same court. However, Sibal clarified that the state was not attempting to overturn the earlier order but was merely seeking consideration of its legal concerns within the context of the ongoing appeal. IN THIS STORY#Karnataka
Time of India
03-05-2025
- Business
- Time of India
‘Trimming the edges, not redrawing the canvas' – Supreme Court on award modification
Vivek Narayan Sharma is an Advocate (AOR) at Supreme Court of India with 25 years of core experience in litigation, arbitration, mediation. Known for resolving high-stakes disputes in a quick-time frame & representing industries, business leaders, celebrities, politicos; he also serves as pro bono Lawyer to enhance societal hues & spectrum. LESS ... MORE In a far-reaching Constitution Bench decision delivered on April 30, 2025, the Supreme Court has put to rest the longstanding controversy over whether Indian courts can modify arbitral awards under the Arbitration and Conciliation Act, 1996. The five-judge bench, led by Chief Justice Sanjiv Khanna, has clarified that courts have a limited and carefully circumscribed power to modify arbitral awards under Sections 34 and 37 of the Act, thus striking a balance between minimal judicial interference and complete justice in the arbitration regime. The core controversy The fulcrum of the debate revolved around the interpretative vacuum in Section 34 of the 1996 Act, which permits courts to 'set aside' an award but does not explicitly authorize its 'modification.' Over the years, conflicting judgments emerged. Some benches strictly held that courts had no power to modify (notably Project Director, NHAI v. M. Hakeem), while others endorsed partial modifications, especially regarding interest rates and quantum adjustments, to prevent unjust outcomes (Vedanta Ltd. v. Shenzen Shandong, Tata Hydro-Electric, etc.). The key questions answered The Bench framed and decisively addressed the following questions: 1. Can courts modify an arbitral award under Section 34? 2. If yes, under what conditions is this permissible? 3. Do doctrines like severability and implied powers justify such judicial actions? I. Jurisdictional empowerment to modify arbitral awards The core question before courts and commentators has been: Do Indian courts have jurisdictional power to modify arbitral awards under the Arbitration and Conciliation Act, 1996 ('1996 Act')? While the Act does not explicitly confer modification powers under Section 34, judicial interpretation has explored whether such a power may be implicitly located within the scheme of the Act, especially when required to uphold justice without usurping arbitral autonomy. II. Judicial divergence on the power to modify Over the years, judicial opinion on this subject has evolved. The prevailing view had been that Section 34 is not appellate in nature and courts are restricted to setting aside awards on specific statutory grounds. However, a nuanced approach has emerged, recognizing that courts may, in limited cases, modify an award, particularly when dealing with clerical, computational, or typographical errors. Such modifications are not to be confused with appellate review under Order XLI of the Civil Procedure Code. Rather, they are procedural corrections that do not disturb the substantive findings or reasoning of the arbitral tribunal. III. Difference between setting aside and modification The distinction between setting aside and modification is both doctrinal and functional. Setting aside an award entails nullifying it wholly or in part, effectively erasing its legal consequences. Modification, on the other hand, involves altering a portion of the award while retaining the rest making it a less intrusive and more calibrated judicial remedy. Justice K.V. Viswanathan (in his partial dissent in the Constitution Bench judgment) emphasized this distinction, noting that while modification is impermissible in substance, severance – which involves judicial pruning of the award – remains permissible. IV. Concerns of judicial overreach Permitting modification raises concerns over judicial encroachment into the merits of the dispute, undermining the legislative intent of minimal court interference under the 1996 Act. The Act's objective is to foster finality and party autonomy in arbitration, discouraging court-driven alterations based on subjective reassessment of facts or merits. V. Section 34 and the scope for limited modification Despite the absence of explicit language, a narrow window of modification may be inferred under Section 34, provided: a. The modification does not violate the textual guardrails of Section 34; b. It is not premised on a re-evaluation of factual findings or merits; c. It involves severance of parts of the award that are clearly unsustainable. This construction avoids conflating the Section 34 jurisdiction with appellate jurisdiction and adheres to the principle of non-interference with arbitral merits, while still allowing courts to avoid unjust consequences flowing from inadvertent errors. VI. Interplay with Sections 33 and 34(4) The judgment also considered the relevance of Sections 33 and 34(4) of the Act. Section 33 permits the arbitral tribunal to rectify errors, interpret specific parts of the award, or issue additional awards. Section 34(4) allows courts to adjourn proceedings and give the arbitral tribunal an opportunity to eliminate grounds for setting aside the award. The argument that Section 33 and Section 34(4) occupy the field of award correction does not entirely oust the court's inherent power under Section 34 to rectify non-merit based, manifest errors. Courts have residual authority to prevent injustice arising from obvious mistakes, especially where arbitral correction has not been