GAYATRI BALASAMY v. M-S ISG NOVASOFT TECHNOLOGIES LIMITED

Citation: [2025] 4 S.C.R. 2080, 2025 INSC 605

Court: Supreme Court of India

Bench: Sanjiv Khanna, CJI, B.R. Gavai, Sanjay Kumar, K.V. Viswanathan and Augustine George Masih, JJ.

Judgment text

SUPREME COURT OF INDIA Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited [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 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 awards and will constitute a serious threat to India seated arbitrations under the New York 2082 Conventions - If the award is modified by the s.

34 Court in India, any enforcement brought abroad will run into complications as objections will be taken that what is sought to be enforced is not the award but the judgment of the Court - Enforcement of foreign judgements and enforcement of foreign awards are distinct legal concepts - Furthermore, since there is no power u/s. 34 court to modify, in the absence of a statutory enablement, not necessary to go into the aspect of the applicability of the doctrine of merger. [Paras 121, 123, 125] Arbitration and Conciliation Act, 1996 - s. 34 - Application for setting aside arbitral award - Post-Award Interest - Power of the court to declare or modify interest - Use of power u/s. 34(4): Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] For the post award interest in terms of s.

31(7)(b), the courts will retain the power to modify the interest where the facts justify - In the absence of grant of post award interest in the award, the court also possesses the power to grant post award interest - U/s. 31(7) (b), the legislature has established a standard rate of interest to guide the arbitrator's discretion to determine the post-award interest rate - Unless there are special and specific reasons, the rate of interest stipulated by the statute is to be applied - Furthermore, it is appropriate for the s. 34 court to have the authority to intervene and modify the post-award interest if the facts and circumstances justify - Post-award interest can be scrutinized by courts - Court has power to both increase or decrease the post-award interest rate - However, the court, must be cautious and mindful not to overstep its role by altering the interest rate unless there are compelling and well-founded reasons to do so. [Paras 74, 76-78] Held: [per K. V. Viswanathan, J.

(Dissenting)] In a given case where the Court feels that interest has not been awarded or interest beyond the terms of the agreement have been awarded or excessive interest have been awarded or abysmally low interest is awarded, the Court u/s. 34 cannot modify the interest - Course of action to be adopted would be to record reasons in the order and remit the matter to the arbitrator for the arbitral tribunal to make the necessary course correction - If thereafter again, when the matter comes back to the Court, the Court feels that the grounds for setting aside the award are not eliminated, it will have no choice except to set aside the award. [Para 135] Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited Constitution of India - Art. 142 - Supreme Court's power to do complete justice - Power to modify an arbitral award, if exercisable u/Art. 142: Held: [per Sanjiv Khanna, CJI. (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] Power u/Art.

142 is to be exercised by this Court but with great care and caution - It enables the court to do complete justice in any cause or matter pending before it - Exercise of power has to be in consonance with the fundamental principles and objectives behind the 1996 Act and not in derogation or in suppression thereof - Power should not be exercised where the effect of the order passed by the court would be to rewrite the award or modify the award on merits - However, the power can be exercised where it is required and necessary to bring the litigation or dispute to an end. [Paras 82, 84] Held: [per K. V. Viswanathan, J. (dissenting)] In matters arising out of s. 34, Supreme Court will refrain from exercising its power u/Art. 142 as the Art. 142 power cannot be used to give a go by to the substantive statutory provision - Courts exercising powers u/s.

34, which includes the appellate hierarchy cannot change, vary, or qualify arbitrary awards - Such an exercise of power would derogate from the core aspects of the A&C Act and would breach a pre-eminent prohibition in the said Act - If power is reserved for this Court to modify, at the fag end of the litigation, contracting parties will have grave uncertainties as they would not be sure of how the matter will play out when it reaches the apex Court - It would be antithetical to arbitration as an alternative and efficacious mode of dispute resolution - Arbitration and Conciliation Act, 1996 - s. 34. [Paras 113-115, 156] Arbitration and Conciliation Act, 1996 - s. 34, proviso to s. 34(2) (a)(iv) - Severability of awards - Power to set aside an award, if inclusive of the power to partially set it aside: Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. ] Proviso to s.

34(2)(a)(iv)permits courts to sever the non-arbitrable portions of an award from arbitrable ones - Power conferred under the proviso is clarificatory in nature - Authority to sever the "invalid" portion of an arbitral award from the "valid" portion, while remaining within the narrow confines of s. 34, is inherent in the court's jurisdiction when setting aside an award - Authority to set aside an arbitral award necessarily encompasses the power to set it aside in part, 2084 rather than in its entirety - Partial setting aside may not be feasible when the "valid" and "invalid" portions are legally and practically inseparable - "Valid" and "invalid" portions must not be inter- dependent or intrinsically intertwined - Power of partial setting aside should be exercised only when the valid and invalid parts of the award can be clearly segregated without any correlation between valid and invalid parts. [Paras 33-36] Held: [per K. V. Viswanathan, J.

(Supplementing)] Severance as a concept is recognised intrinsically in s. 34 itself - When there are several claims adjudicated and if awards on a few claims fall foul of s. 34, such standalone claims falling foul of s. 34 can be set aside as long as they are capable of being severed without affecting the other parts of the award - If the claims falling foul of s. 34 are not inseparably intertwined with the good portion of the award, the award can be severed - Power to set aside will include the power to partially set aside the award and sever the portions of the award which fall foul of s. 34 subject to the riders engrafted. [Paras 146, 153] Arbitration and Conciliation Act, 1996 - ss. 33, 34 - Application for setting aside arbitral award - Power of the court to modify an award - Correction of computational, clerical and typographical errors, or any other error of similar nature - Actus curiae neminem gravabit: Held: [per Sanjiv Khanna, CJI. (for himself and for B. R.

Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] Notwithstanding s. 33, a Court reviewing an award u/s. 34 possesses the authority to rectify/modify computational, clerical, or typographical errors, as well as other manifest errors, provided that such modification does not necessitate a merits-based evaluation - There are certain powers inherent to the court, even when not explicitly granted by the legislature - Scope of these inherent powers depends on the nature of the provision, whether it pertains to appellate, reference, or limited jurisdiction as in the case of s. 34 - Powers are intrinsically connected as they are part and parcel of the jurisdiction exercised by the court - Such power must not be conflated with the appellate jurisdiction of a higher court or the power to review a judgment of a lower court. [Paras 49, 54] Held: [per K. V. Viswanathan, J. (Supplementing)] s.

33 enables parties to move the arbitral tribunal to correct any computational error, any clerical error or typographical error or any other errors of similar nature - Ordinarily computational error, clerical or Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited typographical error or any other error of a similar nature would not be objected by other party - However, in the unlikely event of an objection and in a scenario where the arbitrator has not been moved u/s. 33 or having moved the arbitral tribunal has been obstinate in not correcting, a Court in s. 34 to uphold the maxim actus curiae neminem gravabit can invoke power and correct computational errors, clerical or typographical errors or any other similar errors without modifying, altering or adding to the original award. [Paras 139, 141] Arbitration and Conciliation Act, 1996 - ss. 34(4) and 37 - Power u/ss. 34(4) and 37 - Suo moto exercise of s.

34(4) - Modification versus remitting: Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. ] If uncertainty obscures the exercise of modification powers, the courts must not modify the award, instead, should avail their remedial power and remand the award to the tribunal u/s. 34(4) for reconsideration of specific aspects - It cannot be said that remand powers make modification unnecessary - They are distinct powers and are to be exercised differently - s.

34(4) does not authorize the arbitral tribunal to rewrite the award on merits or to set it aside - Primary objective is to preserve the award if the identified defect can be cured, thereby avoiding the need to set aside the award - If the award suffers from serious acts of omission, commission, substantial injustice, or patent illegality, the same may not be remedied through an order of remand - Additionally, remand may be inappropriate when it does not serve the interests of the parties, particularly in time-sensitive matters or where it would lead to undue costs and inefficiencies - Once an order of remand is granted, the arbitral tribunal has the authority to vary, correct, review, add to, or modify the award. [Paras 55, 56, 58, 60, 62] Held: [per K. V. Viswanathan, J. (Supplementing)] Ordinarily the stage of s. 34(4) would arise when the Court has put the award through the test of fire under the prior clauses of s.

