IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Arbitration Case Nos.4 and 5 of 2008. Date of decision: 17.12.2009 1. Arb.Case No.4 of 2008. H.P. Housing and Urban …Objector-Petitioner Development Authority. Versus M/s.Kapil Constructions …Claimant-Respondent 2. Arb.Case No.5 of 2008. H.P. Housing and Urban …Objector-Petitioner Development Authority. Versus M/s.Kapil Constructions …Claimant-Respondent Coram The Hon’ble Mr.Justice Dev Darshan Sud,J. Whether approved for reporting ?1 Yes. For the Petitioner(s): Mr.Bhupender Gupta, Senior Advocate with Ms.Charu Gupta, Advocate. For the Respondent(s): Mr.J.S. Bhogal, Senior Advocate with Mr.Suneet Goel, Advocate. Dev Darshan Sud,J. Both these cases under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act’) have been preferred by the H.P. Housing and Urban Development Authority against the 1 Whether the reporters of Local Papers may be allowed to see the judgement? Yes. 2 award made by the Arbitrator on 7th November, 2007. The claim petition was instituted by the respondent herein. The basic grievance of the petitioner herein is that the Arbitrator proceeded to decide an application under Section 33 of the Act filed by the claimants-respondents. It is undisputed before me that despite notice having been given to the petitioners herein on the application, they were not heard by the Arbitrator who proceeded to decide the application behind their back. Learned Senior Counsel appearing for the petitioners submits that the award requires to be set aside on the ground that the Arbitrator has acted contrary to the provisions of the Act. Learned Senior Counsel appearing for the respondents submits that all that is required under Section 33 of the Act is that only notice is required and no hearing is contemplated. I cannot agree with the submissions made by the learned Senior Counsel appearing for the respondents. The principles of natural justice have not been excluded by the provisions of Section 33 of the Act. Issuing notice to the opposite party also carries with it a duty to hear the parties on the maintainability and the merits of any application/ petition filed before the Arbitrator. The Act does not contemplate the Arbitrator acting ex-parte on his own. In State of Kerala and another vs. Joseph Vilangadan, AIR 1990 Kerala 276, a Division Bench of the 3 Kerala High Court dealing with the provisions of Section 13(d) of the Arbitration Act, 1940, held:- “12. Coming to the 3rd question: Assuming the arbitrator has the power to correct the mistake under Sec.13(d) even then he cannot pass an order under that provision without notice to the affected parties, the learned Government Pleader submits. The learned Counsel for the contractor however, argues that the Arbitration Act does not contain any provision saying that the correction could be made only after notice to parties. It is fundamental that no order in a proceeding affecting the parties thereto shall be passed without notice to them. Apart from this principle, it could be seen from the scheme of the relevant provisions in the Arbitration Act that the arbitrator could possibly exercise this power only on the request of one or possibly both of the parties or as per directions of the Court. It is said so, because the arbitrator after filing the award along with all the records in the Court would not get a chance to go through the award and the connected papers again and rectify clerical or accidental mistakes unless it be that the said mistakes in the 4 award are brought to his notice either by the parties or by the Court by an order under Section 16 read with S.15(c) directing the arbitrator to correct such mistake. To put it differently: The arbitrator, having once issued his award can undoubtedly rectify a clerical mistake or an error arising from an accidental slip or omission with the consent of both parties. If such an error is to be rectified otherwise, the same can be had only after notice to the parties and with the strict observance of all rules of judicial procedure. A reference in this connection to the following observation of Scrutton,J. in Inland Revenue Commissioner v. Hunter, (1914) 3 KB 423, is profitable:- “…..It is clear, ……… that a referee, having once issued his award, cannot issue another without the consent of both parties. If an error is to be corrected, unless the parties assent, it can only be done by the Court on proper evidence, and with proper procedure; ….. it is of great importance that the referees should exercise their important duties in 5 the future, …… with strict observance of all rules of judicial procedure.” In the same strain is the comment made by Mustill and Boyd in their treatise, Commercial Arbitration on this aspect. The comment reads:- “……Whichever course is followed, all concerned should be informed in writing of what is happening and the reasons for it. It therefore follows that the arbitrator cannot rectify the mistakes under Sec.13(d) without notice to the parties and without strictly observing all rules of judicial procedure.” To similar effect is the judgment of the Bombay High Court in Mahavir Prasad Mansinghka & Anr. Vs. Mahendra Kumar Mansingka & Ors., (2005)3 RAJ 143 (Bom). The Court holds:- “12. As I have come to the conclusion that cl.16 itself was unenforceable and the award is vitiated for more reasons than one, I am not going into the question whether the conduct of the 6 Arbitral Tribunal of supplying the one page of the award subsequently is as per the law or against the law, though I find considerable substance in the submissions of the learned Counsel appearing for the petitioners that even assuming that the Arbitral Tribunal could have supplied the missing page in view of the provisions of s.33, the arbitrators could not have done so merely by forwarding that page to the parties. Even for doing that under s.33, it was necessary for the arbitrators to take up proceedings under s.33 for that purpose.” The provisions of Section 33 of the Act are in pari materia to the provision of Section 13 of the Arbitration Act, 1940. Section 13(d) of the 1940 Act provides:- “13. Powers of arbitrators. - The arbitrators or umpire shall, unless a different intention is in the agreement, have power to- (a) … … … … … … … … … … … … (b) … … … … … … … … … … … … (c) … … … … … … … … … … … … (d) correct in an award any clerical mistake or error arising from any accidental slip or omission.” 7 Section 33 of the 1996 Act provides:- “33. Correction and interpretation of award; additional award.- (1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties- (a) 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; (b) if so agreed by the parties, 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 arbitral award. (2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award. 8 (3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award. (4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. (6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) of sub-section (5). (7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.” 9 The important point to notice here is that neither Section 13(d) nor Section 33 envisages a situation where the Arbitrator can act unilaterally on his own on the mere asking of a party without notice to the opposite side and without hearing him. To read such a power granted by Section 33 would be militating against the very principle of fair adjudication which is the foundation of our judicial system and which postulates a fair hearing to the parties. I am not entering into the merits of the other submissions made by the learned counsel appearing for the parties on the question of the illegality/legality of the award on the grounds urged by the learned Senior Counsel appearing for the parties in support of their respective contentions. Needless to say that the Arbitrator was bound by the principles of natural justice as also the statutory mandate under Section 33 of the Act to have issued notice to the petitioners herein and heard them in the case before any order was passed by him. In the facts and circumstances of the case, both these petitions are allowed. The award made by the Arbitrator is set aside. There shall be no order as to costs. Having set aside the award, it would be inequitable to leave the parties without any remedy. In these circumstances, it is directed that the proceedings before the Arbitrator shall commence from the stage when the respondents herein have moved filed an application 10 under Section 33 of the Act. He will permit the petitioners herein to file reply and shall hear both the parties before passing any order etc. Parties to appear before the Arbitrator on 6th March, 2010. The records of the case be sent back to the Arbitrator immediately. Needless to say that the Arbitrator shall dispose of the case with due expedition. December 17, 2009 (Dev Darshan Sud) (aks) Judge.