INDIA Trends and Developments Contributed by: Amit Mishra and Mitakshara Goyal, Svarniti Law Offices
Notable cases Supreme Court redefines judicial role in arbitration by recognising limited power to modify awards In the landmark case of Gayatri Balasamy v ISG Nov- asoft Technologies Ltd , the Supreme Court ruled that courts have a limited power to modify arbitral awards under Sections 34 and 37 of the Arbitration and Con - ciliation Act, 1996. This development supersedes the judgment in NHAI v M. Hakeem as the Bench rea - soned that the binary choice between setting aside the entire award or upholding it in full could lead to disproportionate hardship, procedural inefficiency and unnecessary re-arbitration. The recourse of setting aside awards retains its primacy, but modification is allowed in specific, well-defined circumstances, with the following examples: • the award is severable, and only a distinct portion is found legally unsustainable; • there are computational, clerical or typographical errors that require correction; or • post-award interest awarded is excessive, unrea - sonable or perverse. The Bench also clarified that this does not expand courts’ powers to undertake appellate review, as mod - ification in strictly defined scenarios meets the ends of substantive justice without undermining arbitral autonomy or finality. In addition, it serves to preserve the Supreme Court’s constitutional discretion under Article 142 to grant complete justice in the rarest of rare cases. Supreme Court overrules High Court by limiting its role to examining prima facie existence of an arbitration agreement Goqii Technologies filed a petition under Section 11 (6) of the Arbitration and Conciliation Act to appoint an arbitrator, but the Bombay High Court rejected it by scrutinising audit findings and declaring Goqii’s fraud claims “manifestly dishonest”. However, the Supreme Court reversed this decision and held that the court’s role at the Section 11 stage is simply to check wheth - er a valid arbitration agreement exists and whether a prima facie dispute is raised; questions of fact or cred - ibility including fraud must be decided by the arbitra - tor and not by the court.
Supreme Court clarifies currency conversion timeline for foreign arbitral awards In DLF Ltd. v Koncar Generators & Motors Ltd , the Supreme Court laid down authoritative guidance on the appropriate date for currency conversion in the enforcement of foreign arbitral awards under the Arbi - tration and Conciliation Act, 1996. It was held that the relevant date for converting a foreign currency award into INR is when the award becomes enforceable – ie, after all objections under Section 48 are finally adju - dicated. However, if the award debtor deposits a part of the amount during the pendency of objections, and the court allows the award-holder to withdraw it (even without formal security), that specific portion must be converted on the date of deposit and not at the final enforceability stage. The converted deposit is to be adjusted against the award dues, and only the remaining unpaid balance is to be converted at the later enforceable date. Such a dual-stage conversion mechanism ensures clarity, fairness and consistency in executing foreign awards, and prevents currency fluctuation-based windfalls and losses during extend - ed enforcement battles. Supreme Court clarifies distinction between venue and seat The Supreme Court has redefined the “seat” of arbi - tration in M/s Arif Azim Co. Ltd. v M/s Micromax Infor- matics , making it nearly equivalent to an exclusive jurisdiction clause. It rejects the old doctrine of con - current jurisdiction and limits the role of the Closest Connection Test. The Court cited the Shashoua principle and clarified that when an arbitration agreement explicitly desig - nates a place, even using the term “venue” means that the place will be treated as the juridical seat, provided there is no evidence to the contrary. The Closest Con - nection Test still survives as a fallback and applies in rare cases where the arbitration clause is silent on both seat and procedural law. In a situation where multiple seats exist, the doctrine of forum non conveniens may be applied, and the court can refuse to hear a case if there is another court that is more suitable or convenient to do so.
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