2026 INSC 552 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 769-770 OF 2026

GUJARAT WATER SUPPLY AND

SEWERAGE BOARD ... APPELLANT

VERSUS

SARYU PLASTICS PVT. LTD. … RESPONDENT

J U D G M E N T

ALOK ARADHE, J.

1.These appeals arise out of the judgment dated 11.11.2022, as

corrected on 16.12.2022, passed by the Division Bench of the

High Court of Gujarat at Ahmedabad (hereinafter referred to as

“the High Court”).

2.The facts giving rise to the filing of these appeals are stated

hereinafter:

Factual Background

2.1. The appellant, namely Gujarat Water Supply and Sewerage

Board (hereinafter referred to as “the Board”), was

constituted by the State of Gujarat under the provisions of

the Gujarat Water Supply and Sewerage Board Act, 1978

1

(Act No.18 of 1979). The Board was established with the

overarching objective of providing sustainable water supply

and sanitation services across the State of Gujarat.

2.2. The respondent, Saryu Plastics Pvt. Ltd. (hereinafter

referred to as “the Company”), is a company incorporated

under the Companies Act, 1956 and was engaged in the

business of manufacture and supply of PVC pipes. The

Company is registered as a small-scale industrial unit with

the District Industry Centre, Mehasana.

2.3. Between 1998 and 2000, the Board awarded several rate

contracts to the Company for the supply of PVC pipes

covering the years 1998-1999 to 2001-2002. An internal

audit report submitted by M/s. Pipara & Company,

Chartered Accountants, for the year 1999-2000 revealed

certain irregularities and lapses, pointing to alleged excess

payments made to PVC pipe suppliers. Acting upon these

findings, the Board, by order dated 03.10.2001,

commissioned the said Chartered Accountants firm to

conduct a comprehensive audit and verify the extent of

excess payments. The audit report dated 19.06.2002

2

confirmed excess payments by each division during the

relevant period. Consequently, by order dated 29.08.2003,

the Board blacklisted the Company. The disputes between

the parties relate to the supply of PVC pipes during the

period from 1998 to 2002.

2.4. After the passage of more than a decade from the

crystallization of these disputes, the Company requested the

Board to appoint an Arbitrator for their adjudication.

Pursuant to this request, on 03.04.2012, the parties

executed an Arbitration Agreement and one Mr. K.J. Wadher

was appointed as the Sole Arbitrator. Clause 4 of the

Arbitration Agreement stipulated that the mandate of the

Arbitrator would be operative for a period of six months for

the purpose of concluding the arbitral proceedings. The

Agreement further provided that the arbitration proceedings

must be completed within six months, that both parties

shall fully co-operate during this period with a positive

attitude to complete the arbitration within the earmarked

time, and that both parties shall fully co-operate in the

Arbitration Proceeding and act such that the decision can

3

be made within six months from the commencement of the

proceedings.

3. The chronological progression of events which is relevant for the

determination of the issues involved in the appeals is set out in

detail as under: -

3.1.On 19.04.2012, Mr. K.J. Wadher communicated his consent

to act as an Arbitrator.

3.2.On 21.05.2012, the Arbitrator addressed a letter to the

parties seeking submission of certain specified details,

which were required to be furnished prior to 10.06.2012.

3.3.On 22.06.2012, a preliminary meeting of the Arbitral

Tribunal was convened, at which directions were issued for

filing of pleadings. The Statement of Claim (SOC) was to be

filed by 10.07.2012, with a reply thereto to be filed within

one month. The parties were also called upon to produce

documents sought vide the Arbitrator’s letter dated

21.05.2012.

3.4.On 29.09.2012, the Company filed its Statement of Claim

raising an aggregate claim of Rs.24,57,99,732/- against the

Board on various courts.

4

3.5.On 03.10.2012, the Company filed a revised Statement of

Claim at the request of the Board.

3.6.By 21.11.2012, the time limit for concluding arbitration

proceedings had expired on 18.10.2012. However, the

Arbitrator requested the parties to grant an extension for

rendering the Arbitral Award till 31.03.2012.

