Authored By: Kunal Pratap Singh
Lloyd Law College
Abstract
“Alternative dispute resolution” has gain significant global attention over the last few decades for its evolution from informal community dispute mechanism directed towards industrialized disputes. when we talk about in the Indian context “ADR” is not a modern alternation it’s something that has rich traditional approach of resolving disputes through non-judicial body or otherwise referred to as “non-adversarial mean”.
Introduction:
Ancient Indian societies heavily recited on village council or well known as “Panchayat” system which is center of dispute resolve between the villagers. mostly panchayat comprising of village elders which acted as a center of mediator between the parties they deliver judgement on base of local custom, ethics and fairness, which is widely respected and accepted to public at large, without any judicial intervention. Apart from panchayat systems there are some alternate dispute resolution institutions which intended to resolve dispute between their respected communities for a considerable period of time the salient point of these institutions emphasize and focus on the reconciliation of community harmony and amicable settlement of dispute resolution through non-judicial method. Not only on theoretical term’s but it’s evidence also perceive in “Manu smriti” which is one of sacred religious text which guide and emphasize local authority to solve their dispute through mediation and arbitration with harmony and peace.
World Reference
It is not only limited to India but it has its global implication all around the world across the different region like in the context of ancient Greece, Rome and medieval Europe all of them go through non-judicial method of dispute resolution often settled by prominent figure. they were appointed as arbitrator, like region authorities or guilds by lord. They often involve as an arbitrator in dispute related to trade and commerce with minimal interference of court through non-judicial method ,in ancient Rome, Roman law recognized arbitrator and mediator as legal process same as in India and today arbitrator play major contributor in roman legal system and “Rome arbitration law” in ancient Europe a powerful confederation of merchant guilds in norther Europe known as “Hanseatic league” who preferred arbitration and mediation over litigation for resolving commercial disputes among the trader and merchant of ancient Europe.
Pre-Independence India
During the British rule the British East India Company consolidated its political and administrative control over India, the traditional panchayat system and other indigenous dispute-resolution mechanisms began to lose prominence but due to overburden and piling up of cases in British court. it soon made British’s administration realized the significance and effectiveness of arbitration, especially in commercial disputes.
Bengal regulation of 1772,1780,1781 are well known for early legislative attempts to formalize and execute the ADR mechanisms within the British administration territories of Bengal, Bombay and madras to execute politically stabilize to manage dispute within the growing trading dispute.
1899, known for the first comprehensive legislation step on arbitration in India which is solely based on the English arbitration Act of 1889, its aim is to provide for arbitration in the matter of civil dispute within the territory of British administration which is limited to presidency town of Calcutta, Bombay and madras despite these drawbacks of being deficient and was subject to various judicial criticisms it continued to contribute its scope in commercial sector.
Post-Independence India
1980s, India seen as the reborn of ADR mechanism within India by so far, the concept of Lok Adalat’s (People courts) in 1982, was introduced in the state of Junagadh, Gujarat. To promote out-of-court settlements. ADR get recognized as a legislative statutory to Lok Adalat through enacted the “Legal service authorities act” in 1987 which formalize it’s as an enduring body of Indian legal system which as the crucial step in institutionalized ADR mechanism in India.
Arbitration and conciliation act, 1996 play as a new era for arbitration in India which seen as a landmark development in history of ADR. It replaces the Arbitration act of 1940 and brought it to India arbitration laws in line with the UNCITRAL model law on international commercial arbitration.
Arbitration and conciliation act, 1996 streamlined arbitration procedures and provide a full fledge and comprehensive framework for both domestic and international arbitration. It made arbitral award binding on both parties and restrict the judicial intervention and any modification made by courts in arbitral proceeding. 1996 work as domestic non-judicial dispute resolution mechanism to multinational corporation and foreign investors.
Court Interpretation in “ADR”?
While history convey how societies have long go through and heavily relied on negotiation and mediation traditional institutions like panchayats, “kulas” (clan), “steins” (guilds), and “pujas” (associations) and modern litigations and how it’s goes to resolve community -based settlement for dispute resolution the contemporary legal order recognizes these mechanism under formalized concept of ADR it is collective term for dispute resolution method like arbitration, mediation, conciliation and negotiation so, without going thoroughness into in we are going to know what is ADR – “it is settlement of conflict outside the court through arbitrator in the form of arbitral award which operate outside the rigidities of courtrooms without any judicial intervention”.
