The Supreme Court of India, through a five-Judge Constitution Bench, delivered a landmark judgment on 9 May 2025 in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., holding that courts exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 possess only limited power to modify arbitral awards. The Bench ruled 4:1 that modifications are restricted to computational errors and manifest mistakes, and do not extend to appellate review of the merits.
Background
The scope of judicial interference with arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996 has been a contentious issue in Indian arbitration jurisprudence. Section 34 permits courts to set aside an arbitral award on specified grounds, including public policy violations, but does not expressly confer the power to modify or vary an award.
Conflicting High Court decisions and smaller Bench rulings of the Supreme Court had created uncertainty on whether courts could partially modify awards — for instance, by altering the quantum of damages while upholding the underlying finding of liability. The Constitution Bench was constituted to settle this divergence and establish a definitive position on the extent of court power under the provision.
Key Holdings
The Constitution Bench laid down the following principles by a 4:1 majority:
No appellate jurisdiction under Section 34: Courts exercising power under Section 34 do not sit in appeal over arbitral awards. The provision permits only limited judicial review, not a reassessment of evidence or findings on merits.
Modification confined to narrow categories: Courts may modify an arbitral award only to correct computational errors, clerical mistakes, or typographical errors that are manifest on the face of the award. Any modification that alters the substantive decision of the tribunal falls outside the scope of Section 34.
Article 142 not a substitute for statutory power: The majority held that the Supreme Court's extraordinary powers under Article 142 of the Constitution cannot be routinely invoked to modify awards where the statute does not confer such authority. Article 142 is not a general appellate mechanism over arbitral decisions.
Remedy of remand available: Where a court finds a ground for setting aside but considers that partial relief may be appropriate, the proper course is to remand the matter to the arbitral tribunal for reconsideration rather than to modify the award itself.
Implications for Practitioners
This judgment significantly narrows the options available to parties dissatisfied with the quantum or specific terms of an arbitral award. Practitioners who have historically sought partial modifications through Section 34 petitions must now recalibrate their litigation strategy. The practical consequence is binary: an award either survives judicial scrutiny or is set aside entirely, with remand being the only intermediate remedy.
For arbitration counsel drafting claims, the decision reinforces the importance of precise quantification and thorough evidence presentation before the tribunal itself, since the scope for judicial correction downstream has been severely curtailed. Arbitrators, too, must exercise greater diligence in ensuring that computational aspects of awards are accurate, as post-award correction mechanisms are now the primary route for addressing such errors.
The restriction on Article 142 is particularly notable. Parties seeking equitable relief from the Supreme Court in arbitration matters will find it harder to argue for discretionary modifications where the statute itself does not provide for them. This strengthens the finality and autonomy of arbitral proceedings, a development consistent with India's broader pro-arbitration policy trajectory.