ORDER : (PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL) Heard Mr. Kamal B. Trivedi, the learned senior advocate, with Mr. Manav Mehta and Ms. Ankeeta Rajput, the learned advocates appearing for the appellants and Mr. Saurabh Soparkar, the learned senior advocate with Mr. Aditya Mehta for Universal Legal for the respondent No.4 and the learned advocate Mr. Harsh Gajjar for the respondent Nos. 3 and 5.3 and perused the record. 2. The two connected Appeals under Section 37 of the Arbitration and Conciliation Act, 1996 have been filed against the judgment and order 24.10.2018 dismissing the application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act, 1996’), upholding the award dated 17.02.2012 and the additional award dated 30.11.2013 passed by the learned sole Arbitrator. 3. The main question before us is about the scope and purport of Section 33 of the Act, 1996. To deal with the controversy at hand, certain relevant facts are to be noted at this stage. Pursuant to the arbitration clause contained in the deed of partnership, the dispute between the partners of M/s. Rupam Cinema Enterprise, a partnership firm was referred to the learned sole Arbitrator. There were four sets of claimants in the partnership firm before the learned Arbitrator. The firm in the name and style of M/s. Rupam Cinema Enterprise was constituted under a deed of partnership dated 9th August, 1973 to carry out business of running two theaters viz. Apsara and Aaradhana. When the firm was constituted, there were four group of partners and the shares of the partners in the profit and loss of the firm as provided in the original partnership deed were as under :- “Group-I: 1. Mohanlal Thakershibhai Patel 0.09 Ps. 2. Navinkumar Mohanlal Patel 0.04 Ps. 3. Narendrakumar Mohanlal Patel 0.04 Ps. 4. Rasiklal Karshandas Patel 0.04 Ps. 5. Shantilal Karshandas Patel 0.04 Ps. 6. Chandulal Karshandas Patel 0.04 Ps. 7. Mahendrakumar Atmaram Patel 0.03 Ps. 8. Satish R. Patel 0.03 Ps. 9. Kantilal Chunilal Thakkar 0.10 Ps. Group-II: 10. Manubhai Kanaiyalal Shah 0.05 Ps. 11. Virendra Kanaiyalal Shah 0.05 Ps. Group-III 12. Umesh Ratilal shah 0.05 Ps. 13. Ratilal Jethalal Shah 0.05 Ps. 14. Jayantilal Jethalal Shah 0.10 Ps. Group-IV 15. Labhshankar Bhagwandas Raval 0.05 Ps. 16. Mahendrakumar Bhagwandas Raval 0.05 Ps. 17. Jayramdas C. Meghrajani 0.10 Ps. 18. Shardaben Tribhovandas Shah 0.05 Ps. 4.
Group-II: 10. Manubhai Kanaiyalal Shah 0.05 Ps. 11. Virendra Kanaiyalal Shah 0.05 Ps. Group-III 12. Umesh Ratilal shah 0.05 Ps. 13. Ratilal Jethalal Shah 0.05 Ps. 14. Jayantilal Jethalal Shah 0.10 Ps. Group-IV 15. Labhshankar Bhagwandas Raval 0.05 Ps. 16. Mahendrakumar Bhagwandas Raval 0.05 Ps. 17. Jayramdas C. Meghrajani 0.10 Ps. 18. Shardaben Tribhovandas Shah 0.05 Ps. 4. It seems that out of the abovementinoed partners, Shardaben Tribhovandas Shah died on 28th December, 1981 and Rasiklal Karsandas Patel had died on 17th May, 1997. The first group of partners, noted hereinabove, had retired from the partnership firm in the year 1989 under the settlement arrived at between the parties in a Civil Suit filed by the said group. The business of the partnership firm, however, was carried on. It seems that a dispute has arisen between the partners in the matter of maintenance of the Books of Accounts and the allegations of embezzlement and mismanagement of the fund by one set of partners. In a petition filed under Section 11 of the Act, 1996, this Court appointed the Arbitrator, who proceeded to pass the original award dated 17.02.2012. 5. The claim statements were filed by three sets of claimants. The 4th set of claimants adopted the claim statement submitted by the 3rd set. As per the claim statement of the 1st set of partners, after the commencement of the partnership business in the year 1973 under the partnership deed, there have been number of changes in the constitution of the partnership firm. Number of partners either retired or died, some were admitted to the partnership firm after the constitution of the firm in the year 1973 However, these changes have not been registered with the Registrar of the Firms. After death of Shardaben Tribhuvandas Shah and Rasiklal Karsandas Patel, their heirs were not admitted as partners in the firm, nor has there been redistribution of their shares. A Civil Suit was filed seeking dissolution of the firm or retirement from the firm by some of the members of the 1st group wherein a compromise had been arrived at between the parties based on the consent terms filed in the suit. Under the consent terms, Mohanlal Thakershibhai Patel and other partners of the 1st group were permitted to retire from the firm.
Under the consent terms, Mohanlal Thakershibhai Patel and other partners of the 1st group were permitted to retire from the firm. However, their 45% share in the partnership firm, which were required to be distributed amongst the remaining partners of the firm, were not distributed. Two more partners, Jayantilal Jethalal Shah and Ratilal Jethalal Shah have also died, but nothing had been done regarding their shares in the partnership firm. There was gross mismanagement of the affairs of the firm by the managing partners. One Virendra Shah, who was one of the claimants in the 3rd set had joined Manubhai Shah in group-II after retirement of Mohanlal Thakershibhai Patel, in the management of the firm, who are represented in group-II. It was alleged that both Manubhai Shah and Virendra Shah conducted the business in a high-handed manner and against the interest of the firm and on account of their mismanagement, the firm had suffered losses. 6. The 2nd set of claimants have also alleged mismanagement of the business of the firm and falsification of the accounts by Manubhai Shah and Virendra Shah and prayed for dissolution of the firm. In the claim statement of the 3rd set of the claimants, it was contended that Jayramdas Chuhadmal, one of the partners of the firm was responsible for causing losses and after his death his heirs are liable to make good the losses and to pay to the firm. They have further alleged that late Jayramdas Chuhadmal, 1st and 2nd set of claimants have received the income of the firm illegally and they are liable to pay the amount of loss alongwith 8% interest to the firm. 4th set of claimants have adopted the claim statement submitted by the 3rd set of claimants. 7. In view of the contentions of the parties, the following issues were framed by the Arbitrator :- “Issues: 1. Has M/s. Rupam Cine Enterprise, the Partnership Firm been dissolved as alleged by the 2nd set of Claimants ? If so, from which date ? 2. If the 1st part of issue No.1 is answered in the negative, is the said firm required to be dissolved ?. If so, from which date it would stand dissolved ? 3.
