In Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited [2025 INSC 605], a five-judge Bench of the Supreme Court of India ruled that courts possess a limited, functional power to modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, by partially overruling its previous stance in NHAI v. M. Hakeem.
Factual Background
In the above case0, Gayatri Balasamy was appointed Vice President at ISG Novasoft Technologies Limited in April 2006. Later, she resigned after alleging sexual harassment against the CEO, followed by termination letters and reciprocal criminal complaints of defamation, extortion, and harassment. The dispute was referred to arbitration. The tribunal awarded her ₹2 crore. Further, a single-judge of the Madras High Court modified the award in 2014 by granting an additional ₹1.6 crore. The matter eventually reached the Supreme Court to resolve whether courts possess the authority to modify arbitral awards.
Supreme Court’s Rulings
In this case, the Supreme Court held that courts can modify an arbitral award, but strictly within narrow parameters rather than re-evaluating the merits or rewriting the decision.
The four permissible scenarios for modifications are:
- Severability: When the invalid portion of an award can be cleanly separated from the valid portion.
- Error Correction: To fix clerical, computational, or typographical errors apparent on the face of the record.
- Post-Award Interest: To adjust post-award interest where compelling reasons exist.
- Article 142 Jurisdiction: Exclusive power retained by the Supreme Court (not High Courts or District Courts) to “do complete justice” in exceptional circumstances.
