SHAHI AND ASSOCIATES Vs. STATE OF U. P.

JUDGEMENT

(1.) M/S. Shahi and Associates has filed this appeal impugning the common final judgment and order dated 05.12.2007 passed by the High Court of Judicature at Allahabad in F.A.F.O Nos. 3728 of 2007 and 947 of 2007, whereby the High Court has upheld the award of the Arbitrator. However, relying on para 7- A of Section 24 of the Uttar Pradesh Civil Laws (Reforms and Amendment) Act, 1976 (for short 'U.P. Amendment Act'), it has reduced the statutory interest to 6% p.a. from 18% p.a. as awarded by the Arbitrator. The appellant has questioned the reduction of the interest in this appeal.

(2.) The appellant is a registered partnership firm engaged in civil construction projects for the government of Uttar Pradesh. The appellant entered into an agreement dated 08.07.1993 with the Superintendent Engineer, Drainage Division, District Gonda, U.P. for work related to the Gola Pump House. Owing to certain disputes that arose between the parties with respect to the rate of payment for additional work under the agreement, the appellant served a notice invoking arbitration on the respondents and filed the claim petition on 11.09.1999. Shri B.M. Arora was appointed as the sole Arbitrator on 12.10.1999 and the proceedings commenced on 27.10.1999 under the Arbitration and Conciliation Act, 1996 (for short 'the Act of 1996').

(3.) The sole Arbitrator passed an award on 24.12.2001, whereby the appellant was awarded a sum of Rs. 17, 86, 339/- (seventeen lakhs eighty six thousand three hundred thirty nine). The Arbitrator further held that the interest on the sum awarded would be payable in accordance with Section 31(7)(b) of the Act of 1996, i.e. 18% p.a. from the date of the award till the date of actual payment. The operative portion of the award is: