This article has been published in Global Arbitration Review – The Asia-Pacific Arbitration Review 2026 at India’s tryst with modifying awards – pragmatic recognition or a catastrophe – Global Arbitration Review.

In summary

The Supreme Court of India has addressed a pivotal issue in arbitration law. In Gayatri Balasamy v ISG Novasoft Technologies Ltd., a five Judges Constitution Bench, by a 4:1 majority, held that courts possess a limited power to modify arbitral awards under sections 34 and 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). This article examines the Arbitration Act, which restricts recourse to setting aside awards, compares this with foreign jurisdictions where statutes permit variation. Indian law provides no such power. Judicial legislation may create more problems than it would solve. Hence, the decision to grant such a power should be legislative and not through ad-hoc judgments.

Discussion points

• Indian law, as it exists, restricts courts under sections 34 and 37 of the Arbitration Act to setting aside awards without express authority for modification.
• The international perspective: statutes in the UK, Singapore and US expressly allow variation of awards.
• Debate on whether Indian law should incorporate a power to modify awards alongside guardrails to balance efficiency and finality.
• The UNCITRAL Model Law permits courts to set aside awards but offers no mechanism for modification.
• Discussion arises on whether saving an arbitral award through modification outweighs preserving the finality of awards.

Referenced in this article

• Gayatri Balasamy v M/S ISG Novasoft Technologies Limited
• Pallawi Resources Ltd. v Protos Engineering Co. (P) Ltd.
• Hall Street Associates, LLC v Mattel, Inc.
• Oxley Consortium Pte Ltd v Geetex Enterprises Singapore (Pte) Ltd
• Bond v Mackay & Ors
• UNCITRAL Model Law on International Commercial Arbitration, 1985 (with amendments as adopted in 2006)
• Arbitration and Conciliation Act, 1996 (India)
• Arbitration Act, 1996 (UK)
• Arbitration Act, 2001 (Singapore)
• Federal Arbitration Act (US) 

Introduction

Arbitration offers party autonomy, which includes within it the facet of finality. The issue of finality regarding oversight has been considered globally. Courts across the world have grappled with the issue of judicial supervision and its limits over the arbitral awards.

In India, this struggle plays out under sections 34 and 37 of the Arbitration Act, a law adopted from the UNCITRAL Model Law yet moulded by local choices. Can courts modify an arbitral award, or do they only get to scrap it? A Constitution Bench of the Supreme Court of India has now decided the issue of a supervisory court’s powers to modify awards. It did so in the backdrop of various pronouncements from the court, which have reinforced India’s claim as an arbitration-friendly jurisdiction.

The extent of judicial intervention in arbitral awards under sections 34 and 37 of the Arbitration Act has been a subject of considerable debate in India. A fundamental issue that frequently arises is whether courts, in exercising their powers under these provisions, are empowered to modify an arbitral award. While a consistent line of judicial precedents has held that courts do not possess such power, several decisions have either modified arbitral awards or upheld lower court orders that have done so.

In Project Director, NHAI v M. Hakeem,^[1] the Supreme Court held that sections 34 and 37 of the Arbitration Act do not allow the courts to modify or alter arbitral awards. This was reiterated in Larsen Air Conditioning and Refrigeration Company v Union of India,^[2]and SV Samudram v State of Karnataka.^[3]

While Project Director, NHAI v M. Hakeem has consistently been followed, the Supreme Court had previously enjoyed the tryst with modifying the awards. In Tata Hydroelectric Power Supply Co. Ltd. v Union of India,^[4]the Supreme Court modified the date from which the interest would accrue. Similarly, in cases including Vedanta Limited v Shenzhen Shandong Nuclear Power Construction Company Limited,^[5] and Shakti Nath v Alpha Tiger Cyprus Investment,^[6]the Supreme Courtmodified the interest that was payable by the award-debtor. Unfortunately, these decisions do not explain the doctrinal basis for exercise of such power under sections 34 and 37 of the Arbitration Act.

