Haryana State Agricultural Marketing Oard vs Tara Chand

Naresh Chander Jain, J.—In this revision petition filed by the Haryana State Agricultural Marketing Board an important and interesting question of law has arisen for the decision of this Court, namely, whether the arbitrator can, in law, award interest till final payment, or is it that the arbitrator can only award interest uptil the date of the decree to be passed by the Court within the meaning of Section 29 of the Arbitration Act (hereinafter referred to as the Act'')?

The facts giving rise to the present revision petition lie in a very narrow compass. The arbitrator Shri V. P. Duggal gave his award on Mar. 24, 1986, in favour of the respondent-decree-holder for a sum of Rs. 4,88,436/- plus 18 per cent interest till realisation, which was made rule of the Court by Shrimati Raj Rahul Garg, Sub Judge 1st Class, vide her judgment dt. Oct. 20, 1986, by making the ''following observations in the concluding paragraph of the judgment : --

"As a result of the discussion foregoing since the objections are not sustainable, therefore, I have no hesitation in making the award dt. Mar. 24, 1986, a rule of the Court and the same is ordered accordingly. Decree sheet be prepared accordingly and file be consigned to the record room."

When the execution was taken out by the respondent-decree-holder, an objection was filed by the petitioner-judgment-debtor that the arbitrator had no power to award interest at the rate of 18 per cent till final realisation in view of Section 29 of the Act. However, the objection did not find favour with the executing Court on the ground that the matter cannot be reopened as the whole award was made rule of the Court.

The learned counsel for the petitioner has vehemently argued that the arbitrator cannot award the interest beyond the date of the decree till payment in view of Section 29 of the Act and it is only the Court which can, in the decree, order interest from the date of the ''decree at such rate as the Court deems reasonable to be paid on the principal sum as adjudged by the award and confirmed by the decree. The learned counsel has, thus, argued that since the Court, while confirming the award, did not order in the decree the payment of interest from the date of the decree till realisation, the arbitrator''s award is a nullity and without jurisdiction. In support of the proposition of law, the counsel has cited Lal Chand Roy Vs. Nerode Kanta Goswamy, , in which it has been held that the arbitrator has no power to make an award granting the interest after the decree and if the arbitrator exercises any such power, it would be in violation of the jurisdiction conferred upon the Court u/s 29 of the Act. It has further been laid down that where the arbitrator has made any award in respect of interest after the decree. It should not be confirmed.

On the basis of the law laid down in Lal Chand Roy Vs. Nerode Kanta Goswamy, and while interpreting the provisions of Section 29 of the Arbitration Act the conclusion is irresistible that the Arbitrator can award interest up to the date of the decree only and not beyond the date of the decree. Beyond the date of the decree, if the interest has to be awarded it can be done only by the court in the decree.

The learned counsel for the respondent decree-holder in support of the impugned order has relied on three rulings of the Delhi High court reported as Miss Mohinder Kaur Kochhar v. Punjab National Bank Limited, New Delhi AIR 1981 Delhi 106, Puri Constructions (P) Ltd. v. Union of India (1987) 1 Arbi. LR 264 and M/s Khushi Ram Jain & Co. v. New Delhi Municipal Committee (1987) 2 Arbi LR 137.

After going through the facts and the law laid down in the aforementioned judicial pronouncements, I am of the view that none of the authorities is helpful to the respondent.

