SREE BALAJI CONSTRUCTION Vs. UNION OF INDIA

JUDGEMENT

(1.) HEARD learned counsel for the parties.

(2.) THE short question involved in this appeal is as to whether the Civil Court was justified in disallowing the interest for the earnest money and security deposit of the appellant -contractor because of the Clause 16(3) of the contract.

(3.) IN the arbitration proceeding, the learned Arbitrator found that the claim of the appellant -contractor was, in fact, the admitted claim and, therefore, passed the award in favour of the appellant. The claim of the appellant -contractor was with respect to certain dues as well as with respect to the earnest money and the security deposit. The learned Arbitrator observed that the reason for withholding the amount given by the respondent cannot be justified in view of the fact that respondent tried to justify their retention of money on the ground that the contractor was liable to submit the royalty clearance whereas the Hon'ble Supreme Court has vacated the stay in April, 1995 and, therefore, there was no justification for withholding the money by the respondent. However, in civil Court a plea was raised that in view of Clause 16(3) no interest was payable by the respondent on earnest money or security deposit as well as on other amounts. The learned Sub Judge, I, Ranchi relied upon Clause 16(3) and after considering the judgment of the Supreme Court delivered in the case of M. B. Patel and Company v. Oil and Natural Gas Commission ((2008) 8 SCC 251) : (2008 AIR SCW 4094) held that the Arbitrator had no jurisdiction to grant interest which runs contrary to the restriction as per Clause 16(3) of the contract.