Gayatri Balasamy v. ISG Novasoft Technologies (2025): Exploring the Limits of Judicial Power to Modify Arbitral Awards.

The landmark ruling in Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited, delivered on April 30, 2025, settled a crucial controversy in Indian arbitration law by determining whether courts possess the authority to modify arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. The case arose from an employment dispute involving sexual harassment allegations, where an initial INR 2 crore arbitral award was expanded by a single High Court judge but later deeply slashed by a Division Bench. Resolving conflicting opinions, a five-judge Constitution Bench ruled 4:1 that courts hold a limited, defined power to modify awards. Writing for the majority, Chief Justice Sanjiv Khanna identified four permissible scenarios for modification: severing invalid portions of an award, correcting manifest typographical or computational errors, adjusting post-award interest, and cautiously invoking Article 142 of the Constitution to achieve complete justice. Conversely, Justice K.V. Viswanathan delivered a robust dissent, arguing that the legislature intentionally omitted modification powers to align with the UNCITRAL Model Law. He emphasized that modifying an award improperly substitutes judicial reasoning for the tribunal's intent, crossing from a supervisory role into an appellate one. The submission critically notes that while the majority’s view is driven by practical procedural efficiency, it remains doctrinally strained. Relying on Article 142 risks introducing judicial overreach by turning an extraordinary remedy into a routine appellate tool. Furthermore, allowing courts to correct simple errors—functions already handled well by institutional rules—weakens the finality of awards and creates unpredictability for commercial parties. Ultimately, the ruling sends an ambiguous signal regarding India's status as an international arbitration hub, highlighting a pressing need for Parliament to formally amend the Act and establish clear legislative boundaries.