Arbitration in India has long been championed as a faster, more efficient alternative to traditional litigation. The promise of finality—that an arbitral award would bring disputes to a conclusive end—has been a cornerstone of this preference. Yet, a persistent tension exists between this promise and the reality of post-award judicial intervention. The Arbitration and Conciliation Act, 1996, was designed with minimal judicial interference in mind, as expressly stated in Section 5. However, the landscape of Indian arbitration has witnessed a cyclical pattern: legislative reforms aimed at curbing judicial overreach, followed by judicial interpretations that expand the scope of challenge, prompting further reforms. This article examines the evolving judicial approach to the finality of arbitral awards, the statutory framework governing challenges, and the recent trends that both reinforce and undermine the conclusive nature of arbitration in India.
The Statutory Framework: Section 34 and the Limits of Challenge
The primary mechanism for challenging an arbitral award in India is Section 34 of the Arbitration and Conciliation Act, 1996. This provision permits a court to set aside an award only on narrowly defined grounds, including incapacity of a party, invalidity of the arbitration agreement, lack of proper notice, the award dealing with disputes beyond the scope of submission, irregular composition of the tribunal, non-arbitrability of the subject matter, and conflict with the public policy of India.
The 2015 amendments to the Act significantly tightened the public policy ground. Explanation 1 clarifies that an award conflicts with public policy only if it was induced by fraud or corruption, contravenes the fundamental policy of Indian law, or conflicts with the most basic notions of morality or justice. Crucially, Explanation 2 explicitly states that the test for contravention of fundamental policy “shall not entail a review on the merits of the dispute” . For domestic arbitrations, Section 34(2A) permits setting aside on grounds of “patent illegality appearing on the face of the award,” but clarifies that an award shall not be set aside merely for erroneous application of law or re-appreciation of evidence.
The statutory scheme thus embodies a deliberate legislative choice: courts are supervisors, not appellate authorities. Section 34(6) mandates expeditious disposal within one year, reflecting the intent to prevent prolonged post-award litigation.
The Judicial Struggle with Finality
Despite these statutory constraints, Indian courts have historically struggled to resist the temptation of merits review. The evolution of “public policy” jurisprudence illustrates this tension. In ONGC v. Saw Pipes Ltd., the Supreme Court introduced the concept of “patent illegality,” which, while intended to address manifest injustice, opened the door to broader judicial scrutiny. Subsequent decisions like Associate Builders v. DDA sought to restore balance by clarifying that courts cannot reassess evidence or substitute their interpretation merely because another view is possible.
A significant shift occurred with Ssangyong Engineering & Construction Co. Ltd. v. NHAI, where the Supreme Court narrowed the scope of public policy review and aligned Indian arbitration law more closely with international standards. Similarly, in Delhi Airport Metro Express Pvt. Ltd. v. DMRC, the Court reiterated that Section 34 courts are not appellate authorities and cannot re-evaluate factual findings.
However, the biggest shockwave to the principle of finality arrived via the Supreme Court’s curative jurisdiction. In DMRC v. Delhi Airport Metro Express Private Limited (DAMEPL), the Supreme Court entertained a curative petition to set aside an arbitral award worth roughly ₹7,500 crores. This occurred after the award had successfully survived challenges under Section 34, Section 37, a Special Leave Petition (SLP), and a review petition.This extraordinary intervention has triggered immense systemic debate regarding when an arbitral award truly becomes final.
Justice Nariman’s Stinging Critique: “One Big Jamboree”
Speaking at the Gujarat High Court Arbitration Centre (GHAC) Arbitration Week 2026, former Supreme Court Judge Justice Rohinton F. Nariman delivered a powerful critique of the Supreme Court’s recent arbitration jurisprudence, warning that it has created “grave uncertainty” in Indian law.Justice Nariman specifically targeted two developments:
- The Curative Reopening: Commenting on the Delhi Metro (DMRC) curative intervention, Justice Nariman noted it allowed litigation to offer “one more bite at the cherry after the cherry is eaten.” He criticized the ruling for laying down a broad ground of “miscarriage of justice” at the curative stage, effectively permitting an interference on facts at the absolute tail-end of a dispute.
