Under Section 33 Of The A&C Act, The Arbitrator Can Interpret Its Original Award And Give An Additional Award: Gujarat High Court

The High Court of Gujarat has held that after an award is delivered by the arbitrator, it can entertain an application under Section 33 of the A&C Act and correct any typographical errors or provide an interpretation on the award by making an additional award.

The bench of Chief Justice Sunita Agarwal and Justice Aniruddha P. Mayee held that the arbitrator can provide calculations by way of an additional award if in the earlier award it had only determined the liability of the parties without clarifying the exact amount payable under the award.

The Court held that an arbitrator would not be going beyond the original award if it confines itself to the interpretation and quantification of the amount under the heads awarded in the original award.

Facts

The appellant, Gujarat Water Supply and Sewage Board, invited bids for the procurement of Mild Steel Pipes under the Gujarat Earthquake Reconstruction and Rehabilitation Project. The respondent, M/s. Man Industries Limited, was awarded the tender for USD 25,85,405 plus Rs.17,19,260 for local transportation and insurance. A formal contract was signed on 29.01.2005.

The contract required the appellant to make an advance payment of 10% of the contract price within 28 days of signing the contract. The respondent alleged that the appellant delayed releasing the advance payment, which in turn delayed the commencement of manufacturing work of the pipes. Additionally, rain caused further delays.

The appellant granted a 47-day extension to complete the supply of pipes, but the respondent sought a longer extension and objected to the penalty for delayed delivery. The respondent raised a dispute and sought a refund of the entire amount of Rs.55,42,006.68 withheld by the appellant as liquidated damages, along with interest at 18% p.a.

The dispute was referred to arbitration, and the Sole Arbitrator, after considering the evidence, declared an award on 28.11.2009. The Arbitrator rejected most of the respondent's claims but allowed an extension of time for supply by 87 days instead of the 47 days approved by the appellant. The Arbitrator directed the refund/release of the balance amount to the claimant after adjusting the recoveries.

Pursuant to the declaration of the award, the respondent filed an application dated 26.12.2009, under Section 33 of the Act, for correcting certain typographical errors and deciding the quantum of the amount awarded. By the further award dated 07.05.2010, the learned Sole Arbitrator decided the quantum of the amount to be recovered, as per the award dated 28.11.2009, quantifying the same to be recovered and the balance amount to be refunded to the claimant by the appellant Board.

Aggrieved thereby, the appellant challenged the award under Section 34 of the Act, the Commercial Court dismissed the challenge, resultantly, appellant approached the High Court under Section 37.

Submissions of the Parties

Appellant made the following submissions:

• Commercial Court did not provide adequate reasoning in the judgment and order for upholding the additional arbitral award.
• That there was no valid agreement between the parties for the arbitration to interpret and decide the quantum of the amount awarded, thus, the additional award was without jurisdiction.
• That the additional arbitral award dated 07.05.2010 was not declared within the stipulated 60-day period, making it legally invalid.
• That the Arbitrator had exceeded his jurisdiction in interpreting and deciding the quantum of the amount awarded and the award went beyond the original award making it illegal.

The respondent made the following counter-submissions:

• That the appellants had not made out any grounds under Section 34 of the Act and the appellants are seeking reappreciation of evidence which is impermissible in law.
• Arbitrator had the power to pass an additional award interpreting the original award.
• Arbitrator considered the submissions and evidence presented by both parties before passing the additional award.
• The additional award only interpreted and quantified the amount to be adjusted and recovered as per the original award and the contract.
• The additional award did not create any new liability beyond what was determined in the original award.

Analysis by the Court

The Court observed that the additional award quantified the amount to be adjusted and recovered as per the original award and the contract. The Court found that the additional award did not create any new liability beyond what was determined in the original award.

The Court held that the arbitrator can provide calculations by way of an additional award if in the earlier award it had only determined the liability of the parties without clarifying the exact amount payable under the award.

The Court observed that the respondent had validly made the application and served it to the appellants. The Court noted that the Arbitrator considered the submissions and evidence presented by both parties before passing the additional award.

The Court held that after an award is delivered by the arbitrator, it can entertain an application under Section 33 of the A&C Act and correct any typographical errors or provide an interpretation on the award by making an additional award.

It held that the Arbitrator had the authority to pass an additional award interpreting the original award. The Court found that the additional award was within the scope of the contract and the original award, and the Arbitrator had not exceeded his jurisdiction.

The Court observed that while the award was not declared within 60 days, the application under Section 33 was not under Section 33(4) but under Section 33(1)(b), which dealt with interpretation and quantification of liability. Therefore, the Court concluded that the timeliness issue did not render the award null and void.

Accordingly, the Court upheld the order of the Commercial Court and the arbitration award and dismissed the appeal.

Case Title: Gujarat Water Supply & Sewerage Board v. Man Industries (India) Ltd

LL Citation: 2024 LiveLaw (Guj) 53

Date: 22.03.2024

Counsel for the Appellant: Mr. Maulik Nanavati

Counsel for the Respondent: Mr. AH Mohapatra

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