Has M/s. Rupam Cine Enterprise, the Partnership Firm been dissolved as alleged by the 2nd set of Claimants ? If so, from which date ? 2. If the 1st part of issue No.1 is answered in the negative, is the said firm required to be dissolved ?. If so, from which date it would stand dissolved ? 3. Whether 1st and 2nd set of Claimants prove that the 3rd and 4th set of Claimants have not properly maintained accounts and that they have committed financial irregularities as alleged by them? 4.(A) Whether the 3rd and 4th set of Claimants are required to be paid amounts as claimed by them in para 5(B), (D) and (M) of their claim statement? (B) If yes, are the Claimants of the 1st and 2nd set liable to pay interest on such amounts? If yes, at what rate?. 5(A) Whether the 3rd and 4th set of Claimants prove that the Claimants of the 2nd set were managing the cycle stand and canteen as alleged by them for the period from March, 1996 and 1.4.1996 respectively till 13.10.2001 ? (B) If yes, are 2nd and/or 1st set of Claimants liable to pay Rs. 40 Lacs or any other amount as claimed in para 5(E) of their claimant statement ? (c) If so, are the 2nd and/or 1st set of Claimant liable to pay interest on such amount and if so, at what rate ? 6(A) What amount is due from which claimant to which claimant? (B) Is the claimant to whom any amount is due entitled to claim interest ? If so, at what rate ? 8. The bone of contention of the learned senior counsel appearing for the parties revolve around the question Nos. 1 and 2 framed by the learned Arbitrator. The issue is as to who were the partners of the firm on the date the partnership firm stood dissolved and what would be the shares of the remaining partners ?. We, therefore, confine our inquiry to the said question dealing with the contentions made by the learned senior counsels for the parties in that regard. There is a consensus between the parties that the date of dissolution of partnership firm being 30.04.2004 and the dispute only pertains to the shares of the partners. 9.
We, therefore, confine our inquiry to the said question dealing with the contentions made by the learned senior counsels for the parties in that regard. There is a consensus between the parties that the date of dissolution of partnership firm being 30.04.2004 and the dispute only pertains to the shares of the partners. 9. After determination of the date of dissolution, the question framed by the learned Arbitrator was whether the share of 1st group and deceased Shardaben Tribhovandas Shah was required to be distributed amongst the partners, if no other partners admitted to the firm in their place. The answer to the said question has been given by the learned Arbitrator in the original award in the following manner:- “It is not disputed that no partner or partners have been admitted to the Partnership firm as partners in place and instead of 1st group of partners and deceased Shardaben Tribhuvandas Shah. It is contended on behalf of the 3rd set of claimants that shares of the above partners have been transferred to them. So far as 1st group of partners are concerned, the 3rd set of claimant sought to rely on the consent terms filed in the City Civil Court and the agreement. The consent terms of the City Civil Court have not been placed on record nor have they been proved in accordance with law. Copy of consent terms which is placed on record is xerox copy of the so called certified copy of the consent terms issued by the City Civil Court at Ahmedaband. No reliance can be placed on this xerox copy. The agreement on which 3rd set of claimants rely have also not been placed on record. Such agreements, if any, were required to be placed on record and proved in accordance with law. The result, therefore, is that shares belonging to the 1st group of partners who retired from the partnership firm, Shardaben Tribhuvandas Shah and Jayramdas Chuhadmal, who died on 30.08.2001, have to be redistributed among the persons who continued to be partners in the firm on the date on which the firm stood dissolved as stated above.” 10.
The result, therefore, is that shares belonging to the 1st group of partners who retired from the partnership firm, Shardaben Tribhuvandas Shah and Jayramdas Chuhadmal, who died on 30.08.2001, have to be redistributed among the persons who continued to be partners in the firm on the date on which the firm stood dissolved as stated above.” 10. It was, thus, held by the learned Arbitrator that the shares belonging to the first group of partners, who retired from the partnership firm and Shardaben Tribhuvandas Shah and Jayramdas Chuhadmal, have to be distributed amongst the partners who continued to be the partners in the firm on the date when the firm stood dissolved. The award has, thus, been passed in the following manner with respect to the dissolution of the firm and re-distribution of shares of retiring partners and those who were dead and whose heirs have not been inducted or continued as the partners, “1. Claims, claims of compensation and allegations made in each of the claim statement stand rejected. 2. The Partnership firm in the name and style of M/s. Rupam Cine Enterprises shall stand dissolved on and from 30.04.2004. 3. In view of the retirement of 1st group of partners consisting of Mohanlal Thakershi Patel and other 8 partners named above, death of Shardaben Tribhuvandas Shah and Jayramdas Chuhadmal who died on 30.08.2001, their shares are to be redistributed among the persons who continue to be partners in the firm on the date on which the firm stood dissolved as stated above. The shares of the partners as re-distributed shall be as follows : 1. Manubhai Kanaiyalal Shah 12.5 Ps. 2. Virendra Kanaiyalal Shah 12.5 Ps. 3. Umesh Ratilal Shah 12.5 Ps. 4. Ratilal Jethalal Shah 12.5 Ps. 5. Jayantilal Jethalal Shah 25.0 Ps. 6. Labhshankar Bhagwandas Raval 12.5 Ps. 7. Mahendrakumar Bhagwandas Raval 12.5 Ps. 11. We may note from the averments in the award that the oral evidence recorded before the learned Arbitrator was of only Kanaiyalal Shah, who had not been cross-examined by or on behalf of the 1st and 2nd sets of partners, though several opportunities were given to them. As regards the documentary evidence, it was noted by the learned Arbitrator that in the arbitral proceedings only the documents which were admitted by all the parties were exhibited.
As regards the documentary evidence, it was noted by the learned Arbitrator that in the arbitral proceedings only the documents which were admitted by all the parties were exhibited. The rest of the documents, which were not admitted by all the parties were not exhibited. It was opined that except the documents which were exhibited no other documents having been proved in accordance with law was required to be exhibited. So far as the accounts of the partnership firm were concerned, they have been audited by the Chartered Accountant. The pages and accounts books have also been initialed by the parties. It was, thus, noted that none of the advocates had raised objection regarding the correctness or authenticity of the accounts before the learned Arbitrator. It was, therefore, assumed that there was no objection against the audited accounts of the firm being received in evidence, and it was, thus, held that apart from the documents which were exhibited, the accounts which were produced before the arbitral tribunal were to be taken as duly approved and the accounts before the tribunal should be exhibited as correctly reflecting accounts of the business of the firm. 12. With these findings, at least two issues were settled that only those documents/account books audited by the Chartered Accountant and the pages of which were initialed by the parties were exhibited as correctly reflecting accounts of the business of the firm and were taken into consideration in arriving at the findings pertaining to the dissolution of the firm and re-determination of the shares amongst the partners who continued to be the partners in the firm on the date of dissolution of the firm, i.e. 30.04.2004. 13. It seems that after declaration of award dated 17.02.2012 the application under Section 33 of the Act, 1996 was filed by the 1st set of claimants namely the appellants herein with the assertion that there was an error in recording the names of the partners and their respective shares in the profit and loss of the firm, as stated in the original award and the said error falls within the scope of Section 33(a), (b) and (c) and Section 33(4) of the Arbitration and Conciliation Act, 1996. 14.
