ASSAM STATE ELECTRICITY BOARD Vs. R N DUTTA

JUDGEMENT

(1.) THIS appeal u/s 37 of the Arbitration and Conciliation Act, 1996 (in short, 1996 Act) is directed against the judgment dated 17. 10. 07 passed by the learned District Judge at Guwahati in Misc (Arb.) Case No. 6 of 2005 rejecting the application filed u/s 34 of the 1996 Act praying for setting aside the arbitral award passed by the Industrial Facilitation Council (in short, IFC) acting as an arbitrator in respect of the matter referred to it under sub-section (1) of Section 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (in short, 1993 Act ).

(2.) PURSUANT to an order dated 9. 3. 98 for supply of 400 Nos. of pilfer proof steel meter boxes of particular specification, the respondent supplied the materials to the appellant on 14. 5. 99, where-after a bill for Rs. 7 lakh was raised on 2. 6. 99. The appellant on 10. 01. 2000 paid the billed amount to the respondent. The respondent thereafter on 14. 01. 2000 addressed a communication to the Superintending Engineer of the appellant Board claiming interest on delayed payment under the provisions of 1993 Act, followed by a further communication dated 22. 01. 2000 in that regard. By another communication dated 18. 02. 2000, the respondent also informed the Chief Engineer of the appellant Board about the prime lending rate (PLR) of the State Bank of India since 01. 03. 99 enclosing therewith the communication issued by the Deputy General Manager of the said bank dated 17. 02. 2000. Having failed to receive any reply, the respondent again on 03. 04. 2000 wrote to the Superintending Engineer of the appellant Board claiming interest and requested him to make the payment of the interest under the provisions of the 1993 Act by 10. 04. 2000 and intimating the said authority that in the event of failure to make such payment, reference to the IFC u/s 6 (2) of the 1993 Act would be made. The matter was thus referred to the IFC in terms of the provisions contained in sub-section (2) of Section 6 of the 1993 Act on the basis of the application filed by the respondent claiming compound interest with monthly rest at 18% per annum from 13. 6. 99 to 10. 01. 2000 and at the same rate from 10. 01. 2000 to the date of payment including cost. The IFC which acts as an arbitrator initially in its meeting held on 03. 02. 2003 dropped the proceeding, which has been challenged by the respondent in WP (C) No. 5980/2003 before this court. A single bench of this court vide judgment and order dated 26. 03. 2004 set aside the said proceeding of the IFC on the ground of violation of the principles of natural justice and directing it to take a fresh decision on the matter within a period of three months from the date of furnishing the certified copy of the order. The IFC thereafter held its proceeding on 3. 12. 04 and upon hearing the parties passed the award directing payment of Rs. 75,239. 02 being the interest payable under the provisions of 1993 Act with effect from 14. 6. 99 i. e. the date of expiry of one month from the date of supply of materials till 9. 1. 2000 i. e. one day prior to making the payment and also to pay pre award and pendentelite interest. The appellant has challenged the said award by filing an application u/s 34 of the 1996 Act before the learned District Judge praying for setting aside the same, which having been rejected, the present appeal has been filed.

(3.) CHALLENGING the order passed by the learned District Judge, Mr. Das, learned counsel for the appellant, has submitted that the respondent having accepted the principal amount under the bill on 10. 1. 2000 without any reservation, the subsequent claim of the respondent for interest on delayed payment under the provisions of the 1993 Act is not maintainable. Referring to the provisions contained in Sections 3 and 4 of the 1993 Act as well as the definition of "appointed day" in Section 2 (b) of the said Act, it has further been submitted by Mr. Das that even assuming that the respondent can raise the claim for delayed payment after receiving the principal amount without any reservation, he at the best would be entitled to such interest from 14. 6. 99 i. e. the day when the period of 30 days from the date of supply expired, till 10. 1. 2000 i. e. the date when the principal amount has been paid, but the IFC passed the award not only for the period from 14. 6. 99 to 9. 1. 2000 but also from 10. 1. 2000 till the date of the award, which the Arbitrator has no power and jurisdiction. According to learned counsel, the District Judge, therefore, ought to have allowed the application filed u/s 34 of the 1996 Act and set aside the award passed by the IFC.