Setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 lets a court cancel a domestic award on a short list of grounds, and since 2025 it also lets the court modify one in limited situations. The Supreme Court in Gayatri Balasamy (April 2025) held, by 4:1, that a court may sever a separable part, correct clerical or computational errors, and adjust post-award interest, rather than only set aside or remit. Two further shifts now decide real cases: an arbitrator’s ineligibility can be raised for the first time at the Section 34 stage, and a defective protective filing can be treated as non-est so the limitation clock keeps running. This article covers those contested points and the current 2025 to 2026 position.
This article sets out the contested and procedural points that decide a Section 34 application, and the recent Supreme Court authority on each.
Section 34 is the only route to attack a domestic award, and it is deliberately narrow. A challenge is not an appeal on the merits, and a court hearing one does not sit as a second arbitrator. For the ground-by-ground detail, the companion guide on the grounds for setting aside an arbitral award under Section 34 works through each ground in turn.
What has changed over 2025 and 2026 is not the list of grounds but how courts use their powers around them. Modification, limitation, stay, and remand are where the recent rulings moved the line. The practitioner question is no longer only which ground applies. It is what the court will actually do once a ground is shown: set aside, modify, remit, or refuse a stay.
What setting aside an arbitral award under Section 34 actually allows
Setting aside an arbitral award under Section 34 lets a court cancel an award for a listed defect, not re-decide the dispute. The court checks the process and a narrow band of outcomes. It does not re-appreciate the evidence or substitute its own view of the contract for the tribunal’s.
Section 34 of the Arbitration and Conciliation Act, 1996 groups the grounds into three families. Section 34(2)(a) lists five grounds a party must plead and prove, running from incapacity and an invalid arbitration agreement to a defect in notice, an award beyond the reference, and an irregular tribunal or procedure. Section 34(2)(b) lets the court find, on its own, that the subject matter was not arbitrable or that the award conflicts with the public policy of India. Section 34(2A) adds patent illegality on the face of the award for purely domestic awards.
The detail of each ground is well covered ground, and the companion guide sets it out. The point worth carrying into the rest of this article is the scope. A ground under Section 34 is about a defect in how the award was reached or a conflict with a fundamental norm, not about whether the tribunal reached the right commercial answer. The significance of an arbitral award lies in that finality, and Section 34 protects it by keeping the grounds tight.
What is genuinely new is the remedy. Until 2025 the settled position was that a Section 34 court could only set aside an award, in whole or in part, or send it back to the tribunal under Section 34(4). It could not rewrite the award. That binary has now shifted, and the next section explains how far.
Can a court modify an arbitral award instead of setting it aside?
Yes, since 2025 a court has a limited power to modify an arbitral award, not only to set it aside. The Supreme Court settled a question that had divided the High Courts for years, though it did so by a narrow majority and over a strong dissent.
In Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2025 INSC 605, decided on 30 April 2025, a five-judge Constitution Bench held by 4:1 that a court exercising Section 34 or Section 37 powers may modify an award in four situations. The majority reasoned that the express power to sever a separable part, found in the proviso to Section 34(2)(a)(iv), carries a lesser power to vary within it, on the principle that the greater power includes the lesser.
The four permitted situations are specific. A court may sever an invalid part where it is separable from the valid part. It may correct a clerical, computational, or typographical error that is apparent on the face of the record. It may adjust post-award interest where the rate has become unjustified, though not pendente lite interest. And the Supreme Court itself may modify an award under Article 142 of the Constitution to do complete justice, a power the majority said must be used with great caution.
The limits matter as much as the power. Modification does not license a merits review, and it does not let a court re-value a claim or re-read the contract. This is a narrow repair power, not an appeal in disguise. It also reworks the earlier line in Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1, where the Court had held that a Section 34 court has no power to modify at all. For a fuller treatment of that shift, see the analysis of whether courts can modify an arbitral award after Gayatri Balasamy.
The dissent should not be treated as noise. Justice Viswanathan held that the Act does not contemplate a modification power, that severance and modification operate in different spheres, and that Article 142 cannot be used to override a substantive statutory limit. His view was that a court faced with a defective award has two options only, remit under Section 34(4) or set aside. Because the majority is only 4:1 and rests partly on Article 142, applicants should expect the boundaries of the modification power to be litigated further.
After the challenge: set aside, modify, or remit?
