Introduction
On June 5, 2026, at Church House Westminster in London, Chief Justice of India Surya Kant delivered a remark that may unsettle anyone working on the post-Balasamy landscape of Indian arbitration law. Speaking at the 4th International Conference of the Indian Council of Arbitration on “Arbitration Indo-UK Commercial Disputes”, he observed that contemporary arbitration has absorbed “the very habits of litigation that it was designed to avoid” with multiple procedural rounds, heavy pleadings, expanding layers of review and a fee structure that parties find difficult to justify.
Although the Chief Justice’s observations were voiced on an international platform in London, their most immediate domestic resonance lies in a landmark pronouncement delivered scarcely a year earlier. On 30 April 2025, the Supreme Court of India in Gayatri Balasamy v. ISG Novasoft Technologies Ltd [1], by a 4:1 majority, held that Indian courts possess a circumscribed authority to modify an arbitral award, but only within the strict confines of Section 34 [2] of the Arbitration and Conciliation Act, 1996 (the A&C Act or 1996 Act). The greater institutional danger lies not in immediate appellate review but in the gradual transformation of Section 34 from a supervisory jurisdiction into a corrective adjudicatory mechanism.
Unlike the repealed Arbitration Act of 1940, which in Section 16 [3] expressly vested courts with authority to remit awards on specified grounds, the 1996 Act confers no independent or free-standing power of remittal. Section 34(4) instead provides only a limited curative mechanism: upon a party’s request, the court may adjourn the setting-aside proceedings to permit the arbitral tribunal to resume proceedings or adopt measures that may eliminate the grounds for annulment of the award.
Indian Jurisprudence: Finality and Limited Intervention
Pre-Balasamy jurisprudence consistently treated Section 34 as a supervisory rather than corrective jurisdiction. In several cases such as McDermott Int’l Inc. (2006) [4], Associate Builders (2015) [5], Ssangyong Engineering (2019) [6], MMTC Ltd (2019) [7], and S.V. Samudram (2024) [8], the Supreme Court emphasised that judicial review under Section 34 is strictly limited to the statutory grounds, such as patent illegality, fraud, corruption, and violation of natural justice. Courts cannot sit as appellate tribunals and correct an arbitrator’s errors.
The Court repeatedly cautioned that merits review would undermine arbitral finality and impermissibly transform Section 34 into an appellate jurisdiction. This position mirrors the UNCITRAL Model Law, and by its terms, Section 34(1)-(3) only authorised the court to “set aside” (annul) an award on specified bases. There is no express power to alter or add to an award.
Key Principles Established by Pre-Balasamy Decisions
- Section 34 is a supervisory jurisdiction, not an appellate jurisdiction.
- Judicial intervention is confined to the statutory grounds under the Arbitration and Conciliation Act, 1996.
- Courts cannot re-appreciate evidence or correct factual or legal errors made by the arbitral tribunal.
- Arbitral finality remains the governing principle of Indian arbitration law.
- The legislative framework follows the philosophy of the UNCITRAL Model Law.
Leading Supreme Court Decisions
| Case | Year | Principle Recognised |
|---|---|---|
| McDermott Int’l Inc. | 2006 | Section 34 provides supervisory review and not appellate correction. |
| Associate Builders | 2015 | Judicial interference is confined to statutory grounds. |
| Ssangyong Engineering | 2019 | A merits review is impermissible under Section 34. |
| MMTC Ltd. | 2019 | Courts must exercise limited supervisory jurisdiction. |
| S.V. Samudram | 2024 | Reaffirmed the limited scope of judicial intervention. |
Limited Exceptions Under Article 142
There have been some deviations, usually under India’s extraordinary Article 142 power. In a handful of judgements, such as in Tata Hydro-Electric Power (2003) [9] and M.P. Power Generation (2018) [10], the court adjusted awards, often by modifying interest or award dates via Article 142 to achieve “complete justice”.
But these were viewed as exceptional fixes, not norm-setting. The prevailing view remained that if an award is flawed, the court’s role is limited to setting it aside or, if possible, remanding the issues to the tribunal.
The 2025 Balasamy Decision: Limited Modification vs Remand
In Gayatri Balasamy, a Constitution Bench of five judges examined whether courts possess authority under Sections 34 and 37 to alter an arbitral award. The Court recognised a limited power of modification in narrowly confined circumstances, subject to stringent safeguards.
The majority (Chief Justice Khanna) held that Section 34(2)(a)(iv) implicitly allows “severing” invalid parts from valid ones to correct any computational, clerical or typographical errors or any other errors of a similar nature. To justify this implied power, the majority invoked the Latin maxim omne majus continet in se minus, meaning that the greater power to set aside an award must necessarily encompass the lesser power to partially set aside or modify it.
