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In exercise of powers under Section 33 of the Arbitration and Conciliation Act, 1996, the learned arbitrator has the right to modify his order but that can only be done in case of arithmetical and/or clerical error as upheld by the Hon’ble Supreme Court through the learned bench led by Justice M.R. Shah in the case of Gyan Prakash Arya v. M/s Titan Industries Limited (CIVIL APPEAL NO.6876 OF 2021)

The brief facts of the case are that the appellant and the respondent herein had entered into an agreement dated 9.7.2003. A dispute arose between the parties relating to recovery of pure gold weighing 3648.80 grams said to have been in the possession of the appellant herein. The respondent invoked the arbitration clause contained in the agreement dated 9.7.2003. The High Court appointed a retired District Judge as the sole arbitrator to adjudicate the dispute between the parties. The learned arbitrator passed an award dated 04.12.2010 directing the appellant herein to return to the claimant/respondent within three months from the date of the award 3648.80 grams of pure gold along with interest @ 18% per annum calculating the value of gold at Rs.740 per gram from 24.07.2004 and up to the date of delivery of the quantity of gold. The learned arbitrator also passed an award that in the alternative, the appellant shall pay to the claimant/respondent within the said period of three months, the market value of 3648.80 grams of pure gold along with interest @ 18% per annum calculating the value of the gold at Rs. 740 per gram from 24.07.2004 till the date of payment. Subsequently, the respondent filed an application under Section 33 of the 1996 Act and requested to modify the award dated 04.12.2010 by correcting computational/arithmetical/clerical error by deleting “at Rs. 740 per gram as claimed in the claim statement” to delete “Rs.740.00 per gram”, and substitute the same by “Rs.20,747/- per 10 grams”. The learned arbitrator allowed the said application under Section 33 of the 1996 Act vide order dated 14.01.2011 and corrected the original award Being aggrieved, the appellant herein filed an arbitration suit under Section 34 of the 1996 Act before the City Civil Court. The said Court dismissed the said suit under Section 34 of the 1996 Act. Further, appeal under Section 37 of the 1996 Act has been dismissed by the High Court, by the impugned judgment and order. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court and the City Civil Court and the order passed by the learned arbitrator, the original appellant – respondent before the arbitrator has preferred the present appeal.

After the perusal of the facts and arguments by the learned counsels, the Hon’ble Apex Court held, “In the present case, it cannot be said that there was any arithmetical and/or clerical error in the original award passed by the learned arbitrator. What was claimed by the original claimant in the statement of claim was awarded. Therefore, the order passed by the learned arbitrator on an application filed under Section 33 of the 1996 Act and thereafter modifying the original award cannot be sustained. Therefore, both, the City Civil Court as well as the High Court have committed a grave error in dismissing the arbitration suit/appeal under Sections 34 and 37 of the 1996 Act respectively. The modified award passed by the learned arbitrator allowing the application under Section 33 of the 1996 Act cannot be sustained and the same deserves to be quashed and set aside. In view of the above and for the reasons stated above, the present appeal is allowed. The impugned judgment and orders passed by the High Court in an appeal under Section 37 of the 1996 Act and City Civil Court in arbitration suit under Section 34 of the 1996 Act and the order passed by the learned arbitrator modifying the original award are hereby quashed and set aside.”

Click here to read the Judgment

Judgment Reviewed by – Vandana Ragwani