Gayatri Balasamy v. ISG Novasoft Technologies Ltd.

This case originated from an employment dispute between Gayatri Balasamy, a former Vice President at ISG Novasoft Technologies Ltd., and the company. Appointed on April 27, 2006, Balasamy resigned on July 24, 2006, alleging sexual harassment by the CEO. Her resignation was not accepted, and she was later terminated. Both parties filed criminal complaints. The Supreme Court of India referred the dispute to arbitration, where a tribunal awarded Balasamy INR 2 crore in compensation. Dissatisfied, she challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, leading to a series of modifications by the Madras High Court. The matter ultimately reached the Supreme Court, which, on April 30, 2025, delivered a landmark judgment on the extent of judicial power to modify arbitral awards.

In a 4:1 majority decision, a five-judge Constitution Bench of the Supreme Court of India held that courts have a 'limited power' to modify arbitral awards under Section 34. This power is restricted to three specific scenarios: (1) severing an invalid part of an award from the valid part; (2) correcting clerical, computational, or typographical errors; and (3) modifying post-award interest in certain circumstances. The majority opinion was authored by Chief Justice Sanjiv Khanna for Justices B.R. Gavai, P.V. Sanjay Kumar, and A.G. Masih, with Justice K.V. Viswanathan dissenting.

The central dispute was whether Indian courts have the power to modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, and if so, the scope and limits of such power. The case also touched upon the balance between arbitral finality and judicial intervention in the interest of justice.

The judgment is considered a significant turning point in Indian arbitration law. By recognizing a limited judicial power to modify awards, it resolved a long-standing conflict in jurisprudence but also introduced new uncertainties. Critics argue it dilutes the principle of finality, a hallmark of arbitration, potentially leading to increased judicial intervention. The decision has sparked extensive academic and professional debate, with some viewing it as a necessary tool for justice, while others see it as a step back for India's pro-arbitration stance.