34 and entertains the opinion that there are grounds for setting aside the arbitral award - Power to remit u/s. 34(4) can be exercised for undoing the curable defects - s. 34(4) is the safety valve provided in the 1996 Act by the legislature to prevent awards being set aside and to offer a chance to the arbitral tribunal to adopt a course correction - Court is even Suo Moto empowered to invoke powers 2086 u/s. 34(4) in accordance with the parameters set out - All that s. 34 mentions is a request being made and there is no prescription that the request should be in writing. [Paras 128, 131, 132, 134, 136] Arbitration and Conciliation Act, 1996 - s. 34 - National Highways Act, 1956 - Modification of arbitral award under the NHAI Act - Permissibility: Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] Jurisdiction conferred u/s.

34 does not distinguish between statutory and non-statutory arbitration in terms of the scope of courts' power of review - Submission that s. 34 should be expansively interpreted to permit modification of awards under the NHAI Act, particularly court should be allowed to modify quantum of compensation as the Act involves statutory arbitration, is untenable in law. [Para 70] Held: [per K. V. Viswanathan, J. (Supplementing)] Interpretation of s. 34 cannot be bifurcated, and one set of interpretations for commercial arbitrations and another for statutory arbitrations to which the A&C Act is applicable, cannot be offerred - Submission that differential interpretation of the A&C Act for some statutory arbitrations alone is rejected. [Para 119] Arbitration and Conciliation Act, 1996 - s.

34 - Application for setting aside arbitral award - Post-award settlement, if allowed - Abandonment of claims for which awards have been granted, or compromise arrived at between the parties contrary to the terms of the award - Effect: Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] Parties are entitled to enter into an agreement or settlement even after an award is pronounced - Law of the land does not bar the parties from entering into a post award or post decree settlement - Such settlement must be verifiable and in accordance with law, the settlement is not a result of undue influence, force, fraud, coercion, etc. [Para 80] Held: [per K. V. Viswanathan, J. (Supplementing)] In case of settlements which are not severable, the option would be to dismiss the s.

34 application as not pressed, in view of the settlement arrived at - If the compromise has the effect only of severing a standalone portion of the award with it being not Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited inseparably intertwined with any other portion, s. 34 Court can give effect to compromise and sever that portion of the award in accordance with the principles of severability - Same principle would apply with regard to abandonment or giving up of claims by a successful party - However, if the aspects are not severable and the abandonment/giving up has the effect of impinging upon the award and is inseparably intertwined, then the option available to the s. 34 Court is to set aside the award. [Paras 154, 155] Arbitration and Conciliation Act, 1996 - s. 34 - Application for setting aside arbitral award - Power of recourse to a court against arbitral award u/s. 34 - Scope and ambit - Discussed. [Paras 27-30] Arbitration and Conciliation Act, 1996 - s.

34 - Application for setting aside arbitral award - Permissibility and scope of the court's modification powers, within the parameters of s. 34 - Difference between setting aside the award and modification of the award: Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] Modification and setting aside of the award have different consequences, the former alters the award, while the latter annuls it - Recognizing any modification power will not inevitably lead to an examination of the merits of the dispute - It completely depends on the extent of the modification powers recognised. [Para 39] Arbitration and Conciliation Act, 1996 - s. 34 - Application for setting aside arbitral award - Limited power of modification in s. 34: Held: [per Sanjiv Khanna, CJI. (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ.

)] To deny courts the authority to modify an award-particularly when such a denial would impose significant hardships, escalate costs, and lead to unnecessary delays would defeat the raison d'être of arbitration - s. 34 limits recourse to courts to an application for setting aside the award, however, s. 34 does not restrict the range of reliefs that the court can grant, while remaining within the contours of the statute - Power cannot contradict the essence or language of s. 34 - Modification represents a more limited, nuanced power in comparison to the annulment of an award, as the latter entails a more severe consequence of the award being voided in toto - Read 2088 in this manner limited and restricted power of severing an award implies a power of the court to vary or modify the award - Silence in the 1996 Act, should not be read as a complete prohibition - Thus, u/s.

34 court can apply the doctrine of severability and modify a portion of the award while retaining the rest - Power of judicial review u/s. 34, and the setting aside of an award, should be read as inherently including a limited power to modify the award within the confines of s. 34. [Paras 41-46] Arbitration and Conciliation Act, 1996 - ss. 34, 43(4) - Application for setting aside arbitral award - Limitation period - Calculation of, within which the fresh arbitration or court proceedings to be commenced: Held: [per Sanjiv Khanna, CJI (for himself and for B. R. Gavai, Sanjay Kumar and Augustine George Masih, JJ. )] Once an award is set aside, it becomes null and void, but the original dispute may still require resolution - s. 43(4), enables the parties to initiate fresh arbitration or court proceedings in relation to the dispute - s.

43(4) stipulates that the period between the commencement of arbitration and the Court's order setting aside the award is excluded for the purposes of calculating the limitation period under the Limitation Act - Time during which the award is in force is not counted - s. 43(4) provides liberty for the parties to invoke either arbitration or court proceedings, as applicable, following the annulment of the award - Limitation Act, 1963. [Para 81] Arbitration and Conciliation Act, 1996 - s. 34 - Application for setting aside arbitral award under - If words "and, to the extent" and the words "or modified", and "to the extent"can be read into s. 34: Held: [per K. V. Viswanathan, J. ] It cannot be said that words "and, to the extent" and the words "or modified", and "to the extent" be read into parts of s. 34 - Where the language is plain and clear, the Court will prefer the plain meaning rule and when there is no casus omissus, the Court cannot interpret a statute as to create one - s.

34 speaks of 'recourse' being taken against an arbitral award - s. 34 clearly states that an arbitral award may be "set aside" by the Court "only if" the prescribed circumstances are established - Phrase "only if" in the context in which it is used makes it amply clear that only if the grounds prescribed are established could the award be set aside - Combined use of the Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited phrase "set aside" and "only if" read with the phrase "recourse" makes it amply clear that the only manner of interfering with the award as permitted in the Act, is to file an application to set aside or annul the award by establishing the grounds prescribed therein - ss. 5, 33. [Paras 70, 73-76] Arbitration and Conciliation Act, 1996 - s. 34 - Application for setting aside arbitral award - Plea that hardship will be caused if power to modify is not read in s. 34: Held: [per K. V. Viswanathan, J.

] Submission that absurdities will result and hardship will be caused if power to modify is not read in cannot be accepted since s. 43(4) itself contemplates that on the setting aside of the award the option is to commence proceedings including arbitration with respect to the dispute - Law makers are fully conscious of the situation that setting aside of the award will result in the dispute continuing to be thrown open at large since notwithstanding the setting aside of the award the legal position is that the arbitration agreement survives, except in situations where the order setting aside has findings impinging on the validity of the arbitration agreement itself - Recommencement of proceedings including arbitration proceedings-wherever legally maintainablebeing expressly contemplated in the statute the same cannot be brushed aside on the grounds of causing hardship to the parties. [Paras 77, 81] Arbitration and Conciliation Act, 1996 - s.

34 - Application for setting aside arbitral award - Contrast between the appellate power under Code of Civil Procedure and powers available to s. 34 Court: Held: [per K. V. Viswanathan, J. ] Wide power under CPC is not available to a Court u/s. 34 while entertaining an application to set aside the arbitral award - Court does not sit in appeal over the arbitral award - Arbitration has its origin in the contract between parties where parties have stepped out of the ordinary judicial process and in that sense there is an ouster of the jurisdiction of the Court's power to adjudicate - s. 34 Court unless expressly authorized by law cannot modify or vary the award since it will be tantamount to exercising the power of merits review, when parties have contracted to have their disputes referred to a third party outside the normal judicial process, for adjudication by arbitration - Code of Civil Procedure, 1908. [Paras 84, 87-89] 2090 Arbitration and Conciliation Act, 1996 - s.

34 - Application for setting aside arbitral award - Power to 'modify', if a lesser power: Held: [per K. V. Viswanathan, J. ] Qualitative nature of an appellate power is different from the power u/s. 34 - Power to modify is not a lesser power to that of the power to set aside, as the two operate in separate spheres and are not of the same genus - They do not have similar characteristics - It cannot be said that power to set aside is larger and power to modify is smaller or lesser without keeping the context in which s. 34 occurs in the Act and without considering the very ecosystem of the arbitration process - Thus, the power to modify which would include the Court entering the arena of adjudicating the dispute on merits when parties have contractually agreed to go to the arbitrator, cannot be said to be subsumed in the power to "set aside". [Paras 91, 93] Arbitration and Conciliation Act, 1996 - s. 34 - If Court can lay down guardrails for s. 34: Held: [per K. V. Viswanathan, J.