3.7.On 26.12.2012, the Board issued a communication

consenting to the extension of the arbitral period till

31.03.2013.

3.8.On 16.01.2013, the Company issued a further

communication also consenting to extension of the period

till 31.03.2013.

3.9.On 02.03.2013, at the second arbitral meeting, the

Arbitrator requested a further extension to render the

Arbitral Award till 30.06.2013, and the parties consented to

the same. The Record of Proceedings shows that, despite the

submission of the SOC five months prior, the Board had

still not submitted a point-wise reply.

3.10.On 07.05.2013, 11.05.2013, 24.05.2013 and 25.05.2013,

arbitration proceedings were scheduled but the Board

5

remained absent on each occasion for one reason or

another.

3.11. On 05.06.2013, the Company further revised its SOC.

3.12.On 12.06.2013, the Arbitrator issued a letter recording that

the parties had delayed the proceedings and that, in

consequence, the time to render the Arbitral Award required

extension up to 30.09.2013. The letter specifically noted

that the Board had not been attending the arbitration

proceedings, which indicated that the Board was not serious

about resolving the dispute.

3.13.On 27.06.2013, at the third Arbitral Meeting, the Arbitrator

recorded that the Board had still not filed a point-wise

factual reply to the SOC of the Company, despite repeated

reminders and letters sent on 02.03.2012, 20.05.2013 and

12.06.2013, as well as the Company’s supplementary letters

dated 19.03.2013, 28.03.2013 and 18.05.2013.

3.14.On 28.09.2013, the Arbitrator addressed a letter to the

parties recording that the Board had given assurances to

submit its point-wise factual reply to the claim statement,

including all relevant details regarding deposits, within one

6

month before 31.07.2013. Despite the passage of two

further months, the Board was unable to fulfil its

assurances and had given a vague letter dated 13.09.2013

citing invalid reasons.

3.15.On 01.12.2013, the Arbitrator took note of the fact that the

Company had submitted its SOC on 10.07.2012, which was

revised on 01.10.2012. Despite multiple extensions,

reminder letters and the lapse of several months, the Board

had not acted seriously and had avoided attending the

arbitration meetings by furnishing varying reasons. The

Arbitrator granted the Board time till 31.12.2013 to submit

its reply and extended the time to render the Arbitral Award

till 31.03.2014.

3.16.On 26.12.2013, the Board filed its final Reply to the SOC.

3.17.On 20.02.2014, the Board issued a letter to the Arbitrator

stating, inter alia, that it had filed a detailed Reply to the

SOC and that nothing further was required to be submitted

at that stage. The letter stated that any remaining unclarity

would be clarified during the personal hearing.

7

3.18.On 28.03.2014, the Arbitrator noted that the Board, instead

of providing the factual details sought by the Arbitrator, had

replied with a negative response. The factual details to be

submitted by the Board remained incomplete. The Board

proposed extension of the arbitration date to June, 2014.

Time was granted to the Board till 15.06.2014 to submit the

pending factual details.

3.19.On 09.06.2014, the Arbitrator received the Rejoinder from

the Company dated 05.06.2014. He requested extension of

time till 30.09.2014 to peruse the voluminous documents

and arrive at a final conclusion and pass an Award.

3.20.On 30.06.2014, the Board sought time till 15.08.2014 to

submit a Reply to the Company’s Rejoinder, while

consenting to extension of the period of arbitration till

30.09.2014.

3.21.On 30.09.2014, the Arbitrator noted the failure of the Board

to submit pertinent documents which had been sought by

the Arbitrator and the Company. The Arbitrator stated that

he would require three to four months to arrive at an Award,

8

and on his own account extended time to render the Award

till 31.03.2015.

3.22.On 27.03.2015, the Arbitrator noted the failure of the Board

to address factual clarifications sought by him through

various letters. On account of a fresh submission of five

volumes of documents on 10.03.2015, the Arbitrator sought

further time to render the Award till 30.06.2015.

3.23.On 23.06.2015, the Arbitrator, on his own, extended the

time to render the Award till 31.08.2015 in light of the

voluminous documents.