What a court can do once a ground is shown, after Gayatri Balasamy (2025 INSC 605)
Cancel the award
- A listed ground under Section 34(2) or 34(2A) is made out
- The defect goes to the whole award, or to a part that cannot be separated
- The court does not re-decide the dispute
Vary, in 4 situations only
- Sever a separable invalid part (proviso to 34(2)(a)(iv))
- Correct a clerical, computational or typographical error on the face of the record
- Adjust unjustified post-award interest (not pendente lite)
- Supreme Court only, under Article 142, with caution
Send back under 34(4)
- A curable defect: the tribunal can supply reasons for findings it already made
- Cannot manufacture a finding never recorded (I-Pay Clearing, (2022) 3 SCC 121)
- Request may now be oral; a Section 37 court can also remit
The limit on all three: none of them is a merits appeal. A court cannot re-value the claim or re-read the contract because it would have decided differently.
Sources: Arbitration and Conciliation Act, 1996, ss. 34(2), 34(2A), 34(4); Constitution of India, Art. 142; Gayatri Balasamy v. ISG Novasoft, 2025 INSC 605; I-Pay Clearing, (2022) 3 SCC 121iPleaders
Can arbitrator ineligibility be raised for the first time in a Section 34 application?
Yes, an objection that the arbitrator was ineligible can be raised for the first time at the Section 34 stage, because it goes to jurisdiction. A party that never complained during the arbitration is not automatically shut out from raising it against the award.
In Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, decided on 5 January 2026, the Supreme Court held that where an arbitrator falls within Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996, the mandate terminates automatically. The ineligibility is a de jure inability to act, so anything the arbitrator then decides suffers from an inherent lack of jurisdiction. Relying on Kiran Singh v. Chaman Paswan, the Court treated such a defect as one that can be raised whenever and wherever the award is relied on.
After the award, the route for that objection is Section 34(2)(b). The Court held that an award made by an ineligible arbitrator conflicts with the fundamental policy of Indian law, which brings it within the public policy ground. This is why the objection survives even though Section 34(2)(a) grounds usually depend on what a party pleaded and did during the reference.
The waiver point is the sharp edge for drafting. The proviso to Section 12(5) allows the parties to waive the ineligibility, but only by an express agreement in writing made after the dispute has arisen. The Court held that this cannot be inferred from conduct, from participation in the proceedings, or from a general clause agreed at the contract stage. A party who wants to keep an otherwise ineligible arbitrator must record that choice in a clear, written, post-dispute agreement, or the award is exposed at the Section 34 stage.
When does the limitation period for a Section 34 application start and stop?
The Section 34(3) clock is three months from the date the party received the award, extendable by a further thirty days on sufficient cause, and one hundred and twenty days is an absolute ceiling. A court cannot condone delay beyond that outer limit, and Section 5 of the Limitation Act, 1963 does not rescue a filing that misses it. The Supreme Court applied that outer limit strictly in Simplex Infrastructure Ltd. v. Union of India, (2019) 2 SCC 455, refusing to condone a delay of over five hundred days.
The start date carries a twist that catches parties who file a correction application. Where a party applies under Section 33 for correction, interpretation, or an additional award, the limitation for a Section 34 challenge runs from the disposal of that Section 33 application, not from the original award. The Supreme Court in USS Alliance v. State of U.P., 2023 SCC OnLine SC 778 confirmed this, and later benches have added that the benefit accrues whether the Section 33 application is allowed or rejected. The nature and outcome of the Section 33 application do not decide whether the clock resets.
The most dangerous mistake is the non-est filing. Parties running out of time sometimes lodge a bare or defective petition just to stop the clock, intending to cure the defects later. A court can treat such a filing as non-est, meaning it is no filing at all in law, and limitation continues to run through it. If the outer limit passes before a proper petition is filed, the challenge is barred.
The Delhi High Court, sitting as a Full Bench in Pragati Construction Consultants v. Union of India (2025), tried to draw the line. It held that a single defect, such as a defective vakalatnama, an unsigned or unverified petition, or a deficient court fee, will not by itself render a filing non-est. A combination of such defects, or the failure to file the award copy at all, may push a filing over into non-est territory on its facts. The safe course is to file a complete petition within time rather than to rely on a placeholder. The procedural mechanics of preparing that petition are covered in the note on the application for setting aside an arbitral award.
The Section 34 limitation clock
How long you have to challenge an award, and how the clock resets or runs out
DAY 0
Award received
The clock starts on the date the party actually receives the signed arbitral award, under Section 34(3).
