Section 33 Arbitration Act Allows Only Clerical Corrections, Not Substantive Changes Like Replacing Simple Interest With Compound Interest

Case Name: Gujarat Water Supply and Sewerage Board v. Saryu Plastics Pvt. Ltd.

Citation: 2026 INSC 552

Date of Judgment/Order: 26 May 2026

Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe

Held: The Supreme Court held that Section 33(1)(a) of the Arbitration and Conciliation Act, 1996 permits only correction of computational, clerical or typographical errors in an arbitral award, and cannot be used to substantively modify the award. The Court held that replacing “simple interest” with “compound interest” for the pendente lite period is not a clerical correction but a substantive change affecting the merits and financial liability of the parties. The Court further held that where a party participates in arbitration and does not object to extension of the arbitrator’s contractual mandate until after the award is passed, it is estopped from later challenging the award on the ground that the mandate had expired, particularly when the objection is contractual and not statutory.

Summary: The dispute arose from rate contracts awarded by Gujarat Water Supply and Sewerage Board to Saryu Plastics Pvt. Ltd. for supply of PVC pipes between 1998 and 2002. After audit objections and blacklisting, the parties executed an arbitration agreement in 2012 appointing a sole arbitrator with an initial six-month mandate. The proceedings continued for several years, with repeated extensions and several instances of delay and non-participation attributed to the Board. The arbitrator passed an award on 27.10.2015 partly allowing the Company’s claims and awarding about INR 1.01 crores with simple interest at 21.675% for the pendente lite period and compound interest from the date of award till realisation. The Commercial Court later modified the award in review proceedings by substituting compound interest for simple interest even for the pendente lite period, which drastically increased the Board’s liability. The Supreme Court held that the Board had tacitly acquiesced in continuation of the arbitral proceedings and could not challenge the award on mandate expiry after participating without objection. However, the Court held that the Commercial Court had no jurisdiction to alter the nature of interest under Section 33 or review powers.

Decision: The Supreme Court partly interfered with the High Court and Commercial Court orders by setting aside the modification that substituted “compound interest” in place of “simple interest” for the pendente lite period. The Court upheld the validity of the arbitral proceedings and rejected the Board’s objections regarding expiry of mandate, dispatch of award and violation of natural justice. It held that Saryu Plastics Pvt. Ltd. would be entitled to simple interest at 21.675% for the pendente lite period, and not compound interest for that period. The appeals were disposed of with no order as to costs.