Modification of Arbitral Awards•3 min read•2025 INSC 605

Gayatri Balasamy v. ISG Novasoft Technologies Ltd.

Bench: Constitution Bench (Sanjiv Khanna, C.J., B.R. Gavai, Sanjay Kumar, K.V. Viswanathan & Augustine George Masih, JJ.)
Commercial & International Arbitration
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Core Legal Ratio Decidendi

"Courts hearing challenges to arbitral awards under Sections 34 and 37 cannot modify an award on the merits, but have a limited power to sever invalid parts, correct clerical, computational or typographical errors apparent on the record, and in some cases modify post-award interest; the Supreme Court may also act under Article 142, with great caution."

I
Step 1

Issues Before the Court

  1. (i)

    Whether a court hearing an application under Section 34, or an appeal under Section 37, of the Arbitration and Conciliation Act, 1996 can modify an arbitral award, or can only set it aside?

  2. (ii)

    If such a power exists, whether it is confined to severable awards, and what its limits are?

R
Step 2

Law & Rules Applicable

  1. (i)

    Arbitration and Conciliation Act, 1996, Section 34 (setting aside, including the proviso to Section 34(2)(a)(iv) on severable decisions and Section 34(4) on remission to the tribunal), Section 31(7)(b) (post-award interest), Section 33 (correction by the tribunal) and Section 37 (appeals).

  2. (ii)

    Constitution of India, Article 142 (power of the Supreme Court to do complete justice).

  3. (iii)

    Project Director, NHAI v. M. Hakeem (no power to modify an award under Section 34).

A
Step 3

Application to Facts & Circumstances

Benches of two and three Judges had taken conflicting approaches: some had modified awards, while others, as in M. Hakeem, held that the Act gives the court no power to modify. A three-judge Bench referred the question to a Constitution Bench.

Writing for the majority, Khanna C.J. held that the court under Sections 34 and 37 does not sit in appeal over the award and cannot modify it on the merits. But a limited power exists. Where an award is severable, the court may set aside the invalid part and uphold the rest, since the power to set aside the whole includes the power to set aside a part.

The court may also correct clerical, computational or typographical errors that appear on the face of the record, and may in some circumstances modify post-award interest. The Supreme Court may invoke Article 142 to do complete justice, but with great care and caution, and within the limits of the Constitution.

The power to remit the award to the tribunal under Section 34(4) is distinct from modification, and should be considered where the defect is curable.

K.V. Viswanathan J. dissented, holding that Sections 34 and 37 confer no power to modify an award and cautioning against the use of Article 142 for that purpose.

C
Step 4

Conclusion & Ruling

  1. (i)

    Courts under Sections 34 and 37 have a limited power to modify an award: by severing the invalid part from the valid, by correcting clerical, computational or typographical errors apparent on the record, and, in some circumstances, by modifying post-award interest.

  2. (ii)

    The Supreme Court may use Article 142 to modify an award, but sparingly and with great care.

  3. (iii)

    A court cannot modify an award on the merits; otherwise its options remain setting aside the award or remitting it under Section 34(4).

Authorities Cited

Full texts open on Indian Kanoon in a new tab.

  1. Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1Full text of Project Director, NHAI v. M. Hakeem on Indian Kanoon
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