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Gayatri Balasamy v. ISG Novasoft Technologies Limited and ors.

BY;ARYANSINGH BAGGA
10 June 2025 by
BY: ARYANSINGH BAGGA
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Case name 

Gayatri Balasamy v. ISG Novasoft Technologies Limited and ors. 

Citation         

 SLP (Civil) no. 15336 of 2021

Judges

 Justice Sanjiv Khanna , Justice B.R. Gavai, Justice P.V. Sanjay Kumar, Justice K.V. Vishwanathan, Justice A.G. Masih 

Year no. 

2021

Judgement date 

30th April, 2025

Jurisdiction  

 Supreme Court 

Parties           

 Gayatri Balasamy (Appellant) ; ISG Novasoft (Defendant)

Introduction

The case Gayatri Balasamy v. ISG Novasoft Technologies Limited & Others (SLP Civil No. 15336 of 2021) marks a significant ruling by the Supreme Court of India on the scope of judicial powers in modifying arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. Arising from a long-standing employment dispute involving allegations of sexual harassment and workplace misconduct, the case evolved into a crucial constitutional matter. In a landmark 2025 verdict, a five-judge bench clarified the limited extent to which Indian courts can intervene in arbitration outcomes, reinforcing India’s commitment to arbitration finality and minimal judicial interference.

Background of the case 

Gayatri Balasamy was vice president at the defendant’s company. In 2007, she filed a criminal complaint before a magistrate court in Chennai, alleging sexual harassment by the CEO, Krishna Srinivasan under IPC, 1860 and Tamilnadu Prohibition of Harrasment of women Act, 1998. Criminal complaints under extortion and defamation were made by ISG Novasoft. This dispute escalated to the Supreme Court. 

The Supreme Court quashed all the criminal proceedings and directed for arbitration wherein the tribunal awarded ₹2 crore to the petitioner. Petitioner moved to the Madras High Court. As a result in 2014, the single judge of Madras HC, awarded an additional amount of ₹1.6 crores. Further in 2019, the divisional bench modified it and reduced the additional amount of ₹1.6 crores to ₹50,000 . 

Gayatri approached the SC under Article-136 by filing a SLP . In 2021, the case was first heard by a 3 judge bench and it was considered that the case revolved around a question of crucial law point regarding the arbitration awards modification. 

Therefore the case got transferred to a bench consisting of 5 judges and they came to a conclusion that courts have very limited powers to modify any arbitral award under section 34, in a 4:1 majority. 

Issues before the court :

Power of Courts to Modify Arbitral Awards under Section 34

Scope of Judicial Intervention in Arbitration

Interpretation of “Recourse” under Section 34

Applicability of Article 142 in Arbitration Cases

Validity of Segregation of Invalid Portions of Awards

Consistency with International Arbitration Norms

Arguments by Petitioner 

Learned counsel stated that the court has to interfere where the question is for justice. Power to ‘set-aside’ includes the modification powers in itself. Reports of the expert committee were also submitted that suggested legislative changes to modify the award. 

Section 151 of CPC was also brought to light to show the powers of the courts. Also stated that courts have the power to remit the award. 

It was also argued that power to grant interest, reduce or increase interest should be made by courts, rather than a fresh arbitration. The word “recourse” will include the power to modify as well. 

Arguments by Respondent

Ld. Counsel stated that power to modify has to be statutorily granted, supporting provisions of other countries were mentioned. “Set-aside” powers have a limited meaning and so shall be understood accordingly. 

It was contended that Article-142, cannot be extremely exercised. Cardinal rule of interpretation was supported. Also it was stated that courts cannot modify the clear words of the statute and that golden rule should be applied. Precedent namely Hakeem(supra) was referred.

Section-34 grants “limited remedy”. Recommencement means starting of the whole arbitration process again, and does not mean modifying awards. Segregation can take place under this section. NY Convention would get affected if modifications are permitted. Original award’s enforceability would get affected due to this modifications. Segregation of wrongful part must also be considered with due diligence. 

Doctrine of merger does not apply under section-34, as the power of courts is not clarified. 

Judgement 

Power has been granted to meet the ends of justice. Section 34 not only provides for supervision work by courts but also for the duty of arbitrators to grant reasonable awards. 

United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, permits for courts to see through it that in granting of the arbitral awards, miscarriage of justice does not happen. Additionally also allowed for setting aside and modifications of awards. Also it was held that power to set aside, includes power to modify also. In the New York Convention, it was held that the court’s decree cannot substitute an arbitrary award. Power of setting aside is a Sui Generis power. Annulment of awards is permitted. 

