Gayatri Balasamy Vs ISG Novasoft Technologies Limited (Supreme Court of India)
In its landmark judgment delivered on 30th April 2025, the Supreme Court of India addressed the contentious issue of whether Indian courts possess the authority to modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. The case, Gayatri Balasamy v. ISG Novasoft Technologies Limited served as the focal point for this deliberation.The Supreme Court by a majority of 4:1, held that Indian courts have a “limited power” to modify arbitral awards. The Court delineated specific circumstances under which such modifications are permissible:
- Severability: To sever the valid portion of an award from its invalid part.
- Corrections: To rectify clerical, computational, or typographical errors.
- Post-Award Interest: To adjust post-award interest in certain situations.
- Plenary powers of the Court under Article 142: To exercise the Supreme Court’s plenary powers under Article 142 of the Constitution to ensure complete justice.
The majority emphasized that while courts can intervene in these limited scenarios, they cannot re-evaluate the merits of the case or act as appellate bodies over arbitral tribunals. While this judgment does offer welcome clarity on the role of courts in arbitration, I’m not entirely convinced that this new “limited power” won’t have unintended consequences. By permitting even minimal judicial intervention, the majority judgment risks diluting one of the core tenets of the arbitration process- finality of the Award.
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