14. It was contended by the learned senior counsel appearing for the appellants that there was requirement of correction in the name of two persons, namely Ratilal Jethalal Shah, against whose name ‘HUF’ was to be mentioned, whereas in place of deceased Jayantilal Jethalal Shah shown as partner of 25% share at Sr. No.5 in the award, the name of his wife Shantaben Jayantilal Shah who was inducted as partner was to be replaced. Further, the heirs of Jayramdas Chuhadmal Meghrajani, namely Mahesh Jayramdas Meghrajani, Manoj Jayramdas Meghrajamni and Lajwantiben Jayramdas Meghrajani were skipped as partners from the award and they are to be included accordingly. Furthermore, the shares of each partner would be required to be redetermined as a consequence of the correction of the abovenoted error so that each partner gets his legal entitlement under the award. 15. Further, another application dated 16.03.2012 under Section 33 of the Act, 1996 was moved by three partners namely Manubhai K. Shah, Virendra K.Shah and Jitendra K. Shah with the assertion that correction/rectification are to be made in the award and also necessary interpretation is to be made by recalling the award dated 17.02.2012. It was also submitted by 3rd and 4th set of claimants that in Civil Suit No. 2567 of 1989 filed before the City Civil Court, Ahmedabad for dissolution of the accounts of the firm namely M/s. Rupam Cine Enterprises, all the parties had filed consent terms vide Exhibit-63 dated 15.02.1990, whereby shares of each set of claimants were crystallized. As per the consent terms, only 3rd set of claimants were entitled to receive the shares of the profit and losses of 1st set of partners. It was contended that the consent terms were binding to the parties. 16. It seems that the 3rd set of claimants had submitted original certified copy of the consent terms before the learned Arbitrator in the proceedings under Section 33 of the Act, 1996, which was taken on record. It was contended in the application under Section 33 of the Act, 1996 filed by the contenting respondents herein that no issue was framed for re-distribution of shares nor there was any occasion for the parties to make their submissions on the respective shares of each party.
It was contended in the application under Section 33 of the Act, 1996 filed by the contenting respondents herein that no issue was framed for re-distribution of shares nor there was any occasion for the parties to make their submissions on the respective shares of each party. The findings of the Tribunal on the shares of the respective parties was recorded without any opportunity to the 3rd set of claimants to make their submission. No production of documents was ordered by the Tribunal nor the contesting party had insisted upon production of the original documents. A reference is to be included in the award which is sine qua, non, inasmuch as, the parties had received their shares of the firm as per the consent terms only in the year 1990 and accordingly, the income-tax returns had been filed. It was, thus prayed that with respect to the shares of the parties, the findings are required to be interpreted and if required, an additional award as to the claims presented in the original proceedings, but omitted from the arbitral award, is required to be passed. 17. The 2nd issue raised by the respondents herein was that the arbitral tribunal in the minutes dated 22.01.2005 clearly noted the consent of the parties to the effect that the parties have accepted the audited accounts of the firm and hence, for settlement of the accounts, no services of the Chartered Account was required. The said observation in the award needs to be modified accordingly. With regard to the other issues of misappropriation, it was stated that the issue needs to be adjudged on the basis of the circumstances, the affidavits of the parties and the pleadings filed by the parties at various other forums referred before the Tribunal. With these contentions, it was pleaded by the respondents herein that the prayers made in the application under Section 33 are required to be granted even under the inherent jurisdiction on the ground of procedural review as well. 18. From the bare reading of the application moved by the contesting respondents, it is evident that the respondents asked for the review of the findings returned by the Tribunal on the issues adjudicated in the original award dated 17.02.2012. 19.
18. From the bare reading of the application moved by the contesting respondents, it is evident that the respondents asked for the review of the findings returned by the Tribunal on the issues adjudicated in the original award dated 17.02.2012. 19. It may further be noted that no review of the arbitral award has been provided under the Arbitration Act, 1996 and it is settled that the power of review being the creature of the statute cannot be invoked as an inherent power. The review of the arbitral award is not permissible within the scope of the Act, 1996. 20. At this stage, we may also take note of the provisions of Section 33 of the Act, 1996 which reads as under:- “33. Correction and interpretation of award; additional award - (1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties— (a) 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; (b) 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. (2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award. (3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award. (4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.
(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. (6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or subsection (5). (7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.” 21. A careful reading of the Section 33(1)(a) and (b) of the Act, 1996 shows that the application under Section 33 of the Act, 1996 can be filed within a period of 30 days from the date of receipt of the arbitral award, unless parties agree for another period of time. One of the parties to the award with the notice to the other party may request the arbitral tribunal to make corrections to any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award. Further, on an agreement of the parties, a party with the notice to the other party may request the arbitral tribunal to make an interpretation on specific point or a part of the award. Section 33(2), however, states that the request made under sub-section(1) would be considered by the arbitral tribunal, if it considers it to be justified and if the arbitral tribunal proceeds to make corrections or give interpretation of the award within 30 days from the date of receipt of the request, the same shall form part of the arbitral award. Subsection( 3) of Section 33 confers power on the arbitral tribunal to make any corection of the error of the type referred to in subsection (1)(a), on its own initiative, within thirty days from the date of the arbitral award. Under sub-section(4), the arbitral tribunal is empowered to make additional arbitral award as to the claims presented in the arbitral proceedings, but omitted from the arbitral award, on the request of a party with the notice to the other; unless there is a contrary agreement between the parties. Sub-section(5) provides the time-line within which the additional award can be passed under sub-section(4).
