Mrs. Anita Mantri vs M/S. Karvy Stock Broking Limited & ...
2011 Latest Caselaw 4408 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          FAO No.198/2007

%                                                9th September, 2011

MRS. ANITA MANTRI                                     ......Appellant
                                Through:   Mr. Ranjan Kumar, Advocate
                                           with Mr. Manju Kumar,
                                           Advocate and Mr. Rohini Kumar,
                                           Advocate.

                          VERSUS

M/S. KARVY STOCK BROKING LIMITED & ANR.           ...... Respondents

                         Through:    Mr. A.K. Chhabra, Advocate for
                                    the respondent No.1.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    1.   Whether the Reporters of local papers may be
         allowed to see the judgment?

    2.   To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this First Appeal under Section 37

of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as „the

Act‟), is to the impugned order of the Court below dated 1.3.2007, and by

which order the Court below has dismissed the objections of the

appellant herein under Section 34 of the Act against the additional Award

dated 28.6.2005 and which additional Award was passed in addition to

the first Award dated 31.3.2005.

2. The facts of the case are that disputes arose between the

appellant/constituent and the respondent No.1/member/broker with

respect to certain dealings between them as regards sale/purchase of

shares. The respondent No.1 invoked arbitration proceedings which

resulted in the Award dated 31.3.2005 in favour of respondent No.1 for

an amount of Rs.55,323/- alongwith interest. The appellant is said to

have made payment of this amount under the Award to the respondent

No.1 and thereafter the respondent No.1 moved an application under

Section 33 (1) of the Act for correction of the Award because a particular

relief which the respondent No.1 claimed it was entitled to was not

granted in the Award dated 31.3.2005. This application under Section

33(1) of the Act was in the form of a letter dated 29.4.2005 sent by the

respondent No.1 to the Arbitrator and a copy of which is said to have

been sent to the appellant herein.

3. Admittedly, the additional Award dated 28.6.2005 was

passed without issuing any notice to the appellant calling her for any

hearing or filing any response. By the additional Award dated 28.6.2005,

the respondent No.1 was granted the relief whereby the appellant was

directed to transfer certain shares to the respondent No.1 who was

thereafter to re-transfer the same to the husband of the appellant.

4. Before the Court below, the main grievance which was urged

on behalf of the appellant, and which is also an issue which is argued

before me, was that the additional Award which was passed on 28.6.2005

was violative of principles of natural justice because an additional relief

was granted by the additional Award dated 28.6.2005 without issuing any

notice to the appellant, without calling for any response or hearing any

arguments on behalf of the appellant.

5. As per the arbitration record, it is an undisputed fact that the

Arbitrator did not give any hearing to the appellant after receipt of the

letter dated 29.4.2005 of the respondent No.1. The issue is that whether

the Arbitrator can pass an additional Award giving a new relief which is

not granted by the first Award without issuing any notice to the

appellant. In order to appreciate the issue, it is necessary to refer to

Sections 18 and 33 of the Act, and which provisions read as under:-

"18. Equal treatment of parties.- The parties shall be treated with equality and each party shall be given a full opportunity to present his case.

33. Correction and interpretation of award; additional award.-(1) Within thirty days from the receipt of the arbitral

award, unless another period of time has been agreed upon by the parties-

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. (2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award. (4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub- section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section."

6. In view of Section 18, it cannot be disputed that quasi judicial

proceedings such as before the Arbitrator have to be conducted in

accordance with the principles of natural justice. It was necessary that

before any additional Award was passed by the Arbitrator giving an

additional relief that notice ought to have been issued to the appellant

calling for her response with respect to the contention of the respondent

No.1 raised in the letter dated 29.4.2005 and also hear the parties. It is

necessary to bear in mind the difference between the provision of Section

33(1) of the Act as compared to Section 33(4) of the Act. The provision

of Section 33(1) for making of certain corrections, is similar to Section

152 of CPC and both of which provisions pertain to correction of clerical

or typographical errors or other errors of similar nature. The provision of

Section 33(4) is similar to the provisions of Section 114 and Order 47 CPC

providing for review that the reliefs/claims which have been wrongly

omitted to have been granted from an Award, should be granted. A

reference to the additional Award dated 28.6.2005 leaves no manner of

doubt that an additional relief/claim has been allowed, and therefore the

action of the Arbitrator was really under Section 33(4). May be in the

peculiar facts of a case where the clerical or typographical error or some

other error is of such a nature that actually no notice was required, may

be in the facts of that case it can be said that correction can be made

under Section 33(1) without notice, however, the same cannot be said to

an application which is really an application under Section 33(4) for

granting of an additional relief. Since no notice for hearing was given or

no response was called for from the appellant by the Arbitrator before

passing the additional Award dated 28.6.2005 pursuant to the letter

dated 29.4.2005 of the respondent No.1, both the Arbitrator and the

Court below have fallen into an error of law. In fact, the impugned order

glosses over the fact that notice of hearing by the Arbitrator was never

given to the appellant pursuant to the letter of the respondent no.1 dated

29.4.2005. There is also no discussion in the impugned order with

respect to the difference in cases falling under Section 33(1) and Section

33(4) of the Act.

7. Accordingly, the impugned order and the additional Award

dated 28.6.2005 are set aside and the matter is remanded back to the

Arbitrator for a decision on the letter of the respondent No.1 dated

29.4.2005. The Arbitrator will issue notice to both the parties, call for

their response and hear arguments before proceedings to pass an order

on the letter of the respondent No.1 dated 29.4.2005.

At this stage, I may note the submission made on behalf of

the counsel for the respondent No.1 that as on today possibly the subject

shares may in fact no longer be with respondent No.1 and the additional

Award may already have been implemented. If that be so, it is open to

the Arbitrator to pass necessary consequential orders or further orders or

additional Award so as to cover the eventuality which may have arisen

subject of course to the fact that the Arbitrator deciding in favour of the

appellant by rejecting the letter dated 29.4.2005. However, I may hasten

to add that I am making no observations on the merits of the matter with

respect to allowing or disallowing the relief claimed for by the respondent

No.1 in terms of its letter dated 29.4.2005 and the Arbitrator will decide

the matter on merits uninfluenced by any observations which may have

been made in the present order.

8. Accordingly, while allowing the appeal and remanding the

matter back to the Arbitrator to take a fresh decision in accordance with

law on the letter dated 29.4.2005, it is directed that the Arbitrator shall

make an endeavour to ensure that the matter is disposed of within a

period of three months of the date when both the parties first appear

before him/her. I may clarify that if the original Arbitrator is not available

counsel for the both the parties agree that it will be open to the

respondent No.2 herein to appoint a fresh/substitute Arbitrator.

Appeal is disposed of with the aforesaid observations by

remanding the matter back to the Arbitrator. The arbitration record be

given dasti to the representative of the Arbitrator or the respondent No.2

by the Registry of this Court when asked for and till which time, the

arbitration record would remain with this Court.

SEPTEMBER 09, 2011                                 VALMIKI J. MEHTA, J.
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