{"id":347004,"date":"2025-05-02T16:00:38","date_gmt":"2025-05-02T10:30:38","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=347004"},"modified":"2025-05-02T17:14:32","modified_gmt":"2025-05-02T11:44:32","slug":"modification-of-arbitral-awards-supreme-court-section-34","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/02\/modification-of-arbitral-awards-supreme-court-section-34\/","title":{"rendered":"Can Arbitral Awards Be Modified in Setting Aside Proceedings? — A Brief on the Supreme Court’s Reinterpretation of Section 34 of the Arbitration and Conciliation Act, 1996"},"content":{"rendered":"
\n

Section 34<\/a>1<\/sup><\/a> of the Arbitration and Conciliation Act, 1996<\/a>, governs the setting aside of awards arising from arbitrations seated in India. This provision does not provide any powers for the setting aside court to vary or modify portions of the award.<\/p>\n

This was the legal position in vogue under Indian law, until the Supreme Court’s reinterpretation of Section 34, by its judgment dated 30-4-2025 in Gayatri Balasamy<\/span> v. ISG Novasoft Technologies Ltd. (Balasamy)<\/span>2<\/sup><\/a>. In the decision by 5-Judge Bench (by a majority of 4:1) Section 34 has been \u201creinterpreted to include a limited power to modify awards\u201d. The Supreme Court has also explained the limitations on such power, while also touching upon several allied issues, such as the severability of awards and the specific power to modify the interest awarded by a tribunal.<\/p>\n

Position prior to Balasamy<\/h2>\n

In a previous decision by a two-Judge Bench of the Supreme Court in NHAI<\/span> v. M. Hakeem (Hakeem)<\/span>3<\/sup><\/a> the Court declared that no power to modify an award could be derived from Section 34, holding as follows:<\/p>\n

48.<\/span> Quite obviously if one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekha and doing what, according to the justice of a case, ought to be done. In interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended this result. Parliament very clearly intended that no power of modification of an award exists in Section 34<\/a> of the Arbitration and Conciliation Act, 1996<\/a>. It is only for Parliament to amend the aforesaid provision in the light of the experience of the courts in the working of the Arbitration and Conciliation Act, 1996<\/a> and bring it in line with other legislations the world over.<\/p>\n

The Supreme Court in Hakeem<\/span>4<\/sup><\/a> also reconciled earlier decisions wherein awards were modified with the above statement of law \u2014 holding that those decisions were rendered under the extraordinary jurisdiction of the Supreme Court under Article 142<\/a>5<\/sup><\/a> of the Constitution of India<\/a>.<\/p>\n

Subsequently, several judgments further clarified that even despite the lack of power to modify an award, a setting aside court could \u201cpartially set aside\u201d severable portions of an award. This would not amount to modification but merely setting aside a divisible part of an award (to the extent such division is possible). As explained by the Delhi High Court in NHAI<\/span> v. Trichy Thanjavur Expressway Ltd.<\/span>6<\/sup><\/a>:<\/p>\n

43<\/span>. \u2026 The expression \u201cmodify\u201d would clearly mean a variation or modulation of the ultimate relief that may be accorded by an Arbitral Tribunal (AT). However, when a Section 34 Court were to consider exercising a power to partially set aside, it would clearly not amount to a modification or variation of the award. It would be confined to an offending part of the award coming to be annulled and set aside. It is this distinction between a modification of an award and its partial setting aside that must be borne in mind.<\/p>\n

The position post Balasamy<\/h2>\n

The Supreme Court in Balasamy<\/span>7<\/sup><\/a>, while recognising that the Act \u201cdoes not expressly empower courts to modify or vary an arbitral award\u201d has clarified that such power exists, albeit in a limited context, as an inherent power of courts.<\/p>\n

Interestingly, although not a dispositive part of the decision, the approach adopted by the majority of Judges is reflected in the question posed by them as: \u201cto what extent can we weave the principles of equity and justice while not offending the jurisdictional fabric of Section 34?\u201d The majority in Balasamy<\/span>8<\/sup><\/a> thereafter came to the following conclusions in relation to the question of modification.<\/p>\n

(i) Partial setting aside of severable portions of an award<\/p>\n

The majority held that an award may be partially set aside (to the extent that the invalid portion of the award is severable from the remainder of the award). The Court reasoned that:<\/p>\n

