Section 33 of the Arbitration & Conciliation Act, 1996: Correction and Interpretation of Award; Additional Award

Preface:

Section 33 of the Arbitration & Conciliation Act, 1996, is similar to Section 152 of the Code of Civil Procedure, 1908 as the latter provision also speaks of correction of judgments or decrees or orders on account of clerical or arithmetical mistakes or errors arising from accidental slip or omission. Section 33 of the A & C Act essentially is in two parts. One part speaks of and deals with what is known as an additional award on account of the arbitral tribunal omitting to deal with certain claims which have been made before it and which aspect is the subject matter of Section 33(4) of the A & C Act, 1996 with the related sub-sections being sub-sections (5) to (7) of Section 33 of the A & C Act, 1996.

Once there is an additional award, it is considered as a separate award, and there is no merger of the award already passed for some claims with the additional award. The later additional award is given by law a status of an ‘additional award’. When there is correction to the award, arithmetical or clerical, the original award passed merges in the corrected award and hence, the period of limitation necessarily and only starts by applying the doctrine of merger from the receiving of the corrected copy of the corrected/amended award.

Section 34(3) of the A & C Act, 1996 on literal reading provides that the period of three months commences, for filing of the objections, from the date of “disposal” by the tribunal of an application made under Section 33 of the A & C Act, 1996. It is pertinent to mention that whereas the first part of Section 34(3) of the A & C Act, 1996 talks of three months period for filing of objections from receiving of the arbitral award, the later part of Section 34(3) of the A & C Act, 1996 talks of commencement of period, not from receiving  of the copy of the amended award pursuant to allowing an application under Section 33 of the A & C Act, 1996 but from the date of disposal of the application filed under Section 33 of the A & C Act, 1996. It is beyond debate that objections to an arbitral award are to be filed only after receiving the copy of the award and this is obviously because it is only when the award is read and understood, can the grievance be found on account of a particular issue being decided in a particular manner. What requires emphasis is that an award has necessarily to be read before the period of limitation can be said to have commenced for filing of objections to an award and for which there has to be available a copy of the award.

It could not be the intention of the legislature that without knowing and understanding what is the award, and more particularly what is the corrected award under Section 33 of the A & C Act, 1996, and which can be properly known only when a copy of the award is received, the period of limitation should be allowed to start, that is, not from when the copy of the award (or corrected/amended award) is received but from the date of disposal of the matter by the arbitral tribunal (or from date of disposal of the application under Section 33 of the A & C Act, 1996 by the arbitral tribunal).

Statutory Provisions:

Section 33 of the A & C Act, 1996 states 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.

(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 sub-section (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.”

Section 34(3) of the A & C Act, 1996 states as under:

“34. Application for setting aside arbitral award-

(1) XXXXX

(2) XXXXX

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal:

Provided that if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) XXXXX

(5) XXXXX

(6) XXXXX”

Interpretation to Section 34(3) of the A & C Act, 1996:

The period of limitation for preferring objections to the corrected/amended award (that is after the award has been corrected/amended, by exercising powers under Section 33 of the A & C Act, 1996) is to start from when the copy of the amended/corrected award is received by the party to the arbitral proceeding, and not from when the application preferred under Section 33 of the A & C Act, 1996 is disposed of. Therefore, the words “request had been disposed of” appearing in Section 34(3) of the A & C Act, 1996 are to be read to mean when the copy of the arbitral award (corrected/amended) has been received by the party to the arbitral proceeding. To give literal interpretation to the later part of Section 34(3) of the A & C Act, 1996 (“request had been disposed of”) would result in absurdity as a person has to necessarily read an award in order to decide the objections to the same, and, a person can read the award only after he/she receives the copy of the award.

Provision of filing objections under Section 34(3) of the A & C Act, 1996 in some way can be said to be similar to filing of a challenge to the appellate forum from a judgment of a lower court and to which appeals are filed only after receiving the certified copy of the judgment because it is the judgment which gives the rationale (and the reasons) for passing it. The period of time spent in obtaining the certified copy of the judgment/order is excluded from the period of limitation spent in filing the appeal against the said judgment/order. It is only after reading the rationale (and the reasons) and the language of the judgment that the grounds of appeal or the grounds of objections under Section 34(3) of the A & C Act, 1996 to an award can be drafted. Therefore, if the later part of Section 34(3) of the A & C Act, 1996 (“request had been disposed of”) is read literally then only absurdity will result, and it is settled law that absurdity has to be avoided while interpreting a legal provision.[1]

In the matter of: State of Arunachal Pradesh V/s Damani Construction Co., (2007) 10 SCC 742:

In the matter of Damani Construction Co. (Supra) the Hon’ble Supreme Court of India was pleased to hold that an application preferred under Section 33 of the A & C Act, 1996 cannot be in the nature of review, it can only be for curing arithmetical errors, clerical errors and/or typographical errors, and further, it can be preferred for seeking clarification albeit certain portions of the arbitral award and/or for pointing out the issues which the arbitral tribunal omitted to adjudicate upon.

