Published on: August 23, 2026
Authored By: Muskan Pandey
University of Allahabad
I. Case Citation and Basic Information
Case Name: Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited
Citation: 2025 INSC 605; also reported as 2025 SCC OnLine SC 986. Bluebook citation: Gayatri Balasamy v. ISG Novasoft Techs. Ltd., 2025 INSC 605 (India Apr. 30, 2025).[1]
Court: Supreme Court of India, Constitution Bench
Bench: Chief Justice Sanjiv Khanna and Justices B.R. Gavai, Sanjay Kumar, Augustine George Masih and K.V. Viswanathan. Chief Justice Khanna wrote for the 4-judge majority; Justice Viswanathan dissented.
Date of Judgment: 30 April 2025
Statutes Involved: Arbitration and Conciliation Act, 1996, Sections 34 and 37;[6] Section 152 of the Code of Civil Procedure, 1908;[7] Article 142 of the Constitution of India.[8]
II. Introduction
For almost as long as the Arbitration and Conciliation Act, 1996 has existed, Indian courts have argued about a narrow but consequential question: when a court hears a challenge to an award under Section 34, can it change the award, or only strike it down? The text reads like it permits only the latter. Yet High Courts, and even different Supreme Court benches, had modified awards anyway over the years, usually to adjust interest or fix an arithmetical slip, without squarely confronting whether they had the power to do so. Gayatri Balasamy finally forced the issue before a five-judge Constitution Bench, and the answer it produced is neither a flat yes nor a flat no.
III. Facts of the Case
Gayatri Balasamy worked as Vice President for M&A Integration Strategy at ISG Novasoft Technologies. After she alleged sexual harassment against the company’s CEO and resigned, the company filed defamation and extortion complaints against her, while she pursued criminal proceedings of her own. The resulting employment disputes went to arbitration.
The Arbitral Tribunal awarded her roughly Rs. 2 crore but turned down several of her other claims. She challenged the award under Section 34 before the Madras High Court. A single judge, reading a power of modification into Section 34, raised the award by about Rs. 1.6 crore. On appeal, the Division Bench decided that increase had no arithmetic basis and cut it down to a token Rs. 50,000. Two courts, looking at the same award, had reached opposite conclusions about what a Section 34 court was even allowed to do. That disagreement is what landed the matter before a three-judge Bench, which on 20 February 2024 referred the underlying question of law to a Constitution Bench of five judges.
IV. Legal Issues
1. Do courts exercising jurisdiction under Sections 34 and 37 of the Act have the power to modify an arbitral award, or is their role limited to setting it aside?
2. If a power of modification exists, where does it come from, and what are its outer limits, given that the Act is built around minimal judicial interference in arbitration?
3. Can such a power be read into Section 34 itself, and separately, can Article 142 of the Constitution be used to modify an award?
V. Arguments Presented
5.1 Petitioner/Appellant’s Arguments
Counsel for Balasamy, joined by the Solicitor General, argued that denying courts any power to modify would be self-defeating: setting aside a whole award over one severable defect just forces fresh proceedings that serve nobody. They pointed to the proviso to Section 34(2)(a)(iv), which already lets a court set aside an award “in part” — if partial invalidation is permitted, a power to modify the surviving portion should follow. They also invoked the ordinary power to fix clerical or computational mistakes obvious from the record, comparable to Section 152 CPC, and argued Article 142 lets the Supreme Court adjust post-award interest, as it had done in Vedanta Ltd. v. Shenzhen Shandong Nuclear Power Construction Co.[4]
5.2 Respondent’s Arguments
ISG Novasoft pushed back hard. The 1996 Act, modelled on the UNCITRAL Model Law, deliberately keeps courts out of the merits of arbitral awards and says nothing about modification, unlike statutes such as the National Highways Act, 1956, which expressly allow it. Letting a Section 34 court modify an award turns a supervisory jurisdiction into something closer to an appeal, chipping away at party autonomy and finality. Any modification, they warned, risks the court re-examining the merits under cover of a technical fix, and the inherent powers under Section 151 CPC cannot override the closed scheme Section 34 sets out.
