I. Introduction to the case:

In Indian arbitration law, the Supreme Court’s decision in Gaytri Balaswamy vs. ISG Novasoft Technologies Ltd.¹ sparked intense debate regarding the scope of judicial intervention in arbitral awards, specifically whether or not they can alter rather than simply overturn them under Section 34 of the Arbitration and Conciliation Act, 1996. This article examines whether the Supreme Court’s decision in April 2025 signals a shift from India’s established arbitration framework of minimal judicial intervention by allowing courts to modify, not merely set aside, arbitral awards.

II. The Legal Landscape Before Balaswamy:

Prior to the case of Balaswamy, Indian courts generally held that Section 34 of the Arbitration Act permitted only the setting aside of awards, not their modification, as affirmed in cases like McDermott International² and M. Hakeem³. A few exceptions existed, like Vedanta⁴ and Oriental⁵, primarily concerning interest components, occasionally invoking Article 142 for complete justice. This background sets the stage for evaluating the Supreme Court’s doctrinal stance.

III. Brief facts of the case:

The dispute in this case originated from a sexual harassment claim filed by Gaytri Balaswamy against her employer, ISG Novasoft. Following arbitration, the tribunal awarded her damages, but dissatisfaction arose around the computation of post-award interest and monetary components. When parties challenged the award, instead of setting the award aside entirely, the Court chose to partially modify it, especially the post-award interest component. This prompted a closer examination of whether such a change was lawfully allowed under Section34. The debate swiftly progressed from a factual disagreement to a more comprehensive legal investigation concerning the authority of courts to intervene in arbitral awards on grounds other than those expressly specified in the statute. 

IV. Majority Judgement (Unanimous, authored by CJI Sanjiv Khanna):

Without going against the spirit of minimal judicial interference under the Arbitration and Conciliation Act, 1996, the Court established a clear and limited scope for judicial modification of arbitral awards.

When the “valid” and “invalid” portions of an award are legally and practically separable, courts have the authority to partially set aside or modify it. They can also fix typographical, computational, or clerical errors or manifest errors that are visible on the face of the award without conducting a review of the merits. This makes use of the procedural review and inherent court powers established in Grindlays Bank and Budhia Swain⁶.

In extraordinary circumstances, such as when the rate granted is irrational, punitive, or unanticipated, courts have the authority to raise or lower post-award interest. The Court explained that it may use Article 142 to do “complete justice” in exceptional and compelling cases where altering the award can put an end to protracted litigation. It is justified under Section 31(7)(b), which permits courts to intervene when arbitrators have not specified post-award interest. This authority must be exercised cautiously and cannot be used to rewrite the award based solely on merit.

The Constitution Bench rejected the “functus officio” reasoning used in Kinnari Mullick⁷, ruling that the authority to remand remains under Section 37 even in the event that an award is set aside. The Court noted that a rigid interpretation would unnecessarily limit Section 34(4)’s curative powers, which are intended to uphold arbitral awards in cases where the flaw is minor and fixable.

V. Dissenting reasoning by Hon’ble Justice K.V. Vishwanathan:

Hon’ble Justice Viswanathan’s dissenting opinion is notable for its constitutional caution and clarity: Courts cannot modify arbitral awards. Sections 34 and 37, he argued, enumerate limited negative powers to set aside, not rewrite or re-engineer awards. He pointed out that nowhere in the text does it give judges the authority to change decisions made by a tribunal that was mutually agreed upon. Modification would transform the Court from a supervisory body to an appellate forum, violating both the letter and spirit of the Act. He views severability as the nullification of an unlawful portion rather than the Court rewriting what is
left; it is not a modification. This distinction, he argued, must remain sharp.

He also objected to the modification of the interest in the arbitral award. A court may only set aside or return the award to the tribunal as a remedy under Section 34. Even post-award interest cannot be unilaterally changed by the Court if it violates the law. Only typographical, clerical, or computational errors may be fixed, according to the dissent. This is not considered “modification” in the substantive sense and is limited to technical mistakes, not changes in legal reasoning or merit-based outcomes.

