# North Delhi Municipal Corporation v. M/s S.A. Builders Ltd

- **Citation:** 2024 INSC 988
- **Court:** Supreme Court of India
- **Decided:** 2024-12-17
- **Case number:** Civil Appeal No. 1878 of 2024
- **Bench:** Abhay S. Oka, Ujjal Bhuyan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/north-delhi-municipal-corporation-v-m-s-s-a-builders-ltd-37937
- **Pages:** 37

## Headnote

Whether the Arbitrator had become functus officio after passing of
the award dated 16.12.1997 and had no jurisdiction to issue the
clarification dated 15.03.2005.
Headnotes†
Arbitration and Conciliation Act, 1996 - s.31 and s.33(1)
(a) - Appellant contended that the Arbitrator had become
functus officio and therefore lacked jurisdiction to issue the
clarification:
Held: The interpretation given to Section 33(1) of the 1996 Act
and on a cumulative assessment of the attendant facts and
circumstances of the case, this Court is of the view that the
clarification sought for and issued by the Arbitrator would be
covered by the expression unless another period of time has been
agreed upon by the parties appearing in Section 33 (1) of the 1996
Act - This is a case where court had permitted the respondent to
seek clarification from the Arbitrator beyond the initial period of 30
days whereafter the appellant fully participated in the clarificatory
proceeding - Therefore, the present case would be covered
by the above expression - In the circumstances, contention of
the appellant that the Arbitrator had become functus officio and
therefore lacked jurisdiction to issue the clarification cannot be
accepted and is thus rejected - That apart, it is not the case of
the appellant that the interest portion is covered by the contract
agreement between the parties - In the absence thereof, Section
31(7)(a) as well as Section 31(7)(b) of the 1996 Act would have
their full effect - The sum awarded would mean the principal
amount plus the interest awarded from the date of cause of action
upto the date of the award - Thereafter, as per Section 31(7)(b) of
the 1996 Act, the sum (principal plus interest) would carry interest
* Author
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[2024] 11 S.C.R.
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@ 18% from the date of the award to the date of payment - This
would be consistent with the law laid down by this Court in M/s.
Hyder Consulting (UK) Ltd. [Paras 59, 60]
Arbitration and Conciliation Act, 1996 - s.33(1) - Correction
and interpretation of award; additional award:
Held: As per sub-Section (1), within 30 days from the date of
receipt of the arbitral award, 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 - Further, if the parties agree, 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 -
The period of 30 days contemplated under sub-Section (1) may
stand extended to another period of time if agreed upon by the
parties - Therefore, ordinarily the time limit for correction of errors
or for interpretation of a specific point or part of the award is 30
days from the date of receipt of the arbitral award - However, the
limitation of 30 days can be waived for another period of time, if
agreed upon by the parties - Question for consideration is what
would be the contours of the expression unless another period of
time has been agreed upon by the parties, as appearing in subSection (1) of Section 33. [Para 45.1]

## Text

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[2024] 12 S.C.R. 1581 : 2024 INSC 988
North Delhi Municipal Corporation
v.
M/s S.A. Builders Ltd.
(Civil Appeal No. 1878 of 2024)
17 December 2024
[Abhay S. Oka and Ujjal Bhuyan,* JJ.]
Issue for Consideration
Whether the Arbitrator had become functus officio after passing of
the award dated 16.12.1997 and had no jurisdiction to issue the
clarification dated 15.03.2005.
Headnotes†
Arbitration and Conciliation Act, 1996 - s.31 and s.33(1)
(a) - Appellant contended that the Arbitrator had become
functus officio and therefore lacked jurisdiction to issue the
clarification:
Held: The interpretation given to Section 33(1) of the 1996 Act
and on a cumulative assessment of the attendant facts and
circumstances of the case, this Court is of the view that the
clarification sought for and issued by the Arbitrator would be
covered by the expression unless another period of time has been
agreed upon by the parties appearing in Section 33 (1) of the 1996
Act - This is a case where court had permitted the respondent to
seek clarification from the Arbitrator beyond the initial period of 30
days whereafter the appellant fully participated in the clarificatory
proceeding - Therefore, the present case would be covered
by the above expression - In the circumstances, contention of
the appellant that the Arbitrator had become functus officio and
therefore lacked jurisdiction to issue the clarification cannot be
accepted and is thus rejected - That apart, it is not the case of
the appellant that the interest portion is covered by the contract
agreement between the parties - In the absence thereof, Section
31(7)(a) as well as Section 31(7)(b) of the 1996 Act would have
their full effect - The sum awarded would mean the principal
amount plus the interest awarded from the date of cause of action
upto the date of the award - Thereafter, as per Section 31(7)(b) of
the 1996 Act, the sum (principal plus interest) would carry interest
* Author
1582
[2024] 11 S.C.R.