33.<\/span> \u2026 The authority to sever the \u201cinvalid\u201d portion of an arbitral award from the \u201cvalid\u201d portion, while remaining within the narrow confines of Section 34, is inherent in the court’s jurisdiction when setting aside an award.9<\/sup><\/a><\/p>\n

This ruling reaffirms several decisions of High Courts wherein (even in the pre-Balasamy<\/span>10<\/sup><\/a> scenario) awards have been partially set aside, despite the absence of powers to modify an award.<\/p>\n

(ii) Modification in principle<\/p>\n

Squarely departing from the view in Hakeem<\/span>11<\/sup><\/a>, the majority also found that a limited power of modification is inherent within Section 34. The majority in Balasamy<\/span>12<\/sup><\/a> arrived at this conclusion on two bases:<\/p>\n

First, that Section 34 is merely silent on and does not expressly prohibit modification. This is evident from the majority ruling that:<\/p>\n

43.<\/span> \u2026 Section 34 does not restrict the range of reliefs that the court can grant, while remaining within the contours of the statute. A different relief can be fashioned as long as it does not violate the guardrails of the power provided under Section 34.\u2026<\/p>\n

44.<\/span> \u2026 It will be wrong to argue that silence in the Arbitration and Conciliation Act, 1996<\/a>, as projected, should be read as a complete prohibition.13<\/sup><\/a><\/p>\n

Second, that the policy of arbitration being an expeditious mechanism would be undermined if the setting aside court was forced to only set aside the award, requiring a fresh arbitration to be commenced, followed by consequential litigation. As explained by the majority:<\/p>\n

42.<\/span> Given this background, if we were to decide that courts can only set aside and not modify awards, then the parties would be compelled to undergo an extra round of arbitration, \u2026 In effect, this interpretation would force the parties into a new arbitration process merely to affirm a decision that could easily be arrived at by the Court. This would render the arbitration process more cumbersome than even traditional litigation.14<\/sup><\/a><\/p>\n

(iii) Extent of modification permissible<\/p>\n

Interestingly, the majority, when elaborating on the extent of modification which is permissible under Section 34, appears to have restricted such powers to issues of procedural errors of the kind contemplated under Section 3315<\/sup><\/a> (i.e. those involving computational or typographical errors).<\/p>\n

In its analysis, the majority decision affirmed that:<\/p>\n

49.<\/span> \u2026 a court reviewing an award under Section 34 possesses the authority to rectify computational, clerical, or typographical errors, as well as other manifest errors, provided that such modification does not necessitate a merits-based evaluation. There are certain powers inherent to the Court, even when not explicitly granted by the legislature.16<\/sup><\/a><\/p>\n

The words \u201cas well as other manifest errors\u201d could have opened a debate on the extent of modification powers recognised by the Supreme Court. However, perhaps intentionally, these words do not find a mention in the dispositive part of the decision in Balasamy<\/span>17<\/sup><\/a>, wherein, in its ultimate conclusions, the Court limits the powers of modification to \u201ccorrecting any clerical, computational or typographical errors which appear erroneous on the face of the record\u201d.<\/p>\n

Furthermore, the intent to limit the use of such modification powers to patent errors (not involving reappreciation of merits) is evident from: (a<\/span>) the Court’s ruling that the limited modification power recognised by it does not entail a review on merits; and (b<\/span>) the Court setting out at an extremely high threshold for applying such powers, holding that the appropriateness of the modification should not be \u201cdebatable\u201d or in \u201cdoubt\u201d. Differentiating between a \u201cprocedural review\u201d and a \u201creview on merits\u201d, the majority holds that:<\/p>\n

54.<\/span> \u2026 inadvertent errors, including typographical and clerical errors can be modified by the Court in an application under Section 34. However, such a power must not be conflated with the appellate jurisdiction of a higher court or the power to review a judgment of a lower court. The key distinction between Sections 33 and 34 lies in the fact that, under Section 34, the Court must have no uncertainty or doubt when modifying an award. If the modification is debatable or a doubt arises regarding its appropriateness i.e. if the error is not apparent on the face of the record, the court will be left unable to proceed, its hands bound by the uncertainty.18<\/sup><\/a><\/p>\n