Sub-section(5) provides the time-line within which the additional award can be passed under sub-section(4). Sub-section(6) confers power on the arbitral tribunal to extend the time period within which it can make correction, give an interpretation or make additional award under sub-section(2) or sub-section(5), if necessary. 22. It is, thus, evident that only three recourses for making correction in an award can be taken before the arbitral tribunal, which had declared an award; (i) to make request for correction of computation errors, clerical or typographical errors or any other errors of the similar nature; (ii) to give an interpretation on a specific point or part of the award, if so agreed between the parties; (iii) to make an additional award as to the claims presented, but omitted from the arbitral award, if no contrary agreement exists between the parties. 23. There is absolutely no power of review to the findings returned by the learned Arbitrator to reach at a different conclusion from that arrived in the original award. 24. It was vehemently argued by the learned senior counsel appearing for the appellants that in allowing the applications under Section 33 of the Act, 1996 by passing another award dated 30.11.2013, the learned Arbitrator has transgressed its jurisdiction conferred within the scope of Section 33 and review its findings by taking note of the documents which were filed in the proceedings under Section 33 of the Act, 1996, but already rejected during the course of original arbitral proceedings. Attention of the Court is invited to the findings returned by the learned Arbitrator in the impugned award dated 30.11.2013, which is termed as an additional award, to assert that the evidence such as the consent terms, certified copy of which was filed before the learned Arbitrator in the proceedings under Section 33 of the Act, 1996, could not have been taken on record and moreover, the findings returned by the learned Arbitrator in the original award could not have been set aside or recalled by stating that the earlier conclusion reached by the Tribunal as regards the oral statement of Manubhai Kanaiyalal Shah was not correct.
It was, thus, vehemently argued that the impugned award dated 30.11.2013 cannot be said to be an additional award within the meaning of sub-section(4) of Section 33 of the Act, 1996, nor it can be said to be an award making interpretation on specific point or part of the award as per Section 33(1)(b) or for correcting arithmetical, clerical or typographical errors as per Section 33(1)(a) of the Act, 1996. The learned Arbitrator went on to declare that errors have crept in, in the final award because the attention of the parties was not specifically focused on the issue and therefore, they are entitled to make their submissions at the stage of making application under Section 33 of the Act, 1996. These findings of the learned Arbitrator were beyond the scope of Section 33 of the Act, 1996 and hence the arbitral award dated 30.11.2013 itself cannot be sustained. 25. It was further argued by the learned senior counsel for the appellants that under Section 33 of the Act, the Arbitral Tribunal cannot modify its award and its jurisdiction is confined to only correction of arithmetical, clerical or typographical errors. The arbitral tribunal cannot revisit its award on merits in the garb of making clarification. The modification made by the Tribunal is to be held unsustainable in the eye of law. Reliance is placed on the decision of this Court in Motilal Oswal Financial Services Ltd. & Anr. vs. Utkarsh Divaker Mehta being First Appeal No. 4873 of 2023 dated 30.07.2024. 26. With reference to the decision of the Apex Court in State of Arunachal Pradesh vs. Damani Construction Co. [ (2007) 10 SCC 742 ], it was argued that the application designed seeking review of the award, is held to be wholly misconceived, inasmuch as, the arbitral tribunal under Section 33 of the Act, 1996 has no power to review its own award on merits. The application therein was rejected holding that neither review was maintainable nor the prayer which had been made in the application has anything to do with Section 33 and, thus, does not come within the purview of Section 33 and, thus, was misconceived.
The application therein was rejected holding that neither review was maintainable nor the prayer which had been made in the application has anything to do with Section 33 and, thus, does not come within the purview of Section 33 and, thus, was misconceived. It was held by the Apex Court therein that when the award was passed, only option with the appellants therein was to make an application under Section 34 within the time period provided in the said section, but the recourse to review was totally misconceived, as there is no such provision in the Act, 1996 for review of the award passed by the learned Arbitrator and the clarification as sought by the appellants therein was not contemplated under Section 33. 27. With reference to the decision in Gyan Prakash Arya vs. Titan Industries Limited [ (2023) 1 SCC 153 ], it was submitted that the Apex Court has held therein that once the arbitral award was passed considering the claim made by the claimant as per its original claim and as per the statement of claims made, subsequent allowing of application under Section 33 of the Act, 1996 to modify the arbitral award in exercise of powers under the said provision is not sustainable. Only in case of arithmetical, clerical or typographical errors, the award can be modified and such errors only can be corrected. The modified award passed under Section 33 of the Act, 1996 therein was, thus, held to be unsustainable. 28. It was, thus, argued by the learned senior counsel for the appellants that the Commercial Court exercising jurisdiction under Section 34 of the Act, 1996 has committed an error in treating the arbitral award dated 30.12.2013 as an additional award while dismissing the application filed by the appellants herein. 29. Mr. Saurabh Soparkar, the learned senior counsel for the respondents, in rebuttal, vehemently argued that the question of correction in the award came up for consideration before the arbitral tribunal on the application filed by the appellants itself, who themselves had approached the learned Arbitrator seeking addition of the claims of some of the partners with the assertion that they have been left out from the final statement in the award about re-distribution of shares amongst the partners who were continued as such on the date of dissolution, i.e. 30.04.2004.
There was an admission on the part of the appellants that there was an error in the computation of shares of the continuing partners as on 30.04.2004 and the process of re-computation was required to be made and for the purpose, the arbitral tribunal was required to look into the material on record. 30. The submission is that, at least, it was an admitted case of even the appellants that some of the continuing partners as on 30.04.2004 had been left out. The correction could be made by inclusion of the names of the left out partners and working out of percentage of shares of each continuing partner, which has been done in the additional award dated 30.11.2013. For correction/rectification, which was prayed even by the appellants, the recall was permitted, if required. There was an error in the original award on the part of the learned Arbitrator, who while re-working of the shares of the continuing partners had left out the partners, one of them is Jitendra K. Shah the contesting respondent herein. The arbitral tribunal had revisited the award to correct the computational errors and while doing so, it was required to look into the documentary evidences on record. The shares were given to the partners on the asking of the appellants. It was admitted to the appellants that Jitendra K. Shah, one of the respondents herein, continued as partner on 30.04.2004, whose share has not been included in the original award. The additional award dated 30.11.2013, therefore, cannot be said to suffer .from any patent illegality. The Commercial Court under Section 34, therefore, cannot be said to have committed any illegality in rejecting the application of the petitioner. 31.