triggered or is no longer available. VII. The doctrine of inherent and implied powers Relying on Grindlays Bank Ltd. v. CGIT, the Court held that every court or tribunal has incidental and ancillary powers to perform its functions effectively. This includes correcting inadvertent errors, which is procedural in nature and does not amount to review on merits. This jurisprudence supports the existence of inherent judicial powers under Section 34, not to modify awards substantively, but to rectify procedural or technical oversights, and ensure justice is not sacrificed at the altar of technical finality. VIII. The doctrines of severability and implied power The judgment also reaffirmed the importance of the doctrines of severability and implied power. Severability permits courts to strike down only those parts of an award that are legally unsustainable, while preserving the rest. In practice, this results in a limited form of modification, albeit under a different label. The doctrine of implied powers, on the other hand, supports the view that courts must be allowed to ensure that legislative intent is not frustrated merely because the statute does not expressly provide for every eventuality. Both doctrines work in tandem to ensure that arbitral awards do not become instruments of injustice due to formalistic constraints. IX. Section 152 CPC as a comparative anchor Under Section 152 of the Code of Civil Procedure, courts may correct clerical or arithmetic mistakes or accidental slips. Analogously, the Section 34 court, although not an executing court, functions within a special statutory framework, and similar limited corrective powers can be inferred to preserve judicial efficacy and avoid injustice. Closing thoughts The 2025 Constitution Bench judgment may well become a turning point in Indian arbitration law. It embraces realism without sacrificing principle, offering a pragmatic route to avoid injustice without undermining arbitral autonomy. In the wake of this decision, it is now for parliament, arbitral institutions, and drafting professionals to integrate this judicial evolution into clearer statutory frameworks and better-crafted arbitration clauses. India's aspiration to become an international arbitration hub demands not just speed and autonomy, but a justice system agile enough to course-correct when fairness demands. This judgment is a confident step in that direction. While Indian courts lack a broad jurisdiction to modify arbitral awards, a limited power of correction and severance exists under Section 34. The distinction between modification of substance and rectification of form is vital. Courts must walk a fine line i.e. correcting what is manifestly wrong, while never rewriting the arbitrator's intent or revisiting the merits. This balanced interpretive approach honors both judicial responsibility and arbitral sanctity under the 1996 Act. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
Time of India
02-05-2025
- Politics
- Time of India
SC urges law minister to make changes in arbitration bill yet to be taken up by Parliament
NEW DELHI: In an unprecedented step, Supreme Court appears to have vetted a bill pending consideration in Parliament. On Friday, it "urged" the law ministry to take a "serious look" and make changes in it, keeping in mind the arbitration regime in India. Constitutional courts are empowered to test the validity of laws enacted by Parliament and state legislatures and interpret the law. The Constitution under Article 141 provides that a law declared valid by the SC shall be binding on all courts. But these courts have never entertained a petition challenging the validity of a bill. Though the Arbitration and Conciliation Bill, 2024, proposing major changes in the 1996 law on the same subject, was not under challenge before SC, a bench of Justices J B Pardiwala and R Mahadevan decided to scrutinise it. They concluded that the bill suffered procedural lacunae and vacuum similar to the 1996 Act. 'Even after 30 yrs, procedural issues dog arbitration regime' The bench's comments came in a case involving arbitration between two parties. Giving a brief background of arbitration laws in India, starting with the 1940 Act, followed by the 1996 Act and the changes proposed to be effected through the 2024 bill, the bench said, 'It has been almost 30 years since the 1996 Act has remained in force. Various amendments to the 1996 Act have been made over the years to ensure that arbitration proceedings are conducted and concluded expeditiously. It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plague the arbitration regime of India.' Writing the judgment, Justice Pardiwala said, 'Unfortunately, even the new bill has taken no steps whatsoever for ameliorating the position of law as regards the power of impleadment or joinder of an arbitral tribunal. What is expressly missing in the 1996 Act is still missing in the Arbitration and Conciliation Bill, 2024, despite a catena of decisions of this court as well as various high courts, highlighting the need for statutory recognition of such power in order to obviate all possibilities of confusion.' He further said, 'We urge the department of legal affairs, ministry of law and justice, to take a serious look at the arbitration regime that is prevailing in India and bring about necessary changes while the Arbitration and Conciliation Bill, 2024, is still being considered.' The same bench had raised eyebrows in political and legal circles with its verdict setting a deadline of three months for the President to give assent to bills sent to her by governors, and by suggesting that she might consider it prudent to take the opinion of the apex court to determine the validity of bills.