3.24.On 26.08.2015, the Arbitrator once again requested the

parties to extend the mandate up to 30.09.2015.

3.25.On 04.09.2015, while agreeing to the extension, the Board

alleged that only three Arbitral meetings had been convened

over the preceding three years and that the last meeting had

been convened on 27.06.2013. The Board accordingly

requested that the matter be fixed for a hearing.

3.26.On 29.09.2015, the Arbitrator again requested extension of

his mandate till 15.11.2015.

9

3.27.On 07.10.2015, the Arbitrator issued a communication

fixing a meeting on 15.10.2015, as requested by the Board.

3.28.On 14.10.2015, the Board communicated by email that it

would not be able to attend the Arbitral meeting scheduled

on 15.10.2015.

3.29.On 27.10.2015, the Arbitrator recorded that the matter was

treated as closed as the Board’s representative had not

attended the said meeting. The Arbitrator further stated

that he had prepared the Award on the basis of the

documents submitted, a copy of which was dispatched to

the parties.

3.30.On 27.10.2015, the Arbitrator passed the Arbitral Award

partly allowing the Company’s claims and awarding an

amount of Rs.1.01 Crores with simple interest at 21.675%

on account of payment of outstanding amounts of

Rs.79,98,361/-, and Rs.21,99,157/- on account of

escalation of price. However, the claim regarding

compensation of cost for legal and administrative

proceedings and the cost of arbitration proceedings was

10

rejected. The Award was dispatched by courier on

29.10.2015 and received by the Board on 30.10.2015.

3.31.On 28.10.2015, the Board issued an email stating that its

inability to appear on behalf of the Board cannot be

construed to mean that nothing further required to be

submitted on behalf of the Board. It was further stated that

under such circumstances, the Board had not extended the

mandate, and that it would proceed in accordance with

Section 14 of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as ‘the Act’).

3.32.On 29.10.2015, the Arbitrator sent a reply to the Board’s

letter dated 28.10.2015 stating that by the time the Board’s

email was received, the Award had already been delivered.

3.33.On 08.11.2015, the Arbitrator issued a corrected Award

making corrections to Paragraph 54(c) of the Arbitral

Award.

4. The Board filed an application under Section 34 of the Act on

03.12.2015, which, upon the constitution of the Commercial

Courts, came to be renumbered as a Commercial CMA. On

07.12.2015, the Company filed an application under Section 33

11

of the Act seeking correction in paragraph 54(c) of the Award by

substituting the expression “simple interest” with “compound

interest”.

5. By order dated 01.02.2016, the Arbitrator held that since

proceedings under Section 34 of the Act were already pending

before the Commercial Court, the matter ought to be placed

before that Court for adjudication. On 26.04.2016, the Company

filed an application under Section 33 and 34 of the Act, which

was subsequently withdrawn.

6. By judgment dated 31.01.2017, the Commercial Court rejected

the application filed by the Company under Section 34 of the

Act, holding the same to be not maintainable. The Company

challenged the said order by filing a writ petition before the High

Court, which was withdrawn on 03.08.2017.

7. The Company thereafter filed a review application seeking

restoration of the commercial appeal withdrawn by it and prayed

that the same be heard on merits. By order dated 25.09.2018,

the Commercial Court modified the Arbitral Award and granted

compound interest for the pendente lite period as well.

12

8. By order dated 17.10.2018, the Commercial Court rejected the

application filed by the Board under Section 34 of the Act. The

Board thereafter preferred two appeals challenging (i) the

judgment dated 25.09.2018 passed in the review proceedings,

and (ii) the judgment dated 17.10.2018 rejecting its application

under Section 34 of the Act.

9. The High Court, by judgment dated 11.11.2022, dismissed both

appeals filed by the Board. It is against the said judgment that

the present appeals have been filed before this Court.

