A Measured Shift : Supreme Court Opens the Door to Limited Award Modification

The bedrock and the basis of arbitration is minimal judicial intervention. The Arbitration and Conciliation Act, 1996, envisioned a swift, efficient, and party-centric dispute resolution mechanism, largely insulated from the lengthy procedures of traditional litigation. For years, a core feature of Indian arbitration law has been that courts, when seized with a challenge to an arbitral award under Section 34 of the Act, could either uphold the award or set it aside in its entirety, but not modify it.

This long-standing position, seemingly absolute, has just been re-evaluated and, to a significant extent, nuanced by the Supreme Court of India. The recent landmark decision in Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited (2025 INSC 605), delivered by a 4:1 majority of a Constitution Bench, has redefined the scope of a court’s power under Sections 34 and 37 of the Act, affirming a limited power to modify arbitral awards. This judgment promises to significantly reshape the landscape of arbitration jurisprudence in India.

The Traditional Stance: No Power to Modify

Prior to Gayatri Balasamy, the prevailing judicial view was firmly against the modification of arbitral awards by courts. The rationale was rooted in the legislative intent behind the 1996 Act, which drew heavily from the UNCITRAL Model Law on International Commercial Arbitration. The Model Law emphasizes restrictive judicial interference, providing only for the setting aside of an award, not its modification.
Several pronouncements of the Supreme Court solidified this position:

1. McDermott International Inc. v. Burn Standard Co. Ltd. (2006 (11) SCC 181): This case was often cited for the principle that courts, while exercising powers under Section 34, could not modify an award. The Court clearly stated that the power to set aside an award does not implicitly include the power to modify it.

2.NHAI v. M. Hakeem (2021) 9 SCC 1): This judgment reiterated that Section 34 of the Act does not grant courts the power to modify, vary, or review an arbitral award. The Court underscored that courts could only set aside an award, entirely or partially if severable, but could not venture into rewriting or modifying the arbitrator’s findings. This decision was a strong affirmation of the minimal intervention principle.

3. Ssangyong Engineering and Construction Co. Ltd. v. NHAI (2019 (15) SCC 131): While focusing on “patent illegality,” this case also generally reinforced the limited nature of judicial review under Section 34, leaning away from expansive powers like modification.

The argument against modification was simple: if the legislature intended courts to have the power to modify, it would have explicitly provided for it, as was the case in the erstwhile Arbitration Act, 1940. The omission in the 1996 Act was therefore seen as deliberate.

The Shift in Gayatri Balasamy (2025): A Limited Embrace of Modification

The Gayatri Balasamy case presented a direct challenge to the M. Hakeem precedent, referring the question of a court’s power to modify arbitral awards to a larger bench. The facts of the case involved an employment dispute leading to an arbitration award. The aggrieved party sought modification of the compensation awarded by the tribunal.
The Constitution Bench, by a 4:1 majority, held that while Section 34 of the Act does not expressly provide for modification, a limited power to modify an arbitral award is indeed available to courts in specific circumstances.

The majority reasoned that:
1. “Setting aside in part” implies modification: The Court invoked the legal “maxim omne majus continet in se minus” (the greater contains the less), arguing that if a court has the power to set aside an entire award (the greater power), it inherently possesses the power to set aside a severable part of it, which effectively amounts to a modification of the original award.

2. To prevent re-arbitration and delays: The majority emphasized the practical reality that if a minor, obvious error or an unsustainable portion required the entire award to be set aside, it would compel parties to re-initiate arbitration, leading to significant costs and delays, thereby defeating the very purpose of speedy dispute resolution.

3. Correction of “manifest errors” akin to Section 152 CPC: The Court acknowledged that courts could correct “computational, clerical, or typographical errors, as well as other manifest errors” in an arbitral award. This power was likened to the court’s power to correct accidental slips or omissions in judgments under Section 152 of the Code of Civil Procedure, 1908.

