Arbitral award modification is limited: courts may sever, correct manifest errors, and adjust post-award interest, but not review merits.

Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 do not confer a general appellate power to modify an arbitral award, but the judgment recognises limited corrective powers within the statutory scheme. Courts may sever and set aside only the offending part of an award where the valid and invalid portions are legally and practically separable, and may correct manifest clerical, computational or typographical errors without reviewing the merits. The Court also held that post-award interest may be adjusted in appropriate cases, while Article 142 cannot be used to rewrite an award or the Act's substantive limits. A concurring opinion accepted severability but rejected any power to modify the award or post-award interest.

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Issues: (i) whether courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 can modify an arbitral award and, if so, to what extent; (ii) whether severability permits partial setting aside of an award; (iii) whether clerical, computational and typographical errors and post-award interest can be corrected or varied in proceedings under Section 34; (iv) whether Article 142 of the Constitution of India can be invoked to modify an arbitral award.

Issue (i): Whether courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 can modify an arbitral award and, if so, to what extent.

Analysis: The majority held that Section 34 confines judicial intervention to limited recourse against an award and does not permit a general appellate review on merits. At the same time, the power to set aside an award in a narrow statutory setting was held to include limited corrective powers where the award is severable, where manifest clerical or computational mistakes are apparent, and where post-award interest requires adjustment on legally permissible grounds. The Court rejected any broad reading that would convert Section 34 into an appellate jurisdiction or permit modification on merits.

Conclusion: The courts do not have a general power to modify arbitral awards, but a limited corrective power exists in the specific situations recognised by the judgment.

Issue (ii): Whether severability permits partial setting aside of an award.

Analysis: The majority held that the proviso to Section 34(2)(a)(iv) recognises severability, and that the greater power to set aside includes the lesser power to set aside only the offending part when the valid and invalid portions are legally and practically separable. The Court emphasised that partial setting aside is impermissible where the offending and unobjectionable parts are interdependent or inextricably intertwined.

Conclusion: Partial setting aside is permissible where the offending portion of the award is severable from the rest.

Issue (iii): Whether clerical, computational and typographical errors and post-award interest can be corrected or varied in proceedings under Section 34.

Analysis: The majority held that obvious computational, clerical and typographical mistakes may be corrected under the court's limited jurisdiction because such correction does not involve merits review. On interest, the Court distinguished pendente lite interest from post-award interest and held that post-award interest may be modified in appropriate cases, while errors in pendente lite interest or contractual departures may justify remand under Section 34(4) rather than merits-based modification. Section 34(4) was treated as a curative mechanism enabling the arbitral tribunal to remove defects when appropriate.

Conclusion: Limited correction of manifest errors is permissible, and post-award interest may be adjusted in appropriate cases.

Issue (iv): Whether Article 142 of the Constitution of India can be invoked to modify an arbitral award.

Analysis: The majority held that Article 142 cannot be used to override the substantive scheme of the Arbitration and Conciliation Act, 1996 or to rewrite an award on merits. The power may be used only sparingly to bring litigation to an end, and not in a manner that contravenes the core statutory limits on arbitral review.

Conclusion: Article 142 cannot be used to modify an arbitral award on merits.

Final Conclusion: The reference was answered by holding that the Section 34 and Section 37 courts have no general power to modify an arbitral award, but they do have limited powers of severance, correction of manifest errors, and adjustment of post-award interest within the statutory framework.

Ratio Decidendi: In proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, courts may exercise only limited corrective powers inherent in the statutory scheme, including severing a separable invalid part of an award and correcting manifest clerical or computational errors, but they cannot undertake merits-based modification of the award.

Concurring Opinion: K. V. Viswanathan, J. disagreed with the majority on the existence of any power to modify an award under Section 34 or Section 37, and held that post-award interest also cannot be modified in Section 34 proceedings. The judge accepted severability under Section 34 but rejected modification, implied powers, and Article 142-based alteration of awards.

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