] There are no judicially manageable standards and this Court cannot venture into formulating guidelines as myriad situations will arise when s. 34 applications are heard before the appropriate Courts - It would amount to judicial legislation which the Court is loathe to do. [Para 117] Arbitration and Conciliation Act, 1996 - s. 34 - Application for setting aside arbitral award - Judgment in ‡Hakeem's case, if per incuriam: Held: [per K. V. Viswanathan, J. ] Judgement in Hakeem'scase rightly interpreted the provisions of A&C Act and is in no manner conflict with any ratio of a co-equal or larger Bench - It cannot be said that Hakeem's case is per incuriam for not noticing Western Geco's case - Other judgments prior to Hakeem's case have not discussed the aspect whether power to modify exists in a s. 34 Court - Hakeem's case insofar as it held that a s. 34 Court has no power to modify the award, is not per incuriam.

[Paras 126, 127] Judicial process - Contractual ouster of normal judicial process: Held: [per K. V. Viswanathan, J. ] When parties agree to arbitrate, they consciously agreed to step out of the normal judicial process and submit their dispute to a third party - Parties are also conscious that when they agree to arbitrate, their rights and liabilities would Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited be governed by the regulating Act, A&C Act - Thus, there is a contractual ouster subject to the terms of the A&C Act of the normal judicial process - Arbitration and Conciliation Act, 1996. [Para 82] Legal maxims - Application, when: Held:[per K. V. Viswanathan, J.

)] Legal maxims to be deployed after ascertaining context - Mechanical deployment of the legal maxims unless they apply on all fours to a case to be discouraged - Legal maxims, no doubt, are very useful tools but its application has to be with great caution - There would be uncertainity and sometimes legal maxims if deployed without adequate attention may lead to pitfalls. [Para 97] Code of Civil Procedure, 1908 - s. 151 - Inherent powers of the Court u/s. 151, if available to modify awards: Held: [per K. V. Viswanathan, J. ] s. 34 is couched in clear terms and the parameters for setting aside the award are clearly laid out in mandatory terms - Inherent powers under CPC cannot be exercised in a manner to be in conflict with the expressly provided powers by the legislature - It cannot be said that s. 34 recourse is taken in the normal Civil Courts as defined in s.

2(e) of the A&C Act and those Courts being Civil Courts of Original jurisdiction or the High Courts the inherent power vested in them should be available to modify awards - Arbitration and Conciliation Act, 1996. [Para 99] Doctrines - Doctrine of implied power, if vest in s. 34 Court a power to modify the award: Held: [per K. V. Viswanathan, J. ] Doctrine of implied powers is invoked to effectuate the final power - Where it is impossible to effectuate the final power unless something not authorized in express terms be also done, in such an event, the power will be supplied by necessary intendment as an exception - No scope for applying the doctrine of implied power to modify awards - No implied power needed to effectuate the final power provided u/s. 34 and, there is no impediment to exercise the final power. [Paras 102, 103] Arbitration - Arbitration process - Concept of party autonomy: Held: [per K. V. Viswanathan, J.

] Party autonomy enables parties to dispense with technical formalities and procedures of National Court proceedings, contractually - They agree to abide by the 2092 terms of the statute regulating arbitration which they perceive as advantageous - Having done so, they cannot be allowed to cry afoul, when it does not suit their needs and clamor for certain procedures which are legislatively not sanctioned in the arbitration process and are available in the normal machinery of the Courts - s. 34 Court cannot be invited to enter into the merits - Limited recourse available is the one provided u/s. 34 and when the Section is plain and clear the historical, textual and the contextual interpretation does not permit the reading in of any implied power to expand the scope of s. 34 - Arbitration and Conciliation Act, 1996 - s. 34. [Para 105] Case Law Cited In the judgment of Sanjiv Khanna, CJI Shilpa Sailesh v. Varun Sreenivasan[2023] 5 SCR 165 : (2023) 14 SCC 231 - followed.

Kinnari Mullick and Another v. Ghanshyam Das Damani[2017] 6 SCR 657 :(2018) 11 SCC 328 - held not correct law. Gayatri Balasamy v. ISG Novasoft Technologies Limited, 2024 SCC OnLine SC 1681; McDermott International Inc. v. Burn Standard Co. Ltd. and Others [2006] Supp. 2 SCR 409 : (2006) 11 SCC 181; Pure Helium India (P) Limited v. Oil & Natural Gas Commission [2003] Supp. 4 SCR 561 : (2003) 8 SCC 593; Mukand Ltd. v. Hindustan Petroleum Corpn. Ltd. [2006] Supp. 1 SCR 182 : (2006) 9 SCC 383; Vedanta Limited v. Shenzhen Shandong Nuclear Power Construction Company Limited [2018] 12 SCR 829 : (2019) 11 SCC 465; Oil and Natural Gas Corporation Limited v. Western GECO International Limited [2014] 12 SCR 1 : (2014) 9 SCC 263; Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd. [2007] 9 SCR 724 : (2007) 8 SCC 466; Tata Hydro-Electric Power Supply Co. Ltd. and Others v. Union of India (2003) 4 SCC 172; Ssangyong Engineering and Construction Company Limited v.

National Highways Authority of India (NHAI) [2019] 7 SCR 522 : (2019) 15 SCC 131; Oriental Structural Engineers Private Limited v. State of Kerala [2021] 4 SCR 137 : (2021) 6 SCC 150; Secretary, Irrigation Department, Government of Orissa and Others v. G. C. Roy [1991] Supp. 3 SCR 417 : (1992) 1 SCC 508; ‡Project Director, National Highways No. 45 E and 220 National Highways Authority of India v. M. Hakeem and Another [2021] 5 SCR 368 : (2021) 9 SCC 1; Ahmedabad St. Xavier College Society and Another v. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited State of Gujarat and Another [1975] 1 SCR 173 : (1974) 1 SCC 717; Pratap Chamaria v. Durga Prasad Chamaria, AIR 1925 PC 293; Grindlays Bank Ltd. v. Central Government Industrial Tribunal and Others [1981] 2 SCR 341 : (1980) Supp. SCC 420; Budhia Swain and Others v. Gopinath Deb and Others [1999] 2 SCR 1189 : (1999) 4 SCC 396; Century Textiles Industries Limited v.

Deepak Jain and Another [2009] 4 SCR 750 : (2009) 5 SCC 634; Dyna Technologies Private Limited v. Crompton Greaves Limited [2019] 15 SCR 295 : (2019) 20 SCC 1; I-Pay Clearing Services Private Limited v. ICICI Bank Limited [2022] 2 SCR 893 : (2022) 3 SCC 121; Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Limited, Saudi Arabia and Others [1993] Supp. 3 SCR 227 : (1995) Supp. 2 SCC 280- referred to. In the judgment of K. V. Viswanathan, J. ‡Project Director, National Highways No. 45 E and 220 National Highways Authority of India v. M. Hakeem and Anr. [2021] 5 SCR 368 : (2021) 9 SCC 1 - held correct law. R. S. Jiwani v. Ircon International Ltd. ,2009 SCC OnLine Bom 2021;Saptarishi Hotels Pvt. Ltd. v. National Institute of Tourism & Hospitality Management,2019 SCC OnLine TS 1765; National Highways Authority of India v. Trichy Thanjavur Expressway Ltd. , 2023 SCC OnLine Del 5183 - approved. CIT, Central Calcutta v.

National Taj Traders [1980] 2 SCR 268 : (1980) 1 SCC 370; Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. [2016] 9 SCR 83 : (2017) 2 SCC 228 - held inapplicable. Kinnari Mullick and Another v. Ghanshyam Das Damani[2017] 6 SCR 657 : (2018) 11 SCC 328 - held not correct law. McDermott International Inc. v. Burn Standard Co. Ltd. [2006] Supp. 2 SCR 409 : (2006) 11 SCC 181; Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899, In re (2024) 6 SCC 1; Tata Hydro-Electric Power Supply Co. Ltd. and Others v. Union of India (2003) 4 SCC 172; J. C. Budhraja v. Chairman, Orissa Mining Corporation Ltd. and Another [2008] 1 SCR 821 : (2008) 2 SCC 444; Madhya Pradesh Power Generation Company Limited and Another v. Ansaldo Energia Spa and Another (2018) 16 SCC 661; Vedanta Limited v. Shenzhen Shandong Nuclear Power Construction Company 2094 Limited [2018] 12 SCR 829 : (2019) 11 SCC 465; Shakti Nath and Others v.