In Miss Mohinder Kaur Kochhar''s case (supra) the Delhi High Court rather in its ultimate conclusion in para 14 observed that it is correct that the arbitrator has authority only to grant interest from the date of the award to the date of the decree and, therefore, the direction in the award to pay interest till the date of realisation is technically beyond his power. After making the aforementioned observations their Lordships by way of practical measure did not think it necessary to severe the award as the learned Single Judge had made the award the rule of the Court. The practical measure was the basic and primary factor which weighed with the court. Moreover, the Division Bench was hearing the appeal against the order or the learned Single Judge making the award the rule of the court. In any case, the view of their Lordships in Lal Chand Roy Vs. Nerode Kanta Goswamy, isquite clear. The other case reported as Puri Construction (P) Ltd. 1987 1 ArbLR 264 (Delhi) is also not helpful because the precise question which has arisen before me was not the quest ion raised before the Bench of the Delhi High Court. On the other hand, while dealing with the various objections to the award, his Lordship at the end of the judgment specifically held that the claimant was entitled to the grant of future interest at the rate of 18 per cent per annum from the date of the decree till realisation. Not only that, it was further observed that if the amount was not paid within one month from the date of the judgment, the decree was to be drawn after the expiry of one month. In this manner, the learned single Judge of Delhi High Court made the award the rule of the Court. In other words, the Hon''ble single Judge of the Delhi High Court was hearing the objections to the award and at the lime of deciding the objections and at the time of making the award the rule of the court, the abovementioned finding was recorded. This is the precise point which has been argued by the learned counsel whose submission is quite clear that the court while passing the decree awarded interest beyond the decree till the realisation. This is what has not been done by the court while making the award the rule of the court. Had the court while confirming the award in the present case made the observations of the type which were made by his Lordship in Puri Construction (P) Ltd. case 1987 1 ArbLR 264 (supra) the decision would have been altogether different and the ratio of law laid down by the single Judge of the Delhi High Court would have been fully applicable to the facts of the instant case, The view taken in the last ruling that is M/s Khushi Ram Jain & Co''s case 1987 2 ArbLR 137 (supra) rather goes against the view propounded by Mr. Puri, learned counsel for the respondent. The following observations made by his Lordship go against the respondent decree-holder : --

"There remains only the ground of the award of interest which according to the learned counsel for the claimants, the learned arbitrator has given on the higher side. As per claim 12 relating to interest the claimant contended that the pendente lite and future interest is within the exclusive domain of the learned arbitrator. He asked for the grant of interest at the rate of 191/2% for withholding/delay in the payments by the respondents. The learned arbitrator on consideration of the material on record did not allow interest for the period prior to the date of the award. He also declined to allow interest for the first month from the dale of the award and thereafter interest @15% till the payment is made was allowed. On the face of it there does not appear to he any mistake in the conclusion arrived at by the learned arbitrator. However, in my view the learned arbitrator could have awarded the interest from the date of the award till payment of the decree passed thereon, whichever is earlier. The future interest could only be awarded by the court passing the decree. On this aspect also it cannot be said that the learned arbitrator acted without jurisdiction."

The pertinent observations out of the above mentioned observations are "however, in my view the learned arbitrator could have awarded interest from the date of the award till payment or the decree passed thereon, whichever is earlier. The future interest could only Be awarded by the court passing the decree," arc dead against the proposition of taw propounded by Mr. Puri, learned counsel for the respondent decree-holder.

In view of the above mentioned observations, I am of the firm view that the ratio laid down in Lal Chand Roy Vs. Nerode Kanta Goswamy, is fully applicable to the facts of the instant case. The wording of the Section 29 of the Arbitration Act when interpreted in the light of the observations made in Lal Chand Roy''s ease (supra) leads one to the conclusion that the arbitrator is not empowered to award interest beyond the date of the decree. This power vests only in the court, To put any other interpretation of Section 29 would amount to making additions in the language of the statute and would be rather doing violence to the very wording of Section 29 of the Act. I am of the considered view that the Delhi High Court in Miss Mohinder Kaur Kochhar''s case AIR 1981 Delhi 106 (supra) does not go against the ratio laid down in Lal Chand Roy''s case (supra). In any case, t he facts before the Delhi High Court in Miss Mohinder Kaur''s case (supra) were altogether different and it is for this very precise reason that the decision in Miss Mohinder Kaur''s case (supra) did not form the basis of the latter two decisions in Puri Construction Pvt. Ltd''s easel supra) and M/s Khushi Ram Jain & Co.''s case (supra). On the other hand, as has been observed above, the observations made in the aforementioned two cases are against the proposition of law unequivocally enunciated by the High Court of Calcutta in Lal Chand Roy''s case(supra).

For the reasons recorded above, this revision petition is allowed and the impugned order is set aside. However, in view of the fact that intricate questions of law arose for decision be fore this Court, the parties are left to bear their own costs.