The conflicting approaches of the courts set the stage for the Supreme Court referring the issue to a five-judge bench in Gayatri Balasamy v M/S Isg Novasoft Technologies Limited.^[7]On 30 April 2025, the Supreme Court (through majority) held that courts do possess a limited power to modify arbitral awards under section 34 of the Arbitration Act.

It may be noted that the judgment will impact all arbitrations seated in India including international commercial arbitrations defined under section 2(1)(f) of the Arbitration Act. It does not impact foreign award enforcement on account of the fact that India follows the dual enforcement regime, which differentiate between domestic and foreign awards.

Court’s power to set aside an award under section 34 of the Arbitration Act

Section 34 of the Arbitration Act, under Chapter VII, addresses recourse against an arbitral award. Subsection (1) permits courts to entertain applications for setting aside such awards only under the conditions specified in subsections (2) and (3). Subsection (2) states, ‘an arbitral award may be set aside by the Court only if’certain grounds exist.

The section outlines these grounds in two parts. Courts may set aside an award if a party demonstrates:

• a party was under some incapacity;
• the arbitration agreement is not valid under the law to which the parties have subjected it;
• the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
• the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. Courts limit this to the separable part addressing matters not submitted; and
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties.

Courts may also set aside an award if they find that (1) the subject-matter of the dispute is not capable of settlement by arbitration under the law or (2) the arbitral award is in conflict with the public policy of India.

It is important to note that the first part of section 34 of the Arbitration Act addresses the parties. This provision, rooted in the UNCITRAL Model Law, primarily focuses on how the parties have been treated during the arbitral process. In contrast, the second part of section 34 of the Arbitration Act, which has not been directly lifted but rather inspired by the Model Law, with subtle yet significant changes such as the meaning of public policy, inclusion of patent illegality as a ground for setting aside, deviates from the Model Law framework.

Indian courts have time and again re-iterated that the courts need to be cautious and should defer to the view taken by the arbitral tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under section 34 of the Arbitration Act.^[8]

Section 34 of the Arbitration Act does not expressly authorise courts to modify an arbitral award. It restricts relief to ‘setting aside’. This term means annulment. In this regard, Mustill and Boyd state that:

“As regards setting-aside, it is clear that the effect of an order is to deprive the award of all legal effect, so that the position is the same as if the award had never been made. It is much less clear what happens to the arbitration after the award has been set aside. Logically, the consequence should be that the arbitration reverts to the position in which it stood immediately before the Tribunal published his award; i.e. that he is not yet functus officio and remains seized of the reference …”^[9]

Courts void awards entirely or, if separable, in part. The Arbitration Act excludes language permitting alteration or modification of awards. This omission marks a shift from the Arbitration Act, 1940, where section 15 of the Arbitration Act, 1940 allowed modification.

In stark contrast to the Arbitration Act, the erstwhile Arbitration Act, 1940, included provisions for the modification of arbitral awards by courts. Section 15 of the Arbitration Act, 1940 expressly provided the courts with the power to modify or correct an award under specific circumstances. Additionally, section 41 of the Arbitration Act, 1940, which addressed the procedure and powers of the court, stipulated that (1) the provisions of the Code of Civil Procedure, 1908 (CPC), apply to all proceedings before the court and to all appeals under this Act and (2) the court possesses the same powers to make orders concerning arbitration proceedings as it does in relation to any court proceedings, as set out in the Second Schedule of the CPC.

Section 15 of the Arbitration Act, 1940 aligned with the CPC, specifically the Second Schedule, paragraph 12 (now repealed).^[10] This alignment was rooted in the legal framework of the time, where the Arbitration Act, 1940 did not distinguish between a court reviewing an order from a subordinate court and an arbitral award. Consequently, the Law Commission that reviewed the Arbitration Act, 1940 suggested that the powers to modify or correct awards under section 15 of the Arbitration Act, 1940 were akin to the powers of a civil court under the CPC.

