The case of Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited (2025) is a landmark judgment by a five-judge Constitution Bench of the Supreme Court of India. It has fundamentally changed Indian arbitration law by addressing whether courts have the power to "modify" an arbitral award.
Case Overview
Court: Supreme Court of India (Constitution Bench)
Bench: 5 Judges (4:1 Majority)
Decided On: April 30, 2025
Primary Statutes: Sections 34 & 37 of the Arbitration and Conciliation Act, 1996.
1. The Core Legal Question
Previously, under the precedent of Project Director, NHAI v. M. Hakeem (2021), the rule was strict: a court could either set aside an award entirely or uphold it. It could not modify the award (e.g., change the compensation amount) because Section 34 of the Arbitration and Conciliation Act, 1996, does not explicitly grant that power.
In this case, the Supreme Court re-evaluated this position to see if such a restrictive view led to unnecessary delays and fresh rounds of litigation.
2. The Verdict (April 30, 2025)
By a 4:1 majority, the Supreme Court held that Indian courts do possess a limited power to modify arbitral awards under Sections 34 and 37 of the Act.
The Majority Opinion (led by CJI Sanjiv Khanna):
The "Greater Includes the Lesser" Principle: The majority invoked the legal maxim omne majus continet in se minus. Since courts have the "greater" power to set aside (annul) an award, they should logically have the "lesser" power to modify it to avoid total annulment and subsequent re-litigation.
Severability: The court can sever and strike down an invalid portion of an award while keeping the valid portion intact.
Correction of Errors: Courts can correct "manifest errors" such as clerical, computational, or typographical mistakes that are apparent on the face of the record and do not require a re-evaluation of the case's merits.
Interest Rates: The court affirmed that judges could modify the post-award interest rates to ensure they are fair and statutory.
The Dissenting Opinion (Justice K.V. Viswanathan):
He argued that the Arbitration Act was designed to minimize judicial interference. He felt that reading a "power to modify" into the statute—where the legislature had intentionally left it out—goes against the spirit of the law and could lead to courts acting as appellate bodies.
3. Background of the Dispute
The case originated from a 2006 employment dispute. Gayatri Balasamy, a former Vice President at ISG Novasoft, alleged workplace sexual harassment and wrongful termination.
Arbitration: The matter went to arbitration, where she was awarded ₹2 crore.
High Court Intervention: Both parties challenged the award. The Madras High Court eventually modified the award, increasing the compensation. This raised the jurisdictional question of whether the High Court was allowed to make such a change.
4. The "Four Scenarios" for Modification
The Court ruled that while judges cannot "re-write" the merits of an award, they can modify it in the following four specific circumstances:
Severability: If an award has multiple parts and only one is invalid, the Court can "surgically" remove the invalid part while keeping the rest intact.
Manifest Errors: The Court can correct errors that are "apparent on the face of the record." This includes:
Clerical Errors: Typos or misstatements of names/dates.
Computational Errors: Math mistakes in calculating damages or interest.
Typographical Errors: Errors in the written text of the award that lead to absurdity.
Post-Award Interest: The Court can adjust interest rates if the rate awarded by the tribunal is "unconscionable," "illegal," or "manifestly inadequate."
Article 142 (Supreme Court only): The Supreme Court may modify an award to "do complete justice," though this power is not available to High Courts or District Courts under Section 34.
5. The "Manifest Error" Threshold
The judgment creates a high bar for what qualifies as a "manifest error" to prevent every case from becoming an appeal:
No Merits Evaluation: A court cannot modify an award if it requires looking at the evidence again or re-interpreting the law.
Objectively Verifiable: The error must be so obvious that no two people could disagree on it (e.g., 100 + 100 written as 300).
Certainty Required: If there is any doubt or "debatable" logic behind the error, the court must not modify it. In such cases, the court should instead remand (send back) the award to the tribunal under Section 34(4).
6. Legal Reasoning: "The Greater Includes the Lesser"
The majority relied on the Latin maxim Omne majus continet in se minus (The greater contains the less).
Logic: Since Section 34 gives a court the "greater" power to set aside (destroy) an entire award, it must logically possess the "lesser" power to partially set aside or modify a specific, incorrect portion of it.
Pragmatism: The Court noted that forcing parties to start arbitration from scratch over a simple math error leads to "judicial ping-pong" and defeats the purpose of "speedy resolution."