GYAN PRAKASH ARYA versus M/S TITAN INDUSTRIES LIMITED on 22 November 2021

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 18.03.2021 passed by the High Court of Karnataka atCBengaluru in M.F.A. No.7098 of 2018 (AA), by which the High Courthas dismissed the said appeal preferred by the appellant herein underSection 37 of the Arbitration and Conciliation Act, 1996 (hereinafterreferred to as the ‘1996 Act’) and has confirmed the judgment and orderpassed by the XXIX[th] Additional City Civil & Sessions Court dismissingarbitration suit (A.S. No. 12/2011) under Section 34 of the 1996 Act andDconfirming the Arbitral Award dated 04.12.2010, further modified videorder dated 14.01.2011, the original appellant has preferred the presentappeal.

2. That the appellant and the respondent herein had entered intoan agreement dated 9.7.2003. A dispute arose between the parties relatingEto recovery of pure gold weighing 3648.80 grams said to have been inthe possession of the appellant herein. The respondent invoked thearbitration clause contained in the agreement dated 9.7.2003. The HighCourt appointed a retired District Judge as the sole arbitrator to adjudicatethe dispute between the parties. The respondent filed a claim petitionFbefore the learned arbitrator seeking the following reliefs:

“a) to direct the respondent to deliver pure gold weighing 3648.80grams to the claimant or in the alternative direct the respondent topay the claimant a sum of Rs.27,00,112.00 towards the cost ofpure gold weighing 3648.80 grams (calculated at the rate of Rs.740per gram);G

b) to direct the respondent to pay to the claimant a sum ofRs.11,74,545.00 towards the interest amount due on the saidamount of Rs.27,00,112.00 (value of pure gold weighing 3648.80grams) from June 2003 till date of filing of this claim and further H

interest on the said amounts at 18% per annum during the pendencyof these proceedings and until realization of the same;

c) to direct the respondent to pay to the claimant a sum ofRs.26,50,338.00 towards the loss which has been caused to theclaimant on account of the defaults committed by the respondent;and

d) award costs of the proceedings and such other and furtherreliefs which are just in the interest of justice and equity.”

3. The learned arbitrator passed an award dated 04.12.2010directing the appellant herein to return to the claimant/respondent withinthree months from the date of the award 3648.80 grams of pure goldalong with interest @ 18% per annum calculating the value of gold atRs.740 per gram from 24.07.2004 and up to the date of delivery of thequantity of gold. The learned arbitrator also passed an award that in thealternative, the appellant shall pay to the claimant/respondent within thesaid period of three months, the market value of 3648.80 grams of puregold along with interest @ 18% per annum calculating the value of thegold at Rs. 740 per gram from 24.07.2004 till the date of payment.

4. Subsequently, the respondent filed an application under Section33 of the 1996 Act and requested to modify the award dated 04.12.2010by correcting computational/arithmetical/clerical error by deleting “atRs. 740 per gram as claimed in the claim statement” at page 14, secondpara, line 20 and to delete “Rs.740.00 per gram” at page 17, para 15(b),line 3, and substitute the same by “Rs.20,747/- per 10 grams” at page17, para 15(b), line 3.

5. The learned arbitrator allowed the said application under Section33 of the 1996 Act vide order dated 14.01.2011 and corrected the originalaward dated 04.12.2010 as under:

“a) the respondent is directed to return to the claimant withinthree months from today 3,648.80 grams of pure gold along withinterest @ 18% per annum calculating the value of gold atRs.740.00 per gram from 24.07.2004 and up to the date of deliveryof that quantity of gold.

b) in the alternative, the respondent shall pay to the claimant withinthe said period of three months the market value of 3,648.80 gramsof pure gold at [Rs.20,747.00 per 10 grams … value substituted]

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Aalong with interest thereon at 18% per annum from 24.07.2004and up to the date of payment.

