GAYATRI BALASAMY V. M/S ISG NOVASOFT TECHNOLOGIES LIMITED
2025 INSC 605 (30 April 2025)

Issues

The case revolved around the following key legal questions:

1. Whether courts under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 have the power to modify an arbitral award?

2. If modification is allowed, can it be exercised only when the award is severable?

3. Whether the power to set aside an award includes the power to modify it.

4. Whether the judgment in Project Director NHAI vs. M. Hakeem (2021), which denied modification powers, lays down the correct law.

6. Held by the Supreme Court

The Supreme Court ruled that:

• Courts do not have general power to modify arbitral awards under Section 34.

• However, limited modifications are permissible in specific cases:
  Severability: If part of the award is invalid, only that part can be set aside if separable.
  Clerical/Computational Errors: Courts can correct obvious errors.
  Post-Award Interest: Courts can modify interest rates in certain cases.
  Article 142 Powers: The Supreme Court can modify awards under its extraordinary constitutional powers, but sparingly.

• The judgment upheld the principle in M. Hakeem (2021) that modification is not a default power under Section 34.

7. Importance of the Judgment

• Clarifies the limited scope of judicial intervention in arbitration.

• Ensures finality of arbitral awards while allowing minimal corrections.

• Balances party autonomy (arbitration being a consensual process) with judicial oversight.

• Prevents excessive court interference, aligning with the UNCITRAL Model Law.

8. Rationale

• The Arbitration Act, 1996 is based on minimal judicial interference, unlike the 1940 Act which allowed modifications.

• Section 34 only permits setting aside awards on specified grounds, not rewriting them.

• Severability is allowed under Section 34(2)(a)(iv) if the invalid part is independent.

• Section 34(4) provides an alternative—remanding the award to the tribunal for corrections instead of modifying it.

• Foreign jurisprudence (UK, Singapore, etc.) allows modification only where expressly permitted by law, which India lacks.

9. Conclusion

The Supreme Court rejected the argument that courts can freely modify arbitral awards under Section 34. It upheld strict judicial restraint, permitting only severability, error corrections, and interest modifications in exceptional cases. The ruling reinforces arbitration as a speedy, binding dispute resolution mechanism with limited court intervention.

ALL INDIA JUDGES ASSOCIATION vs UNION OF INDIA

2025 INSC 735 (20 May 2025)

Issues

Whether the 10% quota for Limited Departmental Competitive Examination (LDCE) for promotion to Higher Judicial Service (District Judge) should be restored to 25%.
Whether the minimum qualifying experience for LDCE should be reduced, and if so, by how many years.
Whether a quota should be reserved for meritorious Civil Judges (Junior Division) for promotion to Civil Judge (Senior Division).
Whether the quota for departmental examinations should be calculated based on cadre strength or annual vacancies.
Whether a suitability test should be introduced for promoting Civil Judges (Senior Division) to District Judges under the 65% merit-cum-seniority quota.
Whether the requirement of minimum 3 years of legal practice for appearing in the Civil Judge (Junior Division) exam should be restored.
If restored, whether the practice period should be calculated from provisional enrollment or passing the All India Bar Examination (AIBE).

1. Held by the Supreme Court
   The 10% LDCE quota for promotion to Higher Judicial Service was restored to 25% to incentivize merit.
   The minimum qualifying service for LDCE was reduced to 3 years as Civil Judge (Senior Division) (total 7 years including Junior Division service).
   A 10% quota was introduced for accelerated promotion of Civil Judges (Junior Division) to Senior Division via LDCE, requiring 3 years of service.
   The LDCE quota must be calculated based on cadre strength, not annual vacancies.
   Suitability tests were mandated for promotions under the 65% merit-cum-seniority quota, assessing legal knowledge, judgment quality, ACRs, and viva voce performance.
   The minimum 3 years of legal practice was restored for eligibility to the Civil Judge (Junior Division) exam, calculated from provisional enrollment.
   States and High Courts were directed to amend rules within 3 months, with State approvals within a further 3 months.

2. Importance of the Judgment
   Reforms judicial recruitment to prioritize merit and efficiency in promotions.
   Addresses long-standing anomalies in promotion timelines and incentivizes younger, meritorious judges.
   Reinforces the need for practical legal experience before judicial appointment to improve court functioning.
   Standardizes recruitment rules across states to ensure uniformity in judicial services.

3. Rationale
   LDCE Quota Restoration: To provide faster promotions for meritorious judges and reduce delays caused by unfilled vacancies.
   Reduced Experience for LDCE: Ensures eligibility before officers are promoted through regular channels, maintaining incentive.
   Suitability Tests: Ensures objective assessment of candidates’ legal knowledge and efficiency.
   Practice Requirement Restoration: Fresh law graduates without court experience often struggle with court decorum and case handling, as noted by multiple High Courts.
   Provisional Enrollment Basis: Counting practice from provisional enrollment (not AIBE) balances practicality and ensures exposure to court proceedings.

4. Conclusion
   The judgment aims to strengthen the subordinate judiciary by promoting merit, reducing delays, and ensuring experienced candidates enter judicial service.
   It aligns with the Shetty Commission’s recommendations and addresses practical challenges highlighted by High Courts.
   The directions seek to improve judicial efficiency and uphold the quality of justice delivery.