UNION OF INDIA Vs. S.N.NAIK

JUDGEMENT

(1.) By this appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996, appellant seeks to challenge an order and judgment dated 24 th July, 2009 passed by the Principal District Judge, Raigad, Alibaug rejecting application filed by the appellant under Section 34 of the Act (Civil Misc. Application No.66 of 2005). By the said Civil Misc. Application No.66 of 2005, the appellant had challenged two claims out of several claims viz. grant of interest at the rate of 21% in the sum of Rs.2,42,107/- and pende-lite interest in the sum of Rs.4,68,263/-.

(2.) Mr.Sureshkumar, the learned counsel appearing on behalf of the appellant places reliance on clause 16 (2) of General Conditions of Contract which reads thus :-

(3.) Relying upon this clause, the learned counsel appearing for the appellant submits that such clause prohibits payment of interest from the appellant to the respondent contractor. It is submitted that though the clause prohibits payment of interest on the earnest money or the security deposit or any amount payable to the contractor under the contract, the learned arbitrator ignored the terms of the contract and in breach thereof has allowed the claim for interest placing reliance upon section 29 of the Arbitration Act, 1940. It is submitted that though admittedly the present reference was under the provisions of Arbitration and Conciliation Act, 1996, the Learned District Judge placed reliance upon section 29 of Arbitration Act, 1940 while rejecting the application filed by the appellant which is totally misplaced and on the face of it, perverse. The learned counsel invited my attention to the judgment of the Supreme Court in case of Sree Kamatchi Amman Constructions vs. The Divisional Railway Manager (Works), Palghat & Ors., 2010 8 SCC 767 and more particularly para (19). Supreme Court has considered the same clause which was relied upon by the appellant and was part of the contract. After considering the same, the Supreme Court in para (19) has held as under :-