3 MONTHS
On-time window closes
A Section 34 application filed within three months is in time as of right.
+30 DAYS
Condonable extension
The court may allow a further thirty days only on sufficient cause. Not automatic.
120 DAYS
Hard stop, no condonation
After the outer limit the challenge is barred. Section 5 of the Limitation Act does not extend it (Simplex Infrastructure, (2019) 2 SCC 455).
Reset: if a Section 33 application (correction or interpretation) is filed, the clock runs from its disposal, whether allowed or rejected (USS Alliance, 2023 SCC OnLine SC 778).
Trap: a defective “protective” filing can be treated as non-est, so limitation keeps running through it (Pragati Construction, Delhi HC FB, 2025).
Sources: Arbitration and Conciliation Act, 1996, ss. 33, 34(3); Limitation Act, 1963, s. 5; Simplex Infrastructure (2019) 2 SCC 455; USS Alliance (2023); Pragati Construction (2025)iPleaders
Does filing a Section 34 application stay enforcement of the award?
No, filing a Section 34 application does not stay enforcement of the award. Since the 2015 amendment, the mere filing of a challenge has no automatic suspensory effect, and the award-holder can move to enforce the award as a decree.
An award-debtor who wants to hold off enforcement must file a separate application for a stay under Section 36(2) and Section 36(3). The court then applies its mind and may grant a stay on terms. Section 36(3) directs the court, when it considers a stay of an award for the payment of money, to have due regard to the provisions for the stay of a money decree under the Code of Civil Procedure, 1908. In practice that usually means a deposit or security as the price of a stay.
An unconditional stay is the exception, not the norm. In Popular Caterers v. Ameet Mehta, 2025 INSC 1354, decided on 18 November 2025, the Supreme Court held that an unconditional stay is permissible only in exceptional circumstances, and that the second proviso to Section 36(3) mandates it where a prima facie case of fraud or corruption in the making of the award is shown. Outside those situations the court must ordinarily impose conditions such as a deposit or security. The Court set aside a Bombay High Court order that had granted an unconditional stay in a catering dispute and directed the award-debtor to deposit four crore rupees as security for the stay to continue.
The practical consequence is that a Section 34 challenge and the stay question are two different battles. Winning time to argue the challenge now depends on the debtor’s willingness and ability to secure the award. The enforcement side of this is dealt with in the note on the enforcement of arbitral awards.
What can a court fix by remand under Section 34(4), and what can it not?
Section 34(4) lets a court adjourn the challenge and send the award back so the tribunal can cure a curable defect, but it cannot be used to manufacture reasons that were never given. The remand is a chance to eliminate a ground for setting aside, not a chance to rebuild the award.
The line was drawn in I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd., (2022) 3 SCC 121. The Supreme Court held that where a tribunal has recorded findings but failed to give adequate reasons, a Section 34(4) remand can allow it to supply the reasoning. Where the tribunal recorded no findings at all on an issue, there is nothing to cure, and the defect is a merits failure that goes to setting aside rather than to remand. A court cannot use Section 34(4) to invite the tribunal to decide something it never decided.
Gayatri Balasamy also adjusted the procedure around remand. The Constitution Bench held that a request for remand under Section 34(4) can be made orally rather than only by formal application, and that a court hearing an appeal under Section 37 can also order a remand. That modifies the earlier position in Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328, which had read the power more restrictively.
Remand now sits alongside the new modification power, and the two should not be confused. Where a defect can be cured only by the tribunal reconsidering the matter, the route is remand. Where the defect is a separable invalid part, a clear arithmetical error, or unjustified post-award interest, the court can act itself. Where neither fits, the award is set aside.
Which grounds for setting aside an arbitral award succeed, and which fail
Most challenges to set aside an arbitral award fail, because the grounds are narrow and courts read them in favour of upholding the award. A challenge that reads like an appeal, asking the court to prefer a different view of the evidence or the contract, is the most common way to lose.
The challenges that work share a feature: they point to a defect in the process or a conflict with a fundamental norm, not a disagreement with the result. Patent illegality that goes to the root of the matter and appears on the face of the award can succeed for a domestic award, following ONGC v. Saw Pipes, (2003) 5 SCC 705 as later narrowed. A genuine breach of natural justice, such as a party denied notice or a real chance to present its case, can succeed. So can an award that travels beyond the reference, and, after Bhadra International, an award made by an ineligible arbitrator.
