The most expansive potential for intervention (and also criticism) recognized by the judgment is the Hon’ble Supreme Court’s power under Article 142 of the Constitution of India, which allows it to pass orders necessary for doing “complete justice.” The majority acknowledges that this power has been used in the past to vary aspects like interest rates. However, the majority opinion also emphasizes that this power must be exercised with “great care and caution.” It should not be used to rewrite the award or modify it on merits, but rather to bring litigation to an end, saving time and costs. This finding, one may say, could have been avoided in the majority decision. Arbitration proceedings involve parties resolving their “commercial disputes.” While agreeing to refer their disputes to an arbitral tribunal, they agree to be bound by the decision of the judge they have chosen themselves, unlike court proceedings. They agree to live with the consequences of their decision too. Saving the protection provided to them under the Act on limited grounds of setting aside the award (and now modifying too) may not be entirely the pro-arbitration stance that the Hon’ble Supreme Court seems to have taken in bringing in its power under Article 142.

Having said that, looked at from another angle, this view may in fact turn out to be beneficial. The power under Article 142 is only available to the Hon’ble Supreme Court. We have seen instances in the past where two parties have been in prolonged, decades-long litigation. In those circumstances, the Hon’ble Supreme Court has exercised its power under Article 142 to bring a closure to the dispute, which may otherwise have gone for years (see Delhi Metro Rail Corporation Ltd v. Delhi Airport Metro Express Pvt Ltd; Oil and Natural Gas Corporation Ltd v. Afcons Gunanusa JV). A similar power was exercised by the Hon’ble Supreme Court in Ssangyong Engineering & Construction Co Ltd v. NHAI, while upholding the minority award. A detailed analysis of the judgments of the Hon’ble Supreme Court in this regard till date and after a year or two of Gayatri Balasamy may provide a better answer. Until then, we can be hopeful.

The Dissent

In his dissenting view, Viswanathan J. holds that courts exercising power under Section 34 (and appellate courts under Section 37) do not have the power to “modify” an award. His view aligns with the judgment in Project Director NHAI v. M. Hakeem, which held that a Section 34 court has no power to modify the award. The dissent emphasizes that the power to modify must be statutorily conferred and cannot be exercised otherwise. He disagrees with the idea that this power can be assumed from inherent powers under the CPC or implied powers, as this would contravene the express limitations in Section 34 and the intent of the Act. While Viswanathan J. agrees that the power to set aside an award in part (severance) is permissible when the invalid portion is separable, he maintains a conceptual distinction between “modification” (changing, varying, or qualifying an award) and “severance” (separating or disjoining parts). His dissent also disagrees with the majority view on allowing courts to modify post-award interest and the use of Article 142 for modifying awards. His discomfort lies fundamentally with the absence of legislative sanction for modification under the current Act, viewing it as an overreach of judicial power, an opinion which many legal experts have expressed in their respective comments after the judgment.

This raises an intriguing question: Is Vishwanathan J.’s position primarily based on statutory interpretation that the current legal framework does not permit modification, rather than a principled objection to modification per se? The dissent posed seems to highlight that if the legislature were to explicitly permit modification in certain circumstances, the dissent’s concerns would be addressed. Further, dissent, like the majority, seems willing to carve out exceptions that absolutely prohibit modification since it may lead to inefficient outcomes, forcing parties to relitigate issues that could be resolved more directly through limited judicial intervention.

Contours of Modification: Balancing Principles

Presently, while the Act does not expressly vest courts with the power of modifying arbitral awards, the debate confronts the tension between the principle of minimal judicial interference, a cornerstone of the Act and the Model Law, and the potential negative consequences of not allowing modification, such as compelling parties to initiate fresh arbitration, leading to significant hardships, escalated costs, and delays.

On the other hand, as an alternative to judicial modification, the Act provides for remanding the award to the arbitral tribunal under Section 34(4). This discretionary power allows the court to adjourn proceedings to give the tribunal an opportunity to resume proceedings or take corrective action to eliminate the grounds for setting aside the award. Remand is deemed more appropriate when there is uncertainty or doubt regarding the required modification, as it allows the arbitral tribunal to reconsider and cure defects, potentially involving additional evidence or process. The arbitral tribunal’s powers upon remand are described as “substantial” compared to the court’s narrow role under the rest of Section 34. This option avoids the court exercising appellate powers or engaging in fact-finding.

Further, if we were to take a future where the Act is amended to allow courts to modify an arbitral award, a key concern lies in defining the boundaries of permissible modification. There appears to be some consensus that modifications addressing clerical errors or adjustments to interest rates might fall within acceptable parameters. The majority view in Gayatri Balaswamy has emphasized that the power to modify should be restricted on the grounds available for setting aside the award under Section 34.

One of the major concerns that may lie in recognizing the courts’ power to modify is its impact on the increased judicial intervention in the arbitration process, which is indisputably against the framework of the Act. It is well-established that Singapore has grounded itself as a leading arbitration hub by maintaining a balanced approach to judicial intervention in arbitrations. The Singapore courts have developed a reputation for respecting arbitral autonomy by setting aside, varying or remitting awards on appeal only in extremely limited circumstances, primarily relating to jurisdictional issues, public policy considerations. Further, while Singapore legislatively allows ‘varying’ an award, there have been little to no instances of the appeal courts indulging in the same. Singapore courts will adopt a generous approach and will not undertake a hypercritical or excessive syntactic analysis of what the arbitrator has written (see Republic of India v. Vedanta Resources plc; Lao Holdings NV and another v. Government of the Lao People’s Democratic Republic; Prometheus Marine Pte Ltd v. King, Ann Rita and another appeal; CEF and another v. CEH; BZW and another v. BZV).

While the majority view in the Gayatri Balasamy has on numerous places emphasized on the importance of the minimal judicial interference, the final decision once again reignites a vital debate on the scope of judicial intervention in arbitration, highlighting both practical necessities and statutory constraints. As a way forward, legislative reform may be the most coherent path—expressly defining the contours of permissible modification to balance arbitral finality with judicial oversight in exceptional cases.

This article was originally published in Bar & Bench on 26 May 2025 Co-written by: Smarika Singh, Partner; Saifur Faridi, Partner; Ishaan Saraswat, Associate. Click here for original article

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