Alpha Tiger Cyprus Investment No. 3 Limited and Others (2020) 11 SCC 685; Oriental Structural Engineers Private Limited v. State of Kerala [2021] 4 SCR 137 : (2021) 6 SCC 150; Ramesh Rout v. Rabindra Nath Rout [2011] 16 SCR 254 : (2012) 1 SCC 762; Juggilal Kamlapat v. General Fibre Dealers Ltd. , 1961 SCC OnLine SC 402; Dyna Technologies Private Limited v. Crompton Greaves Limited [2019] 15 SCR 295 : (2019) 20 SCC 1; Shamnsaheb M. Multtani v. State of Karnataka [2001] 1 SCR 514 : (2001) 2 SCC 577; Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal, 1961 SCC OnLine SC 17; Padam Sen v. State of Uttar Pradesh [1961] 1 SCR 884; Savitri v. Govind Singh Rawat (1985) 4 SCC 337; Kunhayammed & Others v. State of Kerala and Another [2000] Supp. 1 SCR 538 : (2000) 6 SCC 359; National Insurance Co. Ltd. v. Pranay Sethi and Others [2017] 13 SCR 100 : (2017) 16 SCC 680; Oil and Natural Gas Corporation Ltd. v. Western Geco International Ltd.

[2014] 12 SCR 1 : (2014) 9 SCC 263; I-Pay Clearing Services (P) Ltd. v. ICICI Bank Ltd. [2022] 2 SCR 893 : (2022) 3 SCC 121; Som Datt Builders Ltd. v. State of Kerala [2009] 14 SCR 611 : (2009) 10 SCC 259; North Delhi Municipal Corporation v. M/s. S. A. Builders Ltd. , 2024 INSC 988; U. P. SRTC v. Imtiaz Hussain [2005] Supp. 5 SCR 725 : (2006) 1 SCC 380; J. G. Engineers (P) Ltd. v. Union of India & Anr. [2011] 8 SCR 486 : (2011) 5 SCC 758; Vishaka and Others v. State of Rajasthan and Others[1997] Supp. 3 SCR 404 : (1997) 6 SCC 241; Oil and Natural Gas Corporation Limited v. Afcons Gunanusa, JV 2022 SCC OnLine SC 1122; Supreme Court Bar Association v. Union of India and Another[1998] 2 SCR 795 : (1998) 4 SCC 409; Shilpa Sailesh v. Varun Sreenivasan[2023] 5 SCR 165 : (2023) 14 SCC 231 - referred to. Gayatri Balaswamy v. ISG Novasoft Technologies Limited, 2014 SCC OnLine Mad 6568 - referred to. Berkey v. Third Avenue Railway Co. 244 N. Y, 84; AKN v. ALC 2015 SGCA 63 - referred to.

Books and Periodicals Cited In the judgment of Sanjiv Khanna, CJI Sir Michael J. Mustill & Stewart C Boyd QC, Commercial Arbitration, p. 617 (2nd ed. 2001) - referred to. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited In the judgment of K. V. Viswanathan, J. "Mustill & Boyd" on Commercial Arbitration; P. Ramanatha Aiyar's Advanced Law Lexicon Third Edition - referred to.

List of Acts In the judgment of Sanjiv Khanna, CJI Arbitration and Conciliation Act, 1996; Constitution of India; National Highways Act, 1956; Code of Civil Procedure, 1908; Singapore Arbitration Act, 2001; United Kingdom Arbitration Act, 1996; United States of America Federal Arbitration Act, 1925; France Code of Civil Procedure; Australia Commercial Arbitration Act, 2017 (Australian Capital Territory); New Zealand Arbitration Act, 1996; Canada Arbitration Act, 1991 Ontario; South Africa Arbitration Act, 42 of 1965; Hong Kong Arbitration Ordinance; Kenya Arbitration Act, 1995; Brunei Darussalam Arbitration Order, 2009; Philippines Republic Act No. 9285 (2004); Philippines Alternative Dispute Resolution Act, 2004; Philippines Republic Act No. 876; Srilanka Civil Procedure Code. In the judgment of K. V. Viswanathan, J.

Arbitration and Conciliation Act, 1996; Arbitration Act of 1899; Arbitration Act, 1940; Constitution of India; National Highways Act, 1956; Code of Civil Procedure, 1908; Contract Act, 1872; Bharatiya Nagarik Suraksha Sanhita, 2023; English Arbitration Act; New Zealand Arbitration Act, 1996; Kenyan Arbitration Act, 1995. List of Keywords In the judgment of Sanjiv Khanna, CJI Modification of arbitral award; Omne majus continet in se minus; Contours of s. 34 Arbitration and Conciliation Act, 1996; Severability of awards; Kompetenz-kompetenz; "Valid" portion of award; "Invalid" portion of award; Power of partial setting aside; Minimal judicial interference; Guardrails of power u/s. 34 of the A & C Act; Doctrine of implied power; Remand of award; Hardship to parties; ‡M. Hakeem's case; Power to "modify" the award; Divergent and contrasting judicial opinions as regards the power of the court u/s. 34 to modify arbitral award; Power to set aside an award u/s.

34 of the A & C Act, being larger power; Limited power of modification; Doctrine of merger; New York Convention Awards; 2096 Power of modification u/s. 34; International Commercial Arbitration Regime; Post-Award Interest; Power to modify an arbitral award, if exercisable u/Art. 142 of the Constitution; Power to set aside award, if inclusive of the power to partially set it aside; Correction of computational, clerical and typographical errors, or any other error of similar nature; Suo moto exercise of s.

34(4) of the A & C Act; Modification of arbitral award under the National Highways Act; Post-award settlement, if allowed; Power of recourse to a court against arbitral award; Difference between setting aside the award and modification of the award; Calculation of limitation period, within which the fresh arbitration or court proceedings to be commenced; UNCITRAL Model Law on International Commercial Arbitration, 1985; United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 In the judgment of K. V. Viswanathan, J. Modification of arbitral award; Principle of Kompetenz-Kompetenz; Severability of awards; Safety valve; Legislative intent; UNCITRAL Model law; No casus omissus; ejusdem generis; Hardship to parties; Contractual ouster of normal judicial process; Omne majus continet in se minus; Appellate power; Absence of express legislative power; Lesser power; Ecosystem of arbitration process; Legal maxims; Inherent powers of Court u/s.

151 CPC, if available to modify awards; Doctrine of implied power; Doctrine of implied power, if vest in s. 34 Court a power to modify the award; Computation, typographical and clerical errors; Remand of award; Party autonomy; Statutory arbitration; Differential interpretation; New York Convention Awards; Statutory provisions of other countries; Award of interest; Actus curiae neminem gravabit; Compromise between parties; Abandonment of claims; M. Hakeem and Anr. 's case, if per incuriam; Power to modify an arbitral award u/Art. 142 of the Constitution; Power to 'modify', if lesser power; Guardrails for s. 34 of the A & C Act. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 6178-6179 of 2025 From the Judgment and Order dated 08. 08. 2019 of the High Court of Judicature at Madras in OSA Nos. 59 and 181 of 2015 With Civil Appeal Nos. 6192, 6180, 6181, 6182-6183, 6308, 6184-6191 of 2025, Civil Appeal Nos. 8183 and 8184 of 2016 Gayatri Balasamy v.

