UNION OF INDIA Vs. NONGTHOMBAM RAJENDRA SINGH

JUDGEMENT

(1.) ALL the three Appeals arise out of two Arbitration proceedings between the same parties under two different agreements. Since the issue in both the Arbitration proceedings is one and the appeals can be disposed of by answering the said issue, on the request of the learned counsel appearing for the parties, all the three Appeals were taken up for hearing and are disposed of in this common judgment.

(2.) THE claimant -respondent in all the three Appeals was entrusted for execution of certain works by the Appellants under agreement No. 24/EE/MCD/86 -87. The respondent was entrusted with the work of construction of internal roads, culverts and drainage in Regional Tasar Research Station at Imphal. Dispute arose between the parties and the respondent in invoking the Arbitration clause contained in the agreement filed Original (Arbitration) Suit No. 5 of 1993 in the Court of Civil Judge (Sr. Divn.) No. I, Manipur East for appointment of an Arbitrator. In the said case, an Arbitrator was appointed and Arbitration Case No. C -16 of 1998 was registered before the Arbitrator. The Arbitrator passed an award on 21st December, 1998 directing the present appellants to pay an amount of Rs. 2,29,580.05 (Rupees two lakhs twenty nine thousand and five paise) only with 30% compound interest per year w.e.f. 27.04.1987 from the date of award and special damage of Rs. 12,000/ - (Rupees twelve thousand) only per month w.e.f. 27.4.1987 till realisation of the award amount. The said award passed by the Arbitrator was made Rule of the Court by the learned Civil Judge (Sr. Divn.) No. I, Manipur East on 29th December, 2006 and a decree was drawn up. The said judgment and decree are the subject matter of challenge in RFA No. 8 of 2007.

(3.) CHALLENGING the award in both the cases, only one point has been raised with regard to interest awarded by the Arbitrator and made a Rule of the Court by learned Civil Judge. It was contended on behalf of the appellants that the Arbitrator has no jurisdiction to award compound interest at the rate of either 15% or 30% per year. Reliance was placed on a decision of the Apex Court in the case of Rajasthan SRTC -Vs -Indag Rubber Ltd. reported in : 2006 (VII) SCC 700. Referring to the above decision, it was contended by the learned counsel appearing for the appellants that in the said case interest had been awarded at the rate of 12% per year from the date of award which was reduced to 6% per year by the Supreme Court. Learned Sr. Counsel, Mr. Ibotombi, also relied upon another decision of the Supreme Court in the case of Kishorilal -vs -Sales Officer, District Land Development Bank and others reported in : 2006 (VII) SCC 496, though the said case does not relate to an arbitration proceeding, it was contended by the learned sr. counsel appearing for the appellants that interest was granted at the rate of 6% per year.