India’s SC reiterates arbitrator cannot rewrite contract terms
India’s Supreme Court has consistently ruled that arbitrators must strictly follow contract terms and cannot rewrite or modify them under the guise of interpretation. This principle upholds party autonomy in commercial agreements.
Key Case: Bhadra International (2026)
In Bhadra International India Pvt. Ltd. v. Airports Authority of India, the Court held that arbitral tribunals cannot alter contracts or grant relief against express terms, as this exceeds their jurisdiction. The ruling reinforces limits on arbitral discretion to preserve contract sanctity.
Earlier Precedents
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In IRCTC v. S. Brandavan (2025), the SC set aside an award for ignoring Railway Board circulars and rewriting terms, calling it patently illegal under Sections 34 and 37 of the Arbitration Act.
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SEPCO Electric Power (2025) emphasized no deviation from “No Oral Modification” clauses, deeming such rewriting a breach of justice.
Legal Implications
Arbitrators interpret but stay within the contract’s four corners, per Section 28(3). Courts intervene if awards shock conscience by altering bargains. This applies to ongoing disputes in infrastructure and commercial arbitration.