4. Power to modify post-award interest: The judgment explicitly clarified that courts retain the power to modify post-award interest under Section 31(7) of the Act, where the facts justify such modification.

The majority stressed that this power is limited and must be exercised with “care and caution.” It is not a power to re-appreciate evidence, substitute the court’s own findings for those of the arbitrator, or convert the Section 34 proceeding into an appellate review on merits. The modification must be based on grounds already available for setting aside the award under Section 34, where the error is apparent and no further deliberation by the arbitrator is required.

The Dissenting Voice: Upholding Legislative Intent
Justice K.V. Viswanathan, in his sole dissenting opinion, articulated a powerful counter-argument, aligning with the traditional view. He contended that:
1. No express statutory power: The Act does not contain any provision empowering courts to modify awards, unlike the 1940 Act or arbitration statutes in other jurisdictions (e.g., England, Singapore) that explicitly grant such limited powers. The deliberate omission by the Indian legislature signals a clear intent to restrict judicial intervention.

2. Against the spirit of minimal intervention: Reading a power to modify into Section 34 would be antithetical to the core principle of minimal judicial interference that underpins the 1996 Act.

3. Risk of appellate review: Allowing modification, even limited, could inadvertently open the floodgates for parties to seek alterations, blurring the lines between setting aside and appellate review, and prolonging disputes.

4. Alternative remedies exist: If an award suffers from an incurable defect, it can be set aside, and parties are not without recourse as they can commence fresh arbitration, ensuring the finality and binding nature of arbitral awards.

The dissent highlighted the potential for increased challenges and delays in the enforcement of awards if courts start exercising a modification power not explicitly granted by the statute.

Implications and the Way Forward:
The Gayatri Balasamy judgment marks a significant shift, creating a nuanced space for judicial intervention in arbitral awards. Its implications are far-reaching:
1. Reduced delays in certain cases: For awards suffering from easily identifiable and severable defects, the judgment offers a path to rectification without compelling a full re-arbitration, potentially saving time and costs.

2. Increased complexity in Section 34 proceedings: While aiming for efficiency, the nuanced power of modification might lead to more arguments being raised in Section 34 petitions, seeking not just setting aside, but also specific modifications.

3. Clarity on “severability”: The judgment reinforces the importance of the “severability” doctrine, allowing courts to excise only the offending portions of an award without invalidating the entire decision, where possible.

4. Focus on patent and manifest errors: The judgment strongly emphasizes that modification is reserved for errors apparent on the face of the record, not for re-appreciation of evidence or merits.

The Gayatri Balasamy decision is a testament to the Supreme Court’s approach to ensuring justice and efficiency within the arbitration framework. While the dissenting opinion raises valid concerns about legislative intent and potential overreach, the majority view attempts to strike a balance i.e preventing the complete nullification of an otherwise sound award due to a minor, rectifiable error.

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GAYATRI BALASAMY vs ISG NOVASOFT_Judgement_30-Apr-2025 the law literates

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Introduction

In a significant ruling, the Madras High Court has reiterated that the Enforcement Directorate (ED) cannot act as a ‘super cop’ with no limitation on powers to investigate any and every criminal activity without adhering to statutory limits reiterating the fundamental need to ensure that the agency does not expand its mandate beyond what Parliament has envisaged. Recently, the Enforcement Directorate (ED) has emerged as one of the most powerful investigative agencies in India’s legal landscape. Tasked primarily with enforcing laws related to money laundering and foreign exchange violations, the ED was envisaged as a specialised agency with a clear, limited mandate under the Prevention of Money Laundering Act, 2002 (PMLA) and the Foreign Exchange Management Act, 1999 (FEMA). However, there is growing concern that the agency has increasingly overstepped its statutory boundaries, launched investigations and taken coercive actions even in cases where there is no legally recognised predicate offence or where the alleged wrongdoing falls squarely within the domain of other statutory authorities. Such overreach not only violates the well-established principle that an investigative body must act strictly within the four corners of its enabling statute, but also creates unnecessary legal harassment, overlapping proceedings, and chilling effects on legitimate business activities.

Background

The matter was initially heard by a Division Bench of the Madras High Court. After hearing the contention of both the parties, the Court came to

the following conclusion – “in the absence of there being any predicate offence under the Customs Act, 1962, for the present, and the fact that the alleged offence under the FEMA, 1999, is not a predicate offence under the PML Act, 2002, it follows that there cannot be any offence of money-laundering under Section 3 of the PML Act, 2002 qua these offences. Consequently, a writ of mandamus is issued restraining the Enforcement Directorate from exercising its powers under the PML Act,2002, qua the investigation of alleged money-laundering in respect of these offences alone. We make it abundantly clear that we have not interdicted the investigation pertaining to the allegations of money-laundering qua the predicate offences forming the subject matter of FIR No. RC 219 2014E 0018 which is being by investigated the CBI.” Aggrieved by the High Court’s decision, the ED filed a Special Leave Petition (SLP) before the Supreme Court. While the appeal was pending, the CBI filed a supplementary final report. This supplementary report concluded that there was sufficient incriminating material to justify prosecution under Sections 120-B read with 420 and 471 of the Indian Penal Code (IPC) and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. Following the filing of this final report, the ED withdrew its SLP before the Supreme Court.

Subsequently, the ED conducted fresh searches between 31 January 2025 and 1 February 2025 at the premises of the Directors and holding companies associated with RKMP. On 31 January 2025 itself, the ED issued a freezing order under Section 17(1A) of the PMLA, freezing fixed deposits amounting to ₹901 crore. The present writ petition challenges the said order.

Submission of Petitioner and Respondent One of the principal arguments advanced by the petitioner’s counsel was that the concept of “round tripping”, which formed the basis for the ED’s investigation, could not be a valid ground for action under the PMLA. The petitioner argued that the CBI, in its final report, had already indicated that this aspect should be examined under FEMA which is not a scheduled offence under the PMLA and therefore could not give rise to a money-

laundering offence. In response, Mr. AR.L. Sundaresan, learned Additional Solicitor General of India appearing for the ED, submitted that the power to pass a freezing order under Section 17(1A) of the PMLA is intrinsically linked to Section 17(1). According to him, if there are “proceeds of crime”, the authority is empowered to freeze or attach assets even in the absence of an established predicate offence at that stage. Essential to show link between the alleged offence and the actCiting the stance of the supreme court in the case of Vijay Madanlal Choudhary, the bench held that the condition precedent for an enquiry by the ED is the existence of a predicate offence. The predicate offence, which led the CBI to file a final report, is the coal allocation scam case. The alleged offence of “round tripping” of funds, diversion of public loans and misuse of share premiums are not relatable to coal allocation scam.

Emphasising the statutory scheme under the Prevention of Money Laundering Act (PMLA), the Court observed, “The ED is not a loitering munition or drone to attack at will on any criminal activity.” The observations came while quashing an order by the ED that froze fixed deposits worth ₹901 crore belonging to RKM Powergen (RKMP) under Section 17(1A) of the PMLA. The court said that plea of ED that the aforesaid three aspects have led it to withdraw the SLP and continue with its investigation. Even assuming that they are true, for the purpose of ED to investigate into these aspects, there should have been a complaint at the instance of the Power Finance Corporation and other financial institutions, who had lent monies to RKMP, for ED to swing into action. Court’s Decision The Court stressed the principle that when a statute prescribes a specific procedure, the same must be strictly followed. “Unless and until proceeds of crime linked to the predicate offence are shown, the ED by virtue of a combined reading of Sections 2(1)(u), 2(1)(p), 3 read with Section 17, lacks the jurisdiction to proceed further,” the Court ruled, setting aside the freezing order. The Court made it clear that the ED cannot derive jurisdiction merely because another agency, like the CBI, has filed a final report. Unless the alleged acts are linked to the predicate offence and proceeds of crime are established, the ED has no power to proceed under the PMLA.