M/s ISG Novasoft Technologies Limited Appearances for Parties Advs. for the Appellant: Ms. Archana Pathak Dave, A. S. G. , Arvind Datar, Sr. Adv. , Nishanth Patil, M. V. Mukunda, Ms. Hina Shaheen, Mithun Shashank, M. V. Swaroop, Hredai Sriram, Ms. Payal Chawla, Arijit Dey, Sudarshan Lamba, Tanmay Mehta, Prashant Singh-II, Shyam Gopal, Vishnu Shankar Jain, Jagdish Chandra, Ms. Astha Singh, Vaibhav Dang, Amrendra Kumar Mehta, Sahil A. Garg Narwana, Ranpal Awana, D. N. Ojha, Debmalya Banerjee, Rohan Sharma, Vikas Gogne, Satyam Chaturvedi, Agastya Shelat, Ms. Tanvi Seth, M/s. Karanjawala & Co. , T. Harish Kumar, Navneet Dugar, Bharathi Subramanan, Shubham P. Chopra, Jinendra Jain, Ajay Jain, Krishna Sharma, Ms. Bijay Lakshmi, M. N. Mishra, Manoj Gautam, Ms. Shreya Jain, Ms. Mitika Choudhary, Harshit Batra, Manoj, Ashwin Shanker, Sanjay Grover, Ms. Ridhi Nyati, Ms. Vanshika Jain, Shivlal Singh, K. V. Mohan. Advs. for the Respondent: Tushar Mehta, Secretary General, Vikramjit Banerjee, A. S.

G. , Darius J. Khambata, Gaurav Pachnanda, Sumeet Pushkarna, Ritin Rai, Benny P. Thomas, Gourab Banerji, Saurabh Kirpal, Prashanto Chandra Sen, Naresh Markanda, Sr. Advs. , Kanu Agarwal, Surjendu Sankar Das, Ms. Annie Mittal, Kanu Agarwal, Nikilesh Ramachandran, Lovekesh Aggarwal, Sagar Kumar Pradhan, Saket Agarwal, Ms. Neelam Rathore, Shubham Seth, Ms. Prakruti Malhotra, Kanu Agarwal, Ankur Mittal, Abhay Gupta, Ms. Nidhi Mittal, Digvijay Dam, Ms. Ikshita Parihar, Sanjivan Chakraborty, Rakshit Ranjan, Ms. Jutirani Talukdar, Ankur Sahoo, Aviraj Pandey, Kaustubh Prakash, Ms. Hita Sharma, Ms. Prachi Bhatia, Ravi Prakash Singh, Ms. Tanya Singh, Aditya Mehta, C. Rashmikant, Mahesh Agarwal, Ankur Saigal, Ms. S. Lakshmi Iyer, Rohan Dakshini, Ms. Namrata Shah, Ms. Suprriya Lopes, Ms. Sailee Dhayalkar, Shashwat Singh, Jai Sanyal, Ms. Vidhi Shah, E. C. Agrawala, Ms. Garima Bajaj, Mohit Goel, Sidharth Goel, Raghavendra Mohan Bajaj, Ms. Karmanya Dev Sharma, Ms.

Aishna Jain, Shashwat Mukherjee, Ishaan Pratap Singh, Ms. Nikita Jaitly, Siddharth Kapoor, Ms. Shreya Bansal, Nikhilesh Krishnan, Gaurav Varma, Varun Chugh, Sudeep Vijayan, Abhishek Bhushan Singh, Swapnil Joshi, Ms. Aishwarya Mishra, Abel Tom Benny, Aabhas Kshetarpal, Ms. Ritika Sinha, Ms. Ankita Gupta, Dhiliban Varadarajan, Debasis Jena, Prakash Ranjan Nayak, George Pothan Poothicote, Ms. Manisha Singh, Ms. Jyoti Singh, Prakarsh Kumar, 2098 Rakesh Talukdar, T. S. Sundaram, Subhro Mukherjee, Mohit Pandey, Ms. Venkata Supreeth, Ms. Raka Chatterjee, Arunava Mukherjee, Ms. Manmeet Kaur, Debmalya Banerjee, Rohan Sharma, Gurtej Pal Singh, Jai Dogra, Ms. Liza Vohra, Dhruv, M/s. Karanjawala & Co. , Sudiep Shrivastava, Pranav Sachdeva, Jatin Bhardwaj, Ms. Rashi Goswami, Tanmay Yadav, Ms. Smrithi Sreekumar, Ms. Prerna Mukherjee, Abhay Nair, Atul Sharma, Abhinav Sharma, Ms. Abhilasha Sharma, Ayush Srivastava, Ankur Sharma, Mayank Bansal, Alok Tripathi, Sudarshan Lamba, Ms.

Sathavi Asthana, Arun Singh, Paavan Awasthi, Saurabh Pandey, Ms. Manvi Sharma, Shubhendu Anand, Navanjay Mahapatra, Rohan Markanda, Mrs. Harsheen Madan Palli, Chritarth Palli, Saket Sikri, Naman Joshi, Ajay P. Singh Kullar, Ms. Ritika Vohra, Ms. Charu Ambwani, Ms. Manisha Ambwani, Akash Deep Singh, Ms. Amber Tickoo, Sonal K Singh, Parth Sidhwani, Ms. Sukanya Lal, Saurav Agrawal, Ms. Sonali Jaitley Bakhshi, Jaiyesh Bakhshi, Ravi Tyagi, Ms. Manmilan Sidhu, Manish Bhatt, Atharva Koppal, Ms. Neetu Devrani, Abhijay Basu, Babit Jamwal, Ms. Prachi Dubey, Anshuman Chowdhury, Ajay Sharma, Ms. Mahek Upadhaya, Aarya Bhatt, Ms. Soloni Paliwal, Harsh Khabar, Sarthak Nayak, Ms. Anushruti, Rahul G. Tanwani, Anantha Narayana M. G. , Shubhendu Anand, Tadimalla Bhaskar Gowtham, Ayush Anand, Sudipto Sircar, Aditya Shekhar, Rishi Ashok, P. D. V. Srikar, Aman Shukla, Alabhya Dhamija, Aditya Kashyap, Neeleshwar Pavani, M.

Chandrakanth Reddy, Soayib Qureshi, Suvigya Awasthy, Sameer Jain, Vivek Joshi, Rohan Gulati, Deepesh Raj, Abhishek Kumar Rao, Shailesh Suman, Shashibhushan P. Adgaonkar, Pallav Mongia, Abubhav Mishra, Shashank Dwivedi. Judgment / Order of the Supreme Court Judgment Sanjiv Khanna, CJI A three-Judge Bench of this Court, vide order dated 20th February 2024, directed that the Special Leave Petitions in Gayatri Balasamy v. ISG Novasoft Technologies Limited,1 be placed before the Chief 1 2024 SCC OnLine SC 1681. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited Justice of India for an appropriate order. The matter was to be examined to determine the need to refer the following questions of law to a larger Bench: "1. Whether the powers of the Court under Sections 34 and 37 of the Arbitration and Conciliation Act 1996 will include the power to modify an arbitral award? 2.

If 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 power to set aside an award under Section 34 of the Act, being a larger power, will include the power to modify an arbitral award and if so, to what extent? 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? 5. Whether the judgment of this Court in Project Director NHAI vs. M. Hakeem,2 followed in Larsen Air Conditioning and Refrigeration Company vs. Union of India,3 and SV Samudram vs. State of Karnataka,4 lay down the correct law, as other benches of two Judges (in Vedanta Limited vs. Shenzden Shandong Nuclear Power Construction Company Limited,5 Oriental Structural Engineers Pvt. Ltd. vs. State of Kerala,6 and M. P. Power Generation Co. Ltd. vs. Ansaldo Energia Spa)7 and three Judges (in J. C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd.

,8 Tata Hydroelectric Power Supply Co. Ltd. vs. Union of India,9 and Shakti Nath vs. Alpha Tiger Cyprus Investment No. 3 Ltd. 10) of this Court have either modified or accepted modification of the arbitral awards under consideration? " 2 (2021) 9 SCC 1. 3 (2023) 15 SCC 472. 4 (2024) 3 SCC 623. 5 (2019) 11 SSC 465. 6 (2021) 6 SCC 150. 7 (2018) 16 SCC 661. 8 (2008) 2 SCC 444. 9 (2003) 4 SCC 172. 10 (2020) 11 SCC 685. 2100 2. Accordingly, this Bench of five-Judges has been constituted to decide the questions referred. 3. The fulcrum of the legal controversy rests on the following question(s): Are Indian courts jurisdictionally empowered to modify an arbitral award? If so, to what extent? The controversy arises because the Arbitration and Conciliation Act, 1996,11 does not expressly empower courts to modify or vary an arbitral award. Section 34 of the 1996 Act only confers upon courts the power to set aside an award.