SUBMISSIONS

10. Learned senior counsel appearing on behalf of the Board

submitted that the mandate of the Arbitrator stood extended

only up to 30.09.2015. It was contended that the Board had

expressly declined the Arbitrator’s request seeking extension of

mandate till 15.11.2015. It was further submitted that, despite

the expiry of the mandate, the Arbitrator, by communication

dated 07.10.2015, fixed the matter for hearing on 15.10.2015. It

was urged that the letter dated 14.10.2015 sent by the Board

could neither be construed as consent for extension of the

mandate nor as indicating any extended date. Reliance was also

13

placed on the tracking report to demonstrate that the Award had

been dispatched to the Board on 29.10.2015 and was delivered

on 30.10.2015. It was, therefore, contended that the Arbitrator

had proceeded to pass the Award even after expiry of his

mandate and despite receipt of the Board’s communication dated

28.10.2015.

11. It was further contended that the Award had been rendered in

violation of the principles of natural justice and procedural

fairness, without affording an effective opportunity of hearing to

the Board. It was urged that mere participation in arbitral

proceedings does not confer jurisdiction upon the Arbitrator. It

was also submitted that while the Arbitrator had originally

granted simple interest for the pendente lite period and

compound interest for the post-Award period, the Commercial

Court, in exercise of review jurisdiction, impermissibly modified

the Award by granting compound interest for the pendente lite

period as well. It was pointed out that, under the original Award,

the liability of the Board was approximately Rs.30.38 crores,

whereas pursuant to the modified Award, the liability had

escalated to Rs.144.93 crores. It was contended that the

Commercial Court lacked jurisdiction to entertain and allow the

14

review petition. In support of the aforesaid submissions, reliance

was placed on the decision of Bombay High Court

1

and decisions

of this Court

2

.

12.Per contra, learned senior counsel appearing on behalf of the

Company submitted that the Arbitrator had continued the

proceedings by extending the mandate and that the Board had

never objected thereto. It was further submitted that even in its

communication dated 14.10.2015, the Board had not specifically

asserted that the mandate of the Arbitrator had expired. It was

pointed out that the Board had not sought any adjournment or

requested fixation of a further date of hearing. It was therefore

contended that the plea regarding expiry of the Arbitrator’s

mandate is devoid of substance. Learned senior counsel further

submitted that neither the arbitration agreement contemplated

an oral hearing nor had the Board specifically demanded one.

Attention was invited to the Award to contend that, upon a

holistic reading thereof, it becomes evident that the Arbitrator

intended to grant compound interest and that the reference to

1

Bharat Oman Refineries Limited v. M/s. Mantech Consultants, Civil Appeal

No.702 of 2011

2

NBCC Limited v. J.G. Engineering Pvt. Ltd., (2010) 2 SCC 385; Jayesh H. Pandya

and Anr. v. Subhtex India Limited and Ors., (2020) 17 SCC 383; Gayatri

Balasamy v. ISG Novasoft Technologies Ltd., (2025) 7 SCC 1 and Bharat Udyog

Ltd. v. Ambernath Municipal Council through Commissioner and Anr., (2026)

SCC OnLine SC 463.

15

“simple interest” in the operative portion was merely inadvertent.

It was accordingly submitted that the Commercial Court rightly

exercised review jurisdiction in correcting the error and granting

compound interest to the Company. Lastly, it was urged that the

concurrent findings of fact recorded by the Commercial Court as

well as the High Court do not warrant interference by this Court

in exercise of appellate jurisdiction.

13.We have considered the rival submission made on both sides and

have perused the record.

ISSUES

14. The issues which arise for consideration in these appeals are (i)

whether the arbitral mandate had validly subsisted at the time,

the Arbitral Award came to be passed; (ii) whether the Arbitrator

despite letter dated 28.10.2015, sent by the Board dispatched

the Award on 29.10.2015; (iii) whether the arbitral proceeding

were conducted in accordance with principles of natural justice;

and (iv) whether the Commercial Court possessed jurisdiction to

modify the Award in exercise of powers under Section 33(i)(a) of

the Act to substitute the simple interest awarded by the arbitral

tribunal for pendente lite period with compound interest.