The additional award dated 30.11.2013, therefore, cannot be said to suffer .from any patent illegality. The Commercial Court under Section 34, therefore, cannot be said to have committed any illegality in rejecting the application of the petitioner. 31. It was further argued by the learned senior counsel for the respondents that the questions this court need to answer in the present proceeding are :- (i) Whether the Commercial Court erred in upholding the order passed by the learned Arbitrator within the scope of Section 34 of the Act, 1996, can only be examined if the order passed by the Commercial Court finds foul of the said section, or else Section 37 has no applicability; (ii) On an application made under Section 33 of the Act, 1996, the additional or corrected award passed by the learned Arbitrator would again be an award which unless found to be hit by any ground under Section 34, cannot be disturbed under Section 37; (iii) Once the application is made under Section 33 filed at the instance of the appellants is allowed and the original award is corrected, the appellants are estopped from challenging the additional award dated 30.11.2023. (iv) In any case, the corrected or additional award is passed in accordance with law, or in any case it is one of the possible interpretations, and, as such, it could not be disturbed under Section 34 of the Act, 1996 and was accordingly, not disturbed by the Commercial Court. Now the jurisdiction in appeal under Section 37 is even narrower than Section 34 of the Act, 1996, which is one more reason not to interfere in the award. (v) As regards the jurisdiction of the arbitral tribunal under Section 33, it was submitted that once the application under Section 33 is filed, the mandate of the arbitral tribunal will automatically be extended and the arbitral proceedings would not be terminated in view of the Section 33(3) of the Act, 1996. The arbitral tribunal cannot be said to have become functus officio and it had power to revisit the award. 32. In support of the above questions framed by the learned senior counsel for the respondents, it was vehemently argued that the additional award dated 30.11.2013 would fall within the scope of both the provisions under sub-sections (1)(a) and (1)(b) of Section 37 of the Act, 1996.
32. In support of the above questions framed by the learned senior counsel for the respondents, it was vehemently argued that the additional award dated 30.11.2013 would fall within the scope of both the provisions under sub-sections (1)(a) and (1)(b) of Section 37 of the Act, 1996. Once there is a computation error, as admitted to the appellants, it was open for the arbitral tribunal to correct the errors and in the process, re-computation if required, is to be done. It was found by the arbitral tribunal while passing the additional award dated 30.11.2013 that the shares were determined without hearing the parties and further the names of the some partners including one of the contesting respondents were omitted. Even one partner admittedly having been left out from the process of re-determination of shares of the partners continuing as on 30.04.2004 would require re-determination as the shares of the partners was not properly determined. There was, thus, admittedly a computation error. The question is as to how that error would be corrected. It was argued that the arbitral tribunal was empowered to correct the errors by all means including by revisiting the award or having a relook to the documentary evidences on record. 33. Placing Section 34(2)(b)(ii), it was vehemently argued that the only ground available to interfere in the arbitral award prior to the amendment brought in the year 2015, was a situation where the Court finds that the award is in conflict with the public policy of India. The phrase ‘public policy of India’ has to be understood with reference to the decision of the Apex Court in Associate Builders vs. Delhi Development Authority [ (2015) 3 SCC 49 ], wherein it was held that the phrase ‘public policy of India’ used in Section 34(2)(b)(ii) is to be looked into under certain specified circumstances and the grounds contained in sub-section(2)(a) of Section 34 cannot be raised to examine the merits of the arbitral award. What would be the patent illegality has further been clarified in paragraph No. 32.1(a) of the decision in Associate Builders (supra), wherein it was held that the contravention of the substantive law of India would result in setting aside of an arbitral award. However, this must be understood in the sense that such illegality must go into the root of the matter and cannot be of trivial nature. 34.
However, this must be understood in the sense that such illegality must go into the root of the matter and cannot be of trivial nature. 34. It was urged that the shares, in the instant case, have been determined in the impugned award as per the substantive law. The procedure adopted may or may not be correct. Procedural flaws by itself would not give rise a ground for setting aside the award under Section 34(2) of the Act, 1996. The first original award dated 17.02.2012 was against the terms of the contract and if the learned Arbitrator considers the contract in a reasonable manner while making the additional award dated 30.11.2013, the subsequent award cannot be set aside. No fair-minded or reasonable man could point out any flaw in the additional award dated 30.11.2013. 35. It was argued that once it was held that the learned Arbitrator had jurisdiction to make the additional award, this Court will not exercise its jurisdiction unless it is found that there exists any legal bar on the face of the award. Section 33 permits correction in the award and with the request made by all the parties including the appellants to make correction, the Tribunal found the error. Once it found the error, it cannot turn away the parties saying sorry. The arbitral tribunal was bound to correct the award on the basis of the admitted documents on record. 36. Even otherwise, no interference is required in the additional award dated 30.11.2013, as any interference in the said award would result in great injustice, as it would amount to denial of share to one of the partners namely Mr. Jitendra K. Shah. It is settled law that if the order passed by the Court results in reviving a wrong order, the court would desist from setting aside the said order to revive the illegal order. The additional award having been passed on the application of both the parties cannot be set aside within the limited scope of Section 37, which is confined to the grounds stated in Section 34 of the Act, 1996. 37. Reliance is placed on the decisions of this Court in Gujarat Water Supply and Sewerage Board & Anr.
The additional award having been passed on the application of both the parties cannot be set aside within the limited scope of Section 37, which is confined to the grounds stated in Section 34 of the Act, 1996. 37. Reliance is placed on the decisions of this Court in Gujarat Water Supply and Sewerage Board & Anr. vs. Man Industries (India) Limited being FA No. 1257 of 2024 dated 22.3.2024 and in Reliance Media Works Limited vs. Nishant Construction Pvt. Ltd. being First Appeal No. 1548 of 2021 decided on 01.07.2024 to submit that the law stated therein would be applicable in the facts of the instant case to save the additional award dated 30.11.2013. 38. In rejoinder, it was vehemently argued by Mr. Kamal Trivedi, the learned senior counsel appearing for the appellants that the dispute decided by the learned Arbitrator was with regard to the shares of the retiring partners. The question was as to whether the distribution of share would be on pro-rata basis or it is in accordance with the consent terms or consent decree. Once the learned Arbitrator had rejected the findings on the distribution of share of retiring partner by refusing to accept the consent terms stating that continuing partners as on 30.04.2013 are entitled to distribution of share of the retiring partners on pro-rata basis, the said finding could not have been upturned or recalled in the garb of computation error. So far as the claims of the appellants that they have asked for inclusion of the names of the partners, who were left out accidentally and who were continuing partners as on 30.04.2004, the said error can be said to be an error of the nature which did not require any fresh determination or dispute between the parties. The only requirement before the learned Arbitrator was to include the names of the partners who were continued as on 30.04.2004 and re-determine the shares amongst the partners on pro-rata basis as per its own finding. Beyond that, any further consideration to revisit the findings returned about the admission of the documents and conclusion finally arrived at was not permissible.
