Appellant– Gayatri Balasamy
Respondent– M/s ISG Novasoft Tech. Limited
Court- Supreme Court of India (Civil Appeal Nos. Of 2025) ( Arising out of SLP (C) Nos.15336 – 15337 Of 2021)
JUDGES- Hon’ble Sanjiv Khanna ,CJI , B.R. Gavai J , P.V. Sanjay Kumar J , K.V. Vishwanathan J , A.G. Masih J.
Date of Judgement- 30 April 2025
Introduction
The case revolves around Section 34 and 37 of The Arbitration and Conciliation Act , 1996 (Arbitration Act / The Act). In this landmark decision a five- judge Bench of the Supreme Court of India addressed a long- standing dilemma i.e, whether courts have the power to modify arbitral awards. Section 34 of the Indian Arbitration and Conciliation Act, 1996 provides the framework for setting circumstances. Section 37 deals with appealable orders in the context of arbitration and outlines the specific orders against which an appeal can be made to a court authorized to hear appeals from original decrees or to the arbitral tribunal itself. Arbitration has emerged as a preferred methods for resolving disputes nowadays due to its efficiency, confidentiality and the expertise of arbitrators.
Facts –
- Gayatri Balasamy was an employee at ISG Novasoft Technologies Limited an IT company. On 27 April 2006, she was appointed as a vice- president (M&A Integration Strategy) of ISG. After few months, on 24 July 2006 she was sexually harassed by the ISG’s chief executive officer Mr. Krishnan Srinivasan.
- Subsequently Gayatri lodged a criminal complaint against Srinivasan and Vice president of the company for offences under IPC,1860 and Tamil Nadu Prohibition of Harassment of Women Act 1998.The company also filed criminal complaint against Gayatri of Defamation and Extortion. When both parties reached the Supreme Court, the court referred the parties to arbitration. The arbitral tribunal awarded Gayatri a sum of ₹ 2 crore.
- She approached the Madras High Court seeking to set aside the arbitral award, contending that the tribunal had failed to address several of the issues she had raised.
- On 2 September 2014, a single- judge bench of the Madras High Court modified the award given by arbitral tribunal and granted Gayatri an additional compensation of ₹1.6 crore over and above the ₹2 crore previously awarded by the tribunal. But on 8 August 2019 a Division Bench of the same Court revisited the decision and altered the single judge’s order. It was held that while the Single judge was right in awarding additional compensation to Gayatri but the amount lacked a rational basis. Terming the compensation as “ excessive and onerous”, the bench reduced the enhanced compensation from ₹1.6 crore to ₹50,000.
- Following this, Gayatri Balasamy approached the Supreme Court by filing a Special Leave Petition (SLP).
- At the Supreme Court, the matter came up for hearing before a Bench comprising former Chief Justice N.V Ramana with Justice Surya kant and Hima Kohli on 1 October 2021. During the proceedings, the Bench deemed it appropriate to refer the case to a larger Bench for further consideration. It finally reached a Bench comprising Justice Dipankar Datta , K.V.Viswanathan and Sandeep Mehta in 2024. On 20 February 2024, the Division Bench observed that the matter raised a significant question of law and directed that the Special Leave Petition in this case be placed before the Chief Justice of India for an appropriate order.
Issues Raised
1 – Whether the power of the Court under Section 34 and 37 of the Arbitration and Conciliation Act 1996 will include the power to modify an arbitral award ?
2 – If courts have the power to modify the award is available, whether such power can be exercised only where the award is severable, and a part thereof can be modified ?
3 – Whether the judgment of the Supreme Court in M. Hakeem and subsequent decisions that follow the position in M.Hakeem lay down the correct law ?
4 – Whether the power to modify an award can be read into the power to set aside an award under Section 34 of the Act ?
Contentions-
Arguments from Appellant-
1. It was argued that the judgment given in M.Hakeem case should be reconsidered as past Supreme Court decisions have allowed changes to arbitral awards. The Court has upheld the Modification of awards by High Courts and District Courts in other cases too. Another point raised was that the Model law based on the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, permits a broader scope of judicial intervention. Many countries follow this approach and allow courts to not only cancel Awards but also change or partially change them. If courts can cancel an award under Section 34 they should also be able to modify it, as modification is a lesser power.
2. A reference was made to the case Ahmedabad St. Xavier College Society vs. State of Gujarat , where the court used the Latin maxim “ omen majus continent in se minus” which means “ a greater power includes a lesser one”. So, if the court have the power to cancel or set aside an award, then it should be able to modify or partially cancel it. And if an arbitral award goes against public policy under Section 34(2)(b)(ii) or contain a legal errors under Section 34(2A), the court should have the power to change or cancel it.
3. Three additional Arguments were raised. The first argument was that the word “ recourse” in Section 34 is wide in meaning. It can includes any actions to enforce a right such as modifying or varying an award. The second argument relates to the public law aspects of land acquisition under the National Highway Act 1956 , courts can increase compensation showing courts have power to modify. Finally, it was argued that courts should have the inherent power to modify awards under Section 34 when appropriate.