16

15. We shall now deal with the first issue i.e., about the subsistence

of the mandate of the Arbitrator at the time when the Award was

passed. As already noticed, the Arbitration Agreement dated

03.04.2012, provided that mandate of the Arbitrator would be

six months. The Arbitrator entered the reference on 19.04.2012.

The mandate of the Arbitrator expired on 18.10.2012, which

admittedly was extended up to 30.09.2014 with consent of the

parties. The Arbitrator by communication dated 30.09.2014

extended his mandate unilaterally. The relevant extract of the

aforesaid communication sent to the Board reads as under: -

“Under the circumstances, to study the

bulky documents submitted by both

the parties (about more than 4000

pages) and for want of proper para wise

reply of Claim Statement / Rejoinder by

the Respondent, I will require at least 3

to 4 Months to come to the conclusion

of amicable and judicious award and

hence the time limit for Arbitration

Proceeding is further extended up to 31

March 2015.”

16. On 27.03.2015, the Arbitrator on his own, extended the time to

render the Award up to 30.06.2015. The relevant extract of the

communication addressed to the Board reads as under: -

17

“This final submission containing

volume 1 to 5 with pages no.1 to 755 is

received by me on DT. 10/03/2015

from the Claimant. The final

submission is also a bulk volume

containing more than 700 pages and to

study the same, minimum 3 months

are required by me so that the judicial

and amicable award be finalised. Thus

the time limit of Arbitration proceedings

is further extended up to 30

th

June

2015 instead of 30

th

March 2015, which

may please be noted.”

17. On 23.06.2015, the Arbitrator again unilaterally extended the

time limit for delivering the arbitration Award up to 31.08.2015.

The relevant extract of the communication dated 23.06.2015

sent to the Board reads as under: -

“The study of the above documents and

the interpretation of the various, legal

and final provisions including the

various conditions given by the

respective chief engineers in their

supply holders etc., the more time will

be required for study of the same and to

workout proper interpretation and

conclude the Arbitration, etc. further

more time will be required by me to

complete the Arbitration Award and

hence the time limit is further extended

up to 31

st

August 2015, which may

please be noted.”

18

18. The Board by a communication dated 04.09.2015 addressed to

the Arbitrator, agreed to extend the mandate of the Arbitrator up

to 30.09.2015. The Arbitrator by letter dated 29.09.2015

requested for extension of mandate till 15.11.2015. The

Arbitrator on 07.10.2015 issued a communication fixing a

meeting on 14.10.2015. The Board responded to the aforesaid

communication by an email dated 14.10.2015. The aforesaid

email reads as under: -

“With reference to above referred letter

it is to inform you that, because of pre-

engagements, it will not be possible to

be present before your honor on

15.10.2015. Please take note of it and

requested to do needful.”

19. Thus, from the aforementioned facts, it is evident that Arbitrator

after expiry of the mandate, on 30.09.2014, which was extended

with the consent of the parties, unilaterally extended the

mandate thrice up to 30.09.2015. The Board did not at any point

of time raise an objection that the mandate of the Arbitrator had

expired. In response to the request of the Arbitrator dated

29.09.2015, for extension of mandate up to 15.11.2015, the

Board did not respond. In response to the communication dated

07.10.2015, of the Arbitrator fixing the date of hearing on

19

15.10.2015, the Board in its email dated 14.10.2015 only

expressed the inability to attend the hearing. The Board did not

take an objection that the mandate of the Arbitrator had already

expired.

20. Party autonomy, coupled with minimal intervention of judicial

authorities, has been the guiding principle for the Act. This is

perhaps the reason for not providing a statutory timeline for

delivering the Awards and prescribing consequences of not

delivering them on time. The absence of time limit under the Act

had resulted in Arbitration remaining pending for several years

without intervention of the Court, thereby defeating the very

object of the Arbitration as a speedy dispute resolution

mechanism. Section 29A of the Act was amended with

retrospective effect from 23.10.2015 to effectively deal with

delays with arbitral proceedings and provided for timeline for

delivery of the Award

3

.

