Dispute Resolution Quarterly Milestones (April-June 2025)

Partner: Mohit Rohatgi, Senior Associate: Ashwini Tak, Associate: Umang Bhat Nair

Key Developments

Supreme Court clarifies the limited power of courts to modify arbitral awards

A five-judge Constitution Bench of the Supreme Court in Gayatri Balasamy v ISG Novasoft Technologies Limited has settled the long-standing debate on whether courts have the power to modify arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996 (1996 Act). The Court held that the power to set aside an award under Section 34 does not include the power to modify it, affirming the position laid down in Project Director, NHAI v M. Hakeem.

However, the Bench carved out certain specific and narrow exceptions to this rule. It held that a court, under Section 34, can:

• sever an award, setting aside only invalid portions, provided they are not legally and practically inseparable from valid portions of the award, deriving authority from the proviso to Section 34(2)(a)(iv);
• correct manifest errors, including clerical, computational, or typographical errors, on the principle of actus curiae neminem gravabit (an act of the court shall prejudice no one), provided such correction does not require a merits-based evaluation;
• modify post-award interest, as Section 31(7)(b) of the 1996 Act, a provision unique to Indian law, sets a legislative standard against which an arbitrator’s discretion can be scrutinised;
• exercise its powers under Article 142 of the Constitution of India to pass orders for doing complete justice in a matter pending before it, in consonance with the fundamental principles and objectives underlying the 1996 Act.

The judgment clarified that where modification is not permissible but a defect is curable, the appropriate course is to remand the matter to the arbitral tribunal under Section 34(4) to allow for defect ratification.

This ruling reinforces the finality of arbitral awards and upholds the structural integrity of the arbitration framework in India by strictly defining the boundaries of judicial review.

(To read our detailed update on this ruling, click here.)

Supreme Court outlines the right of an accused to access documents in cases under the Prevention of Money Laundering Act

The Supreme Court, in Sarla Gupta v Enforcement Directorate, has clarified and strengthened the procedural rights of an accused in proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). The Court established comprehensive guidelines for disclosure of documents reviewed by the Directorate of Enforcement (ED) during its investigation, balancing the need for a fair trial under Article 21 of the Constitution of India with the stringent PMLA objectives.

Drawing upon Sections 200-204 of the Code of Criminal Procedure, 1973 (CrPC), the Court held that once a special court, established under PMLA, takes cognizance of a complaint, the accused must be supplied with a copy of the complaint and all documents produced in the court along with it. This includes witness statements, statements recorded under Section 50 of the PMLA, and supplementary complaints.

The most crucial aspect of the ruling concerns documents collected during the investigation but not relied upon by the prosecution. The Court mandated that while an accused is not entitled to copies of such documents at the charge-framing stage, the ED is obligated to provide a complete list of all documents, material objects, and exhibits collected during the investigation, whether relied upon or not.

This is to ensure the accused is aware of potentially exculpatory material and can make a targeted application for its production at the defence stage under Section 233 of the CrPC. The Court also held that an accused could invoke Section 91 of the CrPC to seek production of these unrelied documents even at the bail stage. This right is pivotal for discharging the heavy burden placed on the accused by the twin conditions for bail under Section 45(1)(ii) of the PMLA.

Supreme Court holds arbitral awards on claims extinguished or settled in approved resolution plans under the Insolvency and Bankruptcy Code, 2016 to be null and unenforceable

The Supreme Court, in Electrosteel Steel Ltd. v Ispat Carrier (P) Ltd., reinforced the ‘clean slate’ theory under the Insolvency and Bankruptcy Code, 2016 (IBC). It held that an arbitral award passed in respect of a claim extinguished by an approved resolution plan is null and unenforceable. This decision clarifies the finality of the Corporate Insolvency Resolution Process (CIRP) and its supremacy over other legal proceedings.

The case involved arbitral proceedings initiated by an operational creditor that remained in abeyance due to the moratorium imposed under the IBC. During the CIRP, the operational creditor filed its claim. However, the resolution plan, approved by the National Company Law Tribunal (NCLT), settled all operational creditor claims at ‘nil’ value. Despite this settlement, after the moratorium was lifted, the arbitral tribunal resumed proceedings and passed an award in the creditor’s favour.

The Supreme Court reasoned that once the creditor’s claim was legally extinguished upon NCLT’s approval of the resolution plan, the arbitral tribunal lacked jurisdiction to adjudicate a non-existent claim. An award passed without jurisdiction is a nullity. Consequently, its executability can be challenged in execution proceedings under Section 47 of the Code of Civil Procedure, 1908, even if the award itself was not challenged under Section 34 of the 1996 Act.

This judgment reaffirms the supremacy of the IBC and ensures that approved resolution plans provide a definitive and final settlement of all past dues.

Singapore High Court recognises Indian insolvency proceedings as a ‘foreign main proceeding’ under UNCITRAL Model Law

The High Court of Singapore recognised an Indian CIRP as a ‘foreign main proceeding’ under the UNCITRAL Model Law on Cross-Border Insolvency (Model Law),¹ a significant first for Indian insolvency proceedings on the international stage.

The Court analysed whether the CIRP met the requirements of a ‘foreign proceeding’ under the Model Law. It concluded that a CIRP is a ‘collective proceeding’ as it benefits all creditors, involves public notice for claim submission, and culminates in a resolution plan that considers the rights of all stakeholders. The Court held that the NCLT qualified as a ‘foreign court’, acknowledging its quasi-judicial nature and explicit statutory authority under the IBC to control and supervise the insolvency process.

This decision establishes a vital precedent for recognition and enforcement of Indian insolvency proceedings in international jurisdictions and offers valuable guidance on the interpretation of the Model Law in relation to the IBC.

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[1] Re Compuage Infocom Ltd.

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