Nevertheless, this Court, on several instances, has been compelled to modify arbitral awards, seeking to minimize protracted litigation and foster the ends of justice. In contrast, some judgments have posited that Indian courts cannot modify awards, due to the narrowly defined scope of Section 34. Therefore, divergent and contrasting judicial opinions exist on this question. 4. Annexure A to this judgment reproduces Section 34, and other pertinent provisions of the 1996 Act - namely Sections 5, 31, 33, 37, 43 and 48. Annexure B provides a compilation of prevailing stances adopted by foreign jurisdictions vis-à-vis the question of modification. 5. Before addressing the arguments raised, it would be useful to capture the divergence of judicial opinions on the question of modification. These conflicting judgments provide context to the legal controversy and the arguments presented. A. Judicial Divergenceon Modification Powers 6. In McDermott International Inc. v. Burn Standard Co. Ltd.

and Others,12 this Court explained the difference between judicial interference permitted by the 1996 Act vis-à-vis the Arbitration and Conciliation Act, 194013. The 1996 Act limits the supervisory role of the court to specific grounds under Section 34, while the 1940 Act gave courts broader powers under Sections 30 and 33. The Court clarified that under Section 34, the court does not act as an appellate authority for factual findings, evidence, or questions of law dealt with by the arbitral tribunal. At the same time, the 1996 Act mandates that 11 Hereinafter referred to as, "1996 Act". 12 (2006) 11 SCC 181. 13 Hereinafter referred to as, "1940 Act". Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited arbitrators issue a reasoned award, which was not a requirement under the 1940 Act. 7. Further, the judgment clarifies the role of arbitrators in determining claims and counterclaims. The court cannot correct the arbitrator's mistakes, whether factual or legal.

Rather, its role is confined to setting aside the award, leaving the parties the option to initiate fresh arbitration proceedings if they wish. However, when it came to the rate of interest, the Court invoked its power under Article 142 of the Constitution14 to vary the award, reducing the interest from 10% per annum (as awarded by the tribunal) to 7. 5% per annum. It felt compelled to do so as there was a significant lapse of time. Two earlier decisions were relied upon: Pure Helium India (P) Limited v. Oil & Natural Gas Commission,15wherethe rate of interest was reduced from 18% per annum to 6% per annum, and Mukand Ltd. v. Hindustan Petroleum Corpn. Ltd. ,16 where the interest rate was lowered from 11% per annum to 7. 5% per annum. 8. In Vedanta Limited v.

Shenzhen Shandong Nuclear Power Construction Company Limited,17 this Court, in the context of an international award, highlighted the need to consider the differing impact of interest rates when the parties operate in different currencies. The rate of interest had to be aligned with the applicable currency of each party. Accordingly, the Court held that applying a uniform interest rate for both the INR and Euro components was not justified. While maintaining the interest rate at 9% per annum for the INR component, the interest on the Euro component was modified to the London Interbank Offered Rate (LIBOR) rate plus 3 percentage points. Furthermore, the Court deleted the interest rate of 15% per 14 "142. Enforcement of decrees and orders of Supreme Court and orders as to discovery, etc.

-- (1) The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe. (2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself. " 15 (2003) 8 SCC 593. 16 (2006) 9 SCC 383. 17 (2019) 11 SCC 465. 2102 annum, which was applicable if the awarded sum was not paid within 120 days.

Significantly, this judgment did not reference the Court's power under Article 142 of the Constitution. 9. In Oil and Natural Gas Corporation Limited v. Western GECO International Limited,18 a three Judge Bench of this Court observed that when an arbitral tribunal, upon considering the facts presented before it, fails to draw an inference that ought to have been drawn or, conversely, draws an inference that is manifestly untenable, resulting in a gross miscarriage of justice, such an award becomes amenable to challenge. In such circumstances, the award may be set aside or modified, depending on whether the offending part of the award is severable or not. 10. Earlier, a two-Judges Bench of this Court in Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd. ,19 held that courts should ordinarily refrain from substituting their interpretation for that of the arbitrator.

However, where the parties, with full knowledge, have consented to refer the matter to arbitration, the court may intervene and modify the award when it is demonstrably and reasonably justified. For example, when an arbitrator acts without jurisdiction or adopts an interpretation that is contrary to established law, the court has the authority to interfere and set the matter right. 11. In an earlier decision of this Court in Tata Hydro-Electric Power Supply Co. Ltd. and Others v. Union of India,20 this Court exercised its power to modify the effective date from which the awarded interest would apply. However, similar to Numaligarh Refinery Ltd. (supra), this decision did not specifically address the restricted grounds of Section 34. 12. In a catena of judgments of this Court, it has been consistently held that the arbitral tribunal is the master of evidence. The scope of judicial intervention under Section 34 is confined to the limited grounds expressly provided therein.

21 The Court does not possess 18 (2014) 9 SCC 263. 19 (2007) 8 SCC 466. 20 (2003) 4 SCC 172. 21 See Maharashtra State Electricity Distribution Company Limited v. Datar Switchgear Limited and Others, (2018) 3 SCC 133; Parsa Kente Collieries Limited v. Rajasthan Rajya Vidyut Utpadan Nigam Limited, (2019) 7 SCC 236; and M. P. Power Generation Co. Ltd. v. ANSALDO Energia SpA, (2018) 16 SCC 661. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited the power to correct errors of fact, reconsider costs, or engage in a review of the merits of the arbitral award. 13. In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI),22 a two-judge bench of this Court ruled that interference based on public policy violations under Section 34(2)(b)(ii) is limited to the fundamental policy of Indian law. The court cannot interfere merely because the arbitrator lacked a "judicial approach".

23Albeit in the said case, an issue arose which went beyond the narrow scope of Section 34. The fundamental principle of justice was stated to be violated due to a unilateral change or addition to the contract by the arbitral tribunal. The Court emphasized that such changes, made without the affected party's consent, cannot be allowed. As a result, the majority award was set aside, along with the judgments of the Single Judge and the Division Bench of the High Court that had upheld the award. To ensure full justice, this Court, using its power under Article 142 of the Constitution, upheld the minority award and the interest it stipulated. 14. In Oriental Structural Engineers Private Limited v. State of Kerala,24 this Court upheld the award for being in consonance with the contract but intervened to modify the interest rate. It was observed that the principles laid down in Secretary, Irrigation Department, Government of Orissa and Others v. G. C.

Roy,25for determining the interest rate would be equally applicable to the 1996 Act. In fact, Section 31(7)(a) of the 1996 Act, incorporates this principle. Simple interest at the rate of 8% per annum was directed to be paid on the sum left unpaid. 15. In Project Director, National Highways No. 45 E and 220 National Highways Authority of India v. M. Hakeem and Another,26 a two-judge bench of this Court held that Section 34 allows arbitral awards to be set aside only on the limited grounds specified in sub-sections (2) and (3). When a right is limited, its enforceability is 22 (2019) 15 SCC 131. 23 For domestic awards made in India, an additional ground of interference is available - patent illegality appearing on the face of the award - in terms of Section 34(2A) of the 1996 Act. 24 (2021) 6 SCC 150. 25 (1992) 1 SCC 508. 26 (2021) 9 SCC 1. 2104 coterminous with its limited nature, i. e. , it can only be enforced in line with those limitations.

As a result, the award can either be set aside or remanded to the arbitral tribunal. Section 34(4) facilitates such remand by allowing the court to adjourn the proceedings, and hence providing the arbitral tribunal a chance to eliminate the grounds for setting it aside. Here again, the tribunal's opinion is key in determining whether the grounds for setting aside have been resolved. 16. The Court also noted that Section 34 is modelled on the UNCITRAL Model Law on International Commercial Arbitration, 1985,27 which does not allow courts to modify awards. Unlike the broader powers available under the 1940 Act, the court's powers under the 1996 Act are narrower. The Court cited previous judgments of this Court and various High Courts, emphasizing that allowing modification under Section 34 would go against the legal framework, as only the legislature has the power to change the law. Any expansion of Section 34's powers to include modification would require a legislative amendment. B.

Arguments Raised I. In Favour of Modification 17. First, it is contended that the judgment in M. Hakeem (supra) warrants reconsideration, as it conflicts with several decisions rendered by Benches of two and three Judges of this Court, in which awards were modified and varied. This Court has also upheld the modification of awards by the High Courts or District Courts on other occasions. Second, it is claimed that the Model Law, based on the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 195828, permits a broader scope of judicial intervention. Several signatory countries to the Model Law have enacted provisions for domestic awards that permit modification and/or variation (Annexure B), in addition to allowing for the setting aside of awards. This international perspective, it is argued, reflects a broader understanding of the court's powers in arbitrations. Lastly, the principle that a greater power includes a lesser power is invoked.

