LexGAYATRI BALASAMY versus M/S ISG NOVASOFT TECHNOLOGIES LIMITED
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[2025] 4 S.C.R. 2080 : 2025 INSC 605 Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited (Civil Appeal No(s). 6178-6179 of 2025) 30 April 2025 [Sanjiv Khanna,* CJI, B.R. Gavai, Sanjay Kumar, K.V. Viswanathan* and Augustine George Masih, JJ.] Issue for Consideration In ‡M. Hakeem and Anr.’s case, this Court held that while exercising powers u/s.34 of the Arbitration and Conciliation Act, 1996, a Court hearing the petition had no power to “modify” the Award, whereas other benches of two judges and three judges of this Court have either modified or accepted modification of the arbitral awards. In view of the divergent and contrasting judicial opinions as regards the power of the court u/s.34 to modify an arbitral award, the matter has been placed before the Constitution Bench to decide the questions referred. The questions referred are: whether the powers of the Court u/ss.34 and 37 of the 1996 Act include the power to modify an arbitral award; whether such power can be exercised only where the award is severable, and a part thereof can be modified; whether the power to set aside an award u/s.34, being a larger power, will include the power to modify an arbitral award and to what extent; whether power to modify an award can be read into the power to set aside an award u/s.34; and whether the judgment of this Court in ‡M. Hakeem’s case lay down the correct law. Headnotes† Arbitration and Conciliation Act, 1996 – s.34 – Application for setting aside arbitral award – Power of the court to modify an award – Limited power of modification, if can be located in s.34: Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai, Sanjay Kumar and Augustine George Masih, JJ.)] Court has a limited power u/ss.34 and 37 to modify the arbitral award – This limited power may be exercised-when the award is severable, by severing the “invalid” portion from the “valid” portion of the award; by * Author [2025] 4 S.C.R. 2081 Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited correcting any clerical, computational or typographical errors which appear erroneous on the face of the record; by modifying post award interest in some circumstances; and/or exercise of power u/Art.142 is permitted, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power. [Para 85] Held: (per K.V. Viswanathan, J.) (Dissenting) Courts exercising power u/s.34 and Courts hearing appeals thereunder have no power to “modify” an award – While modification is not permitted u/s.34, severance of the award falling foul of s.34 is permissible in exercise of powers u/s.34 – Power to set aside will not include the power to modify since power to modify is not a lesser power to that of the power to set aside – Furthermore, inherent power u/s.151 CPC cannot be used to modify awards as it will be contrary to the express power mentioned in s.34 – Also there is no scope for applying the doctrine of implied power to modify awards – Art.142 will not be exercised by this Court to modify awards passed by arbitrators – Interest awarded also cannot be modified – ‡Hakeem’s case is not per incuriam, it lays down the correct law insofar as it held that s.34 Court cannot modify the award and will be read with the only exception made. [Para 156] Arbitration and Conciliation Act, 1996 – s.34 – Application for setting aside arbitral award – Doctrine of merger – New York Convention Awards – Power of modification u/s.34 – Affect on International Commercial Arbitration Regime: Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai, Sanjay Kumar and Augustine George Masih, JJ.)] Once s.34 is reinterpreted to include a limited power to modify awards, this authority will not affect the international commercial arbitration regime or the enforcement of foreign awards – It cannot be said that court orders partially setting aside or modifying an award would render the amended award unenforceable under the New York Convention. [Para 66] Held: [per K.V. Viswanathan, J. (Dissenting)] In UK, Singapore, New Zealand and Kenya, not only were there express provisions to modify awards in those statutes by the Court hearing the setting aside application, there are also express provisions recognising that the award would hitherto be read in the modified form – In the absence of similar statutory regime serious complications will arise in enforcement of New York Convention awar
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