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Calcutta High Court Upholds Tribunal’s Power To Correct Calculation Errors Under Section 33 Of Arbitration Act

Calcutta High Court Upholds Tribunal’s Power to Correct Calculation Errors Under Section 33 of Arbitration Act
The Calcutta High Court has reaffirmed that an arbitral tribunal has the authority to correct computation errors under Section 33 of the Arbitration and Conciliation Act, 1996, even without a separate application from the parties. In Haldia Development Authority v. Konark Enterprises, Justice Sabyasachi Bhattacharya held that tribunals can rectify such errors suo motu if necessary.
The case arose from a work order issued by Haldia Development Authority (HDA) to Konark Enterprise for road construction and maintenance in Haldia. Disputes over the execution of the contract led to arbitration, where the tribunal directed HDA to refund ₹9,06,091.44 to Konarak Enterprise, representing the contractor’s earnest money and security deposit. Additionally, the tribunal partially allowed HDA’s counterclaim for risk and cost expenses amounting to ₹18,00,163. Dissatisfied with the decision, HDA challenged the refund and sought an increase in the risk and cost amount, citing a calculation error. Konarak Enterprise, on the other hand, contested the risk and cost claim altogether.
One of the key legal questions was whether the arbitral tribunal could modify the risk and cost component without a separate application from HDA. The Court rejected HDA’s claim that the refund of the security deposit was time-barred, noting inconsistencies in their arguments. It also dismissed HDA’s assertion that the work was incomplete, emphasizing that the contract was never rescinded, completion certificates had been issued, and payments had been made accordingly. The Court ruled that clause 3(a) of the contract, which deals with the forfeiture of security deposits, was not applicable in this case.
On the issue of HDA’s risk and cost claim, the Court upheld the tribunal’s decision, stating that the non-imposition of a penalty did not invalidate the claim under clause 3 of the contract. It also rejected Konarak Enterprise’s arguments regarding the nature of the subsequent contract work and the timing of the award.
However, the Court found merit in HDA’s contention that the tribunal had made a calculation error in determining the cost of unfinished work, leading to an incorrect risk and cost assessment. Justice Bhattacharyya observed that the tribunal’s refusal to correct this error was legally untenable. He ruled that the arbitral tribunal had a duty to rectify such errors suo motu, particularly when it had already made corrections in response to an application under Section 33.
“The refusal of the Arbitral Tribunal to correct the award insofar as the risk and cost element of the award was concerned and to enhance the risk and cost compensation… is patently illegal and perverse, being contrary to its own corrected award and as such, amenable to being set aside under Section 34 of the 1996 Act.”
Calcutta High Court Upholds Tribunal’s Power to Correct Calculation Errors Under
Section 33 of Arbitration Act
As a result, the Court ruled in favor of HDA regarding the correction of the risk and cost calculation while upholding the rest of the arbitral award.