Case Name – RKM Powergen Private Limited v ED & Or

Written By : Aryan Shrivastav LC 1, Delhi University

all rights reserved (Vaibhav Tomar adv)

Navigating Deed Challenges: Cancellation vs. Declaration Explained

When challenging a deed of transfer in court, precision in your legal approach is critical. A key decision every litigant faces is whether to seek cancellation of the deed or a declaration that it’s invalid, non-binding, or illegal. The choice hinges on one fundamental question: Are you the person who signed the deed (executant), or someone who didn’t (non-executant)?

This distinction shapes your legal strategy, determines court fees, and defines the relief you can seek. Drawing from key judicial pronouncements, including landmark Supreme Court rulings, this guide breaks down the differences, legal requirements, and practical implications to help you navigate these challenges effectively.

Understanding the Core Distinction: Executant vs. Non-Executant

The Supreme Court in the landmark case of Suhrid Singh @ Sardool Singh vs. Randhir Singh & Ors (2010) established a clear rule:- Executant: If you signed the deed, you must seek cancellation to annul it.

– Non-Executant: If you didn’t sign the deed, you can seek a declaration that it’s invalid, non-binding, or legally non-existent. While both remedies aim to nullify a deed’s effect, they differ significantly in legal process, court fees, and outcomes

Path 1: Cancellation for Executants (Section 31, Specific Relief Act, 1963) If you’re the person who executed (signed) the deed and now want to challenge it, your remedy is a suit for cancellation under Section 31 of the Specific Relief Act, 1963.

Why Cancellation?

1. Direct Involvement: As an executant, you’re a party to the deed, so you must formally cancel it to undo its legal effect as held in para 3 of the case of (Chellakannu, Son of Pichamuthu vs. Unknown (2005)).

2. Court Fees: You’ll typically pay an ad valorem court fee based on the deed’s stated consideration as held in the lanndmark case of (Suhrid Singh @ Sardool Singh vs. Randhir Singh & Ors (2010)

For example, in the case of Chellakannu, Son of Pichamuthu vs. Unknown (2005), the court required the plaintiff to pay fees under Tamil Nadu’s cancellation suit provisions (Section 40 of the Tamil Nadu Court Fees and Suits Valuation Act), even when the prayer was phrased as a declaration (paras 6, 7, 8, 16).

3. Nature of Action: Cancellation is an in personam action, binding only the parties involved, not the world at large as held in the case of (Deccan Paper Mills Co. Ltd. vs. Regency Mahavir Properties (2020), para 75).

When Can Cancellation Be Granted?

Courts grant cancellation under Section 31 if three conditions are met:
1. The deed is void or voidable against you.

2. There’s a reasonable apprehension of serious injury if the deed remains valid.

3. The court deems cancellation a proper form of preventive justice as held in the case of (Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025), paras 120, 122 and Deccan Paper Mills Co. Ltd. vs. Regency Mahavir Properties (2020), para 68).

Cancellation typically applies to deeds affecting your title, not those executed by unrelated parties as held in the case of (Deccan Paper Mills Co. Ltd. vs. Regency Mahavir Properties (2020), paras 69, 74; Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025), paras 120, 123).

Key Considerations

– Registrar’s Role: A registered deed cannot be unilaterally cancelled by the Registrar without a civil court’s declaration of fraud as held in the case of Vinod Shankar Jha @ Binod Shankar Jha vs. Unknown (2024), paras 249, 251). The Registrar’s authority under the Registration Act is limited to scrutiny before registration, not post-registration annulment (paras 229, 230).
– In Personam Nature: Cancellation doesn’t alter the deed’s status for non-parties as held in the case of Deccan Paper Mills Co. Ltd. vs. Regency Mahavir Properties (2020), paras 76-80).