c) the respondent is directed to pay to the claimant within threemonths from today a sum of Rs.50,000.00 (rupees fifty thousandonly) as the probable loss suffered by the claimant due to hisBfailure to keep up to the time schedule in fulfilling his responsibilityas a job worker. If he fails to pay that amount within three months,it shall carry interest @ 18% per annum from the date of thisaward and up to the date of payment.

d) claimant is also entitled to cost which shall include the expensesCshared by the claimant along with respondent for arranging thevenue for arbitration.

e) advocate’s fee Rs.30,000.00"

6. Being aggrieved, the appellant herein filed an arbitration suitunder Section 34 of the 1996 Act before the City Civil Court. The saidDCourt dismissed the said suit under Section 34 of the 1996 Act. Further,appeal under Section 37 of the 1996 Act has been dismissed by the HighCourt, by the impugned judgment and order.

7. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court and the City Civil Court and theEorder passed by the learned arbitrator allowing the application underSection 33 of the 1996 Act and modifying the award dated 04.12.2010as above, the original appellant – respondent before the arbitrator haspreferred the present appeal.

8. Shri Sukumar Pattjoshi, learned Senior Advocate appearing onFbehalf of the appellant has vehemently submitted that the order passedby the learned arbitrator allowing the application under Section 33 of the1996 Act and consequently modifying the original award dated 04.12.2010as above, is beyond the scope and ambit of the jurisdiction of the arbitratorunder Section 33 of the 1996 Act.

G8.1 It is submitted that as such there was no arithmetical and/orclerical error in the original award passed by the learned arbitrator andwhat was awarded by the learned arbitrator was as per the originalclaim made by the claimant and even the discussion by the learnedarbitrator was on the claim as made by the original claimant after adiscussion on merits and on appreciation of the evidence on record.H

8.2 It is submitted that in exercise of powers under Section 33 ofthe 1996 Act, only an arithmetical and/or clerical error can be correctedin the award. It is submitted that in the application under Section 33 ofthe 1996 Act, the respondent – original claimant came out altogetherwith a new claim which was not permissible in an application underSection 33 of the 1996 Act.

8.3 It is therefore submitted that both, the City Civil Court as wellas the High Court have materially erred in upholding the order passed bythe learned arbitrator allowing the application filed under Section 33 ofthe 1996 Act and modifying the award in purported exercise of powersunder Section 33 of the 1996 Act.

9. Shri Sajan Poovayya, learned Senior Advocate appearing onbehalf of the respondent, as such, is not a position to defend the orderpassed by the learned arbitrator allowing the application under Section33 of the 1996 Act and modifying the award. However, he submittedthat what has been modified by the learned arbitrator on an applicationfiled under Section 33 of the 1996 Act is in the context of the alternativeprayer and the relief being granted by the learned arbitrator. Even if theoriginal award stands as it is, the respondent – claimant shall be entitledto return of the gold which was the first and primary relief claimed andgranted by the learned arbitrator.

10. We have heard the learned counsel for the respective partiesat length.

10.1 At the outset, it is required to be noted that in exercise ofpowers under Section 33 of the 1996 Act, the learned arbitrator hasmodified his earlier award dated 04.12.2010. The original claim made bythe respondent – original claimant is reproduced hereinabove. Whilepassing the original award, the learned arbitrator passed an award asunder:

“a) the respondent is directed to return to the claimant withinthree months from today 3,648.80 grams of pure gold along withinterest @ 18% per annum calculating the value of gold atRs.740.00 per gram from 24.07.2004 and up to the date of deliveryof that quantity of gold.

b) in the alternative, the respondent shall pay to the claimant withinthe said period of three months the market value of 3,648.80 grams A

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of pure gold at Rs.740.00 per gram along with interest thereon at18% per annum from 24.07.2004 and up to the date of payment.

