LIMITATION FOR CORRECTION OF ARBITRAL AWARD

[Mr. M. GOVINDARAJAN]

Correction of arbitral award

Section 33 of the Arbitration and Conciliation Act, 1996 provides the procedure for correction and interpretation of the award.  Section 33(1) provides that within 30 days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties-

• 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;
•  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.

Section 33(2) of the Act provides that if the arbitral tribunal considers the request made to be justified, it shall make the correction or give the interpretation within 30 days from the receipt of the request and the interpretation shall form part of the arbitral award.  Section 33(3) provides that the arbitral tribunal may correct any error of the type on its own initiative, within 30 days from the date of the arbitral award.

Setting aside of the award

Section 34(2A)  of the Act provides that an arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award.  An award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.

Section 34(3) of the Act provides that an application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal.  If the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months it may entertain the application within a further period of 30 days, but not thereafter.

Case laws

In M/S VED PRAKASH MITHAL AND SONS VERSUS UNION OF INDIA - 2018 (8) TMI 2124 - SC ORDER, the Supreme Court has interpreted Section 34 (3) with reference to Section 33 of the Arbitration and Conciliation Act, 1996, to hold that the disposal of an application under Section 33 of the Act would be the starting point for limitation.  The said decision was in the context of an application moved by one of the parties before the arbitral tribunal under Section 33 of the Act.  The Supreme Court observed that in the present case, the arbitral tribunal in terms of powers given under sub-section (3) of Section 33 of the Act had on its own initiative made corrections in the award dated 18.04.2018, vide the award dated 05.05.2018. The suo moto corrections in terms of sub-section (3) of Section 33 of the Act can be made within a period of 30 days from the date of arbitral award.

The Supreme Court was of the opinion that the purpose and object behind Section 34 (3) of the Act, which is to enable the parties to study, examine and understand the award, thereupon, if the party chooses and is advised, draft and file objections within the time specified, the starting point for the limitation in case of suo moto correction of the award, would be the date on which the correction was made and the corrected award is received by the party.   The Supreme Court held that once the arbitral award has been amended or corrected, it is the corrected award which has to be challenged and not the original award. The original award stands modified, and the corrected award must be challenged by filing objections.

In M/S USS ALLIANCE VERSUS STATE OF UTTAR PRADESH & ORS. - 2023 (9) TMI 171 - SC ORDER, the objections/application for setting aside the arbitral award were filed on 03.08.2018.  The same was filed within a period of 90 days from the date of the corrected award.  The Supreme Court held that the High Court was right in holding that the objections were filed within the limitation period.  Even otherwise, the Court has the power to condone the delay for further period of thirty days.  Application for condonation of delay can be filed at anytime till the proceedings are pending.  Of course, exercise of discretion and whether or not the delay should be condoned is a different matter

The Supreme Court held that the Supreme Court did not find any good ground and reason to interfere with the impugned judgment and hence, the special leave petition is dismissed.