The only requirement before the learned Arbitrator was to include the names of the partners who were continued as on 30.04.2004 and re-determine the shares amongst the partners on pro-rata basis as per its own finding. Beyond that, any further consideration to revisit the findings returned about the admission of the documents and conclusion finally arrived at was not permissible. The fact that the appellants admitted that the name of Jitendra K. Shah was not included in the list prepared by the learned Arbitrator of seven partners in the award requiring re-determination of their share, did not confer power of revision upon the arbitral tribunal Even otherwise, the prayer made in the application filed by the respondent itself was for review of the award by revising the findings taking into account the fresh evidence brought on record under Section 33 of the Act, 1996, which was wholly beyond the jurisdiction of the learned Arbitrator. 39. Having heard the learned senior counsels for the respective parties and perused the record, as noted hereinabove, it is pertinent to note, at this juncture, that the Arbitration and Conciliation Act, 1996 is a self-contained Code and as the Act itself does not provide any remedy of review, it is manifest that review of arbitral award is impermissible. It is settled legal proposition that unless statute/rules so permit, the review application is not maintainable in case of judicial/quasi judicial orders. 40. In absence of any provision in the Act, 1996 granting express power of review, the power of review cannot be exercised as an inherent power. The review being the creature of the statute, must be conferred by law either specifically or by necessary implication. The review is also not an appeal in disguise. A reference be made to the decisions of the Apex Court in Devender Pal Singh vs. State, NCT of Delhi Another [ (2003) 2 SCC 501 ], Board of Control for Cricket in India and Another vs. Netaji Cricket Club and Another [ (2005) 4 SCC 741 ], Kalabharati Advertising vs. Hemant Vimalnath Naricharia & Others [ (2010) 9 SCC 437 ] and the judgment of the Bombay High Court in Madhav Structural Engineering Ltd. Mumanbi vs. Maharashtra State Road Development Corporation Ltd.. Mumbai [2013 (7) Bombay CR 373]. Similar views have been expressed in the decisions relied upon by the learned counsel appearing for the appellants noted hereinabove. 41.
Mumbai [2013 (7) Bombay CR 373]. Similar views have been expressed in the decisions relied upon by the learned counsel appearing for the appellants noted hereinabove. 41. Further, keeping in mind the provisions contained in Section 33 discussed in detail hereinabove and the scope of review of arbitral award, we may note the reasoning given in the impugned award dated 30.11.2013, which is termed as an additional award by the contesting respondents and has been saved as such by the Commercial Court with the dismissal of the application under Section 34 of the Act, 1996. While dealing with the application under Section 33, though the Tribunal has noted that in so far as other issues are concerned, it is not necessary to reopen those issues and permit the parties to re-agitate on them under Section 33 of the Act, 1996, however, so far as the claim of the partners and their shares at the time of dissolution of the firm are concerned, errors appear to have been crept in, in the final award, because the attention of the parties was not specifically focused on the issue. It has been noted further that for this reason, the parties were allowed to make their submissions at the stage of application under Section 33. The learned Arbitrator has further noted that not hearing the parties on the above noted issues, would not be an error committed by the Tribunal, rather it can be considered to be a jurisdictional error as the attention of the parties was not focused on the said issues. It has further proceeded to consider the claim of the parties afresh in paragraph No. ‘4’ of the impugned in the following manner : “So far as 3rd set of claimants is concerned, there appears to be substance in their contention. At the time of hearing of the arbitral proceedings, only oral evidence led was that of Manubhal Kanaiyalal Shah of 3rd set of claimants. His affidavit was recorded at Exh. 18 of the arbitral proceedings. It is important to note that there was no cross-examination of this witness. In other words, the statements made by him on oath had gone unchallenged.
His affidavit was recorded at Exh. 18 of the arbitral proceedings. It is important to note that there was no cross-examination of this witness. In other words, the statements made by him on oath had gone unchallenged. In para 3 of his affidavit, Manubhai stated that 1" group of partners as mentioned in the Partnership Deed retired from the firm with the knowledge and consent of all other partners and their shares were taken over by opponents No. 1 and 2 as per the details given in the reply to the application under Section 17 of the Act. This statement given by Manubhai on oath has not been challenged by his cross examination. The 1st group of partners viz. M/s. Mohanlal Thakershibhai Patel and ors. had filed Suit being Civil Suit No.2567 of 1989 in the City Civil Court to retire from the partnership firm and claimed value of their shares. In this suit, compromise was arrived at and the shares of aforesaid partners Mohanlal Thakershibhai Patel and ors were taken over by 3rd set of claimants (Opponent Nos. 1 and 2 of the application under Section 17 of the Act). It may be mentioned here that in the present proceedings, 3rd set of claimants have produced certified copy of the consent terms filed in the City Civil Court. In the arbitral proceedings they had filed only Xerox copy of the consent terms and therefore these consent terms were not taken into consideration. However, as observed above, since the attention of the parties was not focused on the issue regarding the names and shares of the partners at the time of dissolution and since no one has challenged the statement of Manubhal Shah, it was perhaps not considered necessary for the claimants of 3rd set to produce certified copy of the consent terms. Had their attention been drawn to the fact that xerox copy of the consent terms cannot be taken into consideration, they would have produced certified copy. Further, the certified copy of the consent terms or its xerox copy had to be considered in the light of the unchallenged statement of Manubhai Shah. Therefore, there does appear to be an error in not accepting the plea of 3rd set of claimants that they had purchased the shares of Mohanlal Thakershibhai Patel and ors, as stated above.
Further, the certified copy of the consent terms or its xerox copy had to be considered in the light of the unchallenged statement of Manubhai Shah. Therefore, there does appear to be an error in not accepting the plea of 3rd set of claimants that they had purchased the shares of Mohanlal Thakershibhai Patel and ors, as stated above. In my opinion, in view of this unchallenged statement of Manubhai Shah, the 3rd set of claimants ought to have been given opportunity to produce the certified copy of the consent terms which they have now produced. In my opinion, having regard to the evidence of Manubhai Shah and the certified Copy of the consent terms, the ultimate conclusion reached by the Tribunal as regards the statement of Manubhai Shah as stated above is not correct. It is also important to note that the parties been have accepted the audited accounts prepared by the Chartered Accountant of the firm.” 42. A bare reading of the above extracted paragraph from the impugned award indicates that the learned Arbitrator has proceeded to :- (a) re-appreciate the oral evidence, the statement made by Manubhai Kanaiyalal Shah noticing that his statement on oath had not been challenged by his cross-examination; (b) admit on record the certified copy of the consent terms filed in the Civil Court produced before it under Section 33 proceedings by the 3rd set of claimants and noted that in the original arbitral proceedings as only xerox copy of the consent terms was filed, they were not taken into consideration; (c) note that it was not felt necessary by the 3rd set of claimants to produce certified copy of the consent terms in the original arbitral proceedings as the parties were not focused on the issue regarding the names and shares of the partners at the time of dissolution. Had their attention been drawn, they would have produced the certified copy. (d) record that the certified copy of the consent terms or its xerox copy had to be considered in light of the un-challenged statement of Manubhai Shah, thus, re-appreciation of evidence namely oral statement of Manubhai Shah on the basis of the certified copy of consent terms filed before the learned Arbitrator under Section 33 proceedings, was permissible. 43.
