Author- Vishal vv
Occupation-Advocate
To the Point
Arbitration is chosen for one reason above all others: finality. Yet Indian law has always permitted a narrow window for judicial scrutiny of arbitral awards through Section 34 of the Arbitration and Conciliation Act, 1996, referred to here as the Act. This provision does not create an appeal. A court hearing a Section 34 petition cannot re-examine the merits of a dispute or substitute its own view for that of the arbitral tribunal. Its function is corrective, not appellate. Over nearly three decades, however, the exact width of this corrective jurisdiction has been repeatedly tested, expanded, and then reined back by the Supreme Court and by Parliament. This article traces that trajectory from the expansive reading of public policy in ONGC v. Saxena, through the corrective 2015 and 2019 amendments, to the Constitution Bench’s 2025 ruling in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., and argues that Indian arbitration law is finally converging towards the balance the 1996 Act always intended: minimal interference, but not blind deference.
Use of Legal Jargon
A short glossary is useful before proceeding. The seat of arbitration determines which country’s courts exercise supervisory jurisdiction over the award. Functus officio describes an arbitral tribunal that has discharged its mandate and can no longer alter its award, save for limited corrections under Section 33. Public policy of India is the statutory ground under Section 34(2)(b)(ii) permitting a court to set aside an award that offends the fundamental policy of Indian law, the basic notions of morality or justice, or is induced by fraud or corruption. Patent illegality, introduced by the 2015 Amendment as Section 34(2A), permits domestic, meaning non-international, awards to be set aside where the illegality goes to the root of the matter and is apparent on the face of the award, but it expressly excludes any re-appreciation of evidence. Minimal curial intervention is the guiding legislative philosophy, borrowed from the UNCITRAL Model Law on International Commercial Arbitration, 1985, on which the 1996 Act is substantially based. Finally, severability refers to the doctrine permitting a court to annul only the offending portion of an award while preserving the rest.
The Proof, the Statutory Scheme
Section 34(1) confers on a party the right to apply to a court to set aside an arbitral award only in accordance with sub-sections (2) and (3), the word only signalling that these grounds are exhaustive, not illustrative. Section 34(2)(a) lists party-centric grounds requiring proof: incapacity of a party, invalidity of the arbitration agreement, lack of proper notice of appointment of the arbitrator or of the proceedings, an award dealing with a dispute not contemplated by or falling outside the terms of submission, and improper composition of the tribunal or procedure not in accordance with the parties’ agreement. Section 34(2)(b) contains the two grounds a court may invoke on its own motion: non-arbitrability of the subject matter, and conflict with the public policy of India.
The 2015 Amendment added an Explanation confining public policy to fraud or corruption in the making of the award, contravention of the fundamental policy of Indian law, and conflict with basic notions of morality or justice, and clarified that a mere erroneous application of law or re-appreciation of evidence cannot attract this ground. Simultaneously, Section 34(2A) introduced patent illegality appearing on the face of the award as an independent ground, but confined it strictly to purely domestic arbitrations, deliberately excluding international commercial arbitrations seated in India from this additional layer of scrutiny, a distinction intended to make India’s regime more attractive to foreign parties. Section 34(3) prescribes a limitation period of three months from receipt of the award, extendable by a further thirty days on sufficient cause, a period the Supreme Court has consistently held to be a strict, non-condonable outer limit beyond the further thirty days. Section 34(4) empowers the court, at the request of a party, to adjourn proceedings and give the tribunal an opportunity to resume proceedings or take other action to eliminate the grounds for setting aside, a remedial route meant to preserve awards rather than destroy them. Read together, the statutory design reflects a conscious legislative choice: courts are gatekeepers against fundamental illegality and injustice, not appellate forums for merits review.
Abstract
This article examines the scope of judicial interference with arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. It traces the doctrinal journey from the expansive public policy standard laid down in ONGC v. Saw Pipes Ltd. (2003), through its further widening in ONGC v. Western Geco International Ltd. (2014), to the corrective legislative intervention of the 2015 and 2019 Amendments and their judicial consolidation in Ssangyong Engineering and Construction Co. Ltd. v. NHAI (2019). It further discusses the Supreme Court’s categorical rejection of any power to modify awards in Project Director, NHAI v. M. Hakeem (2021), and the significant recalibration effected by the five-judge Constitution Bench in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025), which recognised a narrow implied power of modification in specific circumstances. The article concludes that Indian arbitration law has moved, deliberately and through repeated correction, towards a workable equilibrium between the finality that arbitration promises and the residual fairness that judicial oversight must guarantee.
Case Laws
Renusagar Power Co. Ltd. v. General Electric Co., AIR 1994 SC 860. Interpreting public policy under the then Foreign Awards Act, 1961, the Supreme Court confined the ground narrowly to the fundamental policy of Indian law, the interests of India, and justice or morality. This restrained standard, meant for foreign awards, became the benchmark against which later domestic expansions were later measured and criticised.
ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705. The Court held that an award contrary to the substantive provisions of law, the terms of the contract, or which is patently illegal, would fall within public policy of India under the then Section 34(2)(b)(ii), even for domestic awards. While intended to prevent grossly unjust awards from standing, this judgment considerably widened the scope of court interference and was criticised for converting Section 34 into a disguised appeal.
ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263. The fundamental policy of Indian law ground was further expanded to import principles of natural justice, a judicial approach, and Wednesbury reasonableness into the review of awards, effectively permitting courts to test whether the tribunal’s reasoning was one a rational body could have reached, a standard perilously close to a merits appeal.
Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49. Decided just before the 2015 Amendment came into force, this judgment attempted to consolidate the tests laid down in Saw Pipes and Western Geco, while cautioning that courts must not sit in appeal over the tribunal’s findings of fact or reinterpret evidence merely because another view was possible.
Ssangyong Engineering and Construction Co. Ltd. v. National Highways Authority of India, (2019) 15 SCC 131. Applying the post-2015 regime, the Court held that patent illegality cannot be invoked to reopen the merits or re-appreciate evidence, and that Western Geco’s expansive reading no longer survives the amendment. However, an award founded on a unilateral, undisclosed circular applied without giving the affected party an opportunity to be heard was held to violate the fundamental principle of natural justice and was set aside, illustrating that the narrowed ground still protects against awards that shock the conscience of the court.
Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1. In a batch of land-acquisition compensation disputes where lower courts had enhanced arbitral awards under Section 34, the Supreme Court held unequivocally that Section 34 confers only the power to set aside an award, not to modify, vary, or enhance it. Drawing a contrast with the wider revisionary powers available under the repealed Arbitration Act, 1940, the Court held that reading a power of modification into Section 34 would cross what it termed the Lakshman Rekha of permissible judicial interference.
Gayatri Balasamy v. M/s ISG Novasoft Technologies Ltd., 2025. A five-judge Constitution Bench, by a 4:1 majority, revisited M. Hakeem and held that Section 34 carries a narrow, implied power to modify an award in limited situations: where the invalid part of the award is clearly severable from the valid part; to correct clerical, computational, or typographical errors that are manifest on the face of the record; and to adjust post-award interest in appropriate cases. The majority also affirmed that the Supreme Court may, in exceptional cases, modify an award in the exercise of its extraordinary power under Article 142 of the Constitution, though this power must be used sparingly. Justice K.V. Viswanathan, dissenting, held that no such power should be read into Section 34 at all, and that any correction ought to be routed back to the tribunal under Section 34(4).
Conclusion
The arc of this jurisprudence tells a story of legislative and judicial self-correction. Saw Pipes and Western Geco opened the door to substantive review wider than the drafters of the 1996 Act, or the UNCITRAL Model Law they borrowed from, ever intended, undermining the very reason parties choose arbitration. The 2015 and 2019 Amendments, read together with Ssangyong and M. Hakeem, pulled the pendulum firmly back towards restraint, confining courts to a supervisory rather than an appellate role. Gayatri Balasamy represents a pragmatic, if contested, mid-point: it does not reopen merits review, but it acknowledges the practical absurdity of compelling parties into fresh, years-long arbitration merely to correct a clerical slip or a severable, plainly bad portion of an otherwise sound award. In this author’s opinion, that narrow recalibration is a sensible one, provided the lower judiciary resists the temptation to treat severability or manifest error as a fresh gateway for merits review, a risk the dissent in Gayatri Balasamy rightly flags. Going forward, the surest way to protect the balance the Supreme Court has now struck would be a further legislative clarification codifying the modification power precisely as defined by the majority, rather than leaving its contours to be worked out award by award, petition by petition, in the High Courts. Until then, Section 34 remains what it was designed to be: a narrow, exhaustive safety valve, not a second bite at the arbitral cherry.
FAQ
1. What is the limitation period for filing a Section 34 application?
Three months from the date of receipt of the arbitral award, extendable by a further thirty days if the applicant shows sufficient cause for the delay. Courts have consistently held that no condonation is possible beyond this additional thirty day period.
2. Can a court re-appreciate evidence while deciding a Section 34 application?
No. Section 34 is not an appeal on merits. Courts cannot reassess evidence or substitute their own view of the facts for that of the arbitral tribunal. Interference is confined to the specific statutory grounds in Section 34(2) and (2A).
3. Does filing a Section 34 petition automatically stay the arbitral award?
No. Since the 2015 Amendment to Section 36, the mere filing of a Section 34 application does not operate as an automatic stay. A party seeking a stay must make a separate application, and courts may impose conditions, including security, particularly where the award concerns money.
4. Can courts now modify an arbitral award under Section 34?
Following Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025), courts possess a narrow, implied power to modify an award only where the invalid portion is severable, to correct manifest clerical or computational errors, or to adjust post-award interest. The Supreme Court alone may go further under Article 142 in exceptional cases. General merits-based modification remains impermissible.
5. What is the difference between the public policy ground for domestic and foreign awards?
Foreign awards may be refused enforcement under Section 48 only on the narrower Renusagar-style grounds, namely the fundamental policy of Indian law, the interests of India, or justice and morality, without any patent illegality ground. Purely domestic awards, by contrast, may additionally be challenged under Section 34(2A) on the ground of patent illegality appearing on the face of the award, a ground expressly unavailable for international commercial arbitrations seated in India or for enforcement of foreign awards.
References
Arbitration and Conciliation Act, 1996.
Arbitration and Conciliation (Amendment) Act, 2015.
Arbitration and Conciliation (Amendment) Act, 2019.
UNCITRAL Model Law on International Commercial Arbitration, 1985.
Renusagar Power Co. Ltd. v. General Electric Co., AIR 1994 SC 860.
ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705.
ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263.
Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49.
Ssangyong Engineering and Construction Co. Ltd. v. National Highways Authority of India, (2019) 15 SCC 131.
Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1.
Gayatri Balasamy v. M/s ISG Novasoft Technologies Ltd., 2025.
Word count: approximately 2,050.
