2021 (11) TMI 779 - SC - Indian Laws

Arbitration award - Dispute between parties - Smuggling - Gold - recovery of pure gold weighing 3648.80 grams said to have been in the possession of the appellant - modification in the original award - HELD THAT - The original award was passed considering the claim made by the claimant as per its original claim and as per the statement of the claim made and therefore subsequently allowing the application under Section 33 of the 1996 Act to modify the original award in exercise of powers under Section 33 of the 1996 Act is not sustainable. Only in a case of arithmetical and/or clerical error, the award can be modified and such errors only can be corrected - 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. 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. 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 dated 14.1.2011 modifying the original award dated 04.12.2010 are hereby quashed and set aside - the original award passed by the learned arbitrator dated 04.12.2010 stands restored. Appeal allowed.

Summary

Issues:
1. Dismissal of appeal under Section 37 of the Arbitration and Conciliation Act, 1996 by the High Court.
2. Confirmation of judgment and order passed by the XXIXth Additional City Civil & Sessions Court.
3. Modification of the Arbitral Award dated 04.12.2010 by the learned arbitrator.
4. Legal scope and ambit of the arbitrator's powers under Section 33 of the 1996 Act.
5. Correctness of the order passed by the learned arbitrator in allowing the application under Section 33 of the 1996 Act.
6. Applicability of arithmetical and clerical error correction under Section 33 of the 1996 Act.

Detailed Analysis:

1. The appellant appealed against the High Court's dismissal of their appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The High Court had confirmed the judgment of the XXIXth Additional City Civil & Sessions Court, which dismissed the arbitration suit (A.S. No. 12/2011) and upheld the Arbitral Award dated 04.12.2010.

2. The dispute arose from an agreement between the parties regarding the recovery of pure gold. The respondent invoked the arbitration clause, leading to the appointment of a retired District Judge as the sole arbitrator. The respondent sought various reliefs, including the return of gold or payment in lieu, interest amounts, and compensation for losses.

3. The learned arbitrator initially awarded the return of gold or payment at a specified rate with interest. Subsequently, the respondent requested a modification under Section 33 of the 1996 Act to correct computational errors, which the arbitrator allowed, altering the payment terms significantly.

4. The appellant challenged the modification through an arbitration suit under Section 34 of the 1996 Act, which was dismissed. The High Court upheld this decision, prompting the appellant to file the present appeal.

5. The appellant argued that the arbitrator exceeded their jurisdiction by modifying the award beyond arithmetical or clerical errors permissible under Section 33. The respondent contended that the modification aligned with the alternative relief sought and should stand.

6. The Supreme Court held that the arbitrator's modification, deviating from the original claim, was unjustified as no arithmetical or clerical errors existed. The Court emphasized that Section 33 only allows corrections of such errors, rendering the modification unsustainable. Consequently, the Court allowed the appeal, quashing all previous judgments and restoring the original award.

This detailed analysis covers the key issues raised in the legal judgment, providing a comprehensive overview of the case and the Supreme Court's decision.