This approach shifted with the enactment of the Arbitration Act, which was modelled on the UNCITRAL Model Law and is designed as a self-contained code. The statements of the object of the Arbitration Act emphasises key principles such as the enforcement of arbitral awards and minimal judicial supervision. The Arbitration Act aims to reduce the supervisory role of courts in the arbitral process by aligning with the objectives of the UNCITRAL Model Law.

Thus, the Arbitration Act, unlike its predecessor, the Arbitration Act, 1940, does not include a provision akin to section 15 of the Arbitration Act, 1940, which allowed courts to modify arbitration awards. Further, the Arbitration Act is a self-contained code where the CPC, serves only as a guiding framework. Further, the decision to omit a provision similar to section 15 of the Arbitration Act, 1940 in the Arbitration Act reflects a deliberate legislative choice. This shows a clear intent to move away from allowing modifications of arbitral awards by the courts. In Pallawi Resources Ltd. v Protos Engg. Co. (P) Ltd.,^[11] theSupreme Court reiterated that:

“it is a well-established principle of statutory interpretation that the legislature is specially precise and careful in its choice of language. Thus, if a statutory provision is enacted by the legislature in a certain manner, the only reasonable interpretation which can be resorted to by the courts is that such was the intention of the legislature and that the provision was consciously enacted in that manner…”

The Expert Committee on Arbitration Law, established on 12 June 2023 and chaired by Dr T K Viswanathan, was tasked with reviewing the functioning of arbitration law in India and proposing reforms to the Arbitration Act.^[12] Among its recommendations, the committee suggested amending section 34 of the Arbitration Act to include the power to vary or modify arbitral awards. The fact that such a recommendation has been made by the committee underscores that, as of today, no such power exists under the current legal framework in India.

Courts power to exercise appellate jurisdiction under section 37 of the Arbitration Act

Section 37 of the Arbitration Act deals with the appeals from orders under the statute. Subsection 1(c) provides that an appeal shall lie from an order ‘setting aside or refusing to set aside an arbitral award under section 34’.

The Supreme Court has consistently held that section 37 of the Arbitration Act limits appellate scope to the grounds specified under section 34 of the Arbitration Act.^[13] Courts exercise this power differently from the broad jurisdiction of civil appellate courts. Judicial interference with arbitral proceedings or awards remains narrow. Appellate courts lack power to reassess the arbitral tribunal’s decision on merits. They cannot re-examine evidence as an ordinary appeal court would. The appellate court under section 37 of the Arbitration Act intervenes only if the court acting under section 34 of the Arbitration Act fails to exercise its jurisdiction or exceeds it.

A strict literal interpretation of sections 34 and 37 of the Arbitration Act reveals that there is no express provision granting the courts the power to modify an arbitral award. Section 34 of the Arbitration Act specifically confines the court’s role to merely setting aside an award, while section 37 of the Arbitration Act addresses appeals relating to orders that set aside or refuse to set aside an award under section 34 of the Arbitration Act. By adhering solely to the text of the law, it becomes evident that the courts are not endowed with the authority to modify awards.

An international perspective on recourse against arbitral awards

UNCITRAL Model Law provides a framework for the conduct and management of international commercial arbitration. Legislation based on or influenced by the Model Law has been adopted in 93 states in a total of 126 jurisdictions.^[14]

Article 34 of Chapter VII of the UNCITRAL Model Law addresses recourse against an arbitral award. It specifies that an application for setting aside is the exclusive recourse against an arbitral award. Recourse to a court may only occur through an application for setting aside as outlined in article 34 of the UNCITRAL Model Law.

Relevant extracts:

1. Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.
2. An arbitral award may be set aside by the court specified in Article 6 only if: […]

The UNCITRAL Model Law expressly uses the phrase ‘setting aside’ in article 34. This clarifies that this is the sole permissible recourse for challenging an arbitral award under this provision. If the intent of the Model Law had been to provide a mechanism for modifying or altering the award, it would have employed a different phrase instead of ‘setting aside’. Therefore, any interpretation suggesting that the intent of the UNCITRAL Model Law allows for the modification of an award would render the text of the UNCITRAL Model Law redundant and negate its clear language.