(d) record that the certified copy of the consent terms or its xerox copy had to be considered in light of the un-challenged statement of Manubhai Shah, thus, re-appreciation of evidence namely oral statement of Manubhai Shah on the basis of the certified copy of consent terms filed before the learned Arbitrator under Section 33 proceedings, was permissible. 43. With the above, the learned Arbitrator has reached at the conclusion that an error was committed in not accepting the plea of the 3rd set of claimants that they had purchased the shares of Mohanlal Thakershibhai Patel and others (1st set of retiring partners), and thus, held that the earlier conclusion arrived at in the original award was incorrect. 44. The learned Arbitrator has further proceeded to examine the shares of the partners at the time of dissolution of the firm by accepting the certificate of M/s. Chandulal N. Shah and Co. submitted by the 3rd set of claimants in Section 33 proceedings and went on to hold that there was no reason to dis-believe the certificate of the said firm showing profit/loss sharing ratio of the partners, when the parties have accepted the audited accounts of the aforesaid firm of Charted Accountant and that the certificate reflects the names of partners and their share at the time of dissolution. 45. With the above findings, while holding that there were mistakes in the names of the partners and their shares, it was concluded by the learned Arbitrator in Section 33 proceedings that the shares of the partners were to be re-distributed in the following manner : “1. Manubhai Kanaiyalal Shah 0.20 2. Virendra Kanaiyalal Shah 0.20 3. Jitendra Kanaiyalal Shah 0.20 4. Shantaben Jayantilal Shah 0.10 5. Jairamdas Chauharmal Meghrajani 0.10 6. Labhshankar Bhagwandas Raval 0.05 7. Umesh Ratilal Shah 0.05 8. Ratilal Jethalal Shah HUF 0.05 9. Bharatbhai 0.05 S/o. Mahendrakumar Bhagwandas Raval --------- Total 1.00” 46. From a comparison of the description given in the original award dated 17.02.2012 and the impugned order dated 30.11.2013, it may be noted that there is a substantial change in the shares of the surviving partners.
Umesh Ratilal Shah 0.05 8. Ratilal Jethalal Shah HUF 0.05 9. Bharatbhai 0.05 S/o. Mahendrakumar Bhagwandas Raval --------- Total 1.00” 46. From a comparison of the description given in the original award dated 17.02.2012 and the impugned order dated 30.11.2013, it may be noted that there is a substantial change in the shares of the surviving partners. It was submitted by the learned counsel for the appellants that though the names and number of partners, as prayed for by the appellants were added in the award dated 30.11.2013, but re-distribution of the share was made as per the request of the respondents and that too on consideration of the additional documents produced by the respondents in Section 33 proceedings. 47. This assertion is to be appreciated from the findings returned in the original award. It is categorically observed therein that except the documents, which were exhibited, no other documents having been proved in accordance with law was required to be exhibited and that the exhibited documents were those which were admitted by all the parties. It is further noted that there were objections against the audited accounts of the firm being received in evidence and apart from the documents which were proved before the arbitral tribunal and exhibited, as also the admitted accounts of the Chartered Accountant, should be taken as duly proved and the accounts should be exhibited as correctly appreciated accounts of business of the firm. 48. In so far as the claim of the 3rd set of claimants based on the consent terms filed in the City Civil Court, it was categorically held in the original award that the consent terms have not been placed on record nor they have been proved in accordance with law. It was held that the copy of the consent terms which was placed on record being the xerox copy of the so called certified copy, no reliance can be placed on the same. The agreement on which 3rd set of claimants had relied, was also not placed on record. Resultantly, in so far as the re-determination of the shares of the partners, the learned Arbitrator had relied upon the documents which were admitted to all the parties as also undisputed account produced before it.
The agreement on which 3rd set of claimants had relied, was also not placed on record. Resultantly, in so far as the re-determination of the shares of the partners, the learned Arbitrator had relied upon the documents which were admitted to all the parties as also undisputed account produced before it. It seems that there was mistake in the description of the names of the partners who were found to be continuing as on the date of dissolution of the firm, i.e. 30.04.2004 and one partner has been left out and the name of dead person had been shown in the list of seven persons in the original award dated 17.02.2022. The application for correction in the names of the partners and for re-distribution of the shares amongst the continuing partners as on 30.04.2004 was, thus, filed by the appellants. 49. At least two issues were adjudicated by the learned Arbitrator in the original award dated 17.02.2012 that (i) the shares of the retiring partners were required to be distributed amongst the partners who were continued on the date of dissolution of the firm (on pro-rata basis) and (ii) the date of dissolution of the firm was 30.04.2004. Once these issues were already decided by the learned Arbitrator, the findings on the same could not have been up-turned by revisiting the award on the basis of some documentary evidences filed during the course of the proceedings under Section 33. It seems that the learned Arbitrator has upturned its own award dated 17.02.2012 by exhibiting additional evidences on record on the premise that the opinion drawn by him on the previous occasion in the original award was incorrect and the decision to reject the documents filed therein was an error apparent on the face of the record. The learned Arbitrator has acted as a court of appeal to revisit its findings and even has gone beyond the scope of review, which itself is a limited jurisdiction with a view to correct erroneous assumption which in fact did not exist and perpetration whereof was resulted in miscarriage of justice. The learned Arbitrator while allowing the application under Section 33 filed by both the parties, namely the appellants and the respondents herein had taken into account those documents which were not placed before him earlier in the original proceeding or were rejected by him. 50.
The learned Arbitrator while allowing the application under Section 33 filed by both the parties, namely the appellants and the respondents herein had taken into account those documents which were not placed before him earlier in the original proceeding or were rejected by him. 50. In view of the settled law that even review of the findings is impermissible by re-appreciation of evidence on record and that review is not an inherent power, we reached at an irresistible conclusion that the learned Arbitrator has committed an error of law. Reappreciation of evidence to accept the claim of the respondents that re-distribution of share was to be made in accordance with the consent terms allegedly arrived at between the parties in the year 1990 in the Civil Suit was not permissible. The crux of the dispute settled by the learned Arbitrator holding that the shares of the retiring partners were to be re-distributed amongst the partners continued as on 30.04.2004 on pro-rata basis, could not have been touched within the scope of Section 33 of the Act, 1996. 51. The impugned award passed by the learned Arbitrator does not fall in any of the three categories envisaged under Section 33 of the Act, 1996, which are (i) correction of arithmetic, clerical or typographical error or any error of the similar nature, (ii) interpretation on a specific point or part of the award, (iii) additional award as to the claims presented, but omitted from the original award. 52. The impugned award dated 30.11.2013 termed as an additional award having been passed in the disguise of an additional award suffers from the vice of jurisdiction and as such, is liable to set aside. 53. Coming to the submissions made by the learned senior counsel for the respondents on the scope of Section 37 of the Act, 1996, suffice it to note the observations in paragraph No.19 of Associate Builders (supra) with relevance as under :- “19. When it came to construing the expression “the public policy of India” contained in Section 34(2)( b)( ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. [ (2003) 5 SCC 705 : AIR 2003 SC 2629 ] held: (SCC pp. 727-28 & 744-45, paras 31 & 74) “31.