Majority View on Limited Modification
- Recognises a limited judicial power to modify arbitral awards.
- Applies only in narrowly confined and exceptional circumstances.
- Permits severance of invalid portions from valid portions.
- Allows correction of computational, clerical, typographical, or similar errors.
- Relies upon the doctrine of omne majus continet in se minus.
Statutory Framework Under the Arbitration Act
However, the statutory text strongly resists recognising any implied power of judicial modification. Section 34(1) of the 1996 Act explicitly mandates that recourse to a court against an arbitral award may be made “only by an application for setting aside such award”.
The phrase “only by” functions as a strict, prohibitive gate. This restrictive formulation was adopted to align the 1996 Act with the UNCITRAL Model Law on International Commercial Arbitration.
Further, Section 5 reinforces this position by limiting judicial intervention strictly to what the Act expressly permits.
Justice Viswanathan’s Dissent
Justice Viswanathan, in his dissent, delineated a clear doctrinal boundary by affirming that severability may permissibly operate for the purpose of setting aside an award but cannot be impermissibly extended to justify judicial modification.
He expressly rejects the majority’s view that severability can justify judicial rewriting of an award under Section 34. He said that the two are conceptually and legally distinct: “modification” involves changing, varying, or qualifying an award, while “severance” merely entails separating or disjoining parts of the award.
Majority vs Dissent: Key Differences
| Issue | Majority View | Justice Viswanathan’s Dissent |
|---|---|---|
| Power under Section 34 | Limited implied power of modification | No implied power of modification |
| Severability | Can support limited modification | Applicable only for setting aside |
| Judicial Role | Limited corrective intervention | Strict supervisory jurisdiction |
| Interpretation | Relies on implied powers | Relies on express statutory language |
The Thin Line Between Supervision and Appeal in Arbitration
Although the majority in Gayatri Balasamy emphasised that judicial modification would remain confined to “limited” and “exceptional” situations, the principal concern is not that Indian courts will immediately begin exercising unrestricted appellate review over arbitral awards; the deeper concern lies in the gradual transformation of Section 34 proceedings from a supervisory jurisdiction into a corrective adjudicatory mechanism.
The recognition of even a limited modification power under Section 34 risks blurring this carefully maintained institutional boundary.
Once parties perceive that courts may “correct” awards rather than merely annul them, Section 34 proceedings may gradually evolve into forums for seeking partial merits review disguised as requests for severance, recalculation, clarification or correction.
The danger, therefore, lies not in overt judicial overreach but in what may be termed an “appellate drift” within post-award proceedings.
Institutional Concerns
- Gradual expansion of judicial intervention.
- Blurring of the distinction between supervision and appeal.
- Increase in requests for judicial correction rather than annulment.
- Potential growth of disguised merits review.
- Risk of appellate drift in post-award proceedings.
Impact on the Arbitration Framework
This concern becomes particularly significant in light of the recent observations made by CJI Surya Kant that arbitration has increasingly begun to absorb “the very habits of litigation that it was designed to avoid”, including prolonged procedural layers, excessive review mechanisms and escalating costs.
Parties may increasingly frame Section 34 petitions not as challenges based on statutory invalidity, but as indirect invitations for judicial correction of perceived substantive unfairness.
Such a development would fundamentally alter the character of the Section 34 review.
Section 34(4) preserves tribunal primacy by permitting curable defects to be addressed by the arbitral tribunal itself without displacing its adjudicatory role.
Key Takeaways
- The majority recognised a narrowly confined power of judicial modification.
- The statutory framework continues to emphasise setting aside rather than modifying awards.
- Justice Viswanathan maintained that severance and modification are conceptually distinct.
- Limited modification may gradually encourage appellate-style review.
- Section 34(4) continues to preserve the arbitral tribunal’s primary adjudicatory role.
Why Remand, Not Modification: Practical and Doctrinal Considerations
Remission under Section 34(4) remains institutionally preferable to judicial modification for both doctrinal and practical reasons. On one hand, it allows a tribunal to fix its own errors (via remand) and preserves the integrity and finality of arbitration. The tribunal, after hearing all evidence and arguments, is the best place to remedy a factual omission or reasoning gap. The award, when reissued, will be more robust and not tainted by obvious flaws.
On the other hand, direct judicial modification has potential downsides. It can disturb finality and undermine party autonomy; even a minor tweak means the court has intervened. Allowing the courts to modify awards goes against the very ethos of arbitration, where parties consciously opt to move away from court adjudication. Moreover, courts are not as expert in the commercial merits, and some fear that severability tests could drag judges into factual thickets under the guise of “legal separability”.