21. In the facts of the present case, Section 29A of the Act does not

apply. At the relevant time, there was no statutory provision

prescribing that an extension of the mandate of the Arbitrator

must be in a particular form or be reduced to writing. The

3

C. Velusamy v. K Indhera; 2026 SCC OnLine SC 142

20

ground of challenge to the Award is not based on breach of any

statutory provision. The Arbitrator had unilaterally extended the

mandate on three occasions and even after expiry of the

mandate had fixed a date of hearing. The Board did not raise any

objection in its email dated 14.10.2015 that the mandate of the

Arbitrator has expired. The Board thus had tacitly agreed to

extension of the mandate of the Arbitrator. The Award was

delivered on 27.10.2015. Thereafter, the Board on 28.10.2015

sent an email that it had not extended the mandate of the

Arbitrator, and it shall proceed under Section 14 of the Act. The

grievance of the Board about the expiry of the mandate of the

Arbitrator is a matter governed by the contract and not by the

statute. The Board participated in the proceeding before the

Arbitrator and had acquiesced with the alleged invalidity and

cannot be allowed to turn around after the Award was passed

and is estopped from challenging the Award on the ground that

the mandate of the Arbitrator had expired. In so far as reliance

placed by the Board on the decision of this Court

4

is concerned,

suffice to say that in the said decision, the Arbitrator did not

have mandate in the absence of a valid arbitration agreement.

4

Bharat Udyog Ltd. (supra)

21

This Court in the aforesaid decision held that question of waiver

or estoppel did not arise as there cannot be any estoppel against

the statute. The said decision has no application to the facts of

the instant case. For the aforementioned reasons, we answer the

first issue in the affirmative.

22. We advert to the second issue i.e., whether the Award was

dispatched on 29.10.2015 after receipt of the email dated

28.10.2015 sent by the Board. The Company in Para 11 have

taken a specific stand that the copies of the Award were sent

through the courier on 27.10.2015 to the parties. It has been

stated by learned senior counsel for the Company that a copy of

the receipt issued by courier was produced before the High

Court and the same has been tendered to us. The aforesaid

receipt discloses that the Arbitrator has dispatched the Award by

courier on 27.10.2015. The Board has placed reliance on

tracking report of the courier service which indicates that the

Award was delivered on 30.10.2015. From perusal of receipt, it is

evident that the copies of the Award were delivered to the parties

on 27.10.2015. We, therefore, answer the second issue in the

negative.

22

23. We deal with the third issue, namely whether the arbitral

proceedings were conducted in accordance with principles of

natural justice. This issue needs to be examined in the light of

the conduct of the Board throughout the arbitration

proceedings. The arbitral proceedings were conducted over a

protracted period stretching from April 2012 to October 2015 –

more than three and a half years. During this period, the Board

was afforded repeated and numerous opportunities to

participate, file pleadings, produce documents, and address the

Arbitrator. The Board’s failure to avail itself of these

opportunities in a timely and effective manner cannot now be

converted into a grievance about denial of natural justice.

24. The factual narrative demonstrates that it was the Board’s own

dilatoriness that prolonged the proceedings and necessitated the

repeated extensions of the mandate. The Board failed to attend

hearings, failed to comply with directions to file point-wise

replies, and repeatedly sought adjournments. When, at the

Board’s own request, a hearing was fixed on 15.10.2015, the

Board chose not to attend, merely citing its inability to appear,

without seeking an adjournment or proposing an alternative

date.

23

25. In these circumstances, the Arbitrator was fully justified in

treating the matter as heard and proceeding to pass the Award.

The Board cannot invoke the principles of natural justice to

impugn an Award that was delayed substantially on account of

its own conduct. The opportunity of hearing afforded to the

Board across the entire span of the proceedings was more than

adequate. The Board’s failure to effectively utilize these

opportunities is not a deficiency attributable to the Arbitrator.

Accordingly, the third issue is answered in the affirmative.