Supreme Court Reports
@ 18% from the date of the award to the date of payment - This
would be consistent with the law laid down by this Court in M/s.
Hyder Consulting (UK) Ltd. [Paras 59, 60]
Arbitration and Conciliation Act, 1996 - s.33(1) - Correction
and interpretation of award; additional award:
Held: As per sub-Section (1), within 30 days from the date of
receipt of the arbitral award, 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 - Further, if the parties agree, 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 -
The period of 30 days contemplated under sub-Section (1) may
stand extended to another period of time if agreed upon by the
parties - Therefore, ordinarily the time limit for correction of errors
or for interpretation of a specific point or part of the award is 30
days from the date of receipt of the arbitral award - However, the
limitation of 30 days can be waived for another period of time, if
agreed upon by the parties - Question for consideration is what
would be the contours of the expression unless another period of
time has been agreed upon by the parties, as appearing in subSection (1) of Section 33. [Para 45.1]
Case Law Cited
M/s. Hyder Consulting (UK) Ltd. v. Governor, State of Orissa [2014]
14 SCR 1029 : (2015) 2 SCC 189 - relied on.
State of Haryana v. S.L. Arora [2010] 2 SCR 297 : (2010) 3 SCC
690; Gyan Prakash Arya v. Titan Industries Ltd. [2021] 11 SCR
1 : (2023) 1 SCC 153; Harshad Chiman Lal Modi v. DLF Universal
Ltd. [2005] Supp. 3 SCR 495 : (2005) 7 SCC 791; Mohanlal
Goenka v. Benoy Kishna Mukherjee [1953] 1 SCR 377 : (1952)
2 SCC 648; Gas Authority of India Limited v. Keti Construction (I)
Limited [2007] 6 SCR 439 : (2007) 5 SCC 38; Delhi Airport Metro
Express Private Limited v. Delhi Metro Rail Corporation [2022]
3 SCR 716 : (2022) 9 SCC 286; UHL Power Company Limited
v. State of Himachal Pradesh [2022] 1 SCR 1 : (2022) 4 SCC
116; Delhi Airport Metro Express Private Limited v. Delhi Metro
Rail Corporation [2022] 3 SCR 716 : (2022) 9 SCC 286; Morgan
Securities & Credits (P) Ltd. v. Videocon Industries Ltd. [2022] 9
SCR 819 : (2023) 1 SCC 602 - referred to.
[2024] 11 S.C.R.
1583
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
Ircon International Ltd. v. Budhiraja Mining & Construction Ltd.,
2007(4) Arb. LR 159 (Delhi) - referred to.
List of Acts
Arbitration and Conciliation Act, 1996; Arbitration Act, 1940; Interest
Act, 1978.
List of Keywords
Section 33 of the Arbitration and Conciliation Act, 1996; Correction
of award; Interpretation of award; Arbitral award; Clerical error;
Typographical error; Arbitral Tribunal; Functus Officio; Clarification;
Clarificatory proceedings; Lack of jurisdiction; Interest portion;
Interest awarded; Date of award; Date of payment.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1878 of 2024
From the Judgment and Order dated 01.07.2019 of the High Court
of Delhi at New Delhi in EFAOS No. 17 of 2017
Appearances for Parties
Ms. Madhavi Divan, Sr. Adv., Amol Chitale, Nirnimesh Dube,
Sunil Goel, Ankur S. Kulkarni, Susheel Joseph Cyriac, Ms. Uditha
Chakravarthy, Ms. Aiashani Narayan, Ms. Priya S. Bhalerao, Varun
Kanwal, M/s. Lex Regis Law Offices, Advs. for the Appellant.
C Aryama Sundaram, Sr. Adv., Tarun Gupta, Abhishek Gupta,
Ms. Rohini Musa, Zafar Wayat, Raj Sudhakar Yadav, Atul Kumar,
Yatinder Chaudhary, Davinder Singh Khurana, Manish Bansal,
Advs. for the Respondent.
Judgment / Order of the Supreme Court
Judgment
Ujjal Bhuyan, J.
Heard learned counsel for the parties.
2.
This civil appeal by special leave is directed against the impugned
order dated 01.07.2019 passed by a Division Bench of the High Court
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[2024] 11 S.C.R.
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of Delhi at New Delhi ('High Court') disposing of EFA(OS) No. 17/2017
and C.M. No. 20662/2017 (North Delhi Municipal Corporation Vs.
M/s. S A Builders Ltd).
3.
By the impugned order dated 01.07.2019, the Division Bench held
that this Court vide the order dated 12.03.2015 had directed the
High Court to decide the issue of interest component payable to
the respondent in accordance with the law laid down in M/s. Hyder
Consulting (UK) Ltd. Vs. Governor, State of Orissa1 and not in
accordance with the law laid down in State of Haryana Vs. S.L.
Arora,2 declaring that the matter relating to amount payable to the
respondent had attained finality and could not be interfered with.