The majority’s concern with avoiding the delay and expense of re-arbitration is institutionally understandable; however, efficiency alone cannot justify converting a supervisory jurisdiction into a corrective appellate mechanism.
Key Reasons for Preferring Remission Under Section 34(4)
- Allows the arbitral tribunal to correct its own errors.
- Preserves the integrity and finality of arbitration.
- Protects party autonomy by limiting judicial interference.
- Ensures factual and evidentiary issues remain with the tribunal that heard the dispute.
- Prevents Section 34 proceedings from evolving into appellate review.
Comparative Position in Major Arbitration Jurisdictions
The comparative position of major arbitration jurisdictions further demonstrates why remission, rather than judicial modification, remains the more coherent remedy for defective arbitral awards. Article 34[11] of the UNCITRAL Model Law permits only an application for “setting aside” an arbitral award and does not confer any express power of modification.
Article 34(4) further authorises the court solely to suspend or remit the setting-aside proceedings, so that the arbitral tribunal can cure defects; it does not empower the court to modify the award.
Singapore’s International Arbitration Act (IAA) [12], which incorporates the UNCITRAL Model Law, contains no provision empowering courts to modify arbitral awards. The Court of Appeal in AKN v. ALC (2015) [13] and CJA v. CIZ (2022) [14] reaffirmed that judicial intervention is strictly confined to the statutory framework.
Similarly, the United States Federal Arbitration Act [15] permits only narrowly confined ministerial correction, such as evident material miscalculations or defects in form not affecting the merits, rather than substantive modification.
Comparative Analysis at a Glance
| Jurisdiction | Approach to Judicial Modification |
|---|---|
| UNCITRAL Model Law | Permits setting aside and remission only; no express power of judicial modification. |
| Singapore (International Arbitration Act) | No statutory power to modify arbitral awards; courts remain within the statutory framework. |
| United States (Federal Arbitration Act) | Allows only limited ministerial corrections, not substantive modification. |
| India | Remand under Section 34(4) remains the preferred institutional mechanism for curing defects. |
Institutional Significance of Remand Under Section 34(4)
This comparative position strengthens the argument that remand under Section 34(4), rather than judicial modification, remains the more institutionally coherent mechanism within the Indian framework. Remand allows the arbitral tribunal itself to eliminate defects, provide additional reasons, or cure procedural irregularities without displacing the tribunal’s adjudicatory role.
The tribunal, having heard evidence and construed the contractual matrix, is better placed than a Section 34 court to cure defects. Preference for remission under Section 34(4) prevents curial proceedings from assuming appellate character; judicial modification risks converting Section 34 into merits review, contrary to Section 5’s mandate of minimal intervention.
Hence, while Gayatri Balasamy recognises a narrow power of modification, courts must exercise restraint and prefer remand wherever defects are curable by the tribunal itself.
6. Conclusion
Ultimately, the trajectory of Indian arbitration must rest upon systemic discipline rather than curial convenience. Although the majority in Gayatri Balasamy sought to forestall the expense of re-arbitration, the recognition of an implied modification power imperils the supervisory role under Section 34 by gradually assimilating it into an appellate corrective process.
Remission under Section 34(4) preserves arbitral autonomy by enabling defects to be cured without converting courts into appellate forums over arbitral merits. Convergence with global standards of minimal judicial intervention is indispensable as India positions itself for expanding cross-border trade.
In that sense, Chief Justice Surya Kant’s warning that arbitration must not absorb ‘the very habits of litigation that it was designed to avoid’ becomes especially significant in the post-Balasamy landscape. The legitimacy of arbitration ultimately depends not upon judicial capacity to perfect awards but upon judicial discipline to resist doing so.
Key Takeaways
- Remission under Section 34(4) is institutionally preferable to judicial modification.
- Remand preserves arbitral autonomy, party autonomy, and finality.
- Comparative arbitration jurisdictions largely reject substantive judicial modification of arbitral awards.
- Section 34 should remain a supervisory, not appellate, jurisdiction.
- Judicial restraint is essential to maintain India’s arbitration framework in line with international best practices.
Endnotes:
- (2025) 7 SCC 1.
- Arbitration and Conciliation Act, 1996, § 34 (India).
- Arbitration Act, 1940, § 16 (India).
- (2006) 11 SCC 181.
- (2015) 3 SCC 49.
- (2019) 15 SCC 131.
- (2019) 4 SCC 163.
- (2024) 3 SCC 623.
- (2003) 4 SCC 172.
- (2018) 16 SCC 661.
- UNCITRAL Model Law on International Commercial Arbitration, art. 34.
- International Arbitration Act 1994, Cap. 143A, §§ 3(1), 24 (Singapore).
- [2015] SGCA 18.
- [2022] SGCA 41.
- 9 U.S.C. § 11 (1947).
