UNION OF INDIA Vs. R.K. CONSTRUCTIONS

JUDGEMENT

(1.) The dispute before this Court lies within a narrow compass: the petitioners assail the arbitral award dtd. 20/4/2021 (the Award) in respect of the grant of pendente lite interest under Sec. 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act).

(2.) A contract was awarded by the petitioners to the respondent in relation to the collection, supply and related activities as regards machine crushed hard granite stone ballast between specified segments of the Turinjapuram and Thiruvannamalai stations, Reach VIII. In this connection, letter of acceptance dtd. 10/6/2005 (the LoA) was issued to the respondent. This was followed by an agreement dtd. 13/10/2005 (the Agreement). The Agreement was terminated by notice dtd. 15/5/2007. Thereupon, the respondent invoked the arbitration clause by communication dtd. 28/8/2007. At least on two occasions, the arbitral tribunal constituted to adjudicate the matter could not proceed further. Eventually, the Arbitral Tribunal, which pronounced the Award, was constituted.

(3.) Before the Arbitral Tribunal, the petitioner made five claims. The challenge in the present petition is confined to the verdict on the fourth claim, which pertained to interest on the security deposit pendente lite and in the post award period, but was allowed only as regards pendente lite interest. In response to the statement of claim, the petitioners herein filed a counter statement. In such counter statement, the petitioners herein contended that the demand for refund of security deposit is not reasonable and cannot be accepted. However, the issue relating to interest was not expressly dealt with. The respondent herein adduced documentary evidence by exhibiting 27 documents as Exs.C1 to C27 and the petitioners herein exhibited five documents as Exs.R1 to R5. Neither party adduced oral evidence before the Arbitral Tribunal. The petitioners were directed to refund the security deposit of Rs.7,31,785.00 and pay simple interest thereon at 12% per annum from 28/8/2007 until the date of the Award. The admitted position is that the security deposit was refunded while the present petition was pending adjudication before this Court. It should be noticed that the Award does not grant post award interest.