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2023 DIGILAW 968 (CAL)

State of West Bengal v. B. B. M. Enterprises

2023-06-20

RAVI KRISHAN KAPUR

body2023
JUDGMENT : Ravi Krishan Kapur, J. 1. This is an application under section 34 (4) of the Arbitration and Conciliation Act, 1996 (the Act) filed in connection with an application under section 34 of the Act for setting aside of an award dated 17 October, 2016 (the award) filed by the respondent. 2. Briefly, this application has been necessitated in view of the hand written insertion of the words “of receipt” in the last paragraph of the award served on the respondent. By such insertion, the Arbitrator had inserted the date from which interest on the awarded amount would run. Admittedly, the said insertion does not appear in the copy of the award served on the petitioner. In such circumstances, the insertion made after the passing of the award has resulted in there being two awards dated October 17, 2016. 3. In the application challenging the award, the respondent has inter-alia taken the following ground: “FOR THAT the Learned Arbitral Tribunal has committed patent irregularity by incorporating the words “of receipt” in paragraph No.4 at page 30 of the award impugned, which was served and/or delivered to the petitioners herein with a view to cover up the partisan approach untaken by him in communicating the Award dated 17th October, 2016, since the quoted words were not present in the Award which was delivered to the claimant/respondent and, thus, the Learned Tribunal has acted in violation of the judicial propriety and/or judicial approach and thereby the impugned Award is inimical to public policy of India and required to be set aside and/or quashed”. 4. It is contended that the aforesaid insertion had been incorporated by the Arbitrator belatedly at the time of serving the award upon the respondent by hand. As such, the Arbitrator having become functus officio could not have added to the award. Thus, it is contended that the application under section 34 (4) of the Act be adjourned and an opportunity be granted to the Arbitrator to eliminate the said technical mistake. The award served on both the petitioner and the respondent bear the same date. In support of their contentions, the petitioner relies on the decisions of Som Datt Builders Ltd. vs. State of Kerala reported in (2009) 10 SCC 259 at paragraph 23 and 27 and Kinnari Mullick & Anr. The award served on both the petitioner and the respondent bear the same date. In support of their contentions, the petitioner relies on the decisions of Som Datt Builders Ltd. vs. State of Kerala reported in (2009) 10 SCC 259 at paragraph 23 and 27 and Kinnari Mullick & Anr. vs. Ghansyam Das Damani reported in (2018) 11 SCC 328 paragraphs 14-16 to eliminate the ground for setting aside of the award. 5. On behalf of the respondent it is contended that there are no grounds justifying reconsideration of the matter by the Arbitrator. On the other hand, under the guise of additional reasons and filing gaps in the reasoning, the award ought not to be remitted to the Arbitrator. The powers to remit under section 34(4) of the Act can only be invoked if there are inadequate reasons or to fill up the gaps in the reasoning in support of the findings in the award. In this case, there are no circumstances which make it appropriate to remit the matter to the Arbitrator. In such circumstances, a contentious issue cannot be remitted back to the Arbitral Tribunal. 6. The dispute raised in this application is with respect to the incorporation of the handwritten words “of receipt” in the copy of the award which was served on the respondent. Admittedly, no such insertion appears in the copy of the award served on the petitioner. By such insertion, the Arbitrator has clarified the date from which interest on the awarded amount would run. The benefit of this insertion is in favour of the respondent. 7. Section 34(4) of the Act provides as follows: (4)“On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.” 8. In Kinnari Mullick v. Ghanshyam Das Damani reported in (2018) 11 SCC 328 , it has been inter-alia held as follows; “15. In Kinnari Mullick v. Ghanshyam Das Damani reported in (2018) 11 SCC 328 , it has been inter-alia held as follows; “15. On a bare reading of this provision, it is amply clear that the Court can defer the hearing of the application filed under Section 34 for setting aside the award on a written request made by a party to the arbitration proceedings to facilitate the Arbitral Tribunal by resuming the arbitral proceedings or to take such other action as in the opinion of the Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award. The quintessence for exercising power under this provision is that the arbitral award has not been set aside. Further, the challenge to the said award has been set up under Section 34 about the deficiencies in the arbitral award which may be curable by allowing the Arbitral Tribunal to take such measures which can eliminate the grounds for setting aside the arbitral award. No power has been invested by Parliament in the Court to remand the matter to the Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in sub-section (4) of Section 34.” 9. Section 34(4) of the Act is an enabling provision. The purpose of the sub-section is to cure certain defects which would otherwise lead to annulment of the award. The clear indication of the section is to give an opportunity to the Arbitral Tribunal to do whatever is necessary in its opinion to eliminate the grounds for setting aside of an award. The overall object of section 34 (4) of the Act is to provide the Arbitrator with an opportunity to avoid the ultimate remedy of setting aside of the award. The power of the Court to remit the award should be construed independently keeping in mind the purpose of arbitration as an effective and expeditious forum to resolve disputes. The mandate under section 34 of the Act is to respect the finality of the arbitral award and party autonomy in their choice to get their disputes adjudicated by an alternative forum. (Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. (2019) 20 SCC 1 ) 10. The challenge to the award under section 34 of the Act is still pending. By the insertion of the words “of receipt”, the Arbitrator has in effect caused two awards to be published. (Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. (2019) 20 SCC 1 ) 10. The challenge to the award under section 34 of the Act is still pending. By the insertion of the words “of receipt”, the Arbitrator has in effect caused two awards to be published. The copy of the award served on the petitioner does not contain the handwritten words “of receipt”. Such insertion was only added in the copy of the award belatedly served on the respondent. In this case, the error on the part of the Arbitral Tribunal in adding the words “of receipt” does not in any way impinge on the substantive merits of the award. The rest of the award has been kept intact. The defect is technical and curable. By inserting the said words “of receipt”, the date from which interest on the awarded sum would run is to the benefit of the respondent. Such mistake is out of sheer ignorance and without appreciating the fact that the Arbitrator had become functus officio and could not have at that stage added or subtracted to the award. Accordingly, there is no question of deciding any contentious issue as urged by the respondent. 11. The decision in I-Pay Clearing Services (P) Ltd. v. ICICI Bank Ltd., (2022) 3 SCC 121 cited by the respondent is distinguishable and inapposite. In this case, a question had arisen as to whether under the guise of additional reasons and filing up gaps in the reasoning an award could be remitted to the Arbitrator when there were already findings on such contentious issues in the award. 12. In such circumstances, I find it appropriate that an opportunity be given to the Arbitral Tribunal to resume the arbitral proceedings and take such action as in the opinion of the Arbitral Tribunal may eliminate the grounds for setting aside of the arbitral award to the limited extent as prayed for. 13. GA 4 of 2022 stands allowed. There shall be an order in terms of prayer (a) of the Notice of Motion. 14. Let AP 352 of 2017 appear in the monthly list of November, 2023.