Oriental Veneer Products Ltd. , Having Registered Office at: No. 36, Mohamadi Lakada Bazar, M. S. Road, Mumbai v. Union of India, Represented by its General Manager, Integral Coach Factory, Chennai
2023-07-19
ABDUL QUDDHOSE
body2023
DigiLaw.ai
JUDGMENT (Prayer: Petition filed under Section 34 (2) (a) and 2 (b) of the Arbitration and Conciliation Act, 1996 to set aside the Additional Award dated 25.09.2021 passed by Mr.K.V.Babu, Sole Arbitrator, in the arbitration proceeding between the petitioner and respondents arising out of Application No.1 of 2021 in O.P.No.125 of 2019 on the file of this Court for being against the public policy of India and patently illegal, therefore, liable to be set aside under Section 34 (2)(b) and 34 (2A) of the Act.) 1.This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an order dated 25.09.2021 passed by the Arbitral Tribunal under Section 33 of the Arbitration and Conciliation Act, dismissing the application filed by the petitioner, seeking for correction in the arbitral award dated 26.07.2021. 2. The contention of the petitioner is that, by inadvertence in the claim statement, they had disclosed the claim towards refund of liquidated damages as Rs.9,35,523/- instead of Rs.16,39,886/-. 3. The arbitral award dated 26.07.2021 was passed, pertaining to the dispute between the petitioner and the respondents which was sought to be corrected by the petitioner through an application filed under Section 33 of the Arbitration and Conciliation Act, 1996, before the Arbitral Tribunal, came to be dismissed under the impugned order dated 25.09.2021. 4. The following are the undisputed facts: a) In the claim statement filed by the petitioner before the arbitral tribunal, the petitioner had disclosed that its claim towards the refund of liquidated damages was only for a sum of Rs.9,35,523/-; b) In the petition filed by the petitioner before this Court under Section 11 of the Arbitration and Conciliation Act, seeking for appointment of an arbitrator, the petitioner had disclosed that its claim towards liquidated damages is only for Rs.9,35,523/-; c) No prayer was sought for by the petitioner in its application filed before the arbitral tribunal, seeking for reception of additional documents for amendment of the claim; d) Based on documents marked by consent of both the parties, the arbitral tribunal has passed an award on 26.07.2021 in favour of the petitioner by partly allowing the claim. In the said arbitral award, the arbitral tribunal, after giving due consideration to the claim statement and other documents, had awarded a sum of Rs.9,35,523/- together with interest and costs.
In the said arbitral award, the arbitral tribunal, after giving due consideration to the claim statement and other documents, had awarded a sum of Rs.9,35,523/- together with interest and costs. The other claims were disallowed by the arbitral tribunal; e) Thereafter, the petitioner had filed an application under Section 33 of the Arbitration and Conciliation Act, seeking for correction of the arbitral award dated 26.07.2021 on the ground that erroneously, eventhough the arbitral tribunal had given clear findings that the petitioner is entitled for liquidated damages, has by inadvertence disallowed a portion of claim towards liquidated damages. 5. According to the petitioner, the arbitrator ought to have allowed the claim of Rs.16,39,886/- toward liquidated damages, but, instead, by inadvertence, the arbitrator has awarded towards liquidated damages only for a sum of Rs.9,35,523/-. 6. The application filed by the petitioner under Section 33 of the Arbitration and Conciliation Act, seeking for correction of the arbitral award dated 26.07.2021 came to be dismissed under the impugned order dated 25.09.2021. The arbitrator while dismissing the application has given the following reasons: a) The petitioner did not seek for amendment of the claim statement to amend the claim towards liquidated damages from Rs.9,35,523/- to Rs.16,39,886/-; b) The petitioner had not sought for amendment of the claim during the pendency of the arbitration. 7. Learned counsel for the petitioner drew the attention of this Court to Section 33 of the Arbitration and Conciliation Act, 1996 as well as to the affidavit filed by the petitioner before the arbitral tribunal. He would submit that as seen from the affidavit, the arbitral tribunal was aware of the fact that the petitioner''s claim towards liquidated damages has to be enhanced. He drew the attention of this Court to the relevant paragraphs in the affidavit filed in support of the application filed by the petitioner before the arbitral tribunal, seeking for reception of additional documents. According to him, since the arbitral tribunal was aware of the amended claim and strict rules of procedure need not be followed by the arbitral tribunal as per Section 19 of the Arbitration and Conciliation Act, the arbitral tribunal ought to have allowed the application filed by the petitioner under Section 33 of the Arbitration and Conciliation Act. 8.
According to him, since the arbitral tribunal was aware of the amended claim and strict rules of procedure need not be followed by the arbitral tribunal as per Section 19 of the Arbitration and Conciliation Act, the arbitral tribunal ought to have allowed the application filed by the petitioner under Section 33 of the Arbitration and Conciliation Act. 8. However, Mr.Ar.L.Sundaresan, learned Additional Solicitor General for Mr.V.Chandrasekaran, learned Senior Panel Counsel (Railways) appearing for the respondents would submit that since the petitioner has not amended the claim and had also chosen to disclose the very same claim as mentioned in the claim statement in the petition filed before this Court under Section 11 of the Arbitration and Conciliation Act, which lead to the appointment of a sole arbitrator, the arbitrator has rightly rejected the application. He would also raise a contention that the present petition under Section 34 of the Arbitration and Conciliation Act is not maintainable as the impugned order is not an arbitral award. He drew the attention of this Court to Section 33 (1) (a) of the Arbitration and Conciliation Act and would submit that only in cases where there are computation errors, or where there is a typographical or clerical error, an arbitral tribunal can entertain application under Section 33 of the Arbitration and Conciliation Act, 1996. He would submit that in the instant case, the request made by the petitioner in his application filed under Section 33 of the Arbitration and Conciliation Act, seeking for amendment of the claim is not legally permissible under Section 33 of the Arbitration and Conciliation Act. 9. Heard Mr.K.Ashok Kumar, learned counsel for the petitioner and Mr.Ar.L.Sundaresan, learned Additional Solicitor General for Mr.V.Chandrasekaran, learned Senior Panel Counsel (Railways). 10. This Court has given careful consideration to the rival submissions. Admittedly, the petitioner had not amended the claim for the purpose of seeking enhancement of its claim towards liquidated damages during the pendency of the arbitration. The prayer in the claim statement filed by the petitioner before the arbitrator also discloses that its claim is only for a sum of Rs.9,35,523/- towards liquidated damages. In the petition filed before this Court under Section 11 of the Arbitration and Conciliation Act, seeking for appointment of an arbitrator, the petitioner has once again disclosed that its claim towards liquidated damages is only for a sum of Rs.9,35,523/-.
