Article 142 Can Be Used To Modify Arbitral Awards, Holds Supreme Court; Justice Viswanathan Dissents

The Supreme Court in its recent decision has held that powers to do complete justice under Article 142 can be exercised to modify an arbitral award if it helps put prolonged litigation to an end. 

The majority opinion authored by CJI Sanjiv Khanna explained that power to do complete justice under Article 142 can be utilised cautiously to modify an award as long as it does not interfere in the merits of the award. 

The decision was rendered by a Constitutional Bench led by CJI Sanjiv Khanna comprising Justices BR Gavai,Sanjay Kumar, AG Masih and KV Viswanathan. Justice KV Viswanathan, however dissented on th issue whether Article 142 can be used to modify arbitral awards. 

The Court held that such a power needs to be utilised in order to ensure that the parties are not stuck in cycle of prolonged litigation. 

Article 142 (1) reads : "The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe."

The Court held that the powers under Article 142 have to be exercised in line with the fundamental rights and the legislative intent behind the Arbitration and Conciliation 1996, and not to their contrary. 

"The exercise of this power has to be in consonance with the fundamental principles and objectives behind the 1996 Act and not in derogation or in suppression thereof."

The Court mainly relied upon its decision in Shilpa Sailesh v. Varun Sreenivasan , where the Court held that complete justice under Article 142(1) does not mean that the Court can contravene the established law and procedure. The relevant part reads : 

“19. Given the aforesaid background and judgments of this Court, the plenary and conscientious power conferred on this Court under Article 142(1) of the Constitution of India, seemingly unhindered, is tempered or bounded by restraint, which must be exercised based on fundamental considerations of general and specific public policy. Fundamental general conditions of public policy refer to the fundamental rights, secularism, federalism, and other basic features of the Constitution of India. Specific public policy should be understood as some express pre-eminent prohibition in any substantive law, and not stipulations and requirements to a particular statutory scheme. It should not contravene a fundamental and non-derogable principle at the core of the statute. Even in the strictest sense, it was never doubted or debated that this Court is empowered under Article 142(1) of the Constitution of India to do “complete justice” without being bound by the relevant provisions of procedure, if it is satisfied that the departure from the said procedure is necessary to do “complete justice” between the parties." 

In Shilpa Sailesh, the Court held that it can dissolve marriages on the ground of 'irretrievable breakdown of marriage', by invoking the powers under Article 142 of the Constitution. 

Considering the above principle, the Court concluded that an award can be modified by using powers under Article 142 provided (1) the modifcation should not amount to rewriting the whole award on merits; (2) the modification aids in bringing the dispute to an end and saving litigation costs. 

"While exercising power under Article 142, this Court must be conscious of the aforesaid dictum. In our opinion, the power should not be exercised where the effect of the order passed by the court would be to rewrite the award or modify the award on merits. However, the power can be exercised where it is required and necessary to bring the litigation or dispute to an end. Not only would this end protracted litigation, but it would also save parties' money and time."

Article 142 Cannot Be Used To Modify Awards; Antithetical To Arbitration : Justice KV Viswanathan Dissents 

Justice Viswanathan in his dissent, explained that Article 142 cannot be used to modify awards as the Arbitration and Conciliation Act (A&C Act) already lays down the procedure for the same under S.34.

In his dissent, Justice Viswanathan has relied upon the decision in Supreme Court Bar Association vs. Union of India and Another where it was held that Article 142 cannot be used to 'supplant' substantive law applicable to a case. It was also held that such a power cannot be used when a particular law already deals with the subject matter. He highlighted the relevant observations from the decision as follows : 

"This power cannot be used to “supplant” substantive law applicable to the case or cause under consideration of the Court. Article 142, even with the width of its amplitude, cannot be used to build a new edifice where none existed earlier, by ignoring express statutory provisions dealing with a subject and thereby to achieve something indirectly which cannot be achieved directly." 

"The very nature of the power must lead the Court to set limits for itself within which to exercise those powers and ordinarily it cannot disregard a statutory provision governing a subject, except perhaps to balance the equities between the conflicting claims of the litigating parties by “ironing out the creases” in a cause or matter before it." 

"Indeed, these constitutional powers cannot, in any way, be controlled by any statutory provisions but at the same time these powers are not meant to be exercised when their exercise may come directly in conflict with what has been expressly provided for in a statute dealing expressly with the subject" 

The dissenting opinion also referred to the decision in Shilpa Sailesh from the observations quoted earlier. Justice Viswanathan concluded neither the Supreme Court nor the Courts under S. 34 can modify awards as it goes against the very concept of the arbitral process. 

According to Justice Viswanathan, modification done through the powers under S.34 " strikes at the very core and root of the ethos of the arbitration process. Such an exercise of power will derogate from the core aspects of the A&C Act and will breach a pre-eminent prohibition in the said Act."

He further flagged the concern of apprehension of the parties opting for arbitration if modifications are allowed by the Supreme Court at the last leg of litigation. He expressed : 

"Apart from the above, if power is reserved for this Court to modify, at the fag end of the litigation, contracting parties will have grave uncertainties as they would not be sure of how the matter will play out when it reaches the apex Court. It will be antithetical to arbitration as an alternative and efficacious mode of dispute resolution."

"Hence, in matters arising out of Section 34 of the A&C Act, this Court will refrain from exercising its power under Article 142, in view of the law laid down in SCBA (supra) and Shilpa Shailesh(supra)."

Case Details : GAYATRI BALASAMY Versus M/S ISG NOVASOFT TECHNOLOGIES LIMITED| SLP(C) No. 15336-15337/2021

Citation : 2025 LiveLaw (SC) 508

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