By reducing the power of modification to typographical or similar errors and increasing the threshold for its application to one of \u201cno uncertainty or doubt\u201d, \u201cnon-debatable\u201d, the majority has, while granting recognition to such power, also leashed it considerably.<\/p>\n

(iv) Interest<\/p>\n

The power of modification in relation to interest (both forming part of an award, and interest on the awarded sums) has also been clarified by the Supreme Court.<\/p>\n

First, in relation to pendente lite interest (i.e. interest for the period spent during the arbitration) the majority appears to have held that there can be no power of modification exercised by the setting aside court.<\/p>\n

Since the correctness of the rate of pendente lite interest would entail a review on merits, this would therefore not be strictly subject to a \u201cmodification\u201d in the limited extent recognised by the Court. Therefore, the majority reasoned that in cases where the pendente lite interest has been awarded in violation of Section 31(7)(a<\/span>) (for example, where the rate of interest awarded is contrary to a contractual provision) \u2014 this could only entail either a setting aside or a remand, by asking the Tribunal to redetermine the rate of interest under Section 34(4)<\/a> of the Arbitration and Conciliation Act, 1996<\/a>.<\/p>\n

However, in relation to \u201cpost-award interest\u201d in terms of Section 31(7)(b)<\/a> of the Arbitration and Conciliation Act, 1996<\/a>, the Court reaffirmed that it would have the power to modify the interest \u201cwhere the facts justify such modification\u201d.<\/p>\n

While at first glance, this appears to depart from the limitations set by the majority on the power of modification \u2014 such power in relation to post-award interest appears to have been recognised on the reasoning that:<\/p>\n

76.<\/span> \u2026 Arbitral Tribunals, when determining post-award interest, cannot foresee future issues that may arise. Post-award interest is inherently future-oriented and depends on facts and circumstances that unfold after the award is issued. … Therefore, it is appropriate for Section 34 Court to have the authority to intervene and modify the post-award interest if the facts and circumstances justify such a change.19<\/sup><\/a><\/p>\n

In this context, therefore there is no \u201creappreciation\u201d of facts considered by the Tribunal, but rather a power of modification of the post-award based on new facts that may emerge.<\/p>\n

Position in other jurisdictions<\/h2>\n

The legislation governing international arbitrations in Singapore (i.e. the International Arbitration Act, 1994) also does not provide for any power of modification or variation of an arbitral award by the setting aside court. Contradistinctly, the power to \u201cvary\u201d an award (on appeals from questions of law) has expressly been provided in the Singaporean legislation governing domestic arbitrations (i.e. the Arbitration Act, 2001).<\/p>\n

Despite the evident (and intentional) absence of such power in the International Arbitration Act, 1994 \u2014 Singaporean courts have held that an implied power to variation\/modify awards is available in setting aside proceedings under this legislation. The Singapore High Court in CAI<\/span> v. CAJ & CAK<\/span>20<\/sup><\/a>, after noting that such power was absent in the International Arbitration Act, 1994 (while being present in a limited context in the legislation governing domestic arbitrations) reasoned that the power to set aside a part of an award necessarily includes the power to \u201cmake ancillary or consequential orders to give effect to its setting aside\u201d. The Court held that such power is \u201cbuilt into\u201d the setting aside power. While declaring that a part of the quantification of delay (in a construction dispute) was to be set aside, the Singapore High Court therefore modified the delay quantification for which liquidated damages were to be paid. The decision of the High Court was affirmed by the Singapore Court of Appeal in CAJ & CAK<\/span> v. CAI<\/span>21<\/sup><\/a>.<\/p>\n

In some other jurisdictions, such as the United Kingdom, the power to vary an award is expressly provided within the legislation itself. Parties are therefore enabled to seek a variation or setting aside of an award from the jurisdictional courts in United Kingdom.<\/p>\n

Evidently, leading arbitral jurisdictions adopt varying approaches to the issue of modification. As briefly explained above, the Supreme Court in Balasamy<\/span>22<\/sup><\/a> appears to have adopted a middle path, wherein a limited power of modification has now been recognised under Section 3<\/a>4 of the Arbitration and Conciliation Act, 1996<\/a>.<\/p>\n