He rejected arguments that courts can rely on inherent powers under Section 151 of the Code of Civil Procedure, 1908 to modify awards. Section 34 is a complete Code, and importing general CPC powers would conflict with the legislative scheme. Implied or inherent powers cannot override express statutory limits. He also underlined that, in contrast to constitutional courts that have the authority to invoke Article 142, arbitral power is statutory. Its use would undermine legislative supremacy and the scheme of minimal judicial intervention.

This dissent stems from an institutional concern that judicial modification would essentially take the role of the arbitral tribunal, blurring the binding and final character of arbitration. His analysis emphasised statutory restraint and legislative intent, contending that Parliament, not the judiciary, must be the source of any expansion of judicial authority over arbitral awards. Otherwise, the arbitral process becomes less predictable, particularly in business partnerships where enforcement certainty is as important.

VI. Implications and Analysis:

Many scholars and practitioners see this judgement as deviating from the well-established jurisprudence around Section 34. In particular, it appears to overturn the precedent laid down in Kinnari Mullick⁸, which held that remission under Section 34(4) requires a formal written application. This judgement sidesteps that requirement and allows broader remedial powers without clear statutory support. It also does not engage meaningfully with recent decisions like Dyna Technologies⁹ or I-Pay Clearing Services¹⁰, which reinforced the idea that courts should not interfere with the merits of an arbitral award.

This judgement opens the door to both parties’ leveraging Court intervention: If any portion of the award is in danger of being overturned, the winning parties may request modification. Now, losing parties have the option to request partial relief without nullifying the full award, which could prolong the proceedings.  Despite the fact that Section 34(4) was meant to be a curative measure, the ruling now raises the possibility of its abuse. Allowing courts to change or remit awards runs the risk of bringing up issues that parties thought were resolved. Forum shopping, appeals that pass as corrections, and judicial creativity that overrides arbitral
finality are some of the things it might promote.

VII. Out-of-Line Judgement or Evolving Doctrine?

This judgement raises several unresolved questions. Most importantly, it blurs the line between modifying and remanding an award. Where does correction stop and rewriting begin?

When Section 37 or appellate remedies are not available, can courts use Section 34(4) to subtly change the award? International concerns are also raised regarding the enforcement of foreign awards under the New York Convention, which only permits the enforcement of “final” awards. The question of how foreign courts will determine whether an Indian award is final arises if Indian courts have the authority to alter awards even after they have become final. Indian law lacks this clarity, in contrast to the UK’s Arbitration Act, which specifically permits variation of domestic awards. India’s reputation as a jurisdiction that supports arbitration may suffer as a result of this uncertainty. Further, the judgement opens a constitutional dimension by implicitly relying on a reasoning similar to Article 142 but riskseroding the minimal judicial intervention principle enshrined in Section 5 of the Act. 

Section 34(4), which was previously regarded as a procedural tool, is now a substantive tool owing to the ruling. However, it fails to address important questions: Can courts make changes or remit cases on their own? What precisely is a “curable defect”? Is “manifest error” just another way to subtly argue for something? Confusion arises from the court’s interpretation of 34(4) as permitting a tribunal to recommence proceedings and take “corrective measures,” particularly when it is not explicitly linked to arbitral consent or scope.

VIII. Conclusion:

While the majority judgment seeks to promote substantive justice by correcting arbitral errors, it blurs established limits on judicial intervention. Hon’ble Justice Viswanathan’s dissent serves as a caution that expanding Court powers without legislative mandate may compromise the autonomy and certainty that arbitration promises, edging courts closer to acting as quasi-arbitral bodies. The decision raises doctrinal, procedural, and even constitutional questions that make it challenging to distinguish between oversight and overreach, placing India’s arbitration-friendly stance at a crossroads and opening the door to increased judicial involvement.

References

1. 2025 INSC 605.
2. Mcdermott International Inc v. Burn Standard Co. Ltd. & Ors, 2006 (11) SCC 181.
3. Project Director NHAI v. M. Hakeem, (2021) 9 SCC 1.
4. Vedanta Limited v. Shenzen Shandong Nuclear Power Construction Company Limited, (2019) 11 SCC 465.
5. Oriental Structural Engineers Pvt. Ltd. v. State of Kerala, (2021) 6 SCC 150.
6. Grindlays Bank Ltd. v. Central Government Industrial Tribunal and Ors, 1980 Supp SCC 420.
7. Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328.
8. Ibid. 
9. Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1. 
10. I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd., (2022) 3 SCC 121.