Section 34 of the Arbitration and Conciliation Act, 1996 allows courts to set aside an award, but says nothing expressly about modifying it. For years, conflicting decisions left it unclear whether a court could vary an award — for example, reduce an amount — or could only set it aside and leave the parties to arbitrate again.
In Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (2025), a Constitution Bench of the Supreme Court — in a dispute that originated in Chennai — held that courts do have a limited power to modify arbitral awards. The Court recognised that a court may sever an invalid part of an award from the valid part, correct clerical, computational or typographical errors, and in certain circumstances modify post-award interest.
The Court was careful to keep this power narrow. A court cannot use modification to review the merits of the award or substitute its own view of the evidence. The power exists to avoid the waste of setting aside an entire award because of a discrete, severable problem.
This was reinforced in 2026 in Saisudhir Energy v. NTPC Vidyut Vyapar Nigam, where the Supreme Court held that an appeal court exceeded its jurisdiction by recalculating compensation itself.
For parties, the takeaway is that a challenge to an award will not become a second trial. The best protection remains a well-run arbitration.
This note summarises the reported judgment for general information and is not legal advice on any specific matter.