An arbitral award passed after consensual and tacit extensions of mandate cannot be challenged on expiry-of-mandate grounds after participation in proceedings

Facts

The Gujarat Water Supply and Sewerage Board entered into rate contracts with Saryu Plastics Pvt. Ltd. between 1998–2002 for supply of PVC pipes. Following audit reports alleging excess payments, the Board blacklisted the Company in 2003. More than a decade later, the parties executed an Arbitration Agreement dated 03.04.2012 appointing a Sole Arbitrator, with a six-month mandate for conclusion of proceedings.

The arbitration proceedings continued from 2012 to 2015 with repeated extensions of time. The Board repeatedly delayed filing replies, failed to attend hearings, and sought adjournments. Paras 3.1–3.29. The Arbitrator ultimately passed an Award dated 27.10.2015 partly allowing the Company’s claims and awarding Rs.1.01 crores with simple interest at 21.675% for the pendente lite period and compound interest post-award. Paras 3.30, 27–28.

Subsequently, the Commercial Court modified the Award by substituting “simple interest” with “compound interest” for the pendente lite period, thereby substantially enhancing the Board’s liability.

Issues Framed

(i) Whether the arbitral mandate validly subsisted when the Award was passed.
(ii) Whether the Award was dispatched after receipt of the Board’s objection email dated 28.10.2015.
(iii) Whether the arbitral proceedings violated principles of natural justice.
(iv) Whether the Commercial Court could modify the Award under S.33(1)(a) Arbitration and Conciliation Act, 1996 by substituting simple interest with compound interest. 

Court’s Reasoning

(a) The Court held that the Board had tacitly consented to extensions of the Arbitrator’s mandate. Despite unilateral extensions by the Arbitrator after 30.09.2014, the Board participated in proceedings without objecting that the mandate had expired. Paras 15–21. The Court observed that the grievance regarding expiry of mandate was “a matter governed by the contract and not by the statute.” Para 21.

(b) The Court found that the Award had in fact been dispatched on 27.10.2015 before the Board’s email dated 28.10.2015 objecting to continuation of proceedings.(Para 22)

(c) On natural justice, the Court noted that the Board had been afforded repeated opportunities over three and a half years but failed to effectively participate. The Arbitrator was therefore justified in proceeding with the Award. (Paras 23–25)

(d) Regarding S.33(1)(a) Arbitration and Conciliation Act, 1996, the Court held that the provision permits correction only of “computational, clerical, or typographical errors” and does not authorise substantive review or modification of an Award (Paras 30–32).
Substituting simple interest with compound interest altered the substantive merits of the Award and exceeded the Commercial Court’s jurisdiction.

Held

The Supreme Court upheld the validity of the arbitral proceedings and the Award but quashed the Commercial Court’s modification substituting compound interest for simple interest during the pendente lite period. The Company was held entitled only to simple interest at 21.675% for the pendente lite period. 

Ratio

A party that participates in arbitral proceedings without objecting to extension of the arbitrator’s mandate is estopped from challenging the award on expiry-of-mandate grounds; further, S.33(1)(a) Arbitration and Conciliation Act, 1996 permits only correction of clerical or computational errors and does not authorise substantive modification of an arbitral award. 

Case Details

Citation: 2026 INSC 552
Decided on: 26 May 2026
Case Title: Gujarat Water Supply and Sewerage Board v. Saryu Plastics Pvt. Ltd.
Court: Supreme Court of India
Bench: Pamidighantam Sri Narasimha, J.; Alok Aradhe, J.