Arbitral award cannot be modified u/s 34 & 37 of AC Act
In the issue whether the Principal District Court can modify arbitral awards under Section 34 & Section 37 of the Arbitration and Conciliation Act, 1996 (AC Act) the five member Constitutional Bench in Gayatri Balasamy v M/S Isg Novasoft Technologies Limited [2025 INSC 605] decided that under the Sections 34 & 37, the Principal District Court has no power to modify the award.
The SC added that the power to set aside will not include the power to modify since the power to modify is not a lesser power subsumed in the power to set aside.
However, the District Court has power to carry out corrections in computational errors, clerical errors or typographical errors and any other errors of similar nature.
Judgements that had said the award cannot be modified
The landmark judgment of Project Director, NHAI v. M Hakeem followed in Larsen Air Conditioning and Refrigeration Company v Union of India and SV Samudram v State of Karnataka have held that the courts are not empowered to modify the arbitral award under Section 34 or 37 of A C Act. The judgements say that the Section 34 is not in the nature of an appellate provision, but it merely provides limited grounds for setting aside an arbitral award.
Judgements that had said the award can be modified
The other judgments consisting of Vedanata Limited v Shenzden Shandong Nuclear Power Construction Company Limited [AIR 2018 SC 4773], J.C. Budharaja v Chairman Orissa Mining Corporation Ltd [AIR 2008 SC 1363 ], Tata Hydroelectric Power Supply Co. Ltd. v Union of India [ AIR 2003 SC1581] are the judgements, which say that the court has power to modify the award under consideration.
The Constitutional Bench brought quietus to the issue
The Constitutional Bench of the SC examined the contours and scope of the power of the Court under Sections 34 and 37 of the A C Act and decided that the Principal District Court lacks power of modification, except in case of clerical, arithmetical or similar mistakes.
References
- Gayatri Balasamy v M/s Isg Novasoft Technologies Limited [2025 INSC 605]
- The SC orders on 23 January 2025
- The Report of the Expert Committee on Arbitration Act
The District Court has no power to modify an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (AC Act) because Section 34 provides only for the setting aside of an arbitral award, not for its modification or correction.
Here’s why: By m. srinivasan 10 May 2025
Arbitral award cannot be modified u/s 34 & 37 of AC
1. Limited Scope of Judicial Intervention:
The AC Act, based on the UNCITRAL Model Law, aims to minimize court intervention. Section 34 is strictly a recourse for setting aside an award on specific grounds like lack of jurisdiction, violation of public policy, or procedural unfairness.
2. Text of Section 34:
The language of Section 34 says:
> “An arbitral award may be set aside by the Court only if…”
It does not provide any provision for the modification or alteration of the award.
3. Supreme Court’s Interpretation:
In Project Director, NHAI v. M. Hakeem (2021), the Supreme Court explicitly held that:
> “The power of a court under Section 34 is limited to either setting aside the award or refusing to set it aside. There is no power to modify or vary the award.”
4. Legislative Intent:
The intention of the legislature was to give finality to arbitral decisions, with minimal judicial review. Allowing courts to modify awards would undermine the autonomy of the arbitration process.
Conclusion:
Thus, under Section 34, District Courts can only annul or uphold the award—they cannot revise or rewrite it. Any correction or modification has to come from the arbitral tribunal itself under Section 33, or through a fresh arbitration if permissible.