The arbitral tribunal cannot modify its award on merits under Section 33 of the Arbitration and Conciliation Act, 1996; it is limited to correcting clerical or arithmetical errors.

JUDGMENT :

PER : HONORABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (in short as “the Act’ 1996”) is directed against the award of the Arbitral Appellate Tribunal dated 09.09.2021 and the judgment and order dated 12.10.2023 passed by the Commercial Court at City Civil Court, Ahmedabad under Section 34 of the Act’ 1996. The appellants and respondent herein are referred as they are arrayed as parties in this appeal while referring to the facts of the case and the order passed by the Appellate Arbitral Tribunal.

2. The contention is that the learned Court has erred in appreciating the fact that the appellate award dated 09.09.2021 suffers from patent illegality and that the supplementary award dated 12.10.2023 had been passed to correct the errors apparent on the record. Learned Court has, thus, erred in setting aside the supplementary award dated 26.10.2021, which is liable to be upheld while allowing the instant appeal.

3. In support of his submissions, the learned Senior Counsel for the appellants has relied on the following decisions of the Apex Court: -

(1) Gyan Prakash Arya vs. Titan Industries Limited, (2023) 1 SCC 153.

(2) Econ Piling Pte Ltd. and another vs. Shanghai Tunnel Engineering Co. Ltd., (2010) SGHC 253.

(3) Master Construction Co.(P) Ltd. vs State of Orissa and another, AIR 1966 SC 1047.

(4) Lakshmi Ram Bhuyan vs. Hari Prasad Bhuyan and others, (2003)1 SCC 197.

(5) Mellor vs. Swire, [L.R] 30 Ch.D. 239, (1885) 30 Ch.D 239(CA)

4. The facts relevant to the controversy at hand are that the respondent herein had authorized Appellant No. 2 as subbroker to carry out trades on the terminal of Appellant No.1. The agreement to this extent was executed on 07.09.2016. The dispute raised before the Arbitrator was pertaining to the alleged unauthorized transactions executed by the Appellant No.2 in the account of the respondent during the period between 25.02.2020 to 03.03.2020, which has caused financial loss to the respondent. The case of the respondent was that the appellant No.1 had unauthorisedly liquidated and realized the mutual fund investment of the respondent on the premise of covering the losses. The arbitral Tribunal held that the transactions made were to the knowledge of the respondent and were duly authorized transactions and had rejected the claims of the respondent. The Tribunal has further allowed the counter claim of the appellants and directed the respondent to pay the regular ledger debit of Rs.1,44,49,610.96/- to the appellants.

5. The arbitral award dated 11.01.2021 was challenged in appeal by the respondent and the appellants did not raise any challenge in relation to the counter claim. The Tribunal also came to the conclusion that the transaction carried out by the appellant No.2 in the account of respondent No.2 were authorized and the appellants were entitled to the recovery claimed by it. However, the appellate arbitral Tribunal held that the appellants ought not to have redeemed mutual fund units in the manner that they did and though it has upheld the award and reaffirmed that all the transactions were authorised.

6. The appellate arbitral Tribunal vide award dated 09.09.2021 has allowed the appeal and set aside the arbitral award dated 11.01.2021 to the extent that it rejected the claim of the respondent to the redemption of units of mutual funds on 16.03.2021 and appropriate proceeds towards shortfall of margin. The direction was issued to the appellant herein to remit the said amount as described therein with interest of 6% per annum within 10 days from the date of receipt of the amount from 16.03.2021 till the date of refund on the amount appropriated by it.

7. While issuing the said directions, it was held that while there cannot be denial of right of respondent herein to have deposited for shortfall in the margin, but the appellants on their own could not have liquidated the assets of the respondent, which was not put in