Conclusion<\/h2>\n

By its decision in Balasamy<\/span>23<\/sup><\/a>, the Supreme Court has answered much-debated questions on modification in a pragmatic manner. While a very limited power of modification has been recognised, the Court has also reaffirmed that: (i<\/span>) awards can be partially set aside to the extent the invalid portions are severable; and (ii<\/span>) reiterated that even its extraordinary jurisdiction to \u201cdo complete justice\u201d available under Article 142<\/a> of the Constitution<\/a> may ordinarily only be exercised based on fundamental considerations of public policy.<\/p>\n<\/div>\n

\n

*Partner, Shardul Amarchand Mangaldas & Co.<\/span><\/strong><\/p>\n

**Principal Associate, Shardul Amarchand Mangaldas & Co.<\/span><\/strong><\/p>\n

***Associate, Shardul Amarchand Mangaldas & Co.<\/span><\/strong><\/p>\n

1.<\/a> Arbitration and Conciliation Act, 1996<\/a>, S. 34<\/a>.<\/p>\n

2.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

3.<\/a> (2021) 9 SCC 1<\/a>.<\/p>\n

4.<\/a> (2021) 9 SCC 1<\/a>.<\/p>\n

5.<\/a> Constitution of India<\/a>, Art. 142<\/a>.<\/p>\n

6.<\/a> 2023 SCC OnLine Del 5183<\/a>.<\/p>\n

7.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

8.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

9.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

10.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

11.<\/a> (2021) 9 SCC 1<\/a>.<\/p>\n

12.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

13.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

14.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

15.<\/a> Arbitration and Conciliation Act, 1996<\/a>, S. 33<\/a>.<\/p>\n

16.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

17.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

18.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

19.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

20.<\/a> 2021 SGHC 21.<\/p>\n

21.<\/a> 2021 SGCA 102.<\/p>\n

22.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n

23.<\/a> 2025 SCC OnLine SC 986<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

by Aashish Gupta*, Puneeth Ganapathy** and Rishab Aggarwal***<\/p>\n","protected":false},"author":67011,"featured_media":347020,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[20271,46698],"tags":[30066,40741,81633,81632,5861,81634,27524,47804,81631,5363],"class_list":["post-347004","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-experts_corner","category-shardul-amarchand-mangaldas","tag-arbitral-awards","tag-arbitration-and-conciliation-act-1996","tag-court-power-to-modify-award","tag-limited-powers-of-court","tag-modification","tag-modification-of-arbitral-awards","tag-section-34","tag-section-37","tag-setting-aside-proceedings","tag-supreme-court"],"yoast_head":"\nCan Arbitral Awards Be Modified? Supreme Court Reinterprets Section 34 of Arbitration Act | SCC Times<\/title>\n<meta name=\"description\" content=\"A brief analysis of the Supreme Court's reinterpretation of Section 34 of the Arbitration and Conciliation Act, 1996, addressing whether arbitral awards can be modified in setting aside proceedings.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/02\/modification-of-arbitral-awards-supreme-court-section-34\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can Arbitral Awards Be Modified in Setting Aside Proceedings? \u2014 A Brief on the Supreme Court's Reinterpretation of Section 34 of the Arbitration and Conciliation Act, 1996\" \/>\n<meta property=\"og:description\" content=\"A brief analysis of the Supreme Court's reinterpretation of Section 34 of the Arbitration and Conciliation Act, 1996, addressing whether arbitral awards can be modified in setting aside proceedings.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/02\/modification-of-arbitral-awards-supreme-court-section-34\/\" \/>\n<meta property=\"og:site_name\" content=\"SCC Times\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/scc.online\/\" \/>\n<meta property=\"article:published_time\" content=\"2025-05-02T10:30:38+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-05-02T11:44:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/05\/shared-image-2025-05-02T165428.792.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"886\" \/>\n\t<meta property=\"og:image:height\" content=\"590\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Editor\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Can Arbitral Awards Be Modified in Setting Aside Proceedings? — A Brief on the Supreme Court's Reinterpretation of Section 34 of the Arbitration and Conciliation Act, 1996\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Editor\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"11 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/02\/modification-of-arbitral-awards-supreme-court-section-34\/\",\"url\":\"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/02\/modification-of-arbitral-awards-supreme-court-section-34\/\",\"name\":\"Can Arbitral Awards Be Modified? 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