UNION OF INDIA Vs. G G SATYANARAYANA

JUDGEMENT

(1.) The appellants filed O.P.No.3 of 2001 against the respondents herein before the III Senior Civil Judge, City Civil Court, Secunderabad under Sections 30 and 33 of the Arbitration Act, 1940 ('the old Act' for brevity) requesting to set aside an award dated 23-10-2000 passed by the respondents 2 and 3 as arbitrators in respect of granting of interest @ 18% per annum from 14-8-1995 to 23-10-2000.

(2.) The petitioners contended that the respondent as a contractor entered into an agreement with the petitioners on 23-11-1993 for supply and stacking of hard stone ballast worth Rs.18.48.300/-. He could not execute the work as stipulated and the agreement was terminated leading to a dispute between the petitioners and the 1st respondent. On a writ petition vide W.P.No.26673 of 1995 filed by the 1st respondent, the respondents 2 and 3 were appointed as arbitrators by the then General Manager, South Central Railway. The respondents 2 and 3 passed an award on 23-10-2000 allowing several claims covered by S.Nos.l, 4, 5, 7, 8, 10 and 12 with interest at 18% per annum by rejecting the other claims. In pursuance of the arbitration award the petitioners paid the principal amounts due and disputed the awarding of interest by contending that the arbitrators exceeded the jurisdiction by awarding interest under the Arbitration and Conciliation Act, 1996 ('the new Act' for brevity), which is not applicable to the above disputes referred to them. It was further contended by the petitioners that Clause 16(2) of the general conditions of the contract prohibits the arbitrators to award interest. Hence the application to set aside the award of the arbitrators regarding the awarding of interest to the 1 st respondent.

(3.) The 1st respondent resisted the application contending that the petitioners paid of Rs.21,572/- being the interest @ 18% P.A. from the date of award till the date of payment, but questioned the interest from the date of notice till the date of award. The 1st respondent is entitled to the interest as awarded by the arbitrators. Hence the application is liable to be dismissed with costs.