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Judgment
Valmiki J Mehta, J.—By this petition u/s 34 of the Arbitration and Conciliation Act, 1996 the petitioner is only challenging one aspect of the Award with respect to grant of interest @ 12% per annum instead of a higher rate and compounding thereof in terms of the Act, The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter referred to as 1993 Act). The Arbitrator while awarding Claim Nos. 9 and 10 relating to interest and compound interest has disallowed the claim of the objector for payment under the 1993 Act. The Counsel for the objector has very strenuously contended before this Court that since the petitioner was admittedly a small scale industry and registered as such, it was entitled to the benefit of a higher rate of interest and also compounding thereof as prescribed under the 1993 Act.
Section 4 of the said 1993 Act is relevant, in this regard, and the same reads as under:
Date from which and rate at which interest is payable: Where any buyer fails to make payment of the amount to the supplier, as required u/s 3, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at one-and-half time of Prime Lending Rate charged by the State Bank of India.
Explanation: For the purposes of this section, "Prime Lending Rate" means the Prime Lending Rate of the State Bank of India which is available to the best borrowers of the bank.
A reading of the aforesaid Section makes it clear that before interest is awarded at a particular rate it is necessary that the said interest must be one and half times the Prime Lending Rate of the State Bank of India. Putting it differently, it is necessary for a person to claim benefit of the interest under this Section of the 1993 Act to prove the Prime Lending Rate of the State Bank of India and only thereafter can such interest can be awarded.
The Counsel for the petitioner urged that the Arbitrator has not declined the higher rate under 1993 Act on the ground that the Prime Lending Rate of the State Bank of India has not been filed, but has independently awarded lesser interest @ 12% per annum. To this argument, I put a query to the Counsel for the objector to show me any document in the record before the Arbitrator where such Prime Lending Rate of the State Bank of India has been proved in any manner whatsoever, for even this Court to consider the issue in favour of the petitioner, however, the Counsel for the objector failed to show me any such document which has been filed by the objector in the arbitration proceedings to prove the Prime Lending Rate of State Bank of India. Therefore, if this aspect was not proved before the Arbitrator, surely, the Arbitrator was justified in not considering the rate as per the said Act. Merely because now the Prime Lending Rate of State Bank of India is sought to be proved in this Court for the first time, during the hearing of the objections by filing a certificate of the State Bank of India, cannot take the petitioner''s case any further because this Court does not sit as an Appellate Court while hearing objections u/s 34. It was for the petitioner to prove its case in the arbitration proceedings in order to succeed in its claim for the rate of interest in terms of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.
Accordingly, I do not find any merits in these objections and which are therefore dismissed, leaving the parties to bear their own costs.