Sanchayita Lahkar

The High Court of Delhi Division Bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar has partly allowed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 arising from an arbitral award in a dispute between homeowners and their building contractor over payments for construction of a residential property. While upholding the arbitrator’s findings on the value of work and extra items, the Court identified a computation discrepancy and directed that the overpayment made by the homeowners be adjusted against the contractor’s dues, thereby partially modifying the award. The Bench held that, in proceedings under Sections 34 and 37, courts have limited yet definite authority to correct apparent calculation errors without reopening the merits of the arbitral determination.

The dispute arises from an agreement under which the contractor-respondent was engaged by the homeowner-appellant and other co-owners for construction of a residential property, based on a provisional estimate and agreed specifications, with a stipulated completion date in January 2011. The contractor commenced work but, according to the homeowners, did not complete the construction and left works pending, compelling them to engage other contractors. In arbitration, the contractor claimed balance payment for work done, costs of equipment and machinery, market escalation, damages, interest, and arbitration costs, relying on running bills, a pre-final bill, and a final bill. The homeowners filed counterclaims for water, electrical, sanitary and other works, alleged unaccounted payments, interest, and arbitration costs, also placing on record an email listing incomplete and defective works.

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The arbitral tribunal framed issues on completion of work, responsibility for delay, extent of payments made, entitlement to the contractor’s claims and to the homeowners’ counterclaims, and relief, and thereafter rendered an award. The homeowners then filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, which was dismissed, leading to the present appeal under Section 37. In the appeal, the homeowners challenged the award as patently illegal and raised an alleged unadjusted overpayment, while the contractor opposed interference, relying on the limited scope of Sections 34 and 37 and the principle that the arbitrator is the sole judge of facts.

The Court recorded that “the appellate jurisdiction of the Court under Section 37 is to be exercised with due restraint, ensuring that it does not traverse beyond the statutory confines delineated under Section 34.” It stated that the Court cannot “undertake an independent assessment of the merits of the award” and must only examine whether the Section 34 court exceeded statutory limits.

It referred to precedents and stated that the appellate court’s role is “supervisory and not corrective in the ordinary appellate sense.” It noted that the scope under Section 37 is even narrower than Section 34 and that factual assessments by an arbitrator are generally immune from interference.

The Court then examined the findings related to extra work and recorded that the Arbitrator had reached conclusions after considering all material, noting: “a clear and reasoned basis has been recorded to hold that the amounts relating to the Mumty and the Machine Room fall within the category of ‘Extra Work’.”

Turning to the computation issue, the Court observed that the Arbitrator had derived two key figures from the claimant’s own documents— “admitted receipt of Rs. 68,00,000/-” and “assessed value of work at Rs. 65,44,049/-.” It stated that the award did not reflect “the mathematical relationship between these figures.”

The Court held that this was a “manifest error, with regard to the computation of the resulting liability, that is self-evident upon comparing the numerical findings recorded in the Award.” It described the discrepancy as “objectively demonstrable from the Award itself.”

Referring to Gayatri Balasamy, the Court stated that courts possess limited power to “rectify or modify an arbitral award where the mistake is purely arithmetical or clerical in nature.” It further recorded that “the mathematical inconsistency in the Award squarely falls within the category of correctable arithmetical errors.”

The Court therefore found that modification—not setting aside—was warranted, since the award did not suffer from perversity but required correction to align with the arbitrator’s own figures.

The Court stated: “Keeping in view the aforesaid discussion, this Court is of the opinion that the extra payment arising out of the difference between the value of the work done at the subject premises and the Award sum received by the Respondent No.1 should be adjusted. Therefore, the Appellant is entitled to receive an extra payment of Rs.2,55,951/- along with the already awarded sum Rs.50,673/- from the Claimant/Respondent No.1.”

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“Accordingly, the Appeal is partly allowed to the extent where the learned Arbitrator has made a manifest error of failing to adjust the aforesaid excess amount in favour of the Appellant.”

“Accordingly, the Award shall stand modified and the Claimant/Respondent No. 1 would now be entitled to Rs.5,33,014/- [Rs.7,88,965/- (Awarded amount in favour of the Respondent No. 1 herein) – Rs.2,55,951/- (Amount to be adjusted in favour of the Appellant)] along with interest @10% p.a. from the date of invocation of arbitration, i.e., 19.12.2011 till realization.”

“Needless to mention, the Claimant/Respondent No. 1 is entitled to Rs.1,50,000/- as costs of arbitration, and also, the Appellant is entitled to receive Rs.50,673/- from the Claimant/Respondent No. 1, as awarded by the learned Arbitrator.”

“The present Appeal, along with pending application, is disposed of in the above terms.”

Advocates Representing The Parties

For the Appellant: Ms. Aastha Dhawan, Advocate
For the Respondents: Mr. Bipin Kumar Prabhat and Mr. Kislaya Prabhat, Advocates

Case Title: Jagdish Kaur v. Jasbir Singh Sandhu & Ors.
Neutral Citation: 2025: DHC:10446-DB
Case Number: FAO (COMM) 205/2024
Bench: Justice Anil Kshetrapal; Justice Harish Vaidyanathan Shankar