Internationally, jurisdictions such as the UK, US and Singapore do provide for a power to modify an award. Statutes in these countries, such as sections 67 and 69 of the UK’s Arbitration Act, 1996 (English Arbitration Act), section 11 of the Federal Arbitration Act (FAA) and section 49 of the Singapore Arbitration Act, 2001 (Singapore Act), expressly provide for modification of the arbitral award in limited circumstances.

Under section 67 of the English Arbitration Act, should a party challenge the tribunal’s award as to its substantive jurisdiction, the court has the authority to confirm, vary or set aside the award, either partially or entirely. Under section 68 of the English Arbitration Act, a party involved in arbitral proceedings has the option to apply to the court to challenge an award on the grounds of serious irregularity. Section 69 of the English Arbitration Act allows a party to arbitral proceedings to appeal to the court on questions of law arising from an award, provided there is no agreement to exclude such appeals. The court hearing the appeal has several options (i.e., it can confirm the award, vary it, remit it back to the tribunal for reconsideration or set it aside partially or wholly).

In Bond v Mackay & Ors,^[15] the arbitrator found that dispute was not within the scope of reference for the arbitration. The Deputy High Court Judge held that the claim for compensation under deed fell within the Arbitrator’s jurisdiction and accordingly varied the award under section 67 of the English Arbitration Act.

The 2025 amendments to the English Arbitration Act do not alter the power to vary an award under section 67 of the English Arbitration Act concerning the challenges to awards on jurisdictional grounds. With respect to such challenges under section 67 of the English Arbitration Act, successful jurisdictional challenges can now result in, inter alia, the award being remitted back to the arbitral tribunal for reconsideration.

The scope of judicial review by courts in the context of English arbitration law provides valuable insights into understanding the power to modify arbitral awards and the extent to which such power can be exercised. In England, the courts’ approach to reviewing arbitral awards is guided by the principle of minimal intervention.

David Joseph QC argues that allowing courts to correct errors of law committed by arbitrators would be potentially catastrophic to the field of arbitration. This is because the consequence would be that such an error of law would result in the overturning of the award, as well as the potential non-recognition of the award under the New York Convention.^[16] This position has been similarly affirmed by the Singapore Court of Appeal, which also analyses the position of law under the English law.^[17]

Similar to the UK, the Singapore Act stipulates that on an appeal against an award, the court may, by order, vary the award. In Oxley Consortium Pte Ltd v Geetex Enterprises Singapore (Pte) Ltd.,^[18] the Singapore Court of Appeal interpreted a contractual term ‘refund all moneys paid by the purchaser’ to mean that it refers tomoneys paid to the vendor and it does not include sums of money paid to third parties. Therefore, the Singapore Court of Appeal reversed the judge’s findings on this question and varied the award under section 49(8)(b) of the Singapore Act.

In the US, the FAA mandates that a court must confirm an arbitration award unless it is vacated, modified or corrected according to sections 10 and 11 of the FAA. Section 10 of the FAA specifies the grounds for vacating an award, while section 11 of the FAA outlines the grounds for modifying or correcting an award. In Hall Street Associates, LLC v Mattel, Inc.,^[19] the US Supreme Court held that contractually enhanced standards of review are not permissible under the FAA. The specific arbitration clause at issue permitted a federal district court to overturn an arbitration award if arbitrator’s conclusions of law were erroneous. This decision clarified that sections 10 and 11 of the FAA exclusively provide the grounds for vacating or modifying an arbitral award. This decision again emphasises the limited nature of judicial intervention in awards, which is strictly defined by law and cannot be contractually expanded.