The challenges that fail are the ones dressed up as public policy or patent illegality but arguing the merits underneath. The public policy ground was deliberately narrowed by the 2015 amendment and read down in Ssangyong Engineering v. NHAI, (2019) 15 SCC 131 and Associate Builders v. DDA, (2015) 3 SCC 49, so that a mere error of law or a possible view the tribunal took is not enough. An award is not patently illegal because the court would have decided differently.
Three practical points follow for anyone contemplating a challenge. Pick the ground precisely, and plead it as a defect rather than as a rehearing. Protect limitation early by filing a complete petition, not a placeholder that risks being declared non-est. And plan for the stay reality, because filing does not stop enforcement and a stay will usually cost a deposit. A step-by-step view of the challenge process is set out in LawSikho’s guide on how to challenge an arbitral award under Section 34.
Frequently asked questions
What is the time limit to file a Section 34 application?
The time limit is three months from the date the party received the arbitral award, under Section 34(3) of the Arbitration and Conciliation Act, 1996. A court can extend this by a further thirty days if the party shows sufficient cause for the delay, but not beyond that. Where a Section 33 application for correction or interpretation was filed, the three months runs from the disposal of that application.
Can a Section 34 application be filed after 120 days?
No, one hundred and twenty days is the absolute outer limit and a court cannot condone delay beyond it. The three-month period plus the thirty-day extension is the maximum, and Section 5 of the Limitation Act, 1963 does not apply to extend it further. A petition filed after the outer limit is barred, as confirmed in Simplex Infrastructure Ltd. v. Union of India, (2019) 2 SCC 455.
Does the court re-hear the whole dispute under Section 34?
No, a Section 34 court does not re-hear the dispute or re-appreciate the evidence. It checks whether one of the narrow grounds in Section 34 is made out, such as a defect in the process, non-arbitrability, a conflict with public policy, or patent illegality on the face of a domestic award. Disagreeing with the tribunal’s view of the facts or the contract is not a ground.
Can a losing party now get the award modified rather than set aside?
In limited situations, yes. After Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2025 INSC 605, a court can sever a separable invalid part, correct a clerical or computational error, or adjust unjustified post-award interest. It cannot modify the award on the merits, and a full re-valuation of the claim remains outside Section 34.
Is there an automatic stay on the award once a Section 34 application is filed?
No, since the 2015 amendment filing a Section 34 application does not automatically stay the award. The award-debtor must apply separately under Section 36(3) for a stay, and the court can impose conditions such as a deposit. An unconditional stay is granted only on a prima facie case of fraud or corruption in the award.
What happens after a Section 34 application is dismissed?
A party can appeal under Section 37 against an order refusing to set aside an award, but the appeal is narrow. The Section 37 court does not re-hear the challenge afresh, and it interferes only where the Section 34 court applied the wrong principles. A further appeal is barred, leaving only the limited route of a petition to the Supreme Court under Article 136.
References
Case law
- Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49
- Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, decided 5 January 2026 (Supreme Court)
- Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2025 INSC 605 (Supreme Court judgment PDF)
- I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd., (2022) 3 SCC 121
- Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328
- ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705
- Popular Caterers v. Ameet Mehta & Ors., 2025 INSC 1354 (Supreme Court, 18 November 2025)
- Pragati Construction Consultants v. Union of India (2025) (Delhi High Court, Full Bench)
- Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1
- Simplex Infrastructure Ltd. v. Union of India, (2019) 2 SCC 455
- Ssangyong Engineering and Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131
- USS Alliance v. State of Uttar Pradesh, 2023 SCC OnLine SC 778
Statutes
- Arbitration and Conciliation Act, 1996 sections cited: 12(5), 33, 34, 34(2)(a), 34(2)(a)(iv), 34(2)(b), 34(2A), 34(3), 34(4), 36, 36(2), 36(3), 37, Seventh Schedule
- Limitation Act, 1963 section cited: 5
- Code of Civil Procedure, 1908 provisions cited: stay of a money decree
- Constitution of India article cited: 142
Related reading
- Grounds for Setting Aside an Arbitral Award (Section 34)
- Can Courts Modify an Arbitral Award: Gayatri Balasamy Explained
- Enforcement of Arbitral Awards
This article is for informational and educational purposes only and does not constitute legal advice. Readers should consult a qualified legal practitioner for advice on their specific circumstances.