Path 2: Declaration for Non-Executants (Section 34, Specific Relief Act, 1963)

If you didn’t sign the deed, you’re not obligated to seek its cancellation. Instead, you can pursue a declaration under Section 34 of the Specific Relief Act, 1963, to assert that the deed is invalid or non-binding on you.

Why Declaration?

1. No Direct Involvement: A deed executed by others doesn’t inherently affect your title, so you can treat it as legally non-existent (Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025), para 134).

2. Court Fees:
– If you’re in possession of the property, you may pay a fixed court fee for a declaration (Suhrid Singh @ Sardool Singh vs. Randhir Singh & Ors (2010), para 89).
– If you’re not in possession and seek possession as a consequential relief, an ad valorem fee applies under Section 7(iv)(c) of the Court-Fees Act, 1870 (Suhrid Singh @ Sardool Singh vs. Randhir Singh & Ors (2010), paras 89, 177).

3. Flexibility: Section 31’s use of “may” indicates cancellation isn’t mandatory for non-executants (Sk. Golam Lalchand vs. Nandu Lal Shaw @ Nand Lal Keshri @ Nandu (2024), para 163).

Legal Precedents

– Treating Deeds as Non-Existent: In Unni vs. Kunchi Amma (1890), cited in Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025) (para 134), courts held that non-executants can ignore a deed and sue for their rights as if it doesn’t exist.

– Prima Facie Void Deeds: In Bijoy Gopal Mukerji vs. Krishna Mahishi Debi (1907), cited in Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025) (paras 136, 137), the Privy Council noted that non-executants can treat voidable deeds as nullities without court intervention.

– No Need for Cancellation: In Vellayya Konar (Died) & Anr. vs. Ramaswami Konar & Anr. (1939), cited in Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025) (para 138), the court clarified that non-executants facing a deed between third parties need only seek a declaration that it’s invalid as to them, not full cancellation.

– Title Declaration: A declaration of title can be as effective as cancellation (Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025), para 141). The Supreme Court overturned a High Court’s dismissal of a non-executant’s suit for failing to seek cancellation when a valid Gift Deed supported their title (paras 105, 141, 148).

Section 34 and Further Relief

Under Section 34, you can seek a declaration of your legal rights or property title. If further relief (e.g., possession) is necessary, you must request it to make the declaration effective (Hussain Ahmed Choudhury vs. Habibur Rahman (Dead) Through Lrs (2025), paras 129-132). Like cancellation, declaratory suits are in personam(Deccan Paper Mills Co. Ltd. vs. Regency Mahavir Properties (2020), paras 87, 88).

Practical Implications: Choosing the Right Path

The distinction between cancellation and declaration isn’t just academic, it has real-world consequences:

1. For Executants (Cancellation):
– File under Section 31 for deeds you signed.
– Pay ad valorem court fees based on the deed’s value.
– Prove the deed is void/voidable and poses a serious threat.
– Outcome is in personam, binding only involved parties.

2. For Non-Executants (Declaration):
– File under Section 34 for deeds you didn’t sign.
– Pay fixed fees (if in possession) or ad valorem fees (if seeking possession).
– Treat the deed as non-existent or seek a declaration of title.
– Outcome is in personam, protecting your rights without cancelling the deed entirely.

Conclusion
Challenging a deed of transfer requires careful consideration of your role as an executant or non-executant. By understanding the legal nuances of cancellation (Section 31) versus declaration (Section 34), you can craft a precise and cost-effective legal strategy. Backed by clear judicial guidance from India’s apex courts, this distinction empowers litigants to navigate deed challenges with confidence.