The Division Bench set aside that part of the order of the learned
Single Judge dated 19.04.2017 passed in E.A. (OS) No. 34/2016
pertaining only to the calculations and permitted both the parties
(appellant and respondent) to make submissions before the learned
Single Judge restricted to the quantum of the amount payable to
the respondent. The appeal and the miscellaneous application were
disposed of with the observation that learned Single Judge would
decide the amount payable by the appellant to the respondent after
hearing both the sides.
4.
At the outset, it would be appropriate to advert to the relevant facts
having a material bearing on the lis.
Facts
5.
Respondent was awarded a contract work relating to construction
of approaches to flyover at the level crossing on New Rohtak Road
with clover-leaf slip road and service road etc. by the appellant. A
contract agreement was entered into between the parties in this
regard on 11.11.1983. The work however could not be completed
even beyond the stipulated date of completion till March, 1990 and,
therefore, the work had to be closed in an incomplete form. The main
reason for closing the work was non-availability of site.
5.1. The last payment to the tune of Rs. 4,71,48,122.00 was made
to the respondent on 09.02.1988. Thereafter, no payments were
1
(2015) 2 SCC 189
2
(2010) 3 SCC 690
[2024] 11 S.C.R.
1585
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
made to the respondent for the work done upto March, 1990
when the contract was closed. Respondent submitted its final
bill which the appellant failed to pay. As a result, dispute arose
between the parties.
6.
Thereafter, respondent filed an application under Section 20 of the
Arbitration Act, 1940 before the High Court seeking appointment of
an arbitrator to arbitrate the dispute between the parties. High Court
appointed Sh. S.P. Rai, Ex-Member(Personnel), Postal Services
Board and Additional Secretary to the Government of India, Ministry
of Communications, as the sole Arbitrator. It may be mentioned that
on the consent of both the parties, the arbitration proceedings were
carried out in terms of the Arbitration and Conciliation Act, 1996
whereafter award was passed by the sole Arbitrator on 16.12.1997.
Learned Arbitrator awarded various sums under different heads
out of the 26 claims, while rejecting a few of the claims of the
respondent. Counter claim of the appellant was also allowed to a
limited extent under three heads. After adjusting the two, an amount
of Rs. 1,70,70,720.80 was awarded to the respondent with simple
interest @ 18% per annum on the award amount w.e.f. 01.04.1990
upto the date of actual payment except on claim No. 23(b) which
related to expenses incurred by the respondent on account of bank
guarantee commission, margin money etc. for keeping the bank
guarantee alive.
6.1. Thereafter, the sole Arbitrator issued a corrigendum dated
18.12.1997 pointing out certain typographical errors in the
award, whereafter it was mentioned that the net amount payable
to the respondent would be Rs. 1,70,40,720.80 instead of Rs.
1,70,70,720.80, further clarifying that the above correction would
form part of the award dated 16.12.1997.
7.
Respondent filed an execution petition being Ex.P. No. 99/1998 under
Section 36 of the Arbitration and Conciliation Act, 1996 (briefly 'the
1996 Act' hereinafter) before the Single Bench of the High Court
for execution of the arbitral award. Learned Single Judge vide the
order dated 26.08.2004 framed the following issue for consideration:
Whether post award interest under Section 31(7) of the
Arbitration and Conciliation Act, 1996 would be calculated
on the principal sum adjudged or would it be calculated on
1586
[2024] 11 S.C.R.
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the principal sum plus interest on the principal sum which
has accrued from the date of cause of action to date of
passing of award, as under the new 1996 Act, award is
enforced as a decree of the court.
8.
Simultaneously, appellant also filed before the Single Bench a
petition under Section 34 of the 1996 Act challenging the award
dated 16.12.1997. By order dated 08.01.2002, the petition of the
appellant under Section 34 of the 1996 Act was dismissed.
9.
Appellant then preferred an appeal under Section 37 of the 1996 Act
before the Division Bench assailing the order dated 08.01.2002 being
FAO(OS) No. 89/2002. The said appeal was, however, dismissed
by the Division Bench of the High Court by the judgment and order
dated 14.03.2002.
10. Being aggrieved by the order dated 14.03.2002, appellant filed a
special leave petition before this Court being SLP(C) No. 7474/2002.
Though this Court had initially issued notice and granted limited stay
qua execution of the award vis-à-vis claim Nos. 22, 25 and 26, the
said special leave petition was subsequently dismissed by this Court
on 03.02.2010.
11. Reverting back to the execution petition filed by the respondent,
learned Single Judge vide the order dated 26.08.2004 after framing
the issue as above expressed the view that post-award interest under
Section 31(7) of the 1996 Act affects a large volume of litigation
before the court. Therefore, in order to avoid proliferation of litigation
and unnecessary appeals, learned Single Judge referred the matter
to the Division Bench to clarify the position in this regard.
