Supreme Court Allows Clarifications on Awards After Arbitral Tribunal Becomes Functus Officio
The Supreme Court, in North Delhi Municipal Corporation v. M/s S.A. Builders Ltd., held that an Arbitral Tribunal, despite becoming functus officio after passing an award, retains limited jurisdiction under Section 33 of the Arbitration and Conciliation Act, 1996, to clarify or correct errors in the award.
A bench comprising Justices Abhay S. Oka and Ujjal Bhuyan dismissed an appeal challenging the Delhi High Court's decision that allowed the respondent to seek clarification from the Arbitral Tribunal on whether post-award interest under Section 31(7)(b) of the Act should be calculated on the principal amount plus pre-award interest.
The Arbitral Tribunal clarified its award in line with the Supreme Court’s ruling in Hyder Consulting (UK) Ltd v. Governor of Orissa, which overruled State of Haryana v. S.L. Arora and held that post-award interest could be granted on the sum comprising both the principal and pre-award interest.
The Supreme Court addressed the issue of whether an arbitrator can issue clarifications after becoming functus officio and concluded that limited jurisdiction under Section 33(1) allows such clarifications if errors or ambiguities arise. Justice Bhuyan observed that the clarification issued was permissible as the respondent was granted leave to seek it beyond the statutory 30-day period, with the appellant's full participation in the proceedings.
The Court rejected the appellant's contention that the Arbitrator lacked jurisdiction, affirming that the clarification fell within the scope of Section 33(1). Accordingly, the appeal was dismissed.