Courts may under Section 34(4) remit an award to the tribunal to cure specific defects — but cannot themselves modify the substantive outcome of the award.

The Legal Question Before the Court

A longstanding controversy in Indian arbitration law concerned whether courts exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 have any power to modify an arbitral award — correcting errors, adjusting quantum, or substituting findings — rather than simply setting it aside in full or upholding it. This question acquired particular importance because setting aside an award entirely and requiring a fresh arbitration is an expensive, time-consuming remedy that often defeats the commercial purpose of having arbitrated in the first place.

Section 34(4) of the Act provides that a court hearing a Section 34 application may, where appropriate, adjourn the proceedings to allow the arbitral tribunal an opportunity to resume the arbitral proceedings or take such other action as may eliminate the grounds for setting aside the award. A five-judge Constitution Bench was convened to determine the outer limits of both Section 34(4) and the court's inherent jurisdiction in this context.

The Court's Decision

The Constitution Bench clarified that the power under Section 34(4) is a remittal power — not a modification power. A court may remit the award to the original tribunal for the limited purpose of curing specific, identifiable defects: for example, where the tribunal failed to consider a particular head of claim, failed to give reasons for a specific finding, or made an arithmetic error. The tribunal, on remittal, addresses only the remitted issue and issues a supplementary or revised award limited to that issue.

The court held, however, that courts do not have a free-standing power to modify the substantive outcome of an arbitral award under Section 34 or under any general inherent jurisdiction. An award cannot be altered in its merits — the quantum of compensation changed, a finding of liability reversed, or a contractual interpretation substituted — by a court reviewing it under Section 34. The choice remains binary: set aside (in whole or identified severable part) or uphold.

Note: This case was decided in 2025 and citation details are subject to official SCC reporting confirmation. Practitioners should verify against the official report before reliance.

The Court's Reasoning

The bench examined the UNCITRAL Model Law framework, which Section 34(4) mirrors. The Model Law's remittal mechanism was designed precisely to avoid the all-or-nothing outcome of Section 34 proceedings. Where a defect is curable — where the tribunal can address a gap or a specific procedural failing without reopening the entire merits — remittal is the proportionate remedy. It preserves the parties' investment in the arbitral process and limits judicial interference to what is strictly necessary.

The court drew a sharp line between curable procedural or reasoning defects (amenable to remittal) and substantive merits disagreements (not amenable to remittal or modification). A court that disagrees with the arbitrator's contractual interpretation, factual findings, or damages assessment must either set aside the award or uphold it; it cannot rewrite it. This line reinforces the finality of arbitration and protects against the risk of Section 34 proceedings becoming a second-tier appeal.

Practical Implications — What This Means Today

Gayatri Balasamy is a significant clarification of post-award remedies under Indian arbitration law. For parties holding favourable awards that are under challenge, the ruling confirms that a court cannot modify the award against them under the guise of Section 34 review. The challenge either fails (award upheld) or succeeds (award set aside, parties return to arbitration or litigation). There is no middle path by which a court can "correct" an award it partially disagrees with.

For parties challenging awards, the remittal option under Section 34(4) is now a recognised tool where the defect is specific and curable. Rather than seeking full set-aside — which requires a much higher threshold — counsel may argue for targeted remittal where the tribunal overlooked a specific claim or failed to provide adequate reasons. This is a proportionate remedy that courts are now expressly empowered to grant.

Relevant Statutory Provisions

  • Section 34(4), Arbitration and Conciliation Act, 1996 — Remittal to arbitral tribunal to cure specific defects
  • Section 34(2), Arbitration and Conciliation Act, 1996 — Grounds for setting aside an arbitral award
  • Section 34(2A), Arbitration and Conciliation Act, 1996 — Patent illegality — ground for setting aside domestic awards
  • Article 34(4), UNCITRAL Model Law on International Commercial Arbitration — Legislative basis for remittal power

Analysis by Vinode V. Luka, Advocate | Published: May 2026 | Last reviewed: May 2026