26. Now, we deal with the fourth issue, namely whether the

Commercial Court possessed jurisdiction to modify the Award in

exercise of powers of review to substitute the simple interest

awarded by the arbitral tribunal for pendente lite period with

compound interest. The significance of this issue is underscored

by financial implication of the substitution of simple interest

with compound interest for the pendente lite period. As a result

of modification of the Award in review proceeding, the Board’s

liability escalated from Rs.30.38 crores to Rs.144.93 crores,

resulting in staggering increase, that underscores the need for

careful and circumspect exercise of jurisdiction in the context of

Arbitral Awards.

24

27. The relevant extract of the Award reads as under: -

“Therefore, considering likely applicable

rate of interest on 27

th

October 2015 =

1.5x14.45=21.675% per annum to be

compounded monthly becomes payable

on the Awarded Sum (Principal amount

plus interest) from date 27 October

2015 i.e., after declaration of Award to

the actual payment is paid, by the

Respondent to the Claimant.

(c) The Respondent is directed to pay

following amounts to the Claimant:

Claim Amount As Claimed

Amount as

Claimed

Amount as

awarded

Principal

Rs.

Amount As

Claimed

Interest

accrued on

claimed

amount up to

27.10.2015

Rs.

Total

claim i.e.,

Principal

+ Interest

Rs.

Release all our

outstanding

payments

84,46,103/-

79,98,361/-

Simple

interest at the

rate of 1.5

times the

prime lending

rates of SBI

up to date of

award

Please

workout

Escalation

payments due

to extension of

Supply period

by the

respondent in

Kheralu dvn.

21,99,157/-

21,99,157/-

Simple

interest at the

rate of 1.5

times the

prime lending

rates of SBI

up to date of

Please

workout

25

award

Compensation

of losses due to

blacklisting

24,04,21,990

Nil

NOT CONSIDERED

Cost of legal

and

administrative

proceedings

carried out by

claimant during

pre Arbitration

period

5,00,000/-

Nil

NOT CONSIDERED,

BOTH THE PARTIES TO

BEAR THEIR OWN COST

Cost of present

Arbitration

2,00,000/-

Nil

BOTH THE PARTIES TO

BEAR THEIR OWN COST

After declaration of award, if payment is

delayed for the amount of awarded sum

and interest payable, the same shall be

paid at the rate of one and half times the

prime lending rate of SBI per annum to

be compounded monthly becomes payable

to the claimant up to the date of actual

payment.

During the process of arbitration

proceedings, both the parties have

submitted large nos. of related documents

and legal citation etc. (more than 5000

pages) time to time in support of their

arguments and their cases.

All these documents shall be returned to

both the parties viz. claimant and

respondent.

The parties shall bear their own cost

including the fees of the Arbitrator,

Advocates, Administrative and incidental

charges and costs.

26

The award is made signed and published

by me on 27

th

Day of October 2015.”

28. The following correction in the aforesaid Award was made on

08.11.2015.

Claim Amount as

claimed

Amount

awarded

Principal Rs.

Interest

amount as

awarded

accrued on

awarded

amount up to

27.10.2015

Total

Award

amount

i.e.

Principal

+

interest

Rs.

(Please

Workout the

amount Rs.)

Release all

our

outstanding

payments

84,46,103/-

79,98,361/-

Simple

interest at

the rate of

1.5 times the

prime lending

rates of SBI

up to date of

award

Please

workout

Escalation

payments due

to extension

of supply

period by the

respondents

in

Xheraludvn.

21,99,197/-

21,99,157/-

Simple

interest at

the rate of

1.5 times the

prime lending

rates of SBI

up to date of

award

Please

workout

Compensation

of losses due

to blacklisting

24,04,21,990

Nil

Not considered

Cost of legal

and

5,00,000/- Not considered. Both the

parties to bear their own

27

administrative

proceedings

carried out by

claimant

during pre

Arbitration

period

Nil cost.

