Question 1

The Supreme Court has granted civil courts full appellate powers over arbitration awards.

Accepted Answer

The modification power is strictly limited to severable issues, clerical errors, and adjusting post-award interest. It explicitly forbids a merits-based review or re-appreciating evidence.

Question 2

The Constitution Bench unanimously agreed that the Arbitration Act allows modifying awards.

Accepted Answer

It was a 4:1 split decision. Justice K.V. Viswanathan issued a strong dissent, asserting that reading a power of modification into Section 34 violates legislative intent and that Article 142 cannot override explicit statutory limits.

Question 3

Consider the following statements regarding the Supreme Court's 2025 judgment on the modification of arbitral awards:
1. The Court invoked the legal maxim 'omne majus continet in se minus' to declare that the power to set aside an award includes the power to partially sever it.
2. The ruling allows courts to conduct a limited merit-based review of the arbitrator's factual findings if they appear manifestly arbitrary.
3. The majority held that reviewing courts have the jurisdiction to alter post-award interest rates under Section 34.
How many of the above statements are correct?

Accepted Answer

(b) Only two — Statement 1 is correct: The majority used the maxim 'omne majus continet in se minus' (the greater contains the lesser) to justify severability. Statement 2 is incorrect: The Court explicitly forbade any merit-based review or re-appreciation of evidence; modification is only for severable, non-merit issues or clerical errors. Statement 3 is correct: The Court ruled that post-award interest, being future-oriented, can be increased or decreased by the reviewing court.

Question 4

Match List I (Legal Concept/Case) with List II (Associated Principle) regarding the jurisprudence of arbitral awards:

List I:
A. NHAI v. M. Hakeem (2021)
B. Gayatri Balasamy v. ISG Novasoft (2025)
C. Omne majus continet in se minus
D. Doctrine of Severability

List II:
1. The greater power encompasses the lesser power.
2. Permits courts to separate and strike down invalid portions of an award without destroying the valid parts.
3. Held that courts possess zero statutory power to modify an arbitral award, restricting them to setting it aside.
4. Established a limited judicial power to modify awards for clerical errors and post-award interest.

Select the correct code:

Accepted Answer

(a) A-3, B-4, C-1, D-2 — NHAI v. M. Hakeem (2021) strictly prohibited modification (A-3). Gayatri Balasamy (2025) overturned this to allow limited modification (B-4). 'Omne majus continet in se minus' translates to 'the greater contains the lesser' (C-1). The Doctrine of Severability allows cutting out the bad parts of a legal instrument while saving the good (D-2).

Question 5

Assertion (A): The Supreme Court in 2025 permitted the limited modification of arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996.
Reason (R): The Arbitration and Conciliation Act, 1996 contains an explicit statutory provision clearly outlining the procedure for appellate courts to rewrite and modify the substantive merits of an arbitral award.
Select the correct answer:

Accepted Answer

(c) A is true but R is false — Assertion (A) is true as the Supreme Court did permit limited modification in the 2025 Gayatri Balasamy judgment. Reason (R) is false because the 1996 Act contains no explicit provision to modify awards (it only mentions 'setting aside'); the Court read the power of modification implicitly into the statute using severability and its Article 142 powers. Furthermore, modifying the 'substantive merits' is strictly prohibited.

Constitution Bench Allows Modification of Arbitral Awards

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