Modifying Arbitral Awards: SC in Gayatri Balasamy (2025)

Courts Have Limited Power to Modify Arbitral Awards: Constitution Bench in Gayatri Balasamy, 4:1

Published: 20 October 2026 · NyayVidhan

By 4:1, a Constitution Bench held that courts hearing challenges under Sections 34 and 37 of the Arbitration Act have a limited power to modify arbitral awards: severing invalid parts, correcting clerical, computational or typographical errors, and modifying post-award interest, with the Supreme Court able to use Article 142 with great caution. Justice K.V. Viswanathan dissented: courts cannot modify awards, though they may sever invalid parts and correct such errors (para 85; Viswanathan J., para 157).

Key holdings

Courts may sever the invalid part of an award if it is separable from the valid part (paras 33-35, 85).

Clerical, computational and typographical errors may be corrected without any merits review (paras 49, 54).

Post-award interest may be increased, reduced or granted where the facts justify it (paras 74, 77).

A remand request under Section 34(4) may be oral and need not precede the decision (para 62).

Article 142 may end litigation but must not rewrite an award on merits (para 84).

Case explainer by NyayVidhan: an account of this judgment and the law it laid down, not the court's text. The judgment itself is the authoritative version.

Brief Facts

The Arbitration and Conciliation Act, 1996 does not expressly empower courts to modify an arbitral award; Section 34 only lets them set it aside (para 3). In M. Hakeem (2021) a two-Judge Bench held that Section 34 allows awards to be set aside only on its limited grounds, while other Benches of two and three Judges had modified awards or accepted modification (paras 1, 15). On 20.02.2024 a three-Judge Bench hearing Gayatri Balasamy's appeals sought a larger Bench on whether courts can modify awards, whether only severable ones, whether the power to set aside includes it, and whether Hakeem is correct (paras 1-2).

Court's Findings

The power to set aside includes setting aside in part: the proviso to Section 34(2)(a)(iv) is clarificatory, and an invalid part may be severed if legally and practically separable (paras 32-35). Modification is a more limited power than annulment, and denying it would force a fresh arbitration after years of litigation (paras 41-45). Courts may correct computational, clerical or typographical errors needing no merits review (paras 49, 54). Where in doubt, they should remand under Section 34(4); the request may be oral and need not precede the decision, contrary to Kinnari Mullick (paras 55, 61-62). A limited power to modify does not affect New York Convention enforcement (paras 66-69). Courts may increase, reduce or grant post-award interest where facts justify (paras 74, 77). Article 142 may end litigation but not rewrite an award on merits (para 84). Dissenting, Viswanathan J. held that courts cannot modify awards, that Article 142 cannot override the statute, and that interest too cannot be modified (Viswanathan J., paras 156-157).

Legal Principle

Courts under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 have a limited power to modify an arbitral award: to sever its invalid part, to correct clerical, computational or typographical errors apparent on the record, and to modify post-award interest, but never to review the award on merits (paras 54, 85).

Precedents Relied Upon

Project Director, National Highways No. 45 E and 220 National Highways Authority of India v. M. Hakeem and Another (2021) 9 SCC 1
Referred To Discussed at ¶ 1, 15, 17
Held that Section 34 allows an arbitral award to be set aside only on its limited grounds and not modified; the reference asked whether it laid down the correct law.
Gayatri Balasamy v. ISG Novasoft Technologies Limited 2024 SCC OnLine SC 1681
Referred To Discussed at ¶ 1
The three-Judge Bench order of 20.02.2024 placing the questions on modification of awards before a larger Bench.
Kinnari Mullick and Another v. Ghanshyam Das Damani (2018) 11 SCC 328
Not Followed Discussed at ¶ 61-62
Held that a remand under Section 34(4) needs a written request made before the Section 34 application is decided; the majority did not accept either condition.

View all precedents (10)

Grindlays Bank Ltd. v. Central Government Industrial Tribunal and Others 1980 Supp SCC 420
Relied Upon Discussed at ¶ 50
Every tribunal or court has ancillary or incidental powers necessary to discharge its functions effectively.
Budhia Swain and Others v. Gopinath Deb and Others (1999) 4 SCC 396
Referred To Discussed at ¶ 51
Recognises the power of recall which every court possesses.
Century Textiles Industries Limited v. Deepak Jain and Another (2009) 5 SCC 634
Relied Upon Discussed at ¶ 53
Clerical or arithmetical errors may be corrected by the executing court, which must take the decree according to its tenor.
Dyna Technologies Private Limited v. Crompton Greaves Limited (2019) 20 SCC 1
Relied Upon Discussed at ¶ 64
A reasoned award must be proper, intelligible and adequate; Section 34(4) lets the tribunal cure such defects.
I-Pay Clearing Services Private Limited v. ICICI Bank Limited (2022) 3 SCC 121
Relied Upon Discussed at ¶ 65
Section 34(4) does not authorise the tribunal to review or reconsider its earlier findings.
Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Limited, Saudi Arabia and Others 1995 Supp (2) SCC 280
Relied Upon Discussed at ¶ 68
The New York Convention speaks of recognition and enforcement of an award; an award may be recognised without being enforced.
Shilpa Sailesh v. Varun Sreenivasan (2023) 14 SCC 231
Relied Upon Discussed at ¶ 83-84
The power under Article 142(1) is bounded by restraint and fundamental considerations of public policy.

Statutory Provisions