Published on: 17th December 2025
Authored by: S. Ranjini
Christ Academy Institute of Law
Sections 34 and 37 of the Arbitration and Conciliation Act of 1996 give the court the authority to alter an arbitral award.
FACTS
The appellant claims that on March 10, 2006, she signed an employment contract with the first respondent company, which led to her appointment as Vice President (M&A Integration Strategy) on April 27, 2006. According to the aforementioned agreement, during the appellant’s first year of employment, the first respondent company would train him in a variety of areas, including project management, general management, finance, and business strategy. The agreement also stipulates that the appellant must work in Chennai for the first year of employment before being relocated to the United States of America (OSA No. 59 of 2015). An arbitration clause with Chennai as the arbitration’s seat is also included in the agreement. The procedure for terminating employment is covered in Clause 6 of the employment agreement, and Clause 6.2 states that the employer may terminate the employment agreement by providing written notice to the other party (120 days in advance) and severance compensation equal to one year’s gross salary, including any maximum bonus pay-outs at the time of severance from the company. However, section 6.3 states that the employee will get four months’ gross income as compensation if either party to the agreement chooses to cancel it within three months of employment due to dissatisfaction, disagreement, or discontent, as the case may be. The appellant claims that a few months after she started working for the first respondent company, Krishna Srinivasan, the company’s chief executive officer, started acting differently and making sexist and disparaging remarks about her appearance and sense of style. On July 24, 2006, the appellant submitted her resignation because she could no longer put up with Krishna Srinivasan’s actions. The aforementioned Krishna Srinivasan, who was taken aback by the appellant’s resignation letter, apologized to the appellant and urged her to withdraw it, claiming that she was an invaluable and irreplaceable asset to the first respondent organization. The appellant was moved by this gesture, accepted the apologies, and kept her job. But soon after returning to the company, Venkatesan was hired again as Vice-President of Global Human Resources (OSA No. 59 of 2015) http://www.judis.nic.in 4/42. The aforementioned Krishna Srinivasan and Venkatesan have implicitly conspired, put pressure on the appellant to carry out her obligations, and thereby attempted to discredit the appellant. The appellant was humiliated by the pair’s unjustified comments and inconsistent instructions. Additionally, in March 2007, Krishna Srinivasan allegedly denied the appellant an increase in her pay. The appellant claims that the aforementioned Krishna Srinivasan and Venkatesan caused her to face several challenges in performing her tasks, allegedly as a form of retaliation for the appellant’s refusal to respond to their sexual advances. The appellant also told the company’s senior executives in the United States about the sexual harassment she had experienced at the hands of Krishna Srinivasan and Venkatesan, but no action was taken. The appellant informed management that she was willing to quit the company if her termination benefits were settled in accordance with the terms of the Employment Agreement dated 10.03.2006 after receiving multiple emails from the two that contained disparaging and offensive remarks. The appellant emailed the Management on December 14, 2017, along with the previous emails she had sent to Krishna Srinivasan and Venkatesan, since she had not received a response. Meanwhile, on October 17, 2007, and December 12, 2007, the first respondent corporation sent out two letters of termination. Following the appellant’s email dated December 14, 2017, the first respondent additionally sent another letter of termination dated December 20, 2007. The appellant claims that on December 21, 2007, instead of answering her emails, the management refused to let her into the workplace and escorted her out in full presence of her coworkers (http://www.judis.nic.in 5/42) OSA No. 59 of 2015). In this regard, the appellant filed a complaint against the Chairman and Director of the Company at the R-4, Pondy Bazaar Police Station, T. Nagar, Chennai. Based on this complaint, a case in Crime No. 824 of 2007 was filed for the offenses of sexual harassment, cheating, criminal breach of trust, misappropriation of company funds, criminal intimidation, etc. The appellant was questioned by police officers based on this allegation, and in her statement, she described how she was sexually harassed while working and how