Jurisdictions like the UK, US and Singapore provide for clear express provisions for modification of arbitral awards into their statutes. Yet, courts tread carefully. They rarely meddle with recourse against arbitral awards. A global consensus backs this hands-off stance. India, however, tells a different story. The Arbitration Act grants no express authorisation to modify an award. Reading that power into the law invites trouble. It erodes the statute’s intent and chips away arbitral autonomy.

Whether Indian courts can vary or not: Constitution Bench draws the line

The five-judge constitution bench of the Supreme Court recently weighed legal submissions on whether courts can modify an arbitral award under sections 34 and 37 of the Arbitration Act. After considering the submissions on both sides, the Supreme Court (majority) held that courts do have a limited power to modify arbitral awards, but only in narrowly defined circumstances. The Court identified certain categories where such intervention is permissible.

• Where an award contains a clearly severable invalid portion, the court may modify or excise that part without affecting the remainder of the award. The majority held that this power is inherent in the court’s jurisdiction under the proviso to section 34(2)(a)(iv) of the Arbitration Act, and reaffirmed that it is clarificatory in nature. Citing the doctrine of omne majus continet in se minus, the Supreme Court observed that the greater power to set aside an award includes the lesser power to partially set it aside.
• The Supreme Court also clarified that clerical, typographical, computational, or other manifest errors where no evaluation of the merits is required may be corrected by courts in a section 34 application. It noted that this power is distinct from section 33 of the Arbitration Act, and that courts must exercise restraint. The power may be used only when the error is apparent on the face of the record and not debatable.
• On the question of interest under section 31(7)(b) of the Arbitration Act, the Supreme Court held that the power to modify the interest rate or period awarded post-arbitration remains with the court, particularly when the awarded interest is exorbitant or contrary to law. However, courts must not use this power in an appellate manner but only as part of their limited authority under section 34 of the Arbitration Act.
• The Supreme Court also observed that it retains the power to modify an arbitral award under article 142 of the Constitution of India. This constitutional power is extraordinary and situational and cannot be used to rewrite an arbitral award. The Supreme Court cautioned against overreach while invoking this jurisdiction, reaffirming the finality of arbitral proceedings.

In his dissent, Justice Viswanathan held that the Arbitration Act permits courts only to set aside an arbitral award and does not allow for any modification or variation. He emphasised that when parties choose arbitration, they consciously opt out of the judicial process and accept the limited recourse framework under the Arbitration Act. Section 34 of the Arbitration Act, he held, is clear and restrictive. It allows courts to set aside awards on limited grounds like patent illegality or public policy, but does not empower them to alter the arbitrator’s reasoning or decision. Allowing modification, even in minor cases, would amount to courts exercising appellate powers. He rejected any attempt to read words like “modified” into the text, calling it a “virtual mutilation” rather than interpretation. He clarified that even computational or typographical errors, if contested, should not be corrected under section 34 of the Arbitration Act by modifying the award, but only in a manner that does not alter its substance. Finally, he warned against invoking article 142 of the Constitution of India to override the Arbitration Act, noting that such use would create uncertainty and defeat the ethos of arbitration as an alternative, autonomous mechanism of dispute resolution.

In this regard, it is settled law that article 142 of the Constitution of India cannot be employed to override or dilute the express provisions of a statute. The constitutional power under article 142, though wide, must operate within the bounds of statutory limitations and cannot be invoked to confer substantive powers that the legislature has consciously withheld.

Would allowing modification help?

Indian law holds firm that courts do not modify arbitral awards. Sections 34 and 37 of the Arbitration Act offer no such power. That is not to say modification itself is flawed. The statute simply does not provide for it and Indian courts lack the authority to vary an award under law. The debate shifts elsewhere: would allowing modification help? The authors lean toward yes. The authors agree with the majority view that permitting limited correction where errors are severable, clerical, or contrary to law can be helpful in preserving the integrity of awards. However, given the structure of the Arbitration Act, its language, and the deliberate exclusion of modification as a remedy, the authors are equally mindful of the concerns raised in the dissent. The law, as it stands, may arguably be more consistent with a reading that precludes modification making the dissent’s position, in some respects, more compelling.

