Lakshman Rekha Or Loophole? Section 34 & 37 Of The Arbitration Act And The Contested Power Of Modification
- IJLLR Journal
- Jul 28
- 1 min read
Partha V Gudi & Shantanu Shrikhande, B.B.A. LL.B. (Hons), Symbiosis Law School, Pune
ABSTRACT
This paper explores a longstanding yet unsettled question within Indian arbitration law: do Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, permit courts to modify arbitral awards? Rooted in the Model Law, the 1996 Act was designed to uphold arbitral finality and limit judicial interference. However, evolving case law—ranging from JC Budhraja to Project Director, NHAI v. M. Hakeem—has given a contradictory picture on whether Indian courts may correct or adjust arbitral awards, even in the absence of explicit legislative authority.
The article critically examines the developments through procedural histories, a comparative analysis of foreign jurisdictions such as Singapore, the United States, and the UK, and a detailed study of the Constitution Bench judgment in Gayatri Balasamy. With the Bench affirming, by a 4:1 majority, the limited ability of courts to modify awards in rare and exceptional circumstances.
The paper engages with interpretive questions around implied powers, severance versus modification, and Section 34(4)’s evolving potential. It also reflects on the broader policy implications of expanding judicial authority, including the risk of diluting arbitration’s efficiency and international enforceability. Ultimately, the authors argue that while the recent verdict offers a pragmatic middle path, a legislative review may be necessary to reconcile the foundational tension between Lakshman Rekha (judicial restraint) and perceived loopholes in the statutory scheme.
Keywords: Modification of Arbitral Awards, Severance of Awards, judicial interference, international norms, remitting awards for correction
