​In a significant development on April 30, 2025, the Supreme Court of India, in a 4:1 majority decision, held that courts possess the authority to modify arbitral awards under the Arbitration and Conciliation Act, 1996, but only in limited and specific circumstances. This ruling marks a departure from previous judgments that restricted courts to either upholding or setting aside arbitral awards.​

Limited Modification Power: The majority, comprising Chief Justice Sanjiv Khanna and Justices B.R. Gavai, Sanjay Kumar, and Augustine George Masih, concluded that courts can modify arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. This power is confined to situations where the award is severable, allowing the invalid portion to be removed while upholding the valid part, and for correcting clerical, computational, or typographical errors apparent on the face of the record.

Dissenting Opinion: Justice K.V. Viswanathan dissented, arguing that judicial modification of arbitral awards would contravene established precedents and disrupt the statutory framework of the Arbitration and Conciliation Act.

Implications of the Judgment

• Impact on Arbitration Practices: This ruling could influence the conduct of arbitration proceedings in India, potentially encouraging parties to seek judicial modification of arbitral awards in certain circumstances.​
• Future Legal Developments: The decision may prompt legislative amendments to the Arbitration and Conciliation Act to explicitly define the scope and conditions under which courts can modify arbitral awards, providing clearer guidelines for arbitration practitioners and parties involved in arbitration.

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