November 22, 2021: The Supreme Court bench comprising of Justice M.R. Shah and Justice B.V. Nagarathna said that, except in cases of arithmetical and/or clerical error an arbitral award can be modified and only such errors can be rectified.
The case in which the aforesaid observation was made, the arbitrator passed an award directing a party to the dispute to return 3648.80 grams of pure gold along with interest at the rate of 18% per annum to the claimant. While in the alternative, the appellant was directed to pay the market value of 3648.80 grams of pure gold along with interest at the rate of 18% per annum. An application was made under Section-33 of the Arbitration & Conciliation Act, 1996 and accordingly the arbitrator made certain corrections in the award.
Thereafter, one of the parties to the dispute filed an application to set aside the modified arbitral award but it was diminished. The appeal against the order of dismissal was also dismissed.
It was contended before the Supreme Court that there was no arithmetical and/or clerical error in the original award passed by the arbitrator. Thus, the City Civil court and the High Court have materially erred in upholding the order passed by the arbitrator.
The bench agreed with the aforesaid contention and observed that the order passed by the arbitrator in the application is beyond the scope and ambit of Section-33 of the Arbitration & Conciliation Act, 1996. Thus, the bench stated that the modified award passed by the arbitrator cannot be sustained, the same deserves to be quashed and set aside.