27 Hereinafter referred to as, "Model Law". 28 Hereinafter referred to as, "New York Convention". Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited Since Section 34 allows for the setting aside of an award, it is argued that this power inherently includes the ability to modify the award, as modification is seen as a lesser form of intervention than annulment. 18. Reference is made to Ahmedabad St. Xavier College Society and Another v. State of Gujarat and Another,29where a nine-Judge Bench of this Courtapplied the maxim "omne majus continent in se minus" - the greater contains the lesser. Applying this maxim, it is contended that the power to set aside will include power to modify or partially set aside an award. It is also submitted that the power to modify and set aside an award can be exercised when the award is in conflict with public policy in terms of Section 34(2)(b)(ii) or to the extent it is vitiated by patent illegality in terms of Section 34(2A) of the 1996 Act.

This approach aligns with the jurisprudence of other jurisdictions such as the United Kingdom, Australia, Singapore, and other countries (Annexure B), where similar powers are vested in the courts. 19. Three additional and ancillary arguments were raised. The first argument was that the expression, 'recourse', used in Section 34, is broad in scope, and it can include any action to enforce a right. Thus, the recourse to set aside an award includes within its ambit the recourse to modify or vary it. The second argument relates to the public law aspect of land acquisition under the National Highways Act, 195630. As this Act mandates arbitration on public law issues, it is contended that commercial considerations can neither be factored in nor applied. Further, the court, while examining a petition under Section 34, has the power to enhance compensation for acquired land.

Lastly, it was contended that the power to grant, reduce, or increase interest should be read into Section 34, without requiring the parties to go through a fresh arbitration process. The granting of interest does not necessitate an elaborate inquiry that would justify the need for re-arbitration. II. Against Modification 20. The learned counsel opposing the court's power of modification argue that the Model Law was the result of a collective effort by several 29 (1974) 1 SCC 717. 30 Hereinafter referred to as, "NHAI Act". 2106 countries to establish a uniform and cohesive legal framework. During discussions, it was decided that courts should not have the power to modify awards. If courts had such power, it could result in a situation where a court order or decree replaces the arbitral award, which in arbitration jurisprudence is unacceptable. It may carry international repercussions when awards are sought to be enforced under foreign conventions. 21.

For example, under the New York Convention, only arbitral awards are recognized and enforceable, not court decrees/orders that modify those awards. A court decree cannot substitute an arbitral award, especially when the award is examined under the limited jurisdiction of Section 34. Section 36 treats awards as enforceable in the same way as court decrees. However, unless Indian law legislatively empowers courts to modify awards, this power cannot be assumed from the power to set aside an award under Section 34. While some countries have granted courts the specific power to modify or vary an award under their domestic laws, Indian law does not permit the same. 22. It is further submitted that the maxim omne majus continent in se minus - the greater contains the lesser - should not be applied in the present case. The power to set aside an award is a sui generis power, which is intrinsically different from the modification power.

Further, when an award is set aside, it results in the annulment of the award. Annulment means that the award no longer exists. Something that does not exist cannot be modified or altered. Similarly, it is submitted that the arbitral tribunal after rendering an award, becomes functus officio. Thus, the exercise of any modification, would lead to the courts adopting appellate powers. Without appellate powers, which the court does not possess, an award cannot be modified. Therefore, assuming modification powers would be contrary to both the express language and the intent behind Section 34 of the 1996 Act. 23. Lastly, it is submitted that the doctrine of merger does not apply to court modifications of an arbitral award. The nature and scope of the power of a court, being distinct from an arbitral tribunal, the modifications will not merge with the arbitral award.

In simpler words, any modification or variation made by the court to the arbitral award would not be subsumed into the arbitral award. For instance, if the court modifies the rate of interest decided by a tribunal, the original Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited award will not be deemed to have been amended to reflect this new interest rate. This could cause issues at the enforcement stage, as the New York Convention allows only the enforcement of an arbitral award, not a court's judgment/order. C. Analysis 24. Given this background, we have to determine whether, and under what circumstances, the courts have the power to modify or vary arbitral awards. 25. We recognize that the legal controversy carries significant implications. The arguments canvassed symbolize the longstanding conflict between equity and justice, on the one hand, and the fetters imposed by the court's jurisdictional limits, on the other.

Therefore, in addressing the questions referred, it is crucial to adopt a balanced approach. While we may favour an equitable and pragmatic view, our interpretation must not be at odds with the express or implied legislative intent underlying the 1996 Act. The question therefore is - to what extent can we weave the principles of equity and justice while not offending the jurisdictional fabric of Section 34? 26. We begin by examining the scope and ambit of the power of 'recourse' under Section 34 of the 1996 Act. I. Contours of Section 34, 1996 Act 27. Section 5 of the 1996 Act limits judicial intervention in an arbitral award to what is authorized by Part I of the Act. Section 34(1) stipulates that 'recourse' to a court against an arbitral award may be made only by an application for setting aside the award in accordance with Section 34(2) and 34(3). 28. Section 34(2)(a) enumerates specific grounds on which an award can be set aside.

These include - the incapacity of a party, invalidity of an arbitration agreement in law, improper notice for appointment of an arbitrator or arbitral proceedings, denying the opportunity to a party to present their case, the award being beyond the scope of submission to arbitration, and the composition of the arbitral tribunal or the arbitral procedure not being by the agreement of the parties in certain circumstances. The proviso to Section 34(2)(a)(iv) outlines the concept of "severability of awards". This has been addressed separately in Part II of our Analysis. 2108 29. Section 34(2)(b) stipulates that an arbitral award may be set aside when the subject matter of the dispute cannot be settled by arbitration per the applicable law or if the arbitral award conflicts with the public policy of India.

Explanation I clarifies that an award can conflict with public policy of India only if (i) the award is induced or affected by fraud, corruption or is in violation of Section 7531 or Section 8132 of the 1996 Act; (ii) when it is in contravention with the fundamental policy of Indian law;33 or (iii) when it conflicts with the most basic notions of morality or justice. Explanation 2 mandates that no review on the merits shall be undertaken when determining a contravention of the fundamental policy of Indian law. 30. Section 34(2-A) stipulates that an award may be set aside when it is vitiated by patent illegality appearing on the face of the award. The proviso clarifies that such determination shall not be made solely because there is an erroneous application of law or through reappreciation of evidence. Section 34(3) provides timelines which needs to be adhered to while filing an application under Section 34.

Section 34(4) stipulates the court's power of remanding an award to the arbitral tribunal. We have addressed this remand power in Part VI of our Analysis. Section 34(5) outlines notice requirements, while Section 34(6) mandates the expeditious disposal of Section 34 applications, setting a hard outer limit of one year from the date of service of notice on the other party under Section 34(5). 31. The next question that arises is whether the power to set aside an award includes the power to partially set it aside. 31 "75. Confidentiality. -- Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement. " 32 "81. Admissibility of evidence in other proceedings.

-- The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,-- (a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute; (b) admissions made by the other party in the course of the conciliation proceedings; (c) proposals made by the conciliator; (d) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator. " 33 In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI), (2019) 15 SCC 131 the scope of the public policy ground for setting aside awards was narrowed and confined to violations of the fundamental policy of Indian law. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited II. Severability of Awards 32.

In the present controversy, the proviso to Section 34(2)(a)(iv) is particularly relevant. Itstates that if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the arbitral award which contains decisions on matters non- submitted may be set aside. The proviso, therefore, permits courts to sever the non-arbitrable portions of an award from arbitrable ones. This serves a two-fold purpose. First, it aligns with Section 16 of the 1996 Act, which affirms the principle of kompetenz-kompetenz -- that is, the arbitrators' competence to determine their own jurisdiction. Secondly, it enables the court to sever and preserve the "valid" part(s) of the award while setting aside the "invalid" ones. 34 Indeed, before us, none of the parties have argued that the court is not empowered to undertake such a segregation. 33. We hold that the power conferred under the proviso to Section 34(2) (a)(iv) is clarificatory in nature.

