Whether or not an arbitral award can be modified by courts in exercise of powers under Section 34 or 37 of the Arbitration and Conciliation Act, the Supreme Court has referred the issue to a larger bench for its answer.
A three-judge bench of the Hon’ble Supreme Court comprising Justices Dipankar Datta, K.V. Vishwanathan, and Sandeep Mehta has referred the issue of modification of Arbitration Awards by the courts under Section 34 or 37 of the Arbitration Act to a larger bench. The Court noted the conflicting opinions from different courts on the issue, with one line of decisions answering the issue in the negative, while the other line of decisions either modified the Awards of arbitral tribunals or upholding such modifications. The Court observed that it is of seminal importance that an authoritative pronouncement is required for the guidance of the courts. While referring the matter to a larger bench, the Court has formulated following five questions on the issue to be answered:

1. Whether the powers of the Court under section 34 and 37 of the Arbitration and Conciliation Act, 1996, will include the power to modify an arbitral award?
2. If the power to modify the award is available, whether such power can be exercised only where the award is severable and a part thereof can be modified?
3. Whether the power to set aside an award under section 34 of the Act, being a larger power, will include the power to modify an arbitral award and if so, to what extent?
4. Whether the power to modify an award can be read into the power to set aside an award under section 34 of the Act?
5. Whether the judgment of this Court in Project Director NHAI vs. M. Hakeem, followed in Larsen Air Conditioning and Refrigeration Company vs. Union of India and SV Samudram vs. State of Karnataka lay down the correct law, as other benches of two Judges (in Vedanta Limited vs. Shenzden Shandong Nuclear Power Construction Company Limited, Oriental Structural Engineers Pvt. Ltd. vs. State of Kerala and M.P. Power Generation Co. Ltd. vs. Ansaldo Energia Spa) and three Judges (in J.C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd., Tata Hydroelectric Power Supply Co. Ltd. vs. Union of India and Shakti Nath vs. Alpha Tiger Cyprus Investment No.3 Ltd.) of this Court have either modified or accepted modification of the arbitral awards under consideration?