Gurkaranbir Singh
The Supreme Court in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., (“Gayatri Balasamy Judgment”) has now clarified the scope of judicial intervention in respect of modification of arbitral awards. The Court held that a court is empowered not only to set aside an arbitral award but also to modify or vary an arbitral award. This pronouncement marks a significant development in Indian arbitration jurisprudence, signalling an expansion of judicial powers in relation to arbitral awards.
This article examines the judgment, highlighting its risks, inconsistencies, and departure from settled legal doctrines and arbitration jurisprudence. It critically analyzes the decision in light of the relevant provisions of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”), underscores the dissenting opinion of Hon’ble Justice K.V. Viswanathan, compares arbitration friendly jurisdictions, and concludes with suggestions for reform.
1. Section 5 and the Principle of Minimal Judicial Intervention in Arbitration
The Arbitration Act, 1940 (“the 1940 Act”) expressly conferred upon the courts the power to modify or vary an arbitral award, as set out in Section 15 titled “Power of Court to Modify Award”. With the enactment of the 1996 Act, this express provision was omitted, contributing to the view that such powers were no longer available to the courts. The 1996 Act was modelled on the UNCITRAL Model Law on International Commercial Arbitration, 1985 (“the Model Law”), which was formulated to harmonise arbitration and conciliation principles across jurisdictions and was primarily intended for international commercial arbitration. India adopted the Model Law with suitable modifications to also govern domestic arbitration with one of its key objectives i.e., the minimisation of judicial intervention in the arbitral process.
In line with the fundamental objective of minimising judicial intervention, Section 5 of the 1996 Act titled “Extent of Judicial Intervention” was expressly incorporated to reinforce the autonomy of the arbitral process. It provides:
“Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”
As precisely noted in Para 60 of Gayatri Balasamy Judgment (dissenting opinion), Section 5 has both positive and negative facets: it permits judicial intervention only in matters expressly provided under Part I of the 1996 Act, and conversely, prohibits interference where an arbitral tribunal has exclusive jurisdiction. The non-obstante clause underscores this limitation, confining judicial involvement to situations expressly sanctioned by the 1996 Act. Such an interpretation was reinforced by another landmark judgment of the Supreme Court in Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899, In re, where the Supreme Court observed:
“81. One of the main objectives of the Arbitration Act is to minimise the supervisory role of Courts in the arbitral process. Party autonomy and settlement of disputes by an Arbitral Tribunal are the hallmarks of arbitration law. Section 5 gives effect to the true intention of the parties to have their disputes resolved through arbitration in a quick, efficient and effective manner by minimising judicial interference in the arbitral proceedings.”
In sum, the legislative scheme of the 1996 Act, reinforced by judicial interpretation, establishes Section 5 as a clear safeguard of arbitral autonomy. By strictly limiting court intervention to situations expressly provided under Part I, it affirms the primacy of party autonomy and the finality of the arbitral process.
2. Revisiting the contours of Section 34 Powers
At the outset, it is pertinent to note that the bare text of Section 34 is titled “Recourse to a court against an arbitral award” and refers specifically to the “setting aside” of an award. The combined use of the expressions “set aside” and “only if,” when read alongside the term “recourse,” makes it evident that the sole mode of judicial interference contemplated under the Act and reinforced by Section 5 is through an application to set aside the award, by establishing one or more of the grounds expressly prescribed therein.
The 1996 Act does not confer upon courts, either under Section 34 or Section 37, the power to modify or vary an arbitral award; rather, the statutory language explicitly confines the court’s jurisdiction to the setting aside of an award.
However, the Supreme Court in reaching its conclusion, invoked the legal maxim “omne majus continet in se minus” (the greater power includes the lesser). The Supreme Court reasoned that if Section 34 of the 1996 Act empowers a court to set aside an arbitral award, it must necessarily encompass within it the lesser power to modify or vary an award.
But it is imperative to note here that power to modify would include the court entering the arena of adjudicating the dispute on merits when parties have contractually agreed to go to the arbitrator and it cannot be said to be subsumed in the power to “set aside”. It will be a different matter if the power to modify or vary is conferred by the legislature itself. Further, it is crucial to note that how courts exercising jurisdiction under Sections 34 and 37 of the 1996 Act would not modify or vary an award without indulging into a fact-finding exercise. In McDermott International Inc. v. Burn Standard Co. Ltd., the Supreme Court explicitly held that
“52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired…”
More importantly in Project Director, NHAI v. M. Hakeem and Anr, the Supreme Court categorically held that Section 34 of the 1996 Act provides only for setting aside awards on very limited grounds. It held that Section 34 of the 1996 Act is modelled on the UNICTRAL Model Law on International Commercial Arbitration 1985 under which no power to modify an award is given to a court hearing a challenge to an award. It is further crucial to observe that, had it been the intention of Parliament to confer upon the courts the power to modify or vary an arbitral award, such authority would have been expressly incorporated into the statutory framework of the 1996 Act through legislative amendment. The 1996 Act has undergone substantial amendments on three separate occasions in 2015, 2019, and 2021 each designed to refine and strengthen the arbitral process in India. Notwithstanding these legislative amendments, Parliament has consciously refrained from introducing any provision conferring the power of modification or variation of arbitral awards. This deliberate omission strongly suggests that the legislative intent was to restrict judicial authority under Sections 34 and 37 exclusively to the setting aside of awards, thereby maintaining fidelity to the principle of minimal judicial interference.