If an application under Section 33 of the A & C Act, 1996 is preferred to seek review of the arbitral award then the same would not only be dismissed for trending outside the scope of Section 33 of the A & C Act, 1996 but also no benefit as regards the period of limitation would be given to the applicant so far as Section 34 of the A & C Act, 1996 is concerned, that is to say that, the period of limitation would be deemed to have commenced from the date when the copy of the arbitral award was received by the applicant and not from the date when the application under Section 33 of the A & C Act, 1996 is disposed of as dismissed by the arbitral tribunal.

A bare perusal of Damani Construction Co. (Supra) would show that, even if an application is titled as an application under Section 33 of the A & C Act, 1996 but the same is beyond the scope of Section 33 of the A & C Act, 1996, and is in fact in the nature of a review application, then the period spent in the pendency of the application under Section 33 of the A & C Act, 1996 will not be excluded for determining the limitation period for filing of objections under Section 34 of the A & C Act, 1996.

For ready reference Para 8 and Para 9 from Damani Construction Co. (Supra) are extracted here under-

“8. Firstly, the letter had been designed not strictly under Section 33 of the Act because under Section 33 of the Act a party can seek certain correction in computation of errors, or clerical or typographical errors or any other errors of a similar nature occurring in the award with notice to the other party or if agreed between the parties, a party may request the arbitral tribunal to give an interpretation of a specific point or part of the award. This application which was moved by the appellant does not come within any of the criteria falling under Section 33 (1) of the Act. It was designed as if the appellant was seeking review of the award. Since the Tribunal had no power of review on merit, therefore, the application moved by the appellant was wholly misconceived. Secondly, it was prayed whether the payment was to be made directly to the respondent or through the Court or that the respondent might be asked to furnish Bank guarantee from a nationalized Bank as it was an interim award, till final verdict was awaited. Both these prayers in this case were not within the scope of Section 33. Neither review was maintainable nor the prayer which had been made in the application had anything to do with Section 33 of the Act. The prayer was with regard to the mode of payment. When this application does not come within the purview of Section 33 of the Act, the application was totally misconceived and accordingly the arbitrator by communication dated 10.04.2004 replied to the following effect:

‘However, for your benefit I may mention here that as per the scheme of the Act of 1996, the issues/claims that have been adjudicated by the interim award dated 12.10.2003 are final and the same issues cannot be gone into once again at the time of passing the final award.’

9. Therefore, the reply given by the arbitrator does not give any fresh cause of action to the appellant so as to move an application under Section 34(3) of the Act. In fact, when the award dated 12.10.2003 was passed the only option with the appellant was either to have moved an application under Section 34 within three months as required under Sub-section (3) of Section 34 or within the extended period of another 30 days. But instead of that a totally misconceived application was filed and there too the prayer was for review and with regard to mode of payment. The question of review was totally misconceived as there is no such provision in the Act for review of the award by the arbitrator and the clarification sought for as to the mode of payment is not contemplated under Section 33 of the Act. Therefore, in this background, the application was totally misconceived and the reply sent by the arbitrator does not entitle the appellant a fresh cause of action so as to file an application under Section 34(3) of the Act, taking it as the starting point of limitation from the date of reply given by the arbitrator i.e. 10.04.2004.”

Bombay High Court decision in the matter of: Amit Suryakant Lunavat V/s Kotak Securities, Mumbai, 2010 (6) Mh. L. J. 764, stands overruled:

In the matter of Amit Suryakant Lunavat (Supra) it was observed that-

“…13. There is no justification, as contended, to accept the submission in view of the mandate of Section 34 and considering the scheme and purpose of the Arbitration Act that because the application under Section 33 of the Act was filed and it was rejected subsequently, therefore, the limitation period commenced afresh from the date of such decision of the award. In my view, it is contemplated only on a situation where the Arbitrator corrects or interprets and/or add or decide to add any additional claims and modify the award as only in such cases the original award loses its originality and therefore an application for setting aside the award needs to be filed within three months from the date of receipt of such corrected or modified award…”

That the Hon’ble Supreme Court of India, in the matter of: Ved Prakash Mithal & Sons V/s Union of India, (Special Leave to Appeal (C) No. 20195/2017, Date of Decision: 08.08.2018) while overruling the decision in the matter of Amit Suryakant Lunavat (Supra) observed that:

1.   Section 34(3) of the A & C Act, 1996 specifically speaks of the date on which a request under Section 33 of the A & C Act, 1996 has been “disposed of” by the Arbitral Tribunal.

2.   That a “disposal” of the application can be either by allowing it or dismissing it. It is not necessary that the arbitral award is compulsorily corrected/modified/amended on an application moved under Section 33 of the A & C Act, 1996, so that, benefit as regards the period of limitation provided under Section 34(3) of the A & C Act, 1996 is availed.