Cost of

present

Arbitration

2,00,000/-

Nil

Both the parties to bear

their own cost

29. A plain reading of the Award, as corrected on 08.11.2015, makes

it unambiguous that the Arbitrator had awarded a sum of

Rs.1.01 crores along with simple interest at the rate of 21.675%

per annum for the pendente lite period, and compound interest

from the date of the Award till realisation. On 07.12.2015, the

Company filed an application under Section 33 of the Act

seeking correction of paragraph 54(c) of the Award by

substituting the expression “simple interest” with “compound

interest”. Upon the Arbitrator declining to adjudicate the matter

in view of the pending proceedings under Section 34 before the

Commercial Court, the Company filed a fresh application and,

thereafter, a review petition seeking restoration of the withdrawn

commercial appeal. By its order dated 25.09.2018, the

Commercial Court, purporting to exercise review jurisdiction,

28

modified the Arbitral Award and granted compound interest for

the pendente lite period as well.

30. Section 33(1)(a) of the Act confers upon the arbitral Tribunal the

limited power to correct any computational, clerical, or

typographical errors in an Award. The provision is neither

designed nor intended to serve as a vehicle for the substantive

modification of an Award or the review of the merits of the

findings recorded therein. This position is well settled by the

authoritative pronouncements of this Court. This Court

5

has

categorically held that Section 33 of the Act does not contemplate

a review of the Award. The power vested in the Tribunal under

that provision is confined strictly to the correction of

typographical, arithmetic, and clerical errors, and cannot be

stretched to re-examine or revise the substantive findings of the

Award. This Court has reiterated

6

that the power of modification

of an Award under Section 33 of the Act extends only to the

correction of arithmetical or clerical errors and does not permit

any material change to the Award.

5

State of Arunachal Pradesh v. Damani Construction Co.; (2007) 10 SCC 742

6

Gyan Prakash Arya v. Titan Industries Ltd.; (2023) 1 SCC 153

29

31. Applying these principles to the facts of the present case, it is

evident that the substitution of “simple interest” with “compound

interest" for the pendente lite period is not, by any stretch of legal

reasoning, a correction of a computational, clerical, or

typographical error. The Arbitrator had consciously and

deliberately awarded simple interest for the pendente lite period,

as it appears from the express terms of the Award and the

corrected version thereof. The characterisation of the mode of

interest – whether simple or compound - goes to the very of the

Arbitrator’s assessment of the equities of the case and reflects a

substantive determination on the merits. It is neither a slip of

the pen, nor an inadvertent arithmetical mistake, nor a clerical

oversight that could be remedied under Section 33(1)(a).

32. The Commercial Court, therefore, manifestly exceeded its

jurisdiction in purporting to exercise powers under Section 33(1)

(a) of the Act to direct such a substitution. The review

jurisdiction of the Commercial Court could not have been

employed to achieve a result that was impermissible even under

the limited corrective power expressly conferred by Section 33(1)

(a). To hold otherwise would be to render Section 33 an

instrument of review and appellate correction, which is plainly

30

contrary to the scheme of the Act and the consistent judicial

interpretation placed upon it. Accordingly, the fourth issue is

answered in the negative.

CONCLUSION

33. For the reasons stated hereinabove, the following conclusions

emerge:

(i)The Arbitral mandate validly subsisted at the time when the

Arbitral Award was passed.

(ii)The Arbitral Award was dispatched on 27.10.2015, before

the email dated 28.10.2015 sent by the Board.

(iii)The Arbitral proceedings were conducted in accordance with

the principles of natural justice.

(iv)The Commercial Court in purported exercise of powers

under Section 33(i)(a) of the Act erred in substituting the

words “compound interest” in place of “simple interest” in

the Award dated 27.10.2015 passed by the Arbitrator.

34. In view of preceding analysis, the impugned judgment and

decree dated 11.11.2022, as corrected on 16.12.2022, and order

dated 25.09.2018 passed by the Commercial Court substituting

31

the words “compound interest” in place of “simple interest” for

pendente lite period is quashed and set aside. The Company is

held entitled to “simple interest” at the rate of 21.675% for

pendente lite period.

35. Accordingly, the appeals are disposed of. There shall be no order

as to costs.

….………..…………….………….……….J.

[PAMIDIGHANTAM SRI NARASIMHA]

.....…….……………….………….……….J.

[ALOK ARADHE]

NEW DELHI;

MAY 26, 2026.

32