INTRODUCTION
Recently, in the case of Gyan Prakash Arya vs. Titan Industries Limited[1], the Supreme Court enunciated the limited scope of an arbitral tribunal’s power under Section 33 of the Arbitration and Conciliation Act, 1996 (the Act). The Court has authoritatively clarified that such power can only be exercised to correct clerical and/or arithmetic errors (and errors of similar nature).
FACTUAL BACKGROUND OF THE CASE
The dispute pertained to the recovery of gold under an agreement executed between the parties which was subsequently referred to arbitration before a sole arbitrator. The Ld. Arbitrator passed an Award inter alia directing the Appellant (in the Civil Appeal before the Supreme Court) to:
(a) return 3648.80 grams of pure gold along with interest @ 18% p.a., calculated at INR 740 per gram since 24.07.2004 until the date of delivery of that quantity of gold, to the Respondent (in the Civil Appeal before the Supreme Court) within three months from the date of the award.
(b) in the alternative, pay the Respondent, within the said period of three months, the market value of 3648.80 grams of pure gold at INR 740 per gram along with interest thereon @ 18% p.a., from 24.07.2004 and up to the date of payment.
Thereafter, the Respondent filed an Application under Section 33 of the Act (Section 33 Application) and requested for modification of the Award inter alia by deleting ‘INR 740 per gram’ in the alternate prayer granted under the Award and substituting the same with ‘INR 20,747 per 10 grams’. The Ld. Arbitrator allowed the Section 33 Application and modified the Award in terms of the Section 33 Application.
Being aggrieved by the Order modifying the original Award, the Appellant challenged the same along with the Award under Section 34 of the Act before the City Civil Court. On dismissal of the Section 34 proceedings, the Appellant challenged the Order passed by the City Civil Court in an Appeal under Section 37 of the Act, before the Karnataka High Court, which was also dismissed. Consequently, the Appellant approached the Supreme Court in a special leave petition, being aggrieved and dissatisfied with the Judgment and Order passed by the Karnataka High Court.
ARGUMENTS ADVANCED
On behalf of the Appellant, it was inter alia argued/ submitted that:
(a) the Order passed by the Ld. Arbitrator allowing the Section 33 Application and consequently modifying the original Award, was beyond the scope and ambit of the jurisdiction of the Ld. Arbitrator under Section 33 of the Act;
(b) only an arithmetical and/or clerical error in an Award can be corrected under Section 33 of the Act and that there was no such error in the original Award;
(c) in the Section 33 Application, the Respondent had come out with a new claim altogether, which is not permissible;
(d) both, the City Civil Court and the High Court materially erred in upholding the Order passed by the Ld. Arbitrator allowing the Section 33 Application which consequently modified the original Award in exercise of the powers under Section 33 of the Act.
On the other hand, the Respondent stated that, what had been modified by the Ld. Arbitrator in terms of the Section 33 Application, was merely in the context of the alternative prayer, and even if the original Award stood as it is, the Respondent is nevertheless entitled to the return of gold, being the Respondent’s first and primary relief claimed in the arbitral proceedings between the parties and granted by the Ld. Arbitrator under the original Award.
FINDINGS
The Supreme Court held that the Ld. Arbitrator’s Order allowing the Section 33 Application and the subsequent modification of the original Award in purported exercise of its powers under Section 33 of the Act was not sustainable since the original Award was passed after considering the claim made by the Respondent, per the Statement of Claim.
The Court clarified that Section 33 of the Act can be invoked only in cases of arithmetical and/or clerical errors, which was not the case in the dispute at hand. The Court held that the Order passed by the Ld. Arbitrator was beyond the scope and ambit of Section 33 of the Act, and that both the City Civil Court and the High Court have committed a grave error in dismissing the proceedings under Sections 34 and 37 of the Act, respectively.
Accordingly, the Supreme Court allowed the Civil Appeal filed by the Respondent, quashed and set aside the Orders passed by the City Civil Court and the High Court and restored the original Award passed by the Ld. Arbitrator.
CONCLUSION
Section 33 of the Act is akin to Section 152 of the Code of Civil Procedure, 1908 (CPC). Under Section 152 of the CPC, the court is empowered to inter alia correct clerical and arithmetical errors, occurring in Judgments, Decrees and Orders.[2] The exercise of power under Section 152 of the CPC contemplates the correction of mistakes by the court of its ministerial actions, but not passing of judicial Orders after the passing of a Judgment, Decree, or Order.
After a Judgment, Decree or Order is delivered/passed, the court becomes functus officio and is, therefore, not entitled to vary the terms thereof. The corrections contemplated under Section 152 of the CPC are of accidental omissions or mistakes, but do not universally apply to all omissions and mistakes committed by court while passing a Judgment, Decree or Order.[3] Similarly, under the Act, an arbitrator becomes functus officio once an award is passed, and a party can only seek certain corrections of clerical/typographical errors occurring in the award by virtue of Section 33 of the Act.
For further information, please contact:
Aditya Mehta, Partner, Cyril Amarchand Mangaldas
aditya.mehta@cyrilshroff.com
[1]2021 SCC OnLine SC 1100
[2] NTPC Limited v. Marathon Electric Motors India Ltd, 2012 SCC Online Del 3995
[3] Dwaraka Das v. State of M.P. and Anr (1999) 3 SCC 500