12. When the matter was placed before the Division Bench, respondent
sought leave to approach the learned Arbitrator for seeking the
clarification as to whether the interest awarded in the award was
under Section 31(7)(a) of the 1996 Act or not? Division Bench vide the
order dated 03.01.2005 granted such permission to the respondent
with the clarification that the permission so granted should not be
understood to contain any expression of opinion of the Division
Bench about payment of interest under Section 31(7)(a) or Section
31(7)(b) of the 1996 Act.
13. Pursuant thereto, an application was filed by the respondent before
the learned Arbitrator seeking clarification in terms of the order dated
[2024] 11 S.C.R.
1587
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
03.01.2005. It was contended on behalf of the respondent that though
under sub-Section (7) of Section 31 of the 1996 Act interest can be
awarded, Arbitral Tribunal, however, had not clarified as to whether
the said interest was awarded under clause (a) of sub-Section (7) of
Section 31 of the 1996 Act or not. Appellant filed objection to such
application primarily contending on merit that no such clarification
was warranted in the facts and circumstances of the case.
14. Learned Arbitrator after hearing the parties issued a clarification on
15.03.2005 vis-à-vis payment of interest. After analysing the provisions
of both Section 31(7)(a) and Section 31(7)(b) of the 1996 Act, learned
Arbitrator clarified that post-award interest shall be payable on the
awarded sum i.e. on the amount of claim awarded plus the interest
for the pre-reference period as well as interest pendente lite from
the date of the award till it is paid @ 18% per annum.
15. It may be mentioned that against the order of the Division Bench
of the High Court dated 03.01.2005 whereby the Division Bench
had granted permission to the respondent to approach the Arbitral
Tribunal for clarification, appellant had filed special leave petition
before this Court being SLP(C) CC No. 5011/2007 and by order
dated 09.07.2007, the said special leave petition was dismissed.
16. Against the clarification of the learned Arbitrator dated 15.03.2005,
an application was filed by the appellant before the Single Bench
being EA(OS) No. 270/2005 in the pending Ex.P. No. 99/1998 for
setting aside the said clarification. By the order dated 19.02.2008,
learned Single Judge, after referring to Section 32 of the 1996 Act
and a decision of the Delhi High Court in Ircon International Ltd. Vs.
Budhiraja Mining & Construction Ltd.,3 held that learned Arbitrator had
become functus officio and, therefore, had no authority to entertain
the application for clarification. After 30 days of the award, learned
Arbitrator had no authority to make any change in the award. The
earlier order of the learned Arbitrator awarding simple interest @
18% per annum on the awarded amount from 01.04.1990 till the date
of actual payment takes care of the interest part. Learned Single
Judge, therefore, set aside the clarification issued by the learned
3
2007(4) Arb. LR 159 (Delhi)
1588
[2024] 11 S.C.R.
Supreme Court Reports
Arbitrator, declaring that the award dated 16.12.1997 passed earlier
and the interest granted thereunder would hold the field and would
be payable by the judgment debtor (appellant) to the judgment
holder (respondent).
17. According to the appellant, it paid the interest component and
submitted before the executing court that the decree stood satisfied.
Learned Single Judge vide the order dated 08.10.2010 disposed
of the execution petition being Ex.P. No. 99/1998 holding that the
decree stood satisfied.
18. Against the order dated 19.02.2008, respondent preferred an appeal
before the Division Bench being EFA(OS) No. 16/2008. Division
Bench vide the order dated 23.02.2012 referred to the decision
of this Court in S.L. Arora (supra) and held that the settled legal
position that prevailed was that compound interest under the 1996
Act could not be granted in view of the decision in S.L. Arora (supra).
Resultantly, the amount covered by the compound interest was not
payable. It was observed that in view of the settled legal position that
respondent was not entitled to compound interest as per the decision
in S.L. Arora (supra), the appeal had become an academic exercise.
Division Bench therefore declined to examine the reasoning of the
learned Single Judge while passing the order dated 19.02.2008. The
appeal of the appellant was dismissed in the aforesaid manner and
not on the basis of the reasons given by the learned Single Judge.
19. Assailing the order dated 23.02.2012 of the Division Bench,
respondent preferred SLP(C) No. 18614/2012. This Court passed
an order on 13.07.2012 to tag the aforesaid SLP with Civil Appeal
No. 3148 of 2012 (M/s. Hyder Consulting (UK) Ltd. Vs. Governor,
State of Orissa Thr. Chief Engineer).