3. Section 33: Clarificatory Powers and The Limits of Post-Award Intervention
The Supreme Court in its majority judgment, inter alia, held that the courts exercising power under Sections 34 and 37 can correct any clerical, computational, or typographical errors which appear erroneous on the face of the record. At this juncture, it is important to note that Section 33 of the 1996 Act empowers the arbitral tribunal to correct, interpret, or supplement its award within a limited scope and timeframe.
However, unlike an arbitral tribunal, courts are not vested with any such power under Sections 34 and 37 of the 1996 Act. The Supreme Court’s recognition of a judicial power to correct clerical or computational errors under these provisions therefore raises questions of coherence within the arbitration statutory framework. This interpretation appears to extend judicial intervention beyond the limits envisaged under Section 34 of the 1996 Act, potentially creating tension with the principle of minimal court interference and with Section 37 where such power already exists.
Furthermore, a harmonious reading of Sections 31, 34(1), 34(2-A), and 34(4) of the 1996 Act indicates that, in appropriate cases and upon the request of a party, the court may remit the matter to the arbitral tribunal for limited purposes. Such purposes include enabling the tribunal to provide additional reasoning or to address gaps in the reasoning underlying findings already rendered in the award. Similarly, where issues arise in relation to the award of interest such as non-award of interest, award of interest beyond the contractual terms, or the grant of excessive or unreasonably low interest, the Court under Section 34, does not possess the power to modify the award. Instead, the proper course of action is to record its concerns and remit the matter under Section 34(4) to the arbitral tribunal for appropriate correction.
It is noteworthy that this mechanism reflects a legislative intent to preserve the finality of arbitral awards while allowing the arbitral tribunal, than the court, to undertake necessary clarifications or adjustments. The power to correct, clarify, or supplement the award was thus always designed to remain with the tribunal, thereby reinforcing the principle of minimal judicial intervention that underpins the 1996 Act.
The judgment raises serious concerns about its compatibility with the statutory framework of the 1996 Act. Section 5 which is widely regarded as the bedrock of Indian arbitration jurisprudence mandates minimal judicial intervention. Yet, by recognising in courts exercising powers under Section 34 an authority to correct clerical or computational errors, the judgment appears to extend judicial powers beyond what the legislature expressly intended. This expansion directly overlaps with and arguably overrides the powers conferred exclusively upon arbitral tribunals under Section 33, which carefully circumscribes the scope for correction, interpretation, or supplementation of an award.
In addition, the judgment effectively reads into Section 34 a power of modification that the legislature deliberately withheld, notwithstanding multiple amendments to the 1996 Act. Such a judicial gloss risks undermining legislative clarity and coherence. It also revives elements of the earlier 1940 Arbitration Act—an era marked by excessive court intervention that the 1996 Act sought to decisively move away from. Furthermore, this reasoning was advanced under the broad rubric of doing “complete justice,” a constitutional power of the Supreme Court, but one that sits uneasily with the legislative scheme designed to insulate arbitration from judicial overreach.
Taken together, these aspects reveal a jurisprudential incoherence: the judgment is inconsistent with the statutory design, misaligned with the principle of minimal judicial interference, and potentially detrimental to India’s aspirations of positioning itself as an arbitration-friendly jurisdiction.
4. Article 142: The Supreme Court’s Power To Do Complete Justice
Article 142 of the Indian Constitution empowers the Supreme Court to pass such decrees or make such orders as are necessary to ensure complete justice in any matter pending before it. In its judgment, the Supreme Court reiterated that this provision vests it with the authority to do complete justice, even if that requires departing from established procedural provisions. On this basis, the Court held that it may exercise its powers under Article 142 to modify an arbitral award. While doing so, the Court placed reliance on Shilpa Sailesh v. Varun Sreenivasan, observing:
“……..Even in the strictest sense, it was never doubted or debated that this Court is empowered under Article 142(1) of the Constitution of India to do “complete justice” without being bound by the relevant provisions of procedure, if it is satisfied that the departure from the said procedure is necessary to do “complete justice” between the parties.”
The Supreme Court cautioned, however, that this power should not be exercised in a manner that effectively rewrites the award or alters it on its merits. The Supreme Court has exercised this power in practice. In PGI Chandigarh v. Kalsi Construction Company, [Para Nos. 6,7,8], the Court reduced the interest rate initially awarded by the arbitral tribunal. Similarly, in Vedanta Limited v. Shenzhen Shandong Nuclear Power Construction Company Limited [Para Nos. 14,15,16,20], the Court modified the interest rate awarded by the arbitral tribunal.
