Om Metals and Minerals vs Union of India (UOI) and Others

T.S. Doabia, J.—A learned Single Judge of this Court allowed the prayer of the present appellants. The award was made rule of the Court.

It was further directed that in case the award is not satisfied within three months from the date of the decree, then the appellants would be entitled

to interest at the rate of 10% p.a. from the date of decree till the same is satisfied. The appellants have come in appeal. It is submitted that they

were entitled to interest from the date of the award i.e. from 31.01.2001 and not from the date of the judgment and decree which was passed on

11.07.2000. As this has not happened the appellant has come in appeal. The operative portion of the award which was made rule of the Court is

to the following effect:

We accordingly award and direct that--

(1) Against all such claims of the claimant held by us as admissible, we award a combined sum of Rupees Four Lakhs only (4 Lakhs only).

(2) This award shall not debar the contractor from getting payments for the work he has actually executed for which payment has not been

received by him.

(3) The counter-claim of the respondent is rejected.

(4) Each party should bear and pay its own costs and expenses for the arbitration proceedings.

(5) Each party should bear the cost of the fees and other incidentals of the arbitrators approved by them.

A perusal of the award makes it apparent that the arbitrators did not grant any interest. If this be the position then question would arise as to

whether the Court directing the award to be made rule of the Court can grant interest or not. Can interest be awarded from the date of the award

till award is made rule of the Court when arbitrator has not so granted ? This is the question projected in this appeal.

Answer to the question posed in the appeal would need examination of Section 29 of the Arbitration Act. This section reads as under:

Interest on awards--Where and in so far as an award is for the payment of money the Court may 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.

A plain reading of the aforementioned statutory provision clearly indicates that Court has been empowered award interest from the date of the

decree. Language used in the above section does not enable the Court to grant interest from the date of the award. What is sought to be urged by

the respondents is that in case interest is allowed from the date of the award till date of the decree then it would amount to rewriting of the

provision of statute. It is accordingly urged that the view expressed by the learned Single Judge granting interest from the date of the decree is a

view to which no exception can be taken. This aspect of the matter was considered by the Bombay High Court in case reported as S.N. Srikantia

and Co. Vs. Union of India and Another, . At page 354, following observations were made:

Section 29 of the Act is exhaustive of the whole law upon the subject of interest on awards and since the said section enables the Court to award

interest on the principal sum adjudged by an award from the date of the decree onwards, it must be held that it carries with it the negative import

that it shall not be permissible to the Court to award interest on the principal sum adjudged by an award for any period prior to the date of the

passing of the decree.

The aforementioned decision given by the Bombay High Court was followed by the Rajasthan High Court in case reported as Ram Singh Vs.

Ram Singh and Another, . Rajasthan High Court also considered the impact of Section 34 of the Code of Civil Procedure. While dealing with

these provisions it was observed as under:

Section 29 of the Act empowers the Court where the award is for payment of money to award the reasonable rate of interest from the date of

decree. Section 34, CPC provides for award of pendente lite and further interest. It is thus clear that u/s 29 of the Act the Court can only award

interest from the date of the decree of the Court till the realisation of the amount.

It was further concluded:

Under Section 34 of the Code (CPC) interest from the date of the suit to the date of the decree and from the date of the decree until realisation

can be awarded. Section 29 of the Act, however, does not grant that power to the Court in as much as the Court can grant interest only from the

date of the decree at such rate as the Court deems reasonable and that too, on the principal sum as adjudged by the award and confirmed by the

decree.

Two decisions referred to above stands approved by the Supreme Court of India in case reported as Union of India (UOI) Vs. Jain Associates

and Another, . What was said by the Supreme Court of India is being reproduced below:

The first question that arises for consideration is whether the Court could award interest pendente lite. Section 29 of the Act says that in so far as

award is, for the payment of money, the Court may in the decree, order interest from the date of decree at such rate as it deems reasonable, to be

paid on the principal sum adjudged by the award and confirmed by the decree. In S.N. Srikantia and Co. Vs. Union of India and Another, , it was

held that Section 29 carries with it the negative import that it shall not be permissible to the Court to award interest on the principal sum adjudged

in the award for a period prior to the date of the passing of the decree. The same principle was reiterated in Ram Singh Vs. Ram Singh and

Another, . Section 29 of the Act empowers the Court, that where the award is for payment of money, to grant reasonable rate of interest on the

principal amount adjudged and confirmed in the decree, only from the date of the decree. Section 34, CPC empowers the Court, where there is a

decree for payment of money to grant interest pendente lite and future, till the date of realisation. Since Section 29 of the Act enables the Court to

grant interest on the principal amount adjudged in the award and confirmed in the decree only from the date of the decree, it carries a negative

import with it that the Court has no power to grant interest pendente lite. The High Court, therefore, was not right in granting interest pendente lite,

which the arbitrator himself had not granted.

There are two other decisions of the Supreme Court of India. These are as under:

Gujarat Water Supply and Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd. and Another, .

Hindustan Construction Co. Ltd. Vs. State of Jammu and Kashmir, .

In the above cases powers of the arbitrator to grant interest from the date of award till date of the decree were considered. It was observed that

the arbitrator has power to grant interest. Aforementioned two decisions do not deal with the question as to whether interest can be awarded by

the Court when the arbitrator has not done so. As a matter of fact, it would useful to refer to the decision of the Supreme Court of India in case

reported as Union of India v. Jain Associates (supra). In the above case it was observed as under:

The Supreme Court has thus categorically held that u/s 29 of the Act the Court can grant interest only from the date of the decree and not from the

date of the award. That is the clear ratio of the above decision and there can be no controversy in that regard.

Thus question was directly dealt with by the Supreme Court of India in Jain Associates' case (supra), and distinction was made between the

powers of the arbitrator and powers of the Court to grant interest. Even otherwise when award has to be made rule of the Court it has to be made

rule of the Court as it is. No substitution or addition be made to the award. The award has to be executed as it is. In the present case, interest was

not allowed by the arbitrator and, therefore, it would not be apt for us to grant something which the arbitrator did not allow. In view of the above,

we do not find any merit in this appeal and same is dismissed.