It’s growing significance has not gone unnoticed by judiciary in both context India and foreign courts they both have consistently emphasized the role of ADR in ensuring fast and efficient justice delivery like for example- In India supreme court and going to know and interpret some of them in brief.
Cases where court did not intervene and place well settled judgement for restricted judicial competency. Cases in point are like in “Bharat Aluminum Co. (BALCO) v. Kaiser Aluminum (2012)” constitutional bench held that Part I of the Arbitration and Conciliation Act does not apply to foreign-seated arbitrations. Courts in India cannot intervene in such arbitrations. It’s
come up with big impact in arbitration system where court emphasize and respect the party autonomy and restrict the court interference same as in “Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010)” where Court emphasized ADR (conciliation, mediation, Lok Adalat) as an effective tool and clarified the categories of cases fit for ADR. This judgement
work as encouragement in use of ADR and its implication same as the case “Bharat aluminum Co. (BALCO) v. Kaiser aluminum” judgement where court emphasize to limited court’s direct involvement in arbitration process court also stress to go toward ADR mechanism instead of court intervention in the case ”Salem Advocate Bar Association v. Union of India (2003 & 2005)” where supreme Court upheld amendments to CPC that introduced Section 89 (mandatory reference to ADR) and framed guidelines for effective ADR. high court have played a pivotal role in endorsing ADR as a parallel system of justice not only they criticize the judicial intervention of any modification in arbitral award but also play as conner stone as milestone decision in the favor of judicial intervention in arbitration there are several landmark cases that highlights this judicial inclination.
There are also Cases Where Courts Intervened in ADR mechanism like in the case of “ONGC v. Saw Pipes Ltd. (2003)” and “ONGC v. Western Geco (2014)” in both this cases supreme court criticized for diluting the finality of arbitration by expanded the scope of “public policy” and allowed judicial intervention to set aside and allowing review of arbitral awards on the grounds of “judicial approach” and “reasonableness”. if they were “patently illegal.” Courts also stressed on the intervention should not be excessive but in contrary to public policy courts can set aside arbitral award in the ruling of “Associate Builders v. DDA (2015)”
Unlike earlier decisions where courts either expanded their supervisory powers, as we see in ONGC v. Saw Pipes, or consciously limited their role, as in BALCO, the judgment in Gayatri Balasamy v. ISG Novasoft reflect a more neutral and balanced stance in arbitral process where supreme court nether diluted the party autonomy by intervening in it nor abandoned its oversight by intervene in it like in the case of “ONGC’ v. saw pipes Ltd (2003) or in the case of associate builder v. DDA (2015) these are cases where pendulum often swung toward excessive judicial interference or toward nor – intervention but court adopted a neutral approach in the case of Gayatri Balasamy v. ISG Novasoft that come with a neutral approach in arbitral proceeding and stand and provide a respect to the arbitral process while safeguarding fairness. To better understand and appreciate the significance of this judgment, it is important to first look into the background of the Gayatri Balasamy v. ISG Novasoft Technologies Ltd. case and the circumstances that brought the dispute before the court.
Landmark judgement of Gayatri Balasamy
On 27 April 2006, Gayatri Balasamy join ISG NovaSoft Technologies Ltd as vice president of Mergers & Acquisitions integration strategy department. On 24 July, 2006 she sumitted her resignation citing sexual harassment by the company’s CEO, Krishna Srinivasan the resignation is not accepted; instead, three separate termination notices followed over the next year. Balasamy filed criminal charges under the IPC and the Tamil Nadu “Prohibition of harassment of women Act, 1998 against the CEO and another VP. So, ISG retaliated with criminal complaints for defamation and extortion by this all the matter eventually landed in the supreme court which directed the parties to resolve disputes through arbitration the arbitral tribunal ruled in balasamy’s favour and award ₹2 crore arbitral award in compensation. The single-judge bench of Madras high court instead of setting aside the, it increased the arbitral award or compensation by ₹1.6 crore, bringing it to a total of ₹3.6 crore.
Irrespective of the facts appeal was filed at madras high court on 8 Aug, 2019 against the divisional bench which come to the judgement of while endorsing additional compensation, it criticized the figure as arbitrarily excessive, and reduced it to just ₹50,000 —₹1.6 crore to ₹50,000. This judgement figures seen as a very conflicting so, retaliate to this judgement
gayatri balasamy file a “Special leave petition “[A request made to the supreme court to appeal a decision made by any lower court/tribunal] to supreme court. Initially heard by a three-judge bench on 1 Oct,2021, but due to conflicting High court precedents and there is question of law.