VI. Court’s Reasoning and Analysis
The majority read Section 34’s structure, particularly the proviso already permitting partial setting-aside, as inconsistent with a total ban on modification. If a court can strike down part of an award and let the rest stand, it makes little sense to insist it cannot also fix an isolated, identifiable defect without unraveling the whole award. At the same time, the Bench kept this power deliberately narrow: a Section 34 court is not an appellate court, has no business reweighing evidence, and modification remains the exception, not the rule.
Justice Viswanathan’s dissent read the same text differently, treating the Act as a complete code that deliberately withholds any modification power — the absence of an express provision, unlike statutes that do grant it, being a considered legislative choice rather than a gap for judges to fill. On his view, even a narrow modification power drifts toward merits review over time, and the cleaner fix lies with Parliament, not with courts reading a new power into the statute.
VII. Judgment and Ratio Decidendi
By a 4:1 majority, the Court held that courts under Sections 34 and 37 do have a limited power to modify an arbitral award, exercisable only in four defined situations:
Severability — where the invalid part of an award is clearly separable from the valid part, the court may sever it and let the rest of the award stand.
Correction of manifest errors — clerical, computational or typographical errors apparent on the face of the record can be corrected, much as Section 152 CPC allows, without touching the merits.
Post-award interest — the rate or terms of post-award interest may be adjusted where equity and the conduct of the parties warrant it.
Article 142 — in rare cases, the Supreme Court may use its power to do complete justice to modify an award, but only with real caution, and not as a routine substitute for the ordinary Section 34 process.
The ratio: the power to set aside an award under Section 34 carries within it, as a narrow and exceptional incident, a limited power to modify the award in these four categories — never as a route to reassessing the tribunal’s findings on the merits.
VIII. Critical Analysis
8.1 Significance of the Decision
This ruling closes a gap open since Project Director, NHAI v. M. Hakeem,[2] which took the stricter view that Section 34 courts could only set aside awards. Different courts had been quietly modifying awards anyway, especially on interest, without a clear doctrinal basis. Balasamy gives that practice an actual foundation.
8.2 Implications and Impact
Section 34 and 37 courts now have express, if narrow, authority to fix specific defects instead of sending workable awards back for fresh arbitration, cutting some of the delay a full annulment forces on parties. But the categories are not self-executing — what counts as “severable” will be litigated repeatedly, and the line between correcting a clerical error and quietly re-deciding quantum is thinner than the judgment suggests.
8.3 Critical Evaluation
The severability argument is a reasonable reading of the existing proviso, but it remains an inference from silence — the Act nowhere says courts may modify awards, and Viswanathan’s dissent is fair in noting the drafters chose their words deliberately. The majority’s approach avoids the wasteful outcome of annulling entire awards over minor, fixable defects, but offers thin guidance on distinguishing a clerical slip from a substantive recalculation dressed up as one. The Article 142 ground is available only to the Supreme Court, so High Courts hearing most Section 34 petitions are left with three of the four categories, and even those will take years to settle into predictable practice.
IX. Conclusion
Gayatri Balasamy does not overhaul Indian arbitration law so much as give a name and shape to something courts were already doing piecemeal. Four tightly worded categories, with an explicit warning against merits review, amount to a modest departure from the old set-aside-only position. Whether it stays modest, or widens the way exceptions tend to, depends on how narrowly lower courts apply it over the coming years. Justice Viswanathan’s dissent is a reminder that a cleaner fix was always available to Parliament.
References
[1] Gayatri Balasamy v. ISG Novasoft Techs. Ltd., 2025 INSC 605 (India Apr. 30, 2025).
[2] Project Dir., Nat’l Highways Auth. of India v. M. Hakeem, (2021) 9 S.C.C. 1 (India).
[3] McDermott Int’l Inc. v. Burn Standard Co., (2006) 11 S.C.C. 181 (India).
[4] Vedanta Ltd. v. Shenzhen Shandong Nuclear Power Constr. Co., (2019) 11 S.C.C. 465 (India).
[5] Dyna Techs. Priv. Ltd. v. Crompton Greaves Ltd., (2019) 20 S.C.C. 1 (India).
[6] Arbitration and Conciliation Act, No. 26 of 1996, INDIA CODE (1996), §§ 34, 37.
[7] Code of Civil Procedure, No. 5 of 1908, INDIA CODE (1908), § 152.
[8] INDIA CONST. art. 142.
