01 May 2025 Legal Updates

  COURTS CAN MODIFY ARBITRAL AWARDS IN CERTAIN CIRCUMSTANCES UNDER S.34/37 ARBITRATION ACT: SUPREME COURT BY 4:1  

(a) Case Title:

• Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• 30.04.2025

(d) Bench:

• Constitution Bench of 5 judges - Chief Justice of India Sanjiv Khanna, Justices BR Gavai, Sanjay Kumar, AG Masih, and KV Viswanathan

Background

The Supreme Court, in a 4:1 majority decision, addressed the significant question of whether courts have the power to modify arbitral awards when exercising jurisdiction under Sections 34 or 37 of the Arbitration and Conciliation Act, 1996.

The case was referred to the Constitution Bench because of conflicting decisions from smaller benches on whether courts can modify arbitral awards under Sections 34 and 37. Some judgments (M. Hakeem, Larsen Air Conditioning, SV Samudram) had ruled against such powers, while others had either modified or accepted modifications to arbitral awards.

Majority Opinion (4 judges)

The majority, led by CJI Sanjiv Khanna, held that courts have limited powers to modify arbitral awards in the following circumstances:

• When the award is severable - the invalid portion can be separated from the valid portion
• To correct clerical, computational, or typographical errors that appear erroneous on the face of the record
• To modify post-award interest in certain circumstances
• The Supreme Court can use its special powers under Article 142 of the Constitution to modify awards, but with great caution and within constitutional limits

Dissenting Opinion (Justice KV Viswanathan)

Justice Viswanathan disagreed with parts of the majority judgment, holding that:

• Section 34 Courts cannot modify arbitral awards unless expressly authorized by law
• Modification amounts to a merits review, which is against the ethos of arbitration
• Courts cannot change, vary, or modify awards as it undermines the core purpose of arbitration
• Disagreed with the majority's view on modifying post-award interest
• Disagreed that Article 142 powers can be used to modify awards as it would create uncertainty
• Agreed only that clerical or typographical mistakes can be corrected under Section 34

  'RIGHT TO DIGITAL ACCESS PART OF ARTICLE 21': SUPREME COURT DIRECTS TO MAKE EKYC PROCESS ACCESSIBLE TO PERSONS WITH DISABILITIES  

(a) Case Title:  

• Pragya Prasun & Ors. v. Union of India & Ors. ; Amar Jain v. Union of India & Ors.  Court:  Supreme Court of India 

(b) Date of Decision:  

• 30th April 2025 

(c) Bench:

• Justice R. Mahadevan and Justice J.B. Pardiwala 

(d) Key Issues: 

Accessibility of Digital KYC for Persons with Disabilities:

Petitioners (acid attack survivors with facial/eye disfigurements and a blind individual) challenged the inaccessibility of digital KYC processes (e-KYC, Video KYC) under RBI, SEBI, TRAI, and other regulatory frameworks. 

The Current KYC methods (e.g., blinking eyes for "liveness," face recognition, OTP verification) exclude persons with visual impairments or facial injuries, violating their rights under: 

• Article 21 (Right to Life with Dignity). 
• Rights of Persons with Disabilities Act, 2016 (RPwD Act). 
• UN Convention on Rights of Persons with Disabilities (UNCRPD). 

Violation of Fundamental Rights:

Digital KYC is mandatory for banking, telecom, insurance, and government services, but the lack of alternative methods discriminates against persons with disabilities. 

Court’s Observations:

1. Legal Framework: 

   The Representation of People with Disabilities Act, 2016 mandates "reasonable accommodation" (Section 2(y)) and accessibility (Sections 40, 42, 46). 

• Article 21 includes the right to access digital services for a dignified life. 
• International Obligations: India must comply with UNCRPD (Article 9) and Incheon Strategy (ICT accessibility). 

2. Barriers Identified: 

There is no other alternative available to "eye-blinking" for liveness checks.  The biometric devices are inaccessible to persons with disabilities. Further, no training is given to officials to assist persons with disabilities.

Directions Issued:

The Supreme Court directed regulatory bodies (RBI, SEBI, TRAI, DoT, etc.) to: 

1. Amend Digital KYC Processes: 

• Introduce alternative "liveness" checks (e.g., voice recognition, facial movements). 
• Accept thumb impressions for signatures. 
• Continue offline/paper-based KYC for persons with disabilities. 

2. Ensure Accessibility Compliance: 

• Mandate adherence to WCAG 2.1 and BIS accessibility standards for apps/websites. 
• Conduct periodic audits by certified professionals. 

3. Sensitization & Grievance Redressal: 

• Train officials to assist persons with disabilities. 
• Establish dedicated helplines and human review for rejected KYC applications. 

4. Awareness Campaigns: 

• RBI and other regulators to publicize accessible KYC methods via media. 

KEY TAKEAWAY:

This judgment expanded fundamental rights under Article 21 of the Constitution to include digital accessibility.

  MOTOR ACCIDENT CLAIMS | UNEMPLOYED HUSBAND CAN BE PRESUMED TO BE PARTIALLY DEPENDENT ON DECEASED WIFE'S INCOME: SUPREME COURT  

(a) Case Title:

• Sri Malakappa & Ors. vs. The IFFCO Tokio General Insurance Company Limited & Anr.

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• April 29, 2025

(d) Bench:

• Justice Sudhanshu Dhulia and Justice K. Vinod Chandran

Factual Background

The case arose from a motor vehicle accident on February 22, 2015, where a woman riding pillion on a motorcycle met with an accident. She succumbed to her injuries two days later. Her husband (first appellant) and children (second and third appellants) filed a claim seeking compensation for her death.

Key Legal Issues

• Determination of compensation for the death of a pillion rider
• Assessment of income of the deceased for calculating loss of dependency
• Deduction for personal expenses in calculating compensation
• Applicability of future prospects in calculating compensation
• Determination of eligible dependents

Supreme Court Analysis

The Supreme Court upheld the findings that the accident was caused due to rash and negligent driving of the motorcycle driver. While the Motor Accident Claims Tribunal (MACT) had awarded ₹18,81,966/- as total compensation, and the High Court had modified some aspects, the Supreme Court made further modifications and awarded ₹17,84,766/-.

Key holdings:

1. Income assessment:

• The Court retained the monthly income at ₹7,000/- as determined by the Tribunal

2. Future prospects:

• Applied 40% addition for future prospects (instead of 50% initially awarded by MACT) following the Constitution Bench decision in National Insurance Co. Ltd. v. Pranay Sethi

3. Dependents:

• The Court held that the husband should be considered partially dependent on the deceased's income, making the dependent family consist of 4 members

4. Deduction for personal expenses:

• Applied a 1/4th deduction for personal expenses (instead of 1/3rd) considering the family composition

5. Loss of consortium:

• Awarded ₹1,20,000/- for loss of consortium, acknowledging that it extends to children as well, not just the spouse, following New India Assurance Company vs. Somwati

6. Multiplier:

• Applied a multiplier of 16 based on the deceased's age (35 years)