In the petition filed before this Court under Section 11 of the Arbitration and Conciliation Act, seeking for appointment of an arbitrator, the petitioner has once again disclosed that its claim towards liquidated damages is only for a sum of Rs.9,35,523/-. The petitioner had only filed an application before the arbitrator, seeking for reception of additional documents. Even in the affidavit filed in support of the said application before the arbitrator, though they have stated in certain paragraphs about the additional claim, the relief sought for in that application was only for the purpose of reception of additional documents and not for amendment of the claim in the claim statement. 11. The arbitrator has also permitted the reception of additional documents as sought for in the interim application filed by the petitioner before the arbitrator. There was no necessity for the arbitrator to consider the various other paragraphs contained in the affidavit filed in support of the application filed for reception of documents when the prayer for reception of additional documents has been granted by the arbitrator. 12. Section 33 of the Arbitration and Conciliation Act is in the nature of an application under Section 152 of C.P.C. Section 33 (1) (a) of the Arbitration and Conciliation Act 1996 makes it very clear that a request can be made under Section 33 by a party to the dispute only to correct any computation error or any clerical or typographical error or any other errors of a similar nature occurring in the award. The correction sought for by the petitioner in his application filed under Section 33 of the Arbitration and Conciliation Act cannot be considered to be a computation error or clerical or typographical error or any other error of a similar nature, as the correction would amount to altering the main claim of the petitioner itself by enhancing the claim from Rs.9,35,523/- towards liquidated damages to Rs.16,39,886/- and it would amount to modification of the Award which is not legally permissible under Section 33 of the Arbitration and Conciliation Act. 13. Both Section 33 of the Arbitration and Conciliation Act, 1996 and Section 152 of the Code of Civil Procedure have been enacted for a similar purpose viz., only to correct glaring errors on account of any accidental slip or omission. 14.
13. Both Section 33 of the Arbitration and Conciliation Act, 1996 and Section 152 of the Code of Civil Procedure have been enacted for a similar purpose viz., only to correct glaring errors on account of any accidental slip or omission. 14. It is also to be noticed from Section 34 of the Arbitration and Conciliation Act that an application under the said Section can be made, only challenging an arbitral award and it does not talk about a challenge to an order passed under Section 33 of the Arbitration and Conciliation Act which is not an arbitral award. The Arbitration and Conciliation Act, 1996 does not give a concrete definition of the term ''arbitral award''. Section 2(1)(c) merely states that for Part I of the Act, the term includes an interim award within its meaning. 15. Interim award: It is an award that affects the rights of the parties but it is not a final award. An arbitral tribunal may at any time during the arbitral proceedings make an interim arbitral award on any matter concerning which it may make a final arbitral award. 16. An arbitral award is similar to a judgment given by a court of law. In other words, an arbitral award is given by the arbitral tribunal as a decision on various issues. The Arbitration and Conciliation Act 1996, does not clearly define an arbitral award. However, the concept of an award could also be understood as a final determination of a particular issue or claim that has been submitted for arbitration. It represents a resolution of the dispute between the parties. 17. Any order passed under Section 33 of the Arbitration and Conciliation Act, 1996 by the Arbitrator does not satisfy the criteria for terming it as an Arbitral Award. An application passed under Section 33 of the Act is filed only to correct glaring errors on account of any accidental slip or any omission and the errors which can be corrected are only computation errors, clerical or typographical errors or any other errors of a similar nature. 18. Admittedly, the application filed by the petitioner under Section 33 of the Arbitration and Conciliation Act has been rejected and the said rejection order cannot be treated to be an award for the purpose of challenging it under Section 34 of the Arbitration and Conciliation Act.
18. Admittedly, the application filed by the petitioner under Section 33 of the Arbitration and Conciliation Act has been rejected and the said rejection order cannot be treated to be an award for the purpose of challenging it under Section 34 of the Arbitration and Conciliation Act. If the legislature had thought it fit to treat an order passed under Section 33 of the Arbitration and Conciliation Act, to be an arbitral award, they would have mentioned it in Section 33 of the Arbitration and Conciliation Act itself. Having not done so, this Court is of the considered view, that an order passed under Section 33 of the Arbitration and Conciliation Act by the arbitral tribunal, seeking for corrections of the arbitral award cannot be challenged under Section 34 of the Arbitration and Conciliation Act, 1996. The only recourse available to the petitioner is to challenge the arbitral award dated 26.07.2021, if they so desire under Section 34 of the Arbitration and Conciliation Act, if the same is within the period of limitation as per Section 34 (3) of the Arbitration and Conciliation Act. 19. For the foregoing reasons, there is no merit in this petition. Accordingly, this petition is dismissed. No Costs.