Court face “Question of law”
“Does a court’s power to set aside an arbitral award under section 34 and 37 of arbitration and conciliation act, 1996. including the power to modify an award?” If yes, then what the permissible circumstances and limits? And what is the scope of severability -i.e., can invalid sections be separated while leaving the rest intact? so, this matter referred to a five-judge constitutional bench
Here this core issue of law where supreme court said with 4:1 majority opinion on April 30, 2025 that yes, court have award, Clerical / computation error if there is any mistake in arbitral award so court can give direction to arbitrator to modify it.
- Post-award interest adjustments: Only if the interest awarded is “manifestly illegal, confiscatory, or plainly inadequate,” such adjustments must align with the Act and equitable benchmark.
- Courts can use the principle of “Complete justice” in exceptional cases under article 142[supreme court to pass any decree or order to complete justice].
- Limited power to modify arbitral award in specific matter may exercise a narrow, statutory aligned power to modify arbitral award, within strictly defined circumstances under Sections 34 and 37 such as-
- Doctrine of severability: [where court can remove the invalid part and keep the rest of valid part within the arbitral
Minority dissent (1 Judge) Justice K.V. Viswanathan
1) Substance over form: Sections 34 expressly provide only for setting aside or remittance and court have no power to modify arbitral award which so, courts should not override the statutory limit of article 142.
2) Party autonomy: Merit of arbitration was party autonomy so, court does not need to interfere between the arbitration process and judicially inferring modification power’s undermines finality diversity of arbitration.
3) Statutory history: The 1996 act deliberately omitted modification powers that existed in earlier laws (such as the 1940 act and UNCITRAL Model law,); any such additions should be legislative, not judicial.
4) So, by doing this we face difficulty to enforce on the recognition and enforcement of foreign arbitral award like- New York convention
Importance of this case
Gayatri Balasamy lies in its recognition of arbitration in employment disputes and provide the clear picture of how arbitration and courts have distinct power and can work together to ensure efficient and faster justice delivery it’s reaffirmation of party autonomy, and it demonstrate a neutral judicial stance that promote ADR and provide free hand justice delivery while safe
guarding fairness. ADR have advanced significantly and evolved through divergent precedent, where chancery descry ADR has a predominant prestige in cubiculum which confines through the wall of “separation of power” as it evident by Bharat Aluminium co. BALCO v. Kaiser Aluminium (2012) where chancery concord a fuller comprehensive picture through discernment on Arbitration and Conciliation Act that it has amiss jurisdiction while pertaining toward foreign seated arbitration and where judicature have feeble prerogative while intercede in arbitral award while venerating the party autonomy although bestow pliable legal framework and emphasize verge on ADR mechanism and while bestow pliable legal framework and emphasize verge on ADR mechanism chancery also devise slant shrewdness by impart a discrete modification in amicable dispute resolution, analogues in the precedent of “ONGC v. Western Geco (2014)” and “ONGC v. Saw Pipes Ltd. (2003)” where judicial intervention deemed to be reasonable ground while genesis of Non-court dispute resolution ambience.
Gayatri balasamy demonstrates perspicuous distinction betwixt party autonomy by intercede in it and bench intrusion by rectifying it heterogeneous in other precedent, gayatri balasamy serve as a benchmark and approbation to arbitral proceeding while dilating its wiggle room for arbitral adjudication and mould a sanctuary space for arbitration as “separate legal entity”
Conclusion
The majority decision singles a cautious shift in Indian arbitration jurisprudence – granting courts limited modification powers for clerical errors, severable parts, and interest corrections, but preserving the core arbitral award where no appellate power or no broad power to recruit award, balasamy precedent resolve the longstanding debate among the courts that modification of an award can troubleshoot and clear the dust form paramount “questions of law” whether arbitral award can be modify by judicature by granting relief under section 34 by setting aside it, this judgement offer a vision for supplementary responsive curial role, on that create a aqueduct for arbitral remedies to particle justice, yes we know arbitral fanciness cannot override deep architectures eminent judicial design, it is immutable to replace conventional judicial proceeding rather, it yield the rudimentary remedies to ensure justice that is miscellany of autonomy, speed and finality. Ultimately, form conjure up image where now it depends how arbitration construct prominent focal point in Indian arbitration regime whether it evolve continually or dissolve like it never exist the path forward, therefore lies not in judicial patchwork but in legislative design, if judicial modification is to behoove a enduring judicial features of post – award recourse, it scope must be distinctly articulated, until then, it’s ambit must need to be equidistant and discrete from judicial hindrance.
