MEGA CONSTRUCTIONS Vs. SRIKUMAR FOMRA AND OTHERS

JUDGEMENT

(1.) Heard Mr. A. Gunaseelan, learned counsel appearing for the petitioners and Mr. R. Dasaratha Rao, learned counsel appearing for the respondents 1 and 2.

(2.) This petition has been filed under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") to set aside the award dated 28.07.2008. The matter arise out of a construction contract between the parties and since there was a dispute, the respondent by notice dated 08.06.1999 issued to the petitioners stated that under the agreement dated 03.02.1998, the petitioners jointly and severally undertook to repay Rs. 71 lakhs and the balance remaining after the payment of Rs. 10 lakhs on the date of agreement was on agreed terms between December 1998 and June 1999. Further it was stated that the time for payment is the essence of the agreement and it also provided that if delay is committed in the payment of the amount on due date, the petitioners would be liable to pay interest @ 20% on Rs. 60 lakhs from January 1999 to June 1999. The amount payable on or before 30.12.1998 was paid in three installments between 08.01.1999 and 05.02.1999. Further amount payable on 30.01.1999, 28.02.1999, 31.03.1999, 30.04.1999 and 30.05.1999 had not been paid and therefore the respondent has stated that the petitioners had committed default. With these facts, the respondent informed the petitioners that they are liable to pay interest on Rs. 60 lakhs. In terms of Clause 6 of the agreement, the respondent appointed a Retired District Judge as their Arbitrator and called upon the petitioners to nominate an Arbitrator within thirty days from the date of receipt of the said letter. It is not in dispute that the petitioners received the said letter from the counsel for the respondent setting out the claim and nominating an Arbitrator. Nevertheless, the petitioners did not choose to appoint an Arbitrator and in between there was certain other litigation and ultimately, the respondents had to move the Hon'ble Chief Justice of this Court in O.P.No.812 of 2001 under Section 11 of the Act for appointment of an Arbitrator. The Hon'ble Chief Justice by order dated 24.03.2006 appointed an Arbitrator who entered upon reference on 24.04.2006.

(3.) The learned counsel for the petitioners was fair enough to submit that though several grounds have been raised in the petition filed under Section 34 of the Act, those grounds are factual in nature and he is aware of the fact that the jurisdiction of this Court exercising the power under Section 34 of the Act is very limited and seeks to advance arguments as regards the award of interest with regard to the two periods. The learned counsel elaborately referred to the nature of agreement between the parties, memo of calculation filed by the parties and invited the attention of this Court to the finding rendered by the learned Arbitrator from paragraph 16 onwards. The learned counsel further pointed out that the claim is to award interest @ 20% from 01.01.1999 till 24.04.2006, out of which, the learned Arbitrator entered reference and awarded interest @ 7.5% per annum on Rs. 55 lakhs from the date of the award till the date of realisation. The Court has to examine as to whether the respondent would be entitled to the interest at the rate fixed by the learned Arbitrator for the periods referred above.