Civil Appeal Nos. 6178-6179/2025
Supreme Court of India – Constitution Bench Decided: 30 April 2025
Citation: 2025 INSC 605
Case Background
Power of the court to modify the arbitral award, Section 34
The case arose from a sexual harassment and wrongful dismissal claim involving Gayatri Balasamy against her employer, ISG Novasoft Technologies Limited. The arbitral tribunal had awarded compensation to Balasamy, but the question arose regarding the courts’ power to modify arbitral awards.
Legal Issue
Whether courts can set aside arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, specifically addressing the fundamental question of judicial power to modify such awards beyond traditional powers of setting aside or remitting.
Supreme Court Judgment
Constitution Bench Decision: 4:1 Majority
Majority Holding
The Supreme Court held that courts may modify arbitral awards in set aside proceedings under the Arbitration and Conciliation Act, 1996, in limited circumstances.
Key Judicial Pronouncements
- Limited Modification Power: The court may modify or correct an award where it appears that a part of the award is upon a matter not referred to arbitration, provided such part can be separated from the other part and does not affect the decision on the matter referred
- Form-based Corrections: Where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision
- Departure from Strict Approach: The Court relaxed the framework where conventionally, judges were able to do only two things: set the award aside or remit it to the arbitral tribunal
Scope of Modification Power
Without abandoning the principle of minimal judicial interference, the Court recognised a limited power to modify an award in clearly defined situations
Legal Significance
The judgment marks a paradigm shift in arbitration jurisprudence, establishing that courts can make practical corrections to arbitral awards while maintaining the fundamental principle of minimal judicial intervention. This creates a balanced approach between arbitral finality and the need for error correction in appropriate circumstances.