Former Supreme Court Justice S. Ravindra Bhat has voiced concerns regarding the potential implications of the Supreme Court’s decision in the Gayatri Balasamy v. ISG Novasoft case. He cautioned that the ruling might lead courts across India to become ‘interventionist or adventurist’ in their handling of arbitral awards. This apprehension was shared during a panel discussion organized by the Singapore International Arbitration Centre (SIAC) as part of the Singapore Convention Week.
The panel, moderated by Aditya Singh, a partner at White & Case, also featured insights from 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 discussion focused on recent advancements in Indian arbitration law, particularly judicial intervention, award enforcement, and policy decisions shaping India’s arbitration framework.
Supreme Court’s Landmark Decision
The case in question centered on whether courts have the authority to modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. In a 4:1 majority decision, a five-judge Constitution Bench of the Supreme Court ruled that courts possess limited powers to alter arbitral awards under specific conditions. Justice K.V. Viswanathan dissented from this majority opinion.
Aditya Singh, during the panel, referred to the prior discussion on Gayatri Balasamy and highlighted what he deemed Justice Viswanathan’s ‘compelling dissent.’ He raised concerns that the limited power to modify awards might not remain limited in practice.
Concerns Over Judicial Overreach
Justice Bhat, while not explicitly agreeing with the term ‘can of worms’ as used by sitting Supreme Court Justice Ujjal Bhuyan, expressed worries about the judgment’s application across India’s vast judiciary. He noted that challenges to the enforcement of arbitral awards aren’t restricted to the Supreme Court or High Courts but could surface in thousands of courts nationwide.
“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 elaborated.
He emphasized that the impact of the ruling hinges on how various courts interpret and apply the limited power recognized in Gayatri Balasamy. Justice Bhat cautioned against assuming that the experiences of the Delhi High Court are indicative of the broader national landscape.
Sectoral Insights and Future Outlook
Senior Advocate Rajshekhar Rao noted that, on the ground, there hasn’t been a significant shift, with courts continuing to exercise caution. He echoed Justice Viswanathan’s dissent, asserting, “I think Gayatri Balasamy, yes. I mean, I would defer to Justice Viswanathan’s dissent and say, let the tribunal do its job.”
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Rao pointed out that while Section 34(4) of the Arbitration Act, which allows courts to adjourn proceedings to give the tribunal a chance to rectify potential award-setting issues, has been seldom used, Gayatri Balasamy has somewhat eased its invocation by recognizing oral requests.
He further mentioned that courts are pushing back against attempts by lawyers to secure substantial award modifications under the guise of severance or correction, stating, “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.”
