UNION OF INDIA Vs. AMBIKA CONSTRUCTION

JUDGEMENT

(1.) PARTIES to the above appeal entered into an arbitration agreement to resolve their disputes. The Arbitrator published a non-speaking award which was made subject-matter of challenge in this court. This Court directed the Arbitrator to assign reasons. The matter was remanded back to the Arbitrator on that score. The Arbitrator thereafter supplied reasons in support of his award. The appellant filed an application for setting aside of the said award challenging the reasons so supplied by the Arbitrator in terms of the direction of this Court. It was contended in the said application that the respondent/contractor having received payment in full and final settlement of its claim was not entitled to raise any claim before the Arbitrator. It was also urged that the claims made by the respondent/contractor were outside the scope of the arbitration agreement. The learned Single Judge by His Lordship's well versed judgment rejected the contentions of the appellant save and except the submissions made on account of interest. His Lordship modified the award to the extent that the principal claim would carry interest @ 10% per annum on and from September 1, 1992 being the date when the Arbitrator entered upon reference until payment. His Lordship, however, did not feel inclined to interfere with the rest part of the award. Hence, this appeal by the appellant.

(2.) ALTHOUGH several points were canvassed in the Memorandum of Appeal. Mr. Roy Chowdhury, learned Senior Counsel appearing in support of the appeal raised three issues :

(3.) TO elaborate his submission on interest Mr. Roy Chowdhury relied on the Apex Court decisions in the case of Secretary, Irrigation Department, government of Orissa and Ors. vs. G. C. Roy, reported in 1992 (1) SCC page 508 and in the case of Executive Engineer, Dhenkanal Minor Irrigation division, Orissa and Ors. vs. N. C. Budharaj and Ors. , reported in 2001 (2) SCC page 721 and in the case of the Board of Trustees for Port of the Calcutta vs. Engineers-De-Space-Age, reported in AIR 1996 SC page 2853. Citing the aforesaid three decisions Mr. Roy Chowdhury contended that pre-reference interest or interest pendente title to the contrary. Mr. Roy Chowdhury further contended that interest pendente lite and interest on judgment could be allowed by the Court in terms of section 34 of the Code of Civil Procedure and in terms of the provisions of the old Interest Act. Interest Act, 1978, (hereinafter referred to as the "said Act of 1978") however enlarged the scope of awarding interest and section 3 of the said Act of 1978 empowered the Arbitrator to award interest pendente lite and interest on judgment if there was no contract to the contrary. However, in the instant case the agreement categorically provided that no interest would be paid in case of delayed payment. Hence, Arbitrator was bound by the said provision of the contract and as such was not entitled to award interest. Learned Judge erred in appreciating such argument of the appellant.