S.A. Builders Ltd. vs Municipal Corporation Of Delhi
2008 Latest Caselaw 324 Del

ORDER

Shiv Narayan Dhingra, J.

1. A dispute had arisen between the parties which was referred to the arbitration of sole arbitrator Mr. S.P. Rai. Mr. S.P. Rai gave his award dated 16.12.1997 in favor of the claimant and the last paragraph of his award reads as under:

I have summarized the claims and counter claims as a result of my reasoning and award as above and deducting the payments already made to the Claimant in the enclosed Annexure I. The Annexure 2 deals with the calculations with respect to labour escalation. I direct the respondent to pay the net amount concluded in Annexure I as enclosed to the Claimant. It is a fact that the Contractor has been deprived of the use of blocked money arrived at in the above said award resulting in financial sufferings towards his business. The contractor is entitled for compensation and I award a simple interest @ 18% p.a. on the award amount from 1.4.90 to the date of actual payment made to the Claimant except on Claim No. 23(b).

2. This award was challenged by the respondent/judgment-debtor. However, the challenge to the award failed till the highest Court and execution was filed before this Court. During the execution there was a disagreement between the decree-holder and judgment-debtor in respect of the amount payable under the award as the decree-holder was calculating interest differently. Decree-holder pointed out to the Court that there was no clarity whether the interest was awarded under Sub-clause (a) of Sub-section (7) of Section 31 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') and sought permission of the Court to move the Tribunal for clarification. The Court granted liberty to the petitioner/decree-holder to approach the Tribunal but simultaneously observed that this should not be understood as if the Court expressed any opinion about the payment of interest either under Sub-section (a) or Sub-clause (b) of Sub-section 7 of Section 31 of the Act. The petitioner thereafter made an application to the Arbitrator for clarification and the Arbitrator passed an order in the nature of clarification on 15.3.2005. He modified the award by way of clarification in the following manner:

The interest under the act can be awarded under Section 31, Sub-section 7(a) and (b) of the act. These sections empower the arbitrator to award interest for pre-reference period, pendentelite and post award. Unlike the old act where the award become final on making it a rule of court by the respective courts, the award under the new act gains finality and is enforceable as decree as per Section 36. Thus, the amounts so awarded along with interest for the pre- reference and pendentelite periods becomes decretal amount directed to be paid on the date of award. The Sub-section 7(b) is clear that award carries an interest @ 18% unless the award otherwise directs. While awarding the interest, I have held in my award that 'contractor has been deprived of the use of blocked money arrived at in the above said award resulting in financial sufferings towards his business'. Therefore, I have no doubt and clarify that post award interest in the said award shall be payable on the awarded sums i.e. the amounts of claims awarded plus the interest for the pre-reference period and pendentelite up to the date of award at the rate mentioned therein till it is paid.

Date: 15.3.2005

sd/- S.P. RAI Place: Delhi (SOLE ARBITRAtor)

3. The judgment-debtor has filed objections against the order dated 15.3.2005 stating therein that the clarification issued by the Arbitrator was beyond jurisdiction of the Arbitrator. The dispute regarding interest was already considered by the Arbitrator in the award passed by the Arbitrator. The Arbitrator had become functus officio after passing the award. By way of giving clarification Arbitrator, could not have casted any additional burden on the judgment-debtor. The Arbitrator instead of giving clarification passed fresh award in respect of the interest directing that the interest on the amount awarded to the decree holder would be on principle sum plus interest up to the date of award. It is stated that the clarification given by the Arbitrator in fact amounted to a fresh award and was without any valid arbitration agreement and the clarification should be set aside, and the interest as awarded by the Arbitrator in the earlier award only would hold good.

4. In reply to the objections, decree holder had taken the stand that Section 31(7)(b) of the Act clearly stipulates the payment of interest from the date of award till the payment of the awarded amount and the awarded amount as per new Act is the principle plus pendente lite and past interest. The decree holder has calculated interest @ 18% on the amount which was due and payable on the date of payment i.e. 16.12.1997 which was disputed by the judgment-debtor and since the award was not clear about the manner in which interest was leviable, a clarification was sought from the Arbitrator. It is stated that the clarification given by the Arbitrator was well within his authority and should be treated as part of the earlier award. The decree holder has prayed that the objections of the judgment-debtor should be dismissed since the clarification was in accordance with the provisions of Act.

5. Section 32 of the Act reads as under:

(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under Sub-section (2).

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where-

(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute,

(b) the parties agree on the termination of the proceedings, or

(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

(3) Subject to Section 33 and Sub-section (4) of Section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings.

6. Section 32 specifically provided that the mandate of the Arbitrator shall terminate with termination of arbitral proceedings and thereafter if any correction or interpretation of the award or additional award is to be done, the same can be applied to the Arbitrator within 30 days from the receipt of arbitral award. The limit of 30 days can be extended only by the agreement between the parties. A perusal of clarification issued by the Arbitrator would show that the Arbitrator on receipt of application of decree holder issued a notice to the judgment-debtor and hearing them, passed the clarification without considering whether the Arbitrator had any authority to issue such a clarification or not. This Court while giving liberty to the decree holder had categorically stated that this Court was not expressing any opinion about the claim made by the decree holder before the Court and left it to the Arbitrator to consider the application and disposed it of according to law. Giving liberty to the petitioner to file an application before the Arbitrator by the Court does not change the statutory provisions of the Act. Liberty given by the Court is liberty as available under law. If the law permitted the Arbitrator to issue a clarification, then only the clarification could be issued by the Arbitrator, otherwise not.