Arguments from Respondent-
1.The learned counsel opposing the court’s power of modification argue that the Model law was made by many countries to follow one common rule: courts should not change arbitral awards because it could create confusion and problems in enforcing awards Internationally.
2. For eg. Under the New York Convention only arbitral awards are recognized and enforceable not court decree/ order that modify those awards. Courts can not replace an award with their own decision unless Indian law specifically allows it ,but Indian law does not permit it.
3. It is further submitted that the maxim omne majus continent in se minus – the greater contains the lesser should not be applied. The power to set aside an award is a Sui generis power which is intrinsically different from the modification power. The power to set aside is not the same as the power to modify it. Sec 34 allows only annulment not changes.
4. After giving the award the tribunal duty is over and the courts does not have appeal power in case of arbitration so the court can not modify the award either.
Rationale & Decision of the SC
Majority opinion –
The Majority opinion (4:1) represents a major shift in Indian Arbitration law. The SC in a Majority decision made an important change in how Arbitration awards are handled in India. Earlier the courts could only set aside an award under Sec 34 , but now the court has said that they can also modify or correct the award, as long as they stay within the limits of sec 34 and also signals a pragmatic shift from the stringent interpretative posture previously adopted in decision such as the M.Hakeem case. The court also states that if it has the power to completely cancel an award, it should also have the smaller power to make corrections where needed. This is supported by the legal maxim “ omne majus continet in se minus” ( the greater power includes the lesser one ).A key concern for the majority was the inefficiency and delay caused by the rigid “set aside or nothing” approach. The court highlighted that the absence of power to modify sends back parties back to arbitration even for a minor and flexible issues which leads to repeated hearings and relitigation ,especially under Sec 34 and 37. The strict approach defeats the purpose of arbitration causing dealys a flexible approach allowing correction without redoing the entire process ensures better use of arbitration as a dispute resolution tool.
Dissenting opinion –
Justice KV Vishwanathan dissented, warning against judicial overreach.The minority opinion articulates a clear and uncompromising view that courts exercising jurisdiction under sec 34 do not possess the power to modify an arbitral award. According to this view courts can only set aside an award , not change or rewrite it. The opinion is based on a strict reading of law. Sec 34(1) provides that “ recourse to a court against an arbitral award may be made only by the application fir setting aside such award”. In the minority interpretation the word “only” is important- it means courts can declare the award void but it may not change the amount, alter it’s terms, reduce or enhance quantum of monies ,findings , or revise the decision in any way. The dissent draws a categorical difference between setting aside or modification. Setting aside is like legally cancelling something, while modification involves actively changing it which means these are not just different degree of the same point but entirely a separate legal processes.
FINAL VERDIT –
The Court clarified that the court under Section 34 has the power to modify an award, but only to the extent of correcting minor errors and modifying post arbitral interest granted by the arbitral tribunal. Courts have a limited power to modify arbitral awards under sec 34 and 37 of the Arbitration and Conciliation Act, 1996.
Defects in Law
The decision in Gayatri Balasamy is in many way highlights the ongoing debate in Indian Arbitration law. The Majority chose flexibility they said courts should be able to make small changes to arbitral law if needed, so the justice can be done without starting everything over again.It will make the process more practical and efficient.
The change to the system should follow clear rules and principle it should be done by making a proper law by the legislature but not just from the court judgment. If modifying awards is to become a regular part of the Arbitration process it should be clearly written into the law.
Inferences
The Gayatri Balasamy judgment marks a significant and measured clarification in the Indian Arbitration law where rather than outright denying courts the power to modify arbitral awards the court affirms that such a power exists but in a limited and carefully circumscribed manner. The court has brought much needed clarity to a previously unsettled area. This judgment reshapes the contours of Arbitral intervention in India.
REFERENCES
- Vivek Narayan Sharma, Understanding Section 34 of the Indian Arbitration Act: Grounds for Setting Aside an Arbitral Award, LAWATICS (Times of India Blogs),
[2] Supreme Court Observer, Court’s Power to Modify an Arbitral Award – Supreme Court Observer, SCOB. (July 15, 2025),
[3] Vasanth Rajasekaran & Harshvardhan Korada, Judicial Modification of Arbitral Awards: Navigating Between Statutory Intent And Practical Necessity: An In-Depth Analysis Of Supreme Court’S Landmark Decision In Gayatri Balasamy, SCC OnLINE Blog (June 2, 2025),
[4] Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited, 2025 INSC 605 (Supreme Court of India Apr. 30, 2025).
[5] Prem Vinod Parwani & Pranshu Gupta, Modifying Awards Without Overreach: Balaswamy’s Overlooked Balance, NLSIR (May 17, 2025),
AANCHAL K. SINGH
FACULTY OF LAW, UNIVERSITY OF DELHI