20. On leave being granted, SLP(C) No. 18614/2012 came to be
registered as Civil Appeal No. 2841 of 2015. Civil Appeal No. 3148
of 2012 (M/s. Hyder Consulting (UK) Ltd. Vs. Governor, State of
Orissa) came to be disposed of alongwith Civil Appeal No. 2841
of 2015 (M/s. S.A. Builders Vs. North Delhi Municipal Corporation)
and other connected appeals vide the order dated 12.03.2015. This
Court referred to its earlier decision in M/s. Hyder Consulting (UK)
Ltd. (supra) and held that the decision in S.L. Arora (supra) does
not lay down the correct law. Computation of the amount has to be
done by the executing court on the basis of the principles stated in
[2024] 11 S.C.R.
1589
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
M/s. Hyder Consulting (UK) Ltd. (supra). In M/s. Hyder Consulting
(UK) Ltd. (supra), it has been held that the sum directed to be paid
by the award would mean a sum inclusive of the principal amount
adjudged and the interest thereon. Therefore, the post-award interest
that may be awarded would be on the principal amount as well as on
the interest on the principal amount which together would constitute
the sum awarded.
21. Civil Appeal No. 2841 of 2015 i.e. the civil appeal of the respondent
was allowed by directing that the interest component payable to the
respondent shall be computed in accordance with the law laid down
in M/s. Hyder Consulting (UK) Ltd. (supra) and not in accordance
with S.L. Arora (supra) since S.L. Arora (supra) has been overruled
in M/s. Hyder Consulting (UK) Ltd. (supra). Resultantly, the decisions
of the Single Bench as affirmed by the Division Bench were set
aside; respondent was given liberty to seek execution of the award
in terms of M/s. Hyder Consulting (UK) Ltd. (supra).
22. It is stated by the appellant that in the course of an audit, it transpired
that it had made excess payment to the respondent due to an error
in calculation of interest. Therefore, appellant filed an application
being EA(OS) No. 364/2013 in the disposed of execution petition
being Ex. P. No. 99/1998 praying for a direction for refund of the
excess payment which was quantified at Rs. 1,54,19,281.00 alongwith
interest @ 18% from 09.09.2010 till the date of payment. Thereafter,
appellant filed another application being EA(OS) No. 25/2015 for
amending the earlier application being EA(OS) No. 364/2013. It
was stated that the refund claim amount was Rs. 5,45,41,756.00
as on 09.09.2010. In the proceedings held on 10.03.2017, learned
Single Judge prima facie held that respondent would be entitled to
interest on the pre-award interest. Appellant was directed to verify
the calculation of interest and to deposit the said amount before
the High Court which would be without prejudice to the rights and
contentions of the appellant.
23. Respondent filed a fresh application before the Single Bench being
EA(OS) No. 34/2016 claiming a sum of Rs. 9,10,43,399.53 as on
31.12.2015 from the appellant in view of the order of this Court dated
12.03.2015 passed in C.A. No. 2841 of 2015.
24. Appellant also filed an application being EA(OS) No. 166/2017
before the executing court for recall of the direction for deposit of
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[2024] 11 S.C.R.
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the additional interest. Learned Single Judge vide the judgment and
order dated 19.04.2017 held that the arbitral award dated 16.12.1997
has to be considered in the light of the decision of this Court in
M/s. Hyder Consulting (UK) Ltd. (supra). On the contention of the
appellant that the learned Arbitrator had no jurisdiction to issue such
clarification as the Arbitral Tribunal had become functus officio, the
same was rejected by the learned Single Judge on the ground that
such clarification was obtained in terms of the leave granted by
the Division Bench; the special leave petition filed by the appellant
against the order of the Division Bench was dismissed by this Court;
further, the decision of the Single Bench dated 19.02.2008 setting
aside the clarification issued by the learned Arbitrator as upheld by
the Division Bench was expressly set aside by this Court. Therefore,
learned Single Judge held that respondent would be entitled to
post-award interest not only on the claims as awarded [except claim
No. 23(b)] but also on the pre-award interest. The quantum of preaward interest would be included in the amount awarded and that
the post-award interest would run on the said composite amount.
Thus, the amount payable by the appellant to the respondent would
have to be computed on the said basis. Accordingly, the appellant
was directed to verify the calculations and to pay the amount to the
respondent within four weeks.
25. The aforesaid judgment and order of the learned Single Judge
dated 19.04.2017 was assailed by the appellant in appeal before the
Division Bench being EFA(OS) No.17/2017. Division Bench vide the
order dated 26.07.2017 noted that an amount of Rs. 5,14,44,393.00
was outstanding, due to be paid by the appellant to the respondent.
Accordingly, without prejudice to the respective rights and contentions
of the parties, a direction was issued to the appellant to deposit
a sum of Rs. 5,14,44,393.00 before the High Court on or before
06.09.2017 to be released in favour of the respondent, subject to
offering of solvent security.
26. In terms of the aforesaid direction, appellant deposited on 04.09.2017
a sum of Rs. 5,14,44,393.00 before the High Court by way of a
demand draft dated 30.08.2017.
27. Thereafter, an application was filed before this Court by the appellant
for seeking clarification of the order dated 12.03.2015 passed in C.A.