7. This Court in Ircon International Ltd. v. Budhiraja Mining and Construction Ltd. 2007(4) Arb. LR 159 (Delhi) had occasion to consider the question of correction of computational and typographical error in the award and observed as under:

A plain reading of the aforesaid provisions indicates that, unless another period of time has been agreed upon by the parties, and application for correction of any computational errors or typographical errors has to be made to the arbitral tribunal within 30 days from the receipt of the arbitral award. It is also necessary to observe that the application has to be made with notice to the other party. Sub-section (3) of Section 33 also empowers the arbitral tribunal to make such corrections on its own initiative within 30 days from the date of the arbitral award. Sub-section (2) of Section 33 stipulates that the arbitral tribunal, if it considers the request for corrections to be justified, shall make the corrections within 30 days from the receipt of the request and the same shall form part of the arbitral award. It is, therefore, clear that there are three different sets of periods of limitation prescribed under the said provisions. The first is the period of 30 days of receipt of the award by a party during which the said party can request the arbitral tribunal to correct any computational or typographical errors in the award. The second period is a period of 30 days for the arbitral tribunal make the correction. The third period proscribed is in the case where the arbitral tribunal seeks to make a correction on its own initiative. The period prescribed is 30 days from the date of the arbitral award. Since the arbitral tribunal makes a correction under this provision, on its own initiative, the date of the receipt of the arbitral award is not relevant and the clock starts running from the date of the arbitral award itself. In the present case this provision is not in issue but it brings out the nature of the limitation periods prescribed for making corrections of computational errors/typographical errors. The nature being that it is strictly time bound and cannot be extendable unless provided in the statute itself. The provision for extension of time has been made in Sub-section (6) of Section 33 and it only pertains to the time during which the tribunal may make a correction under Sub-section (2) or Sub-section (5) of the said Section 33. In other words, there is a specific provisions for extending the time within which the tribunal makes the correction after a request is received by it. There is, however, no provision enabling the tribunal to extend the time for receiving the request from a party to make corrections of computational and/or typographical errors. This is sufficient indication of the fact that the legislature permitted extension of time to the arbitral tribunal to decide on the question of corrections but did not permit extension of time by the arbitral tribunal for receiving an application whereby a party makes a request for carrying out corrections. It is in this context that Sub-section (3) of Section 33 also gains importance. As pointed out above that provision enables the arbitral tribunal to make a correction on its own initiative and only 30 days time was granted for doing so and that too from the date of the arbitral award. There is no provision like Section 33(6) which enables the arbitral tribunal to correct an error on its own initiative beyond 30 days from the date of the arbitral award. The position, therefore, is very clear that where the legislature permitted extension of time it did so expressly. In these circumstances, the inescapable conclusion would be that the legislative intent was that the delay, if any, in filing of an application under Section 33(1)(a) of the said Act could not be condoned by invoking the provisions of Section 5 of the Limitation Act. This is so because of the provisions of Section 29(2) of the Limitation Act read in the light of the Supreme Court decisions in the case of Hukumdev and Popular Construction.

x x x x x x x x

As a result of the discussion above, the answers to the questions posed in paragraph 3 are that the applications under Section 33 of the said Act were not filed within the period of 30 days stipulated therein. Secondly, the delay in filing the same could not be condoned by invoking the provisions of Section 5 of the Limitation Act, 1963. As such the impugned orders dated 11.08.2003 in both the petitions are liable to be set aside. The same are set aside. It would be open to the parties to challenge the awards dated 23.05.2002 if the law otherwise permits them to do so. These petitions stand allowed to this extent.

8. I consider that the Arbitrator in this case had become functous officio and had no authority to entertain the application for clarification. The earlier order of the Arbitrator awarding simple interest @ 18% per annum on the awarded amount from 1.4.1990 to the date of actual payment takes care of the interest part and specifies what is the interest to be given. If the decree-holder was aggrieved by the interest awarded by the Arbitrator and the manner in which the interest was awarded, decree holder had the option to challenge the award on this count under Section 34 or to seek clarification from the Arbitrator within 30 days of the receipt of the award. Decree holder did not challenge the award nor sought correction/clarification within 30 days. After 30 days of the award, Arbitrator had no authority to make any change in the award. The Arbitrator ignored the mandatory provisions of the Act while issuing clarification. It is also not a case where respondent/judgment-debtor had agreed for extension of time limit.

9. I, therefore, set aside the clarification issued by the Arbitrator and the award as earlier passed shall hold good and the interest awarded in the award dated 16.11.1997 shall be payable by the judgment-debtor. E.A. stands disposed of.