Power To Correct Computation Error U/S 33 Of Arbitration Act Can Be Exercised Suo Moto If No Application Is Filed Within 30 Days: Calcutta HC

The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that power to correct computation error in the award under section 33 of the Arbitration Act can be exercised suo moto by the Arbitral Tribunal when no application is filed to this effect within 30 days.Brief FactsA work order was awarded to the claimant by the respondent under which the claimant undertook to construct a road from Gholpukur to Tekhali Bridge and its maintenance. Dispute arose under the contract and the arbitration clause was invoked. The claimant claimed refund of security deposit and earnest money before the Arbitral Tribunal. The respondent filed a counterclaim to recover risk and cost expenses for completing the unfinished work by assigning it to a subsequent contractor. The tribunal allowed the claim of the claimant for the security deposit and earnest money and the respondent claim for risk and cost expenses.ContentionsThe respondent submitted that the refund of security deposit and earnest money as directed by the Tribunal was not permissible, since the work was not completed by the claimant. It was also argued that the claim of refund of security deposit was barred by limitation, since the work was completed on September 24, 2010 and the claim was made sometime in the year 2016. It was also contended that tribunal made a patent error in the corrected award by retaining value of the unfinished work the same instead of adjusting it because enhancement of the value of the work done would have automatically reduced the value of the unfinished work by applying a simple arithmetic calculation and no independent application under section 33 of the Arbitration Act was required for this purpose.Per contra, the claimant submitted that the respondent/employer did not impose any penal measure on the claimant for non-completion of the work. Furthermore, the Tribunal itself directed security deposit to be refunded to the claimant, thus accepting the argument that the work was duly completed by the claimant.It was further argued that the work awarded to the subsequent contractor on March 3, 2016 was six years after completion of the contractual work done by the claimant in the year 2010. That apart, the said work awarded to the subsequent contractor was merely in the nature of repair, as opposed to constructional work covered by the contract with the claimant.It was further submitted that since the final bill was prepared and passed on May 18, 2016, whereas the demand for refund of security deposit with interest was raised on November 11, 2016, the claim was well within the limitation period as stipulated in Article 137 of the Limitation Act.Observations:The court at the outset rejected the contention with respect to claims barred by limitation on the ground that the final bill was prepared on May 18, 2016 based on which the claim was made on November 11, 2016 which was within the limitation period. The court also noted that clause 3(a) of the contract allowed the forfeiture of security deposit only when the contract was rescinded but in the present case there was no material on record indicating that the contract was rescinded. The court further observed that the proposition laid down by the Supreme Court in Indian Oil Corporation Limited v. Shree Ganesh Petroleum Rajgurunagar (2022) is not applicable in this case as the tribunal while directing the refund of security deposit did not contravene the terms of the contract. Similarly, the award cannot be said to be suffering from perversity therefore the ratio of the Associate Builders v. Delhi Development Authority (2015) will not be applicable as well.Based on the above, the court concluded that “Accordingly, this Court comes to the conclusion that the claimant was entitled to refund of security deposit along with earnest money and the Tribunal was justified in granting the same.”The court further observed that the claim for compensation under the risk and cost principle exceeded the claim of the claimant for security deposit therefore the contractor was liable to pay compensation equal to the security deposit and the respondent acted within its jurisdiction while invoking clause 3(c) of contractNon-imposition of penal measure is, thus, a non-issue in the context. The court also noted that it further added that even if the security deposit was refunded, it did not extinguish the claim of the respondent for risk and cost liability under clause 3(c). It further added that the materials on record sufficiently show that such measuring up was duly done by the respondent and, as such, the award of the work to the second contractor attracted the risk and cost principle under Clause 3(c) of the Conditions of the Contract. It also noted that However, the tender on the basis of which the original work was awarded to the claimant was not restricted to construction of the road but also included subsequent maintenance work for three years and the work awarded to the subsequent contractor ...

Power To Correct Computation Error U/S 33 Of Arbitration Act Can Be Exercised Suo Moto If No Application Is Filed Within 30 Days: Calcutta HC

Mohd Malik Chauhan

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