No. 2541 of 2015. It was contended therein that the civil appeal of
[2024] 11 S.C.R.
1591
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
the respondent was decided on the principles of law laid down in
M/s. Hyder Consulting (UK) Ltd. (supra) but the main issue that
learned Arbitrator lacked jurisdiction to entertain the application for
clarification and then to pass a clarificatory order was not gone into.
28. However, the aforesaid application being M.A. No. 927 of 2018 was
withdrawn by the appellant and was disposed of as such vide the
order dated 13.04.2018.
29. Division Bench thereafter passed the impugned order dated
01.07.2019 rejecting the contention of the appellant that the learned
Arbitrator had no jurisdiction because by the order dated 12.03.2015,
this Court had directed that the High Court would decide the issue of
interest component payable to the respondent in accordance with the
law laid down in M/s. Hyder Consulting (UK) Ltd. (supra) and not in
accordance with S.L. Arora (supra). That apart, such a contention was
not available to the appellant at the stage of execution proceeding.
The matter had attained finality upto the level of this Court and, thus,
cannot be interfered with on merit. Therefore, with the consent of
the parties, Division Bench set aside the operative part of the order
dated 19.04.2017 pertaining only to the calculations and permitted
both the parties to make submissions restricted to the quantum of
the amount payable to the respondent. Learned Single Judge was
requested to decide the amount payable to the respondent after
hearing both the sides.
Pleadings
30. According to the appellant, learned Arbitrator had become functus
officio after passing of the award dated 16.12.1997. Therefore, he
had no jurisdiction to issue the clarification dated 15.03.2005.
30.1. In the garb of the clarification dated 15.03.2005, learned
Arbitrator had substantially modified the award dated
16.12.1997. Appellant's challenge to the same on the ground
that learned Arbitrator had no jurisdiction to issue the clarification
since he had become functus officio was upheld by the learned
Single Judge vide the order dated 19.02.2008. Challenge to the
aforesaid order by the respondent was rejected by the Division
Bench vide the order dated 23.02.2012. However, Division
Bench did not examine the question of jurisdiction but applied
the ratio of S.L. Arora (supra) while dismissing the appeal of
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the respondent though this was the issue before the Division
Bench. When the aforesaid order of the Division Bench was
questioned before this Court by the respondent in C.A. No.
2841 of 2015, the same was allowed vide the order dated
12.03.2015 relying on the decision of this Court in M/s. Hyder
Consulting (UK) Ltd. (supra) which had overruled the earlier
decision in S.L. Arora (supra). This Court also did not examine
the primary question as to whether the learned Arbitrator had
become functus officio while issuing the clarification.
30.2. When the appellant had earlier questioned the award under
Section 34 of the 1996 Act and thereafter under Section 37
of the 1996 Act, the clarification dated 15.03.2005 was not
in existence. Therefore, appellant could challenge the same
only in the execution proceeding. Though the learned Single
Judge had upheld the objection of the appellant and had set
aside the clarification, Division Bench of the High Court while
upholding the decision of the learned Single Judge and this
Court while setting aside both the orders of the learned Single
Judge and the Division Bench, did not examine this aspect
of the matter.
30.3. It is also contended that learned Arbitrator had terminated the
arbitral proceedings vide the award dated 16.12.1997 followed
by the corrigendum dated 18.12.1997. No application having
been moved for rectification of any clerical or calculation error
within 30 days in terms of Section 33 of the 1996 Act and the
respondent having not challenged the award under Section 34
of the said Act, learned Arbitrator could not have introduced
any correction to the award, that too, in the manner in which it
has been done. In the award, he had granted simple interest
whereas by way of clarification, the same was changed to
compound interest.
30.4. It is settled law that Section 33 is the only provision in the
1996 Act which allows correction of clerical errors. In the garb
of clarification or correcting clerical errors, learned Arbitrator
introduced substantial change in the award. In any view of
the matter, the power under Section 33 of the 1996 Act could
not have been exercised by the learned Arbitrator more than
6 years after passing of the award.
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North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
31. Respondent in its counter affidavit has stated that the special
leave petition out of which the present civil appeal arises is totally
misconceived and is an abuse of the process of law.
31.1. Learned Arbitrator vide the award dated 16.12.1997 had
awarded a sum of Rs. 1,70,70,720.80 (corrected to Rs.
