AUTHOR- KAJAL PRAJAPATI
UNIVERSITY- SHRI RAMSWAROOP MEMORIAL UNIVERSITY
Headline of the Article
Supreme Court Affirms Limited Modification Powers Over Arbitral Awards Under Arbitration Act
To the Point
On April 30, 2025, a five-judge Constitution Bench of the Supreme Court of India in Gayatri Balasamy v. ISG Novasoft Technologies Ltd clarified that Indian courts possess a limited yet real power to modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. This consolidation supports party autonomy and balances judicial minimalism with procedural efficiency
Use of Legal Jargon
Arbitral Award
Section 34: Grounds for setting aside awards
Section 37: Appeals against setting aside
Party autonomy
Constitution Bench
Clerical errors, post-award interest, severability
Minimal judicial interference
The Proof
A 4:1 majority authored by former CJI Sanjiv Khanna held courts may correct:
1.Clerical, typographical, or computational errors.
2.Proper characterization of post-award interest, when warranted.
3.Severable parts of an award under the scope of Section 34.
4.Use Article 142 (SC’s constitutional power) for equitable adjustments
Justice K.V. Viswanathan dissented, arguing that modification is not contemplated under the Act and could undermine enforceability .
Abstract
This landmark ruling clarifies the judicial scope under the Arbitration Act: courts cannot review merits of arbitral decisions but may refine awards to correct bona fide errors. It strengthens efficiency in arbitration and bolsters legal certainty while preserving minimal intervention, aligning with India’s international arbitration commitments.
Case Laws
Gayatri Balasamy v. ISG Novasoft Technologies Ltd (30 Apr 2025): Establishes limited correction power under Sections 34 and 37
Ferro Concrete Construction (India) v. State of Rajasthan (2 Apr 2025): Reaffirms arbitrators may award pendente lite interest even if contract is silent
Somdatt Builders NCC‑NEC v. National Highways Authority of India (27 Jan 2025): Courts must not reassess contractual merits when hearing appeals under Section 37
Conclusion
The decision strikes a progressive balance: protecting finality and autonomy of arbitration, while offering a narrow gateway for correcting valid errors. While critics fear judicial overreach, the majority’s restrained approach and the dissent both underscore respect for statutory boundaries. Overall, this strengthens India’s arbitration-friendly posture and may accelerate dispute resolution mechanisms domestically and internationally.
FAQ
Q1: What exactly can courts modify under this ruling?
A: Courts can correct clerical typos, computational mistakes, severable errors, and properly adjust post-award interest—not re-evaluate the substantive decision
Q2: Does this open a loophole for judicial interference?
A: No, the ruling is strictly confined to technical corrections. Courts cannot reinterpret or remold the award’s legal merits.
Q3: What did the dissent argue?
A: Justice Viswanathan warned such powers are not sanctioned by the Act and may threaten enforceability and the integrity of final arbitration decisions .
Q4: How does this impact arbitration in India?
A: It enhances efficiency by reducing remand delays, promotes procedural certainty, and provides a narrow but decisive remedy for genuine mistakes.
Q5: Does this align with international arbitration standards?
A: Largely yes. Most jurisdictions allow limited corrections (e.g., New York Convention includes typographical fixes). It signals India’s intent to align with global best practices.