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Business Standard
02-05-2025
- Politics
- Business Standard
SC flags gaps in arbitration law, urges changes to 2024 amendment Bill
The Supreme Court on Friday expressed its concern over continued absence of statutory clarity in the arbitration regime in the country even after nearly thirty years since the 1996 Act was enacted. Taking note of the Arbitration and Conciliation Bill, 2024, a bench of Justices JB Pardiwala and R Mahadevan, remarked that it fails to address a long-standing legislative vacuum, reported Bar and Bench. "It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plaque the arbitration regime of India," the court noted. "What is expressly missing in the Act, 1996 is still missing in the Arbitration and Conciliation Bill, 2024, despite a catena of decisions of this court as well as the various high courts, highlighting the need for statutory recognition of such power in order to obviate all possibilities of confusion," the bench added. The bill is currently under consideration of the ministry of law and justice. The court further urged the department of legal affairs under the ministry to take a serious look at the current arbitration regime in India and bring about necessary changes while the Arbitration and Conciliation Bill, 2024 is still being considered. The apex court made these observations in an appeal challenging a July 2024 decision by the Delhi High Court in an arbitration matter. The High Court had upheld the arbitral tribunal's decision dismissing the appellant firm's objection to its impleadment in arbitral proceedings, despite it being a non-signatory to the arbitration agreement.
Time of India
30-04-2025
- Politics
- Time of India
Courts can modify arbitral awards: SC
NEW DELHI: Settling divergent judicial pronouncements on the scope of judicial interference in an arbitral award, a five-judge bench of Supreme Court on Wednesday said that to avoid protracted litigation, courts have powers to modify an award to sustain it by severing the 'invalid' portion from its 'valid' part rather than quashing it entirely. Tired of too many ads? go ad free now A bench of CJI Sanjiv Khanna , CJI-designate B R Gavai and Justices Sanjay Kumar, K V Viswanthan and A G Masih was grappling with a long-standing grey area - when the Arbitration and Conciliation Act, 1996, does not expressly permit courts to modify or vary an arbitral award, should courts strike down awards even when it could be saved by minor modifications? Under Section 34 of the Act, a court can only strike down an award. Writing the 37-page 4:1 majority judgment, CJI Khanna said, "We are of the opinion that modification represents a more limited, nuanced power in comparison to the annulment of an award, as the latter entails a more severe consequence of the award being voided in toto." "The limited and restricted power of severing an award implies a power of the court to vary or modify the award. It will be wrong to argue that silence in the 1996 Act, as projected, should be read as a complete prohibition," he said. Justice Viswanathan penned a 130-page dissent and said courts do not have the power to modify an award as the parties had eschewed the path of litigation to go for arbitration. CJI Khanna said, "We are thus of the opinion that the court can apply the doctrine of severability and modify a portion of the award while retaining the rest. This is subject to parts of the award being separable, legally and practically." The majority judgment said courts can also correct clerical, computational and typographical errors apparent in the award and modify the post-award interest rate. Tired of too many ads? go ad free now CJI Khanna said striking down an award in its totality just because there was no agreement over rate of interest would cause grave prejudice to parties, who would then have to undergo a fresh round of arbitration. "This limited power is significant, as it can help avoid further rounds of litigation. Without it, the court may be forced to set aside the entire award or order a fresh round of arbitration because of an erroneous interest rate rather than simply adjusting this rate," the CJI said. Referring to the extraordinary powers of SC under Article 142 of the Constitution, which enables it to pass any order for the purpose of doing complete justice, the five-judge bench sounded a caution and said this power must be exercised with great care and caution while dealing with arbitral awards .