The argument for granting courts the power to modify awards, albeit with strict guardrails, stems from a practical standpoint. Allowing judicial correction of minor defects could preserve the integrity of the award and prevent the need for comprehensive re-arbitration. There are instances where a trivial error in an arbitrator’s reasoning could lead to the annulment of the entire award. Providing courts with limited power to amend such errors could enhance the efficacy of the arbitration process by saving time and resources while upholding the award’s validity. It is essential to remedy minor oversights, such as an arbitrator awarding interest contrary to the terms of the contract, the solution should not necessarily be to set aside the award if a minor judicial correction can resolve the issue.

The tension between rescuing an arbitral award from annulment and upholding party autonomy in arbitration, particularly the finality that parties seek, raises a critical question. Parties, both domestic and international, require a guarantee that an arbitrator’s determination constitutes a definitive resolution, susceptible to judicial revision only in exceptional circumstances as enumerated under the law. To permit a broader modification power would give an undesirable signal to the global arbitration community, namely, that Indian courts have the tendency to revisit and recast awards with regularity, which erodes the very essence of arbitration. For India to cement its standing as a trusted seat of dispute resolution, this equilibrium demands calibration.

Further, enforcement issues may arise if arbitral awards are modified in the absence of clear legal authority. In Venture Global Engineering v Satyam Computer Services Ltd.,^[20] the US Court of Appeals for the 6th Circuit, observed that in the interest of international comity, this court should not enforce an award in a country that would result in the violation of the law of that country.

This raises a concern that if Indian courts modify an award in the absence of statutory authority to do so, and the modified award is sent for enforcement abroad, the enforcing court may view the modified award as one rendered in violation of the governing arbitration law. This could lead to enforcement difficulties, as the modified award might be seen as lacking legitimacy due to the absence of a clear legal basis for such modification under the applicable arbitration framework.

A further complication arises when an award is challenged in the seat court but is simultaneously enforced in another country under the New York Convention. If the award is modified by courts under sections 34 or 37 of the Arbitration Act, or even by the Supreme Court, it could undermine the finality of the award in enforcement proceedings. Enforcement proceedings that may already be underway or even concluded could be disrupted if the award is modified after 3–5 years. Such delays and modifications risk creating uncertainty and conflicting outcomes in different jurisdictions.

Scenarios discussed above could invite scepticism from the global community, raising concerns about the reliability and enforceability of Indian arbitral awards in foreign jurisdictions.

Conclusion: the final word

The Supreme Court has now authoritatively settled the position in Gayatri Balasamy, holding that limited modification of arbitral awards is permissible under the Arbitration Act. This is binding law. That said, the more coherent solution should have come through a legislative amendment. A consultative exercise could have explored whether and to what extent courts should be empowered to modify arbitral awards. This would have allowed for clearer deliberation on the appropriate guardrails.

The Supreme Court, while not authorised to revise legislation from the bench, could have adopted a course by recommending that the legislature consider an amendment to the Arbitration Act. It has done so in the past; for instance in IFFCO Ltd. v Bhadra Products, (2018) 2 SCC 534, Pr. 30., it suggested that Parliament may consider amending section 34 of the Arbitration Act to allow consolidation of interim and final awards so that a single challenge can be brought after delivery of the final arbitral award.

Further, while the majority relies in part on article 142 of the Constitution of India to justify the exercise of modification powers, the authors respectfully do not agree with this position. Article 142 of the Constitution of India should not be used to sidestep or override the statutory framework laid down by Parliament. The invocation of such extraordinary constitutional powers to fill perceived legislative gaps risks undermining the Arbitration Act, which is a self-contained code.

The onus to strike this delicate equilibrium between granting courts the power to modify awards and prescribing strict guardrails should rest squarely with the legislature. Courts, bound by the text of the Arbitration Act, lack the mandate to assume this responsibility.

Endnotes