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c) the respondent is directed to pay to the claimant within threemonths from today a sum of Rs.50,000.00 (rupees fifty thousandonly) as the probable loss suffered by the claimant due to hisBfailure to keep up to the time schedule in fulfilling his responsibilityas a job worker. If he fails to pay that amount within three months,it shall carry interest @ 18% per annum from the date of thisaward and up to the date of payment.

d) claimant is also entitled to cost which shall include the expensesCshared by the claimant along with respondent for arranging thevenue for arbitration.

e) advocate’s fee Rs.30,000.00"

Thus, the original award passed by the learned arbitrator was asper the original claim made by the respondent – original claimant and asDper the statement of claim. Even, there was a specific finding by thelearned arbitrator on the alternative relief of payment of value as on thedate of the award. The relevant discussion reads as under:

“However, in the relief para of the claim statement this rate hasbeen shown as rs.740.00 per gram and the value of 3,648.80 gramsEdue to them as Rs.27,00,112.00.

The counsel for the claimant submitted that as has been laid downby the Hon’ble Supreme Court in the decision in Dhian SinghSobha Singh and another vs. Union of India AIR 1958 SC 274 inan action of wrongful detention of plaintiff’s chattel otherwiseFknown as judgment for the plaintiff in detinue is for delivery of thechattel or payment of its value and damages for detention. Thecounsel for the respondent has submitted that in this case it caneither be ordered for return of 3,648.80 grams of pure gold (24carats) or in the alternative the payment of its value as on thedate of the award. I think that this is a just and reasonable courseGto be followed. I also find that the claimant should be allowedappropriate interest on the said market value even in the event ofthe respondent returning the gold itself to the claimant. No doubt,the market value of gold has increased to a great extent as ontoday but in the absence of any reliable proof in this behalf I findHthat as claimed in the claim statement it is just and reasonable to allow interest on the market value of the balance gold in questionat Rs.740 per gram as claimed in the claim statement and alsointerest on this amount at 18% per annum from the date of theclaim statement and up to the satisfaction of the reliefs to begranted under this award issue Nos. 3 and 3a are answeredaccordingly.”

11. Therefore, the original award passed by the learned arbitratorwas as per the original claim made by the respondent in the statement ofclaim. Thereafter, in an application under Section 33 of the 1996 Act, therespondent prayed to modify the award as per the market value of3648.80 grams of pure gold at Rs.20,747/- per 10 grams, instead ofRs.740 per gram and the learned arbitrator allowed the said applicationunder Section 33 of the 1996 Act and modified the original award dated04.12.2010. The modified award is reproduced hereinabove.

12. The original award was passed considering the claim madeby the claimant as per its original claim and as per the statement of theclaim made and therefore subsequently allowing the application underSection 33 of the 1996 Act to modify the original award in exercise ofpowers under Section 33 of the 1996 Act is not sustainable. Only in acase of arithmetical and/or clerical error, the award can be modified andsuch errors only can be corrected. In the present case, it cannot be saidthat there was any arithmetical and/or clerical error in the original awardpassed by the learned arbitrator. What was claimed by the original claimantin the statement of claim was awarded. Therefore, the order passed bythe learned arbitrator on an application filed under Section 33 of the1996 Act and thereafter modifying the original award cannot be sustained.The order passed by the learned arbitrator in the application under Section33 of the 1996 Act is beyond the scope and ambit of Section 33 of the1996 Act. Therefore, both, the City Civil Court as well as the High Courthave committed a grave error in dismissing the arbitration suit/appealunder Sections 34 and 37 of the 1996 Act respectively. The modifiedaward passed by the learned arbitrator allowing the application underSection 33 of the 1996 Act cannot be sustained and the same deservesto be quashed and set aside.

13. In view of the above and for the reasons stated above, thepresent appeal is allowed. The impugned judgment and orders passedby the High Court in an appeal under Section 37 of the 1996 Act andCity Civil Court in arbitration suit under Section 34 of the 1996 Act and A

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Athe order passed by the learned arbitrator dated 14.1.2011 modifying theoriginal award dated 04.12.2010 are hereby quashed and set aside.Consequently, the original award passed by the learned arbitrator dated04.12.2010 stands restored. However, in the facts and circumstances ofthe case, there shall be no order as to costs.

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Devika Gujral

Appeal allowed.

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