higher-ranking officials did nothing to address the offenders. The appellant sent a legal notice dated 05.02.2008 through her counsel to all the accused in the criminal case, despite the filing of the complaint that resulted in Crime No. 824 of 2007. However, there was no response to the notice, indicating that all the accused have conspired to ensure that Krishna Srinivasan and Venkatesan are not held accountable for their wrongdoings. The second respondent in this case was appointed as an arbitrator to settle the disagreement between the appellant and the first respondent in accordance with the directive issued by the Honourable Supreme Court on March 18, 2011, and the second respondent/arbitrator went into reference on April 29, 2011. The appellant filed a claim petition for the recovery of Rs. 28,88,55,500 under 12 headings before the second respondent/arbitrator. The first respondent company has filed a counterclaim, seeking damages of Rs. 4 crores for the defamation of four employees and an additional Rs. 23 crores for the company’s and its senior executives’ reputational harm.After weighing the opposing claims, the second respondent/arbitrator accepted the appellant’s claims Nos. 1 through 4 and granted a sum of Rs. 2 crore, rejecting the first respondent/management’s counterclaim. The appellant’s claim under Claim Nos. 5, 6, 7, 9, 11, and 12 was denied in all other respects. Admittedly, the appellant filed her resignation on April 27, 2006, after working for the company for three months. She claimed that Krishna Srinivasan, the Vice-President of Mergers and Acquisitions, had harassed her sexually. Her resignation was rejected, though, and she was persuaded to rescind it after being promised a secure workplace. As a result, the appellant withdrew her resignation letter and kept working for the appellant company. The appellant’s problems persisted even after she returned to the company. Instead, it was claimed that the aforementioned Krishna Srinivasan and a man named Venkatesan, who joined as President, proceeded to harass her. The appellant had also brought up the matter with upper management, however it is said that her protest went unanswered. In the end, the appellant’s employment was terminated due to three letters that were delivered to her: one on October 17, 2007; another on December 12, 2007; and the final one on December 20, 2007. The management agreed to give the appellant four months’ gross income in lieu of the notice period, according to the first letter dated October 17, 2007. The employment agreement dated 10.03.2006 is terminated, according to the second letter dated 12.12.2007. The letter dated 12.12.2007 was withdrawn, and the appellant received a new letter of termination, according to the most recent letter dated 20.12.2007.According to the most recent letter dated 20.12.2007, the letter dated 12.12.2007 was withdrawn, and the appellant was given a revised letter of termination subject to certain provisions about the settlement terms. The appellant initiated criminal proceedings shortly after, the specifics of which were described above and do not need to be further explained because they are not the focus of this appeal.This is especially true because, in an order dated March 18, 2011, the Honourable Supreme Court set aside all criminal proceedings that the appellant and the management had started against each other (http://www.judis.nic.in 19/42 OSA No. 59 of 2015). In accordance with the court’s directives, a second respondent/arbitrator was appointed to settle the dispute between the parties.
ISSUES
This is particularly relevant because, in an order dated March 18, 2011, the Honourable Supreme Court set aside all criminal proceedings that the appellant and the management had started against each other (http://www.judis.nic.in 19/42 OSA No. 59 of 2015). In accordance with the court’s directives, the second respondent/arbitrator was appointed to settle the dispute between the parties.
The first respondent, M/s. ISG Novasoft Technologies Limited, filed O.S.A. No. 59 of 2015, contesting the validity of the learned single judge’s order dated 02.09.2014, which increased the compensation amount in connection with claim No. 12.
http://www.judis.nic.in 2/42 OSA No. 59 of2015
The petitioner/claimant has filed O.S.A. No. 181 of 2015 in opposition to the same ruling dated 02.09.2014 passed in O.P. No. 463 of 2012, requesting further increase of the compensation with respect to the prohibited section of the claim petition.
A review of the claim made by the appellant in her claim petition before the arbitrator would show that she filed the claim petition in order to obtain compensation under 12 headings totaling Rs. 28,88,55,500. The next paragraphs explain the basis on which the appellant filed the claim petition.
