POWER TO SET ASIDE ARBITRAL AWARD INCLUDES POWER TO MODIFY AWARD
Gayatri Balasamy v. ISG Novasoft Technologies Limited
Neutral Citation: 2025 INSC 605
Honourable Supreme Court’s Bench: CJI Sanjiv Khanna, Justice B.R. Gavai, Justice Sanjay Kumar, Justice A.G. Masih and Justice K.V. Viswanathan
Date: 30th April 2025
The issue before the Hon’ble Supreme Court is whether the power to set aside an award under Section 34 of the Arbitration and Conciliation Act, 1996, will include the power to modify an arbitral award and to what extent.
The Hon’ble Court clarified that the courts retain the authority to modify the rate of interest in case of a change in circumstances.The post-award interest is intrinsically forward-looking and conditional upon the circumstances that may arise after the issuance of the arbitral award. It would be unreasonable to expect an arbitrator to predict future developments which are beyond the foresight of the arbitrator. Therefore, it was held that it is appropriate and necessary for the court to retain the authority to intervene and modify the post-award interest.
It was further emphasised by the Hon’ble Court that the courts have the power to modify an award when there is ambiguity, doubt or inadvertent errors, and the same shall not be mistaken with the power of the appellate court to review the orders of the subordinate courts.
Dissenting Opinion– Justice K. V. Vishwanathan, in his dissenting opinion, held that the power to set aside does not inherently include the power to modify. Hon’ble Justice reasoned that the power to modify is not a lesser or subordinate aspect of the power to set aside. These two powers are distinct in nature, arising from different legal foundations and are qualitatively dissimilar. Therefore, the power to set aside an award cannot be extended to the power to modify an award.