Written By: Ranvir Singh  Law Student VIPS 

all rights reserved (adv Vaibhav Tomar)

Delhi High Court orders blocking of AI-generated porn of social media influencer

The social media influencer approached the High Court stating that videos and photos uploaded online depicted her in an obscene and malicious manner

Delhi High Court directs porn sites and social media platforms to remove obscene AI-generated images of a woman influencer. Justice says the content is “deplorable” and violates her fundamental rights.

Introduction

The Delhi High Court on Friday ordered social media platforms and porn websites to take down the deepfakes and AI-generated pornographic pictures and videos of a social media influencer. Justice Purushaindra Kumar Kaurav passed an interim order, noting that the content uploaded is “completely appalling, deplorable, defamatory, and is a patent breach of the fundamental rights of the plaintiff”.

*About the case and statement of the case

The influencer had gone to the Delhi High Court for help, saying that some people had uploaded edited and fake photos and videos of her on social media and porn sites. These fake images made it look like she was involved in inappropriate activities, which was false and hurtful to her dignity. She told the court that this fake content was not just a personal attack but also broke her fundamental rights like the right to privacy, reputation and dignity. Her lawyer said it was also a civil wrong, meaning that it could lead to legal punishment under civil laws. After hearing the complaint, the judge agreed and gave support to her claims. The judge passed an order to stop further spreading of these images and videos.

  Context & Content of the Court Order

Plaintiff’s Standpoint: A well-known influencer filed a suit after obscene, AI-altered images and videos went viral on social media and pornographic sites. She argued that the malicious production and circulation of these deepfakes violated her fundamental rights and amounted to a grave civil tort

• Court’s Interim Injunction: The High Court imposed a takedown order not only on social media platforms but on adult websites as well. It extended the right to the influencer to report any new URLs of such content, mandating immediate removal upon notification .
• Privacy Protection for Plaintiff: The court also ordered masking of the influencer’s identity in legal records, directing the court registry to expunge her name from public documents

 Legal Significance

This decision follows a growing recognition in Indian law that AI‑driven deepfake pornography demands special attention. Under the Information Technology Act 2000, various provisions already criminalize:

• Cheating via personation (66D)
• Privacy violations (66E)
• Transmission of obscene content (67/67A)
• Government ability to block harmful content

However, until now, courts have not proactively wielded these at scale against AI-generated deepfakes. This High Court order marks a transformative shift: it proactively protects victims, authorizes dynamic monitoring, and treats deepfake creation as a serious breach of dignity and privacy.

Implications for Influencers and Content Creators

1. Right to Demand Takedowns: You now have legal recourse to seek interim takedowns of non-consensual deepfakes.
2. Dynamic URL Reporting: You can report fresh URLs for removal—platforms must act swiftly.
3. Anonymity Safeguarded: Courts can withhold your identity from public documents, protecting you from further harm.
4. New Legal Precedent: This sets a template for future deepfake defense and contributes to evolving legal standards under the IT Act and Indian jurisprudence.

📜 Judgment Summary

1. Interim Injunction Granted
   Justice Purushaindra Kumar Kaurav granted a temporary injunction, ordering all defendants—including social media platforms and pornographic websites—to immediately remove the AI‑generated obscene content depicting the influencer. The Court acknowledged this content as “completely appalling, deplorable, defamatory,” and a direct violation of her fundamental rights to privacy, dignity, and reputation
2. Dynamic Takedown Mechanism
   The Court authorized the plaintiff to report any new URLs containing identical or similar offending materials. Once notified, platforms must take swift and decisive down‑action
3. Disclosure of Perpetrator Identity
   Specific directions were issued to Meta (Facebook) and X Corp (Twitter) to disclose the identities and handles of the accounts responsible for posting the defamatory content, facilitating traceability and accountability
4. Protection of the Plaintiff’s Identity
   To uphold confidentiality and her safety, the Court mandated that the registry remove her name and details from all public records, and amend the cause title accordingly.

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Written By -ADITYA KUMAR SINGH GGSIPU BBALLB

All Rights Reserved ( Adv Vaibhav Tomar)