Meanwhile, criminal accusations of extortion and defamation have been brought against the appellant by the first respondent/management.
The first respondent has not filed an Original Petition under Section 34 of the Arbitration and http://www.judis.nic.in 7/42 OSA No. 59 of 2015 Conciliation Act, 1996 because they are upset over the denial of the counterclaim. However, the appellant/claimant has filed O.P. No. 463 of 2012 under Section 34 of the aforementioned Act before the learned single Judge, challenging the validity of the decision made by the arbitrator/second respondent in this case with regard to rejecting her claims Nos. 5, 6, 7, 9, 10, 11, and 12. Regarding claim No. 8, the appellant’s attorney who came before the learned single judge did not press the matter, and the learned single judge also noted this in paragraph No. 14. Therefore, the appellant’s question in the Original Petition concerned the arbitrator’s denial of claims Nos. 5, 6, 7, 9, 10, 11, and 12.
The appellant made her claim under a number of different headings, all of whichh were independently examined by the learned single judge. Regarding claims Nos. 1 through 4, the learned single Judge determined that the learned Arbitrator had previously taken into account the claim under head 1 through 4 in paragraph No. 19 of the award.
ANALYSIS
In the case of R. Narayanan vs. M/s. India Info Line Securites Private Limited, which was decided on June 13, 2013, the learned single Judge himself held http://www.judis.nic.in 13/42 OSA No. 59 of 2015 that in the exercise of power under Section 34 of The Arbitration and Conciliation Act, the Court has no power even to remit the matter back to the Arbitrator, so the petition was granted. Furthermore, in A. Chandrasekaran v. Yoha Securities Limited, another ruling by the learned single judge himself, it was decided that the court could either uphold or set aside the award. However, by taking on the role of the arbitrator and conducting an impartial evaluation of the claim, the learned single Judge made a grave mistake in changing the decision in connection to claim No. 12.
The first respondent’s learned coun”el further argued that the learned single judge made a grave mistake by requesting confirmation of a preconceived notion of interfering with the arbitrator’s decision to the extent of assuming the arbitrator’s role in making an independent pronouncement rather than attempting to change any claim decided by the arbitrator. In this regard, the learned counsel for the first respondent cited the ruling of the Honourable Supreme Court in (i) Gautam Constructions and Fisheries Limited vs. National Bank for Agricultural and Rural Development reported in (2000) (6) SCC 518, wherein the Honourable Supreme Court interfered with the award to the extent of changing the rate per square foot at which the Contractor’s built-up space is to be compensated. However, the question of the Court’s authority to modify the award was not brought up or contested. Similar to this, the Apex Court only interfered with the award in the Hydero Electric Power Supply Co., Ltd. Vs. Union of India case reported in 2003 (4) SCC 172 by limiting interest on the awarded sum from the date of the award rather than from the date of bill submissions. OSA No. 59 of 2015 http://www.judis.nic.in 14/42 As a result, it is argued that the Court may use its authority under Section 34 to either dismiss the petition or set aside the decision, but not to change the award.
The Honourable Supreme Court’s ruling in McDermott International Inc. vs. Burn Standard Co., Ltd., reported in 2006 (11) SCC 181, which concluded that the Court cannot correct arbitrators’ mistakes, was also cited by the first respondent’s learned counsel. It can only overturn the award, allowing the parties to resume arbitration if they so want. The Act’s framework keeps the Court’s supervisory role at a minimum level, which is appropriate because the parties to the agreement consciously choose arbitration over the Court’s jurisdiction because they value its finality and convenience.
Thus, the learned Arbitrator came to the conclusion that there was no committee constituted by the first respondent company as per the decision of the Honourable Supreme Court in Vishaka case, but a grievance committee was constituted by the management where the appellant could have putforth her grievance and accordingly refused to award compensation under claim No.12.
