This week in Indian law: A five-judge Constitution Bench delivered a landmark ruling holding that courts can modify arbitral awards under Section 34 of the Arbitration Act, resolving a long-standing judicial split. The Supreme Court also ordered the liquidation of Bhushan Power & Steel in one of the most significant IBC cases. 4 significant legal developments this week across Supreme Court judgments and insolvency law.
Top story
SC Constitution Bench: Courts Can Modify Arbitral Awards Under Section 34
Category: supreme-court-judgments | Date: 30 April 2025 | Source: Supreme Court of India
In Gayatri Balasamy v. ISG Novasoft Technologies Ltd., a five-judge Constitution Bench held by a 4:1 majority that courts exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 possess a limited power to modify arbitral awards — not merely set them aside entirely. Chief Justice Sanjiv Khanna authored the majority opinion, joined by Justice B.R. Gavai, Justice Sanjay Kumar, and Justice Augustine George Masih. Justice K.V. Viswanathan dissented, holding that Section 34 only permits annulment.
The majority held that the proviso to Section 34(2)(a)(iv), which permits severance of invalid portions from valid portions, impliedly confers a limited modification power. However, this power is constrained: courts cannot rewrite the award or substitute their commercial judgment for that of the arbitrator.
Why it matters: This is the most significant arbitration law development in years. Practitioners can now seek modification of awards rather than facing the binary choice of full annulment or full enforcement. However, the "limited" nature of the power means courts will be cautious in exercising it. The distinction between permissible modification and impermissible rewriting will be the battleground in future litigation.
Read more: Veritect analysis
Court judgments
SC Orders Bhushan Power & Steel Liquidation Under IBC
Court: Supreme Court of India | Date: 2 May 2025
The Supreme Court ordered the liquidation of Bhushan Power & Steel Ltd. under the Insolvency and Bankruptcy Code after the resolution plan failed to materialise. The case is one of the original "Dirty Dozen" companies identified by the RBI for insolvency proceedings and has been among the longest-running IBC cases. The liquidation order marks the failure of the resolution process in this major case.
Key point: The liquidation of Bhushan Power demonstrates that the IBC's resolution framework has limits — where resolution fails, liquidation is the statutory consequence. Creditors in similar long-running cases should prepare for potential liquidation outcomes.
Supreme Court · Veritect analysis
Also this week
- SC summer vacation approaching — The Supreme Court will commence its summer vacation in mid-May. Pending matters are being listed for hearing before the recess.
- Civil judge practice requirement — The SC restored the three-year practice requirement for civil judge examinations, affecting judicial service recruitment across states.
By the numbers
- 4:1 — Constitution Bench majority in Gayatri Balasamy arbitration ruling
- 5 — Judges on the Constitution Bench (CJI Khanna, Gavai, S. Kumar, Masih, Viswanathan)
- "Dirty Dozen" — Original RBI list of major insolvency cases that included Bhushan Power & Steel
Looking ahead
- May 5-11: RBI digital lending directions and SC accessibility judgment expected
- Mid-May: SC summer vacation commences; regulatory activity continues
- May-June: SEBI, RBI, MCA circulars expected during court vacation period
This is the Veritect Weekly Legal Roundup for Week 18 of 2025. For daily updates, visit our legal news page. Subscribe to receive this roundup every Monday morning.
Veritect provides this content for informational purposes and does not constitute legal advice.