1,70,40,720.80) alongwith interest @ 18% per annum in favour
of the respondent. In the course of the execution proceeding,
the executing court i.e. the learned Single Judge referred the
matter to the Division Bench on the question as to whether under
Section 31(7) of the 1996 Act, post-award interest would be on
the principal sum adjudged or would be on the principal sum plus
interest on the principal sum which had accrued from the date of
the cause of action to the date of passing of the award. Division
Bench permitted the respondent to seek clarification from the
learned Arbitrator. This order was challenged by the appellant
before this Court by way of a special leave petition. However, the
said special leave petition was dismissed. It was, thereafter, that
the clarification was issued by the learned Arbitrator. Appellant
never challenged the clarified award under Section 34 of the
1996 Act; instead approached the executing court. The executing
court i.e. learned Single Judge had erroneously set aside the
clarification. Appeal filed by the respondent against such order
was dismissed by the Division Bench. When the respondent
had approached this Court by filing special leave petition, a
three-Judge Bench of this Court had already decided the issue
in M/s. Hyder Consulting (UK) Ltd. (supra). In the said decision,
this Court held that an arbitrator has the power to grant postaward interest under Section 31(7) of the 1996 Act on the sum
comprising of the principal plus interest on the principal which
has accrued from the date of cause of action to the date of
passing of the award. Leave was granted whereafter the civil
appeal of the respondent was allowed by this Court. Following
the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra),
the orders of Single Bench and Division Bench were set aside.
Liberty was granted to the respondent to seek execution as per
the law in M/s. Hyder Consulting (UK) Ltd. (supra).
31.2. In the above context, it is contended on behalf of the respondent
that the clarification issued by the learned Arbitrator stood
affirmed by this Court. Therefore, post the decision of this
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Court, it is not open to the appellant to again question the
clarification on the ground that learned Arbitrator had no
jurisdiction to issue such clarification.
31.3. Notwithstanding the same, appellant had filed M.A.
No. 927/2018 before this Court seeking clarification of the order
dated 12.03.2015 passed in the disposed of civil appeal which
was decided in favour of the respondent. Same grounds qua
lack of jurisdiction on the part of the learned Arbitrator were
raised in the miscellaneous application as are being raised
now. The miscellaneous application was extensively argued
before this Court. It was orally observed by this Court during
the hearing that the clarification was in consonance with the
law laid down by the three-Judge Bench of this Court in M/s.
Hyder Consulting (UK) Ltd. (supra) and was on the verge of
dismissing the miscellaneous application. It was at that stage
that learned counsel for the appellant sought leave of this Court
to withdraw the miscellaneous application and accordingly,
the same was disposed of as withdrawn. However, no liberty
was granted to the appellant to reagitate the said issue again
in any other proceeding. That being the position, appellant is
estopped from raking up the said issue again before this Court.
31.4. It is contended that learned Arbitrator was well within his powers
under Section 33 of the 1996 Act to issue the clarification
which has now attained finality.
31.5. In that view of the matter, the civil appeal being devoid of any
merit should be dismissed.
Submissions
32. Ms. Madhavi Divan, learned senior counsel for the appellant, at
the outset, submitted that the clarification of the learned Arbitrator
dated 15.03.2005 is a nullity in the eyes of law. Referring to the final
award dated 16.12.1997, learned senior counsel submits that learned
Arbitrator had awarded simple interest @ 18% per annum from the
date of the cause of action i.e. 01.04.1990 till the date of actual
payment which includes the post-award period as well. She submits
that since the award provided for post-award interest, provisions of
Section 31(7)(b) of the 1996 Act would not come into play.
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North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
32.1. This position is clear and unambiguous. Notwithstanding the
same, after a period of about 8 years, respondent, at the stage
of execution proceeding, made a request before the Division
Bench of the High Court for clarification from the learned
Arbitrator as to whether the interest was awarded under
Section 31(7) of the 1996 Act or not. Without expressing any
opinion on the said issue, Division Bench vide the order dated
03.01.2005 permitted the respondent to approach the learned
Arbitrator for clarification. Though this decision of the Division
Bench was challenged before this Court by the appellant by
way of special leave petition, the same was dismissed.
32.2. Learned senior counsel submits that the clarification sought
for by the respondent from the learned Arbitrator was that in
the award it was not specifically mentioned that interest was
granted under sub-Section(7) of Section 31 of the 1996 Act.
Highlighting this aspect, learned senior counsel submits that
learned Arbitrator was requested only to specifically mention
whether the interest was awarded under Section 31(7) of the
1996 Act or not.
32.3. She further submits that in the clarificatory proceedings before
the learned Arbitrator, it was specifically urged on behalf of
the appellant that the learned Arbitrator had awarded past,
pendente lite and future interest in terms of Section 31(7) of
the 1996 Act. However, in the garb of issuing a clarification,
learned Arbitrator fundamentally altered the award resulting
in heavy financial burden on the appellant.
32.4. Therefore, learned Arbitrator had transgressed the scope of
clarification sought for by the respondent, much beyond the
scope of Section 33(1)(a) of the 1996 Act.
32.5. Learned senior counsel in support of her above contention
has placed reliance on the decision of this Court in Gyan
Prakash Arya Vs. Titan Industries Ltd.,4 more particularly on
paragraph 13 thereof.
