Executing courts cannot modify arbitral awards under CPC Section 152, Karnataka High Court rules

The petitioner, a contractor, had entered into a contract with the respondent for construction of community centres at thirteen locations in Bengaluru for a contract value of ₹6,41,58,238.

Disputes were referred to arbitration, and the sole arbitrator passed an award dated 8 April 2019 awarding ₹63,97,750, together with further interest at 15.80% per annum from 9 April 2016 until realisation.

The respondent did not challenge the award under Sections 33 or 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), and the petitioner initiated execution proceedings.

During execution, the respondent paid ₹63,97,750 and ₹6,67,434, totalling ₹70,65,184.

The respondent thereafter contended that the award contained a typographical error and that further interest ought to run from 9 April 2019, rather than 9 April 2016.

On 30 December 2019, the arbitrator issued a “clarification” stating that the reference to 9 April 2016 was a typing error and that further interest was payable only from 9 April 2019.

By order dated 18 February 2021, the Executing Court accepted the respondent’s calculation, treated the execution petition as fully satisfied, rejected the petitioner’s calculation, directed correction of the award, and held that the petitioner had received an excess amount of ₹1,66,800.

The petitioner challenged that order under Article 227 of the Constitution and also sought to have the arbitrator’s clarification declared non-est and quashed.

Whether the Executing Court could, under Section 36 of the Arbitration Act and Section 152 of the Code of Civil Procedure, 1908 (“CPC”), recalculate interest and modify the terms of an unchallenged arbitral award.

Whether the arbitrator could, after the expiry of the statutory period and termination of the arbitral mandate, issue a clarification altering the date from which post-award interest was payable.

Whether the High Court could, in a petition under Article 227, directly declare the arbitrator’s clarification dated 30 December 2019 non-est and quash it.

Sections 31(7), 32(3), 33 and 36 of the Arbitration Act govern interest in arbitral awards, termination of arbitral proceedings, correction or interpretation of awards, and enforcement of awards, respectively.

Under Section 33(1) and Section 33(3), computational, clerical or typographical errors may ordinarily be corrected within 30 days, unless the parties agree to another period; after termination of the tribunal’s mandate, the arbitrator becomes functus officio.

Section 36 makes an award enforceable in accordance with the CPC as if it were a decree, but does not convert the award into a decree of a civil court or confer power on the Executing Court to alter its substantive terms (Sundaram Finance Ltd. v. Abdul Samad).

An Executing Court cannot go behind or modify a decree except where it is a nullity or was passed without inherent jurisdiction (Darshan Singh v. State of Punjab and Bhawarlal Bhandari v. Universal Heavy Mechanical Lifting Enterprises Ltd.).

Section 152 CPC is confined to accidental clerical or arithmetical errors and cannot be used to modify, add to, or substantively alter a judgment or decree (State of Punjab v. Darshan Singh).

Judicial intervention in arbitration matters under Articles 226/227 must remain exceptional, particularly where the Arbitration Act provides a statutory remedy under Section 34 (Bhaven Construction v. Executive Engineer and Deep Industries Ltd. v. ONGC).

The High Court held that the award dated 8 April 2019 had become final because neither party invoked the statutory mechanisms under Sections 33 or 34 of the Arbitration Act.

The arbitrator’s communication dated 30 December 2019 was issued well beyond the 30-day period and without any agreement between the parties extending that period.

More importantly, it did not merely correct a clerical or arithmetical mistake; it altered the period of interest and therefore affected the substantive financial liability under the award.

The Executing Court likewise exceeded its jurisdiction. Section 36 only prescribes the mode of enforcement and does not authorise an executing court to reinterpret the award, recalculate the interest period, or direct substantive correction of the award under Section 152 CPC.

The Executing Court’s reliance on the fact that the respondent was a public institution or that public money was involved could not enlarge its statutory jurisdiction.

Since the award was neither a nullity nor issued by a tribunal lacking jurisdiction, the Executing Court was bound to enforce it according to its tenor.

However, the High Court declined to directly adjudicate the petitioner’s prayer to quash the arbitrator’s clarification under Article 227, holding that such interference was beyond the proper scope of the constitutional petition and that arbitration-related challenges must ordinarily be pursued under the Arbitration Act.

The High Court held that the Executing Court had no jurisdiction to modify the arbitral award or recalculate the interest awarded.

The parties were directed to bear their own costs, pending applications were closed, and they were directed to appear before the Executing Court on 14 September 2026 for further proceedings.

The Court did not grant the separate prayer to declare and quash the arbitrator’s clarification dated 30 December 2019 under Article 227, leaving any challenge to be pursued through the statutory framework of the Arbitration Act.