Gayatri Balasamy and M/s ISG Novasoft Technologies Limited had entered into a contractual relationship that led to the arbitration of disputes between them. Following disagreements regarding the execution of the contract

The facts of the given situation are based on the case of Gayatri Balasamy v. M/s. ISG Novasoft Technologies Limited decided by Supreme Court on 30th April, 2025. The Hon'ble Supreme Court in this case has said that to deny courts the authority to modify an award particularly when such a denial would impose significant hardships, escalate costs, and lead to unnecessary delays would defeat the raison d'être of arbitration. This concern is particularly pronounced in India, where applications under Section 34 and appeals under Section 37 often take years to resolve. The court opined that modification represents a more limited, nuanced power in comparison to the annulment of an award, as the latter entails a more severe consequence of the award being voided in toto. Read in this manner, the limited and restricted power of severing an award implies a power of the court to vary or modify the award. It will be wrong to argue that silence in the 1996 Act, as projected, should be read as a complete prohibition. The court also opinioned that the Section 34 court can apply the doctrine of severability and modify a portion of the award while retaining the rest. This is subject to parts of the award being separable, legally and practically, as stipulated in Part II of our Analysis. The apex court also said that the courts need not engage in any fact-finding exercise. By acknowledging the Court's power to modify awards, the judiciary is not rewriting the statute. We hold that the power of judicial review under Section 34, and the setting aside of an award, should be read as inherently including a limited power to modify the award within the confines of Section 34. Notwithstanding Section 33, the Apex Court affirmed that 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. The scope of these inherent powers depends on the nature of the provision, whether it pertains to appellate, reference, or limited jurisdiction as in the case of Section 34. The powers are intrinsically connected as they are part and parcel of the jurisdiction exercised by the court. The Hon'ble court held that 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 Apex Court held that the power conferred under the proviso to Section 34(2) (a) (iv) is clarificatory in nature. The authority to sever the "invalid" portion of an arbitral award from the "valid" portion, while remaining within the narrow confines of Section 34, is inherent in the court's jurisdiction when setting aside an award. The questions of law referred to by Gayatri Balasamy were answered by the Hon'ble Supreme Court stating that the Court has a limited power under Sections 34 and 37 of the 1996 Act to modify the arbitral award. This limited power may be exercised under the following circumstances: when the award is severable, by severing the "invalid" portion from the "valid" portion of the award. by correcting any clerical, computational or typographical errors which appear erroneous on the face of the record; post award interest may be modified in some circumstances; and/or Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power.