32.6. Ms. Divan vehemently argued that under the 1996 Act the
arbitration proceedings came to be terminated upon making
4
(2023) 1 SCC 153
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of the award under Section 32 thereof. Any fresh award
beyond the four corners of Section 33 of the said Act is barred
and would be a nullity. It is a case of lack of subject-matter
jurisdiction and, therefore, the clarification is non est in the
eyes of law. In this connection, she has referred to a decision
of this Court in Harshad Chiman Lal Modi Vs. DLF Universal
Ltd.,5 more particularly to paragraphs 30 to 33 thereof. Any
order passed by a tribunal lacking inherent jurisdiction would
be coram non judice. Such an order would be a nullity and is
non est. The same can be questioned at any stage i.e. at the
stage of execution or even in a collateral proceeding.
32.7. Proceeding further, learned senior counsel submits that this
Court never had the opportunity in the earlier proceedings to
examine the issue as to whether learned Arbitrator had acted
without jurisdiction while issuing the clarification which resulted
in modifying the original award. Therefore, the said issue may
be examined and the civil appeal should be allowed.
32.8. Finally, learned senior counsel referred to the decision of this
Court in M/s. Hyder Consulting (UK) Ltd. (supra) and submits
that in that case this Court had clarified the expression 'the
arbitral tribunal may include in the sum, for which the award is
made', occurring in Section 31(7)(a) of the 1996 Act, holding
that the sum may include the principal amount and the interest
accrued thereon and, therefore, grant of interest on interest
or compound interest is permissible under Section 31(7)(b) of
the said Act. She asserts that M/s. Hyder Consulting (UK) Ltd.
(supra) is not an authority for the proposition that where the
arbitrator had exercised his jurisdiction not to grant compound
interest, even then such compound interest ought to be granted
or is mandated to be granted. On the contrary, M/s. Hyder
Consulting (UK) Ltd. (supra) recognises that such interest may
be contained in the 'sum' or may not be contained in the said
'sum'. According to her, it would be a complete absurdity if M/s.
Hyder Consulting (UK) Ltd. (supra) is interpreted to mean that
where interest on interest has not been granted or interest is
not contained in the sum, it should be superimposed on an
5
(2005) 7 SCC 791
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North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
existing award. Seen in the above backdrop, the direction of
this Court to compute the interest amount, in accordance with
the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra),
cannot be interpreted to mean that compound interest must
be granted where it has not been granted in the first place.
32.9. She, therefore, submits that the impugned order of the Division
Bench of the High Court is required to be set aside and the
entire controversy is required to be given a quietus.
33. Mr. C. Aryama Sundaram, learned senior counsel representing the
respondent at the outset submits that the primary issue raised by
the appellant in the present proceeding i.e. whether the Arbitrator
had become functus officio and thus had no jurisdiction to issue the
clarification dated 15.03.2005, was expressly raised by the appellant
and decided in favour of the respondent by this Court on three earlier
occasions. Firstly, the Division Bench of the High Court vide the order
dated 03.01.2005 had permitted the respondent to approach the
Arbitral Tribunal for seeking clarification. In the special leave petition
filed by the appellant before this Court assailing the aforesaid order of
the Division Bench, appellant had specifically challenged not only the
power of the High Court to refer the matter to the learned Arbitrator
for clarification but also the very jurisdiction of the learned Arbitrator
to issue such clarification. The said SLP was dismissed by this Court
vide the order dated 09.07.2007. Secondly, the clarification dated
15.03.2005 of the learned Arbitrator was challenged by the appellant
by filing objection in the pending execution proceeding. The challenge
was made on the ground that the learned Arbitrator had become
functus officio and thus had no authority to issue any clarification.
Learned Single Judge had set aside the clarification of the learned
Arbitrator by accepting the contention of the appellant which order
was upheld by the Division Bench. Special leave petition filed by the
respondent against the aforesaid order of the Division Bench was
allowed by this Court vide the order dated 12.03.2015; judgments
of the learned Single Judge as well as of the Division Bench of the
High Court whereby the clarification issued by the learned Arbitrator
was set aside were reversed by this Court vide the order dated
12.03.2015. Thirdly, appellant had filed a miscellaneous application
before this Court seeking clarification of the aforesaid order dated
12.03.2015. In the said application, it was specifically pleaded that
the order dated 12.03.2015 only considered the issue of interest:
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whether governed by S.L. Arora (supra) or by M/s. Hyder Consulting
(UK) Ltd. (supra) and that other issues contained in the order of the
learned Single Judge dated 19.02.2008 were not considered by this
Court. After arguing the miscellaneous application at considerable
length, appellant unconditionally withdrew the same when it was
about to be dismissed. Mr. Sundaram submits that when an objection
is raised but not pressed, it must be taken to have been impliedly
overruled. Therefore, the party that had raised objection earlier would
be precluded from raising the same again in view of the bar of res
judicata.