Arbitral tribunal can suo motu rectify calculation errors in award: Calcutta High Court

The Calcutta High Court recently ruled that an arbitral tribunal has the power to correct calculation errors under Section 33 of the Arbitration Act, even without a separate application from the parties [Haldia Development Authority v. Konark Enterprises]..Justice Sabyasachi Bhattacharya held, “Section 33(3) empowers the Tribunal to suo moto correct any computation error as envisaged under Section 33(1)(a). Having not done so within the statutory 30 days, it was incumbent upon the Arbitral Tribunal to suo moto correct such error, at least as a resultant effect of the correction done by it on the application of the claimant under Section 33 of the 1996 Act.”.The case involved two applications under Section 34 of the Arbitration Act stemming from the same arbitral award as previously corrected under Section 33 of the Act. The core dispute centered on a work order awarded by Haldia Development Authority (HDA) to Konarak Enterprise for road construction and maintenance in Haldia. Disagreements led to arbitration, with the arbitral tribunal directing a refund of the contractor's earnest money and security deposit (₹9,06,091.44) to Konarak Enterprise and partially allowing HDA's counter-claim for risk and cost expenses (₹18,00,163).HDA challenged the refund and sought an increase in the risk and cost expenses, citing a calculation error. Konarak Enterprise contested the risk and cost claim altogether.A key point of contention was whether the tribunal had the authority to enhance the risk and cost component without a separate application from HDA..The Court considered several key issues, including the entitlement of Konarak Enterprise to the security deposit refund, the validity of HDA's risk and cost claim, and the tribunal's authority to modify the risk and cost component without a separate application from HDA.Justice Bhattacharyya rejected HDA's limitation argument regarding the security deposit refund, noting the contradiction in their claims of both limitation and prematurity. The Court also found that HDA's arguments regarding incomplete work were unsubstantiated, as the contract was never rescinded, completion certificates were issued for various phases of the work, and payments were made accordingly. The Court determined that clause 3(a) of the conditions of contract, which deals with forfeiture of security deposit, was not applicable in this case.Regarding HDA's risk and cost claim, the Court upheld the tribunal's decision, finding that the non-imposition of a penalty was not a bar to the claim under clause 3 of the contract. The Court also dismissed Konarak Enterprise's arguments about the nature of the subsequent contract work and the timing of the award..However, the Court agreed with HDA's argument regarding the calculation error in the risk and cost component. Justice Bhattacharyya pointed out that the tribunal's calculation of the unfinished work was flawed, leading to an underestimation of the risk and cost expenses owed to HDA.“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.”The Court thus ruled in favour of HDA only with respect to calculation of the unfinished work. .HDA was represented by Advocates Swarajit Dey and Debarati Das.Konark Enterprises was represented by Advocates Subhabrata Dutta and Munmun Tiwary..[Read Judgment]