The authority to sever the "invalid" portion of an arbitral award from the "valid" portion, while remaining within the narrow confines of Section 34, is inherent in the court's jurisdiction when setting aside an award. 34. To this extent, the doctrine of omne majus continet in se minus--the greater power includes the lesser--applies squarely. The authority to set aside an arbitral award necessarily encompasses the power to set it aside in part, rather than in its entirety. This interpretation is practical and pragmatic. It would be incongruous to hold that power to set aside would only mean power to set aside the award in its entirety and not in part. A contrary interpretation would not only be inconsistent with the statutory framework but may also result in valid determinations being unnecessarily nullified. 35. However, we must add a caveat that not all awards can be severed or segregated into separate silos.

Partial setting aside may not be feasible when the "valid" and "invalid" portions are legally and practically inseparable. In simpler words, the "valid" and "invalid" portions must not be inter-dependent or intrinsically intertwined. If they are, the award cannot be set aside in part. 34 The "validity" and "invalidity", as used here, does not refer to legal validity or merits examination, but validity in terms of the proviso to Section 34(2)(a)(iv) of the 1996 Act. 2110 36. The Privy Council, in Pratap Chamaria v. Durga Prasad Chamaria,35 addressed this issue with the following pertinent observations: "...

If, however, the pronouncement of the arbitrators is such that matters beyond the scope of the suit are inextricably bound up with matters falling within the purview of the litigation, in that case, the court would be unable to give effect to the award because of the difficulty that it cannot determine to what extent the decision of the subject-matter of the litigation has been affected and coloured by the decision of the arbitrators in regard to matters beyond the ambit of the suit.... " Thus, the power of partial setting aside should be exercised only when the valid and invalid parts of the award can be clearly segregated-- particularly in relation to liability and quantum and without any corelation between valid and invalid parts. 37. We would now proceed to examine, the permissibility and scope of the court's modification powers, within the parameters of Section 34 of the 1996 Act.

In doing so, we will distinguish the court's power of modification from: (i) the court's power of setting aside an award; (ii) the arbitrator's power under Section 33 to correct, reinterpret, and/or issue an additional award; and (iii) the power of the court to remand the award to the arbitrator under Section 34(4). III. Difference between setting aside and modification 38. This distinction lies at the heart of many arguments canvassed before us. The parties opposing the recognition a power of modification of the courts have strenuously contended that modification and setting aside are distinct and sui generis powers. While modification involves altering specific parts of an award, setting aside does not alter the award but results in its annulment. Their primary concern is that recognizing a power of modification may invite judicial interference with the merits of the dispute--something arguably inconsistent with the framework of the 1996 Act. 39.

We agree with this argument, but only to a limited extent. It is true that modification and setting aside have different consequences: the 35 AIR 1925 PC 293. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited former alters the award, while the latter annuls it. 36 However, we do not concur with the view that recognizing any modification power will inevitably lead to an examination of the merits of the dispute. It will completely depend on the extent of the modification powers recognised by us. In the following part of our Analysis, we outline the contours of this limited power and explain why, in our view, recognizing it will ultimately yield more just outcomes. IV. A Limited Power of Modification Can Be Located in Section 34 40. A core principium of arbitration, an Alternative Dispute Resolution37 mechanism, is to provide a quicker and cost-effective alternative to courtroom litigation.

While this suggests minimal judicial interference, the role of domestic courts remains crucial, as they function in a supportive capacity to facilitate and expedite the resolution of disputes. Therefore, it follows that judicial intervention is legitimate and necessary when it furthers the ends of justice, including the resolution of disputes. 41. To deny courts the authority to modify an award--particularly when such a denial would impose significant hardships, escalate costs, and lead to unnecessary delays--would defeat the raison d'être of arbitration. This concern is particularly pronounced in India, where applications under Section 34 and appeals under Section 37 often take years to resolve. 42.

Given this background, if we were to decide that courts can only set aside and not modify awards, then the parties would be compelled to undergo an extra round of arbitration, adding to the previous four stages: the initial arbitration, Section 34 (setting aside proceedings), Section 37 (appeal proceedings), and Article 136 (SLP proceedings). In effect, this interpretation would force the parties into a new arbitration process merely to affirm a decision that could easily be 36 The words used in the statute must be interpreted contextually, taking into account the purpose, scope, and background of the provision. Many words and expressions have both narrow and broad meanings and thereby open to multiple interpretations. Legal interpretation should align with the object and purpose of the legislation. Therefore, we may not strictly apply a semantic differentiation while interpreting the words "modification" or "setting aside".

Instead, a holistic and purposive interpretation of these words will be consistent with the intent behind the provision and the 1996 Act. Linguistically and even jurisprudentially, a distinction can be drawn between the expressions - modification, partial setting aside, and setting aside of an arbitral award in its entirety. However, we must note that the practical effect of partially setting aside an award is the modification of the award. 37 Hereinafter referred to as, "ADR". 2112 arrived at by the court. This would render the arbitration process more cumbersome than even traditional litigation. 43. Equally, Section 34 limits recourse to courts to an application for setting aside the award. However, Section 34 does not restrict the range of reliefs that the court can grant, while remaining within the contours of the statute. A different relief can be fashioned as long as it does not violate the guardrails of the power provided under Section 34.

In other words, the power cannot contradict the essence or language of Section 34. The court would not exercise appellate power, as envisaged by Order XLI of the Code of Civil Procedure, 190838. 44. We are of the opinion that modification represents a more limited, nuanced power in comparison to the annulment of an award, as the latter entails a more severe consequence of the award being voided in toto. Read in this manner, the limited and restricted power of severing an award implies a power of the court to vary or modify the award. It will be wrong to argue that silence in the 1996 Act, as projected, should be read as a complete prohibition. 45. We are thus of the opinion that the Section 34 court can apply the doctrine of severability and modify a portion of the award while retaining the rest. This is subject to parts of the award being separable, legally and practically, as stipulated in Part II of our Analysis. 46.

Mustill and Boydhave observed that an order varying an award is not equivalent to an appellate process. 39 The authors suggest that a modification order would only be appropriate where the modification, including any adjustment of costs, follows inevitably from the tribunal's determination of a question of law. 40 This approach would be beneficial, as it would reduce costs and delays. The courts need not engage in any fact-finding exercise. By acknowledging the Court's power to modify awards, the judiciary is not rewriting the statute. We hold that the power of judicial review under Section 34, and the setting aside of an award, should be read as inherently including a limited power to modify the award within the confines of Section 34. 38 Hereinafter referred to as, "Code". 39 Sir Michael J. Mustill & Stewart C Boyd QC, Commercial Arbitration, p. 617 (2nd ed. 2001). 40 Ibid. Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited V.

Court can modify the award despite Sections 33 and 34(4) 47. Section 33 of the 1996 Act (Annexure A) empowers an arbitrator, upon request, to correct and/or re-interpret the arbitral award, on limited grounds. This includes the correction of computational, clerical or typographical errors, as well as giving interpretation on a specific point or a part of the award, when mutually agreed upon by the parties. Section 33(3) enables the tribunal to suo moto correct any errors within thirty days of delivering the award. Section 33(4) grants wider powers. It permits the arbitral tribunal, upon compliance with specified manner of request, to make an additional award on claims presented before the arbitral proceedings but omitted from the arbitral award. 48. Section 33(7) states that Section 31 (Annexure A) shall apply where correction, interpretation or any addition is made to the arbitral award. Section 31 deals with form and content requirements for arbitral awards.

Consequently, an order passed by the arbitral tribunal under Section 33 amounts to an arbitral award. Under Section 34(3), where a request is made under Section 33, the limitation period for filing an application to set aside the award commences from the date on which the arbitral tribunal disposes of the Section 33 request. 49. Notwithstanding Section 33, we affirm that a court reviewing an award under Section 34 possesses the authority to rectify computational, clerical, or typographical errors, as well as other manifest errors, provided that such modification does not necessitate a merits-based evaluation. There are certain powers inherent to the court, even when not explicitly granted by the legislature. The scope of these inherent powers depends on the nature of the provision, whether it pertains to appellate, reference, or limited jurisdiction as in the case of Section 34.

The powers are intrinsically connected as they are part and parcel of the jurisdiction exercised by the court. 50. In Grindlays Bank Ltd. v. Central Government Industrial Tribunal and Others,41this Court has held that every t