GAYATRI BALASAMY versus M/S ISG NOVASOFT TECHNOLOGIES LIMITED

GAYATRI BALASAMY versus M/S ISG NOVASOFT TECHNOLOGIES LIMITED

By majority, courts under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 do not have a general power to modify arbitral awards on merits; however a limited power to modify exists and may be exercised only in narrow circumstances: (i) severance of invalid/non-arbitrable parts from valid parts where they are separable (proviso to s.34(2)(a)(iv)); (ii) correction of clerical, computational or typographical and similar manifest errors; (iii) limited modification of post-award interest in appropriate facts (guided by s.31(7)(b)); and (iv) in exceptional cases this Court may use Article 142 subject to strict caution; when uncertainty exists courts should remit to the tribunal...

Parties
Appellant: Gayatri Balasamy; Respondent: M/s ISG Novasoft Technologies Limited
Jurisdiction
India
Judgment Date
30 April 2025
Procedural Posture
Civil Appeal (reference to Constitution Bench) / Constitution Bench Judgment Disposing Reference
Outcome
Reference answered and disposed: majority holds limited modification power under ss.34 and 37 in specified circumstances; Hakeem affirmed subject to limited exceptions; one dissent recorded
Legal Topics
Modification of Arbitral Award, Severability of Awards, Section 34 Arbitration and Conciliation Act, 1996, Section 34(4) Remand to Arbitral Tribunal, Post Award Interest, Article 142 of the Constitution, Doctrine of Merger, Correction of Clerical/computational Errors, Actus Curiae Neminem Gravabit, Patent Illegality
Arbitration Constitutional Law Civil Procedure International Commercial Arbitration Modification of Arbitral Award Severability of Awards Section 34 Arbitration and Conciliation Act, 1996 Section 34(4) Remand to Arbitral Tribunal +6 more

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Parties

Gayatri Balasamy

Appellant

M/s ISG Novasoft Technologies Limited

Respondent

Procedural Posture

Civil Appeal (reference to Constitution Bench) / Constitution Bench Judgment Disposing Reference

Legal Issues

  1. 1 Whether courts under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 have power to modify an arbitral award
  2. 2 Whether any such power can be exercised only where the award is severable
  3. 3 Whether the power to set aside under Section 34 includes power to modify the award and to what extent

Ratio Decidendi

By majority, courts under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 do not have a general power to modify arbitral awards on merits; however a limited power to modify exists and may be exercised only in narrow circumstances: (i) severance of invalid/non-arbitrable parts from valid parts where they are separable (proviso to s.34(2)(a)(iv)); (ii) correction of clerical, computational or typographical and similar manifest errors; (iii) limited modification of post-award interest in appropriate facts (guided by s.31(7)(b)); and (iv) in exceptional cases this Court may use Article 142 subject to strict caution; when uncertainty exists courts should remit to the tribunal...

Court Disposition

Reference answered and disposed: majority holds limited modification power under ss.34 and 37 in specified circumstances; Hakeem affirmed subject to limited exceptions; one dissent recorded

Orders

  • Reference to larger Bench disposed of and questions answered as recorded in judgment
  • Courts have limited power under Sections 34 and 37 to modify an arbitral award only to the extent of: severing invalid/non-arbitrable portions when separable; correcting clerical/computational/typographical or similar manifest errors; limited modification of post-award interest in appropriate cases; and limited use...