However, it is imperative note that while the exercise of Article 142 may offer practical benefits by resolving disputes efficiently and conserving resources, it remains in tension with the statutory design of the 1996 Act and the core principle of minimal judicial interference, raising important questions about the limits of judicial intervention in arbitration. More importantly, as noted by Hon’ble Justice K.V. Viswanathan that if power is reserved for this Court to modify an arbitral award at the fag end of the litigation, contracting parties will have grave uncertainties. It will be antithetical to arbitration as an alternative and efficacious mode of dispute resolution.
Lastly, it is important to highlight that in the Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express (P) Ltd the Supreme Court, while exercising its curative jurisdiction, interfered with the arbitral award at the very fag end of litigation. The significance of this intervention lies in the fact that curative jurisdiction is intended to be invoked only sparingly, and solely in cases of manifest miscarriage of justice. Yet, by employing this extraordinary power to alter the outcome of an arbitral award, the Court marked a critical development in Indian arbitration jurisprudence.
Now, in the Gayatri Balasamy judgment, the Supreme Court has opened what may be described as a “Pandora’s box,” wherein arbitral awards could be subjected to judicial modification or interference even in circumstances where it may not be warranted. This trajectory risks unsettling the core foundations of arbitration law, which rest on the principles of finality, party autonomy, and minimal judicial intervention.
5. The Dissenting View: Finality And Legislative Intent
Justice K.V. Viswanathan’s dissent is a powerful defence of arbitral finality and a caution against judicial overreach. He records that arbitration is chosen precisely because it offers parties a binding and conclusive resolution outside the protracted delays of litigation. The 1996 Act deliberately restricts the role of courts to either upholding or setting aside an award under Section 34. By allowing modification, courts risk undermining the very purpose of arbitration, turning it into another stage of litigation rather than an alternative to it. He underscores that arbitral awards must be treated as final, except in cases where they violate fundamental principles of justice, and even then, the only remedy available should be setting aside and not rewriting/modifying that too at the fag end of the litigation. He anchors his reasoning in numerous precedents, particularly the Supreme Court’s ruling in Project Director, NHAI v. M. Hakeem, which categorically held that Section 34 does not empower courts to modify arbitral awards. To depart from this principle, he rightly argues, would create uncertainty in arbitration law and erode confidence in India’s arbitration framework. He warns that judicial modification would invite endless challenges, as dissatisfied parties could seek to have courts tinker with awards rather than accept closure. Lastly, he records that Article 142 of the Constitution shall not be exercised by this Court to modify awards passed by arbitrators as it is well settled that the Article 142 power cannot be used to give a go by to the substantive statutory provision.
6. Comparative Lens
A comparative review underscores how sharply India’s interpretive expansion departs from international practice. In NHAI v. M Hakeem (Supra), the Supreme Court itself acknowledged that jurisdictions such as England, the United States, Canada, Australia, and Singapore contain express provisions permitting limited variation of awards, whereas Section 34 of the 1996 Act does not.
For instance, Singapore under Section 49 of the Singapore Arbitration Act, 2001 (governing domestic arbitrations) allow courts to “vary the award” apart from setting aside or confirming it. Similarly, Australia’s Commercial Arbitration Act, 2017 (CAA) provides under Section 34A that courts may “vary the award” upon appeal.
Crucially, both Singapore, Australia and many other jurisdictions maintain separate statutes for domestic and international arbitrations: the Singapore International Arbitration Act, 1994 and Australia’s International Arbitration Act, 1974 (IAA), neither of which confer any power to modify awards. Thus, the authority to vary awards is carefully confined to domestic arbitration regimes, with clear statutory basis.
Against this backdrop, India’s judicially‑created power of modification appears anomalous: it lacks statutory basis, diverges from the Model Law framework, and risks unsettling confidence in India as a reliable arbitration seat. Such judicial intervention may drive parties to prefer foreign seats, where arbitral finality and predictability are better safeguarded, especially in light of PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion, which affirmed Indian parties’ freedom to choose foreign seats.
7. Conclusion
Viewed holistically, the judgment invites two distinct interpretive lenses. From a pragmatic perspective, recognizing a limited judicial power to modify arbitral awards may, in select cases, enhance procedural efficiency. Yet, this pragmatic gain comes with a structural and foundational risk: expanding the scope of Section 34 even in a narrowly tailored fashion may open the door to disguised appellate review. More importantly, such a power hinges upon party autonomy and contractual consent—the bedrock of arbitration.
That said, the more coherent solution should have come through a legislative amendment. For example, the Court itself has previously adopted such a course in IFFCO Ltd. v. Bhadra Products, where it suggested that Parliament may consider amending Section 34 to consolidate interim and final awards so that a single challenge could be brought after delivery of the final arbitral award.
More importantly, India should follow the path of other jurisdictions by enacting separate statutes for domestic and international arbitration. A bifurcated framework would clarify the scope of judicial powers, align India with the UNCITRAL Model Law, and harmonize practice with leading jurisdictions. If the power to modify is to be embedded, it must be legislatively codified with clear safeguards. Until then, courts must exercise restraint, ensuring fidelity to the 1996 Act’s principles of finality and minimal judicial interference.
Gurkaranbir Singh is a B.A. LL.B. (Hons.) graduate from Symbiosis International University and an associate a Numen Law Offices.
NUALS Law Journal 