When it came to construing the expression “the public policy of India” contained in Section 34(2)( b)( ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. [ (2003) 5 SCC 705 : AIR 2003 SC 2629 ] held: (SCC pp. 727-28 & 744-45, paras 31 & 74) “31. Therefore, in our view, the phrase ‘public policy of India’ used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term ‘public policy’ in Renusagar case [ Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal. The result would be—award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.” 54. While construing the expression “public policy of India’ contained in Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996, it was held by the Apex court therein that the award can be set aside if it is patently illegal, but the illegality must go to the root of the mater, so unfair and unreasonable that it shocks the conscience of the Court. 55.
55. The decision of the Apex court in ONGC Ltd. vs. Saw Pipes Ltd. [ (2003) 5 SCC 705 ], was noted in para-19 in Associate Builders (supra) while dealing with the ambit and scope of Court’s jurisdiction under Section 34 of the Act, 1996 to set aside the award passed by the arbitral tribunal, which is patently illegal or in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract. 56. While elaborating the phrase “patent illegality” in Associate Builders (supra) it was observed in paragraph Nos. ‘42.1’, ‘42.2’ and ‘42.3’ as under : “42.1. ( a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)( a) of the Act, which reads as under: “28. Rules applicable to substance of dispute.—(1) Where the place of arbitration is situated in India— (a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;” 42.2. ( b) A contravention of the Arbitration Act itself would be regarded as a patent illegality — for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside. 42.3. ( c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under: “28. Rules applicable to substance of dispute.—(1)-(2) (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.” This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground.
An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do.” 57. A careful reading of the observations of the Apex Court in the abovenoted paragraphs indicates that the contravention of the substantive law of India would be an instance of patent illegality, and an award suffering from such illegality will be liable to be set aside. In the instant case, the award dated 30.11.2013 is a result of contravention of Section 33 of the Arbitration and Conciliation Act, 1996, which is a substantive law for the Arbitration in India. The illegality committed by the learned Arbitrator in revisiting its own findings by re-appreciation of evidence on record and exhibiting new evidences to restate the terms and conditions of the arbitral award, goes to the very root of the matter and cannot be said to be trivial in nature. As held by the Apex Court in paragraph No. ‘42.2’ in Associate Builders (supra), the contravention of the Arbitration Act, 1996 itself, would be regarded as a patent illegality. The impugned award dated 30.11.2013, thus, is liable to be set aside being contrary to the provisions of Section 33 of the Act, 1996. 58.
As held by the Apex Court in paragraph No. ‘42.2’ in Associate Builders (supra), the contravention of the Arbitration Act, 1996 itself, would be regarded as a patent illegality. The impugned award dated 30.11.2013, thus, is liable to be set aside being contrary to the provisions of Section 33 of the Act, 1996. 58. Now with regard to the the last issue about the scope of interference under Section 37 of the Act, 1996 which is circumscribed by the grounds stated in Section 34 of the Act, 1996, suffice it to say that once we have reached at the conclusion that the award is in conflict with the public policy and is patently illegal, which is one of the grounds for setting aside of the arbitral award under Section 34 in as stated in Associate Builders (supra), it cannot be accepted that this Court exercising power under Section 37 is precluded from setting aside a patently illegal award passed beyond the jurisdiction of the learned Arbitrator under Section 33 of the of Act, 1996, that too only for the reason that the said issue was not agitated or argued before the Commercial Court in Section 34 proceedings. The powers given to this Court under Section 37, though limited, but has been conferred to set the things right by intervening in case of illegal order passed in the proceedings under Section 34 of the Act, 1996 by the Commercial Court and while doing so, patent illegality in the award passed by the learned Arbitrator cannot be overlooked. We are conscious of the fact that under Section 37, this Court cannot act as a Court of appeal to upturn the findings returned by the Court under Section 34 of the Act, 1996 and recorded by the learned Arbitrator in the arbitral award. But the jurisdictional error committed by the learned Arbitrator goes to the very root of the matter and this aspect was required to be looked into by the Commercial Court while dealing with the application under Section 34 filed by the appellants. 59. Further, for the mere fact that appellants have also filed an application under Section 33 for correction of the apparent error in the original award, the learned Arbitrator was not competent to upturn its own finding to draw a new award in the garb of error apparent on the face of the record. 60.
59. Further, for the mere fact that appellants have also filed an application under Section 33 for correction of the apparent error in the original award, the learned Arbitrator was not competent to upturn its own finding to draw a new award in the garb of error apparent on the face of the record. 60. We are, thus, not impressed with the submissions made by the learned senior counsel appearing for the respondents on the scope of Section 37 of the Act, 1996. 61. Lastly on the submissions made by the learned senior counsel appearing for the contesting respondents that one of the contesting respondents was continued as a partner in the firm as on the date of dissolution of the firm, i.e. on 30.04.2004 and if the impugned arbitral award dated 30.11.2013 is set aside, it would cause injustice to the said partner, pertinent it to note that not only one partner named as Jitendra K. Shah who was left out, was included in the impugned award, but the re-distribution of the shares of the parties on the principles stated in the original award was completely upturned and it is not possible for the Court to sustain the impugned award on the premise that it would revive an allegedly illegal award, namely the original award dated 17.02.2002. On the said issue, it would be relevant to note that it is still open for the parties to approach the competent court by invoking the provisions of Section 34 of the Act, 1996 by seeking exclusion of the time taken in pursuing the proceedings under section 33 to challenge the original award dated 17.02.2002 on the grounds stated in the said provision. While we say so, we may not be misunderstood to have expressed any opinion on the correctness of the original award dated 17.02.2002 and on the issue of limitation in filling the application under Section 34 of the Act, 1996. Our observations in this judgment are confined to the scope of jurisdiction of the learned Arbitrator while dealing with the application under Section 33 of the Act, 1996 and the inquiry has been made accordingly. 62. With the above, while setting aside the judgment and order passed under Section 34 of the Arbitration and Conciliation Act, 1996, as also the arbitral award dated 30.11.2013, the Appeals stand allowed. No order as to costs.
62. With the above, while setting aside the judgment and order passed under Section 34 of the Arbitration and Conciliation Act, 1996, as also the arbitral award dated 30.11.2013, the Appeals stand allowed. No order as to costs. The Civil Applications also stand disposed of, accordingly