- The Power to Modify: He also heavily criticized the majority ruling in “Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.” (which allowed courts limited powers to sever or modify awards), famously labeling the resulting legal positioning as “one big jamboree.” Justice Nariman emphasized that under the strict statutory framework of the 1996 Act, Section 33 gives modification powers strictly to the arbitrator, while Section 34(4) requires courts to remit defects back to the tribunal rather than rewriting them. He strongly endorsed the dissenting opinion of Justice K.V. Viswanathan as being legally accurate.To remedy this, Justice Nariman proposed a radical structural shift: completely doing away with single-judge arbitration benches. He argued that domestic award challenges should bypass single judges entirely and go straight to a Specialised Division Bench. Crucially, he suggested allowing this Division Bench to conduct a full appeal on both facts and law to ensure the award is “as accurate as a trial court judgment,” after which it should only be subject to the Supreme Court’s ultimate jurisdiction—thereby eliminating multi-tiered, endless challenges.
Recent Trends: A Reorientation Towards Restraint
The year 2025 witnessed what commentators have described as a “coherent and deliberate reorientation towards judicial restraint” in Indian arbitration. Several Supreme Court decisions reinforced the limited scope of post-award review.
In Somdatt Builders v. NHAI, the Supreme Court set aside a High Court judgment that had re-interpreted contractual clauses in an appeal under Section 37. The Court reiterated that if an arbitral tribunal takes a plausible view of a contract, courts should refrain from interfering under Section 34, as this would defeat the purpose of the Act.
In Bharat Aluminium Company (BALCO), the Supreme Court emphasised the limited scope of judicial intervention under Section 37, holding that the High Court had exceeded its jurisdiction by reassessing evidence and substituting its own factual conclusions for those of the arbitral tribunal. The Court clarified that interference on grounds of “patent illegality” must go beyond allegations of erroneous application of law or misappreciation of evidence.
The Constitution Bench decision in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd. conclusively settled the controversy surrounding the power of courts to modify arbitral awards. The Court held that while the power to set aside under Section 34 includes a power to modify, this power is limited to granting post-award interest, correcting clerical or typographical errors, and severing parts of the award that contravene Section 34. The Court cautioned that this power should not be exercised to rewrite the award or modify it on merits.
The Delhi High Court’s decision in Delhi Jal Board v. Metrro Waste Handling Pvt. Ltd. applied Gayatri Balaswamy, holding that while an arbitral award cannot be modified under Section 34, a severable part may be set aside. The Court emphasised that a plausible conclusion arrived at by the tribunal, backed by reasons, cannot be tinkered with under Section 34.
Most recently, in Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust, the Supreme Court reiterated that a Section 37 Court cannot do what a Section 34 Court cannot: it cannot re-interpret the contract, re-evaluate evidence, or substitute the tribunal’s view merely because another interpretation appears possible. The Court restored the arbitral award, holding that appellate interference transgressed the narrow limits of Sections 34 and 37.
Persistent Challenges: The Temptation of Merits Review
Despite these encouraging trends, instances of judicial intervention persist. Commentators have noted that some courts continue to undertake “merits-oriented review under the guise of public policy and patent illegality” . The Gayatri Balaswamy decision, while limiting the power to modify, has raised concerns that post-award proceedings may in practice assume a quasi-appellate character, thereby diluting the principle of finality .
The issue of delay in pronouncing awards has also generated divergent judicial approaches. In a significant 2025 decision, the Supreme Court addressed whether delay in pronouncing an arbitral award, by itself, constitutes a ground for setting aside under Section 34. The Court held that delay per se is not a ground, but each case must be examined on its own facts to ascertain whether the delay had an adverse impact on the final decision, such that the award stands vitiated due to lapses committed owing to such delay. This nuanced approach, while rejecting delay as a blanket ground, leaves room for argument that could prolong challenges.
In Madhya Pradesh Road Development Corporation Ltd. v. M/s Jabalpur Corridor Pvt. Ltd. (2026), the Supreme Court issued a scathing institutional self-indictment. Dismissing a long-delayed challenge, the bench noted that an award passed in 2014 from a 2007 termination was still being litigated in 2026. The Court candidly observed: “Arbitration in India has not failed, however Courts sometimes have failed arbitration in India.” It reiterated that a Section 34 court cannot act as a regular appellate body.