Section 34 clearly mentions the grounds on which an award can be “set - aside”. An award may be set aside in above mentioned cases. If the matters contain some parts which are not part of the arbitration process, then in such a case, partial orders may be passed. Section 34 does not mention the limitation of court for segregation. 

Section 34 has multiple interpretations. Judicial intervention is necessary. Section 33 puts a duty on the arbitrator to change or re-interpret the award on a limited ground. Courts possess the powers to rectify computational, clerical and typographical errors as this forms a part of ancillary or incidentally. 

Applicability of section 34 depends upon the specific facts and circumstances. The award granted also includes the “interest” in financial terms, if it exists. Court has powers of setting aside the award with very less interest rate or may exercise the power of remand. Courts may modify the interest rates if the facts itself shows tribunal’s improper calculation, hence they have the power to “post award interest”. Article 142 cannot be exercised without control. 

Courts have a limited powers and that too can be exercised for :Segregating and removing the invalid portion from the award , Correcting any clerical, computational or typographical errors, Post award interest may be modified in few circumstances and that Article 142 must be used with great care, caution and precision 

Dissenting opinion [Part of judgement]

Justice K.V. Vishwanathan gave his views on section 34 whereby he stated that no modifications could be made for an arbitral award. Only option by the court was to set aside the award or remand the tribunal, it is not an appellate authority. Landmark case popularly known as Hakeem (supra) case was quoted by that section 34 does not grant modifying powers to court. Courts should not have the powers to modify the awards, as it directly affects the interests of both the parties. 

The only unanimity in the submission was with regards to the “severability power”. Segregation was accepted by the whole bench and one can consider it as a stem of Modifying. There have been judgements wherein, the HC’s as well as the SC have applied the principle of segregation. 

Impact and significance of the case 

The Supreme Court’s verdict in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. marks a turning point in Indian arbitration law. By holding that courts cannot modify the core content of arbitral awards under Section 34, the judgment reinforced the finality and autonomy of arbitral proceedings, discouraging unnecessary judicial interference. This bolsters the objective of the Arbitration and Conciliation Act, which is to provide a swift and independent resolution of disputes.

The ruling aligns Indian arbitration practice with international norms, particularly under the New York Convention, which emphasizes limited court intervention in arbitral matters. By doing so, the decision improves India’s credibility as an arbitration-friendly jurisdiction, crucial for attracting international commercial arbitration.

The Court’s affirmation of the doctrine of severability—permitting the removal of invalid parts of an award without affecting the rest—provides a nuanced remedy that respects the arbitrator’s findings while safeguarding parties from unjust outcomes. This ensures judicial efficiency and prevents the need for a complete rehearing of valid issues.

Additionally, the judgment clarified the limited scope of Article 142, stating that the Court’s extraordinary powers cannot be exercised to override statutory provisions. This reaffirms the separation between constitutional equity powers and legislative intent, preserving the balance between fairness and legality.

In practical terms, the ruling reduces the scope of litigation post-arbitration. Parties now have clearer expectations that courts will not re-evaluate or rewrite arbitration awards, except for minor corrections such as clerical or computational errors. This limits frivolous appeals and contributes to judicial economy.

Finally, the dissenting opinion by Justice K.V. Vishwanathan adds depth to the discourse, reinforcing the debate around the scope of Section 34. However, the majority view now stands as binding precedent, offering much-needed clarity for courts and arbitrators going forward.

Conclusion :

The Supreme Court’s decision in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. firmly establishes that courts have a very limited role in modifying arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. In a single line this judgement can be explained as : Limited Power of Courts to Modify Arbitral Awards. The judgment, delivered by a 5-judge bench with a 4:1 majority, provides crucial clarity on the legal position surrounding judicial intervention in arbitration.

The Court ruled that Section 34 allows only for setting aside an award, not modifying its core content. Courts cannot rewrite or re-evaluate the arbitrator's findings.

Courts may correct clerical, typographical, or computational errors and, in some cases, adjust post-award interest if errors are evident. These changes are limited and procedural.

If a part of the award is invalid but separable, courts can remove the invalid part without disturbing the rest of the award. This is permitted under the doctrine of severability.

While Article 142 provides wide powers to do justice, the Court emphasized that it cannot override statutory limits in arbitration law. Its use must be cautious and controlled.

Justice K.V. Vishwanathan dissented, asserting that courts should only set aside or remit awards, not modify them—highlighting that arbitration is not subject to judicial appeal.

The ruling protects the finality and independence of arbitration, aligning India with international standards like the New York Convention, and discourages unnecessary judicial interference.















BY: ARYANSINGH BAGGA 10 June 2025
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