Conversely, in Bhupesh Bhayana v. Kunal Seth (2026), the apex court encountered an award it found patently illegal. Instead of setting it aside and sending the parties back to square one after 14 years of litigation, the Court invoked its extraordinary equitable powers under Article 142 of the Constitution to directly modify the award. While this put a quietus to that specific dispute, such frequent invocations of Article 142 and curative interventions inadvertently dilute the predictability of statutory arbitration limits.
Similarly, the Supreme Court’s decision in Sri Lakshmi Hotel Pvt. Ltd. v. Sriram City Union Finance Ltd. upheld a 24% interest rate awarded in a commercial loan transaction, holding that an acceptable contractual interest rate does not breach public policy merely by appearing high. The Court reaffirmed party autonomy and imposed the narrowest interpretation of public policy to reinforce finality. Yet, such challenges continue to be brought, consuming judicial resources and delaying enforcement.
The Broader Debate: Balancing Finality with Fairness
The tension between finality and judicial oversight reflects a deeper philosophical debate. Justice Tara Vitasta Ganju of the Karnataka High Court recently observed that India’s arbitration framework requires reconsideration, calling for a more coherent system that balances speed, fairness, party autonomy, and judicial supervision. She emphasised that “the legitimacy of arbitration cannot rest on speed alone, nor can it rest on party autonomy. It must rest on stable legal architecture, certainty about the seat, credible institutions, equality in Tribunal constitution, proportionate timelines, disciplined appellate review, principled judicial restraint, responsible use of technology and effective enforcement”.
Justice Ganju cautioned against allowing challenges under Section 37 to become a second opportunity to contest an arbitral award on merits, stressing that appellate courts should not reassess evidence or reinterpret contractual clauses merely because another view is possible. She also proposed greater judicial specialisation in arbitration, suggesting that specialist arbitration divisions could function within existing High Courts or commercial courts, with designated judges regularly hearing matters under Sections 9, 11, 34, and 37, as well as enforcement proceedings.
Legislative and Institutional Reforms
The Law Commission of India has proposed several reforms aimed at limiting judicial interference while allowing courts to support the arbitration process. These include creating dedicated arbitration benches within Indian courts to streamline and improve consistency, awarding actual costs on a “loser pays” basis to limit frivolous actions, and imposing strict time limits for initiation and disposal of proceedings relating to setting aside and enforcement of awards.
The Commission has also recommended restricting the role of courts in appointment proceedings to a prima facie determination of whether an arbitration agreement is null or void, leaving complex questions of validity to the arbitral tribunal. Additionally, it has proposed measures to discourage adjournments during hearings and ensure continuous sittings of arbitral tribunals.
The Expert Committee constituted by the Ministry of Law and Justice in 2023 examined the working of the Arbitration Act and recommended reforms. The proposed Arbitration and Conciliation Amendment Bill, 2024, contemplated significant changes including emergency relief, post-award review, appellate remedies, and statutory timelines, though it has attracted criticism and remains under reconsideration.
Conclusion
The finality of arbitral awards in India remains a contested terrain. The statutory framework clearly envisions minimal judicial intervention, and recent Supreme Court decisions have demonstrated a commendable commitment to judicial restraint. The reorientation towards limiting post-award review to the narrow grounds specified in Section 34, and the clarification that Section 37 appeals cannot become merits reviews, are positive developments that reinforce the credibility of arbitration as a dispute resolution mechanism.
Yet, the persistence of challenges—sometimes under the guise of public policy or patent illegality—and the temptation of some courts to engage in merits review continue to undermine the promise of finality. The delay in disposal of Section 34 applications and the multiplicity of proceedings erode the very advantages that arbitration is intended to provide.
The path forward requires a multifaceted approach. Legislative clarity on the scope of review, as proposed by the Law Commission and the Expert Committee, is essential. Equally important is the development of a robust judicial culture that respects arbitral autonomy and recognises that finality is not merely a procedural preference but a substantive guarantee that makes arbitration commercially viable. As Justice Ganju aptly observed, “arbitration will command confidence only when it’s fair, neutral, efficient and enforceable not in form alone but in practical effect as well” . The challenge for Indian arbitration is to ensure that the promise of finality is not an illusion but a reality—one that distinguishes arbitration from endless litigation rather than replicating it.
(All views are personal)
