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Judgment
R.S. Ramanathan
The respondent filed Arbitration O.P. No. 119 of 1986 for referring the dispute to arbitration and after under going various stages, finally, the arbitrator passed an award dated 27.9.2000. Meanwhile, the Arbitration O.P. was re-numbered as Arbitration O.P. No. 67 of 2007 on the file of the Principal District Judge, Cuddalore and the respondent filed I.A. No. 1228 of 2007 u/s 34 of the Arbitration Act, 1940 to pass a decree on the basis of award and the revision petitioners filed I.A. No. 718 of 2008 u/s 34 of the Arbitration and Conciliation Act, 1996 to set aside the award. The learned District Judge allowed I.A. No. 1278 of 2007 filed by the respondent and dismissed I.A. No. 718 of 2008 filed by the revision petitioners and as against the same, these two revision petitions are filed. It is submitted by the learned counsel for the revision petitioners that the learned District Judge failed to appreciate that the arbitrator has awarded interest prior to the reference and also during the reference and he has no jurisdiction to pass orders regarding interest and therefore, the order is vitiated and to that extent, the award is liable to be set aside.
On the other hand, the learned counsel appearing for the respondent submitted that as per the contract, there is no prohibition for awarding interest and as per the judgment of the Honorable Supreme Court reported in T.P. George Vs. State of Kerala and Another, , the Arbitrator can award interest and therefore, the same cannot be challenged. The learned counsel for the respondents further submitted that the petition filed byte revision petitioners u/s 34 of the Arbitration and Conciliation Act, 1996 is not maintainable and the arbitration award is governed by the provisions of the Arbitration Act, 1940 and as per the old Act, the award cane challenged within the four corners of section 30 of the said Act and the court cannot go into the interest aspect and considering all these aspects, the court below has rightly allowed the application filed by the respondents and dismissed the application filed by the revision petitioners and therefore, there is no need to interfere with the orders of the court below. He also relied upon the judgment of the Honorable Supreme Court in Union of India (UOI) Vs. Krafters Engineering and Leasing (P) Ltd., in support of his contention.
In this case, admittedly, the Arbitration O.P was filed in the year 1986 and arbitration proceedings were initiated prior to the passing of the Act 26 of 1996. Casper section 85 of the Arbitration and Conciliation Act, 1996, in respect of proceedings initiated under the earlier Act 1940, it shall apply to the arbitral proceedings despite the repeal of the said Act, unless the parties otherwise agree for the application of the new Act. This was taken into consideration by the court below and relying upon the judgment in Visakhapatnam Port Trust Vs. Continental Construction Company, , the court below has rightly held that the new Act 26 of 1996 will not apply to the facts of this case and the parties are governed by the old Act. When the award is passed under the old Act, u/s 30 of the old Act, the award cane set aside only on certain specific grounds as stated therein.
It is not the case of the revision petitioners that the award has been improperly procured or is otherwise invalid or the arbitrator has misconduct himself or the proceedings and therefore, in the absence of challenging the award as per the provisions of section 30 of the Arbitration and Conciliation Act, 1996, a court has to accept the award and pass a decree in pursuance of the award. The only contention raised by the learned counselor the revision petitioners is that the arbitrator has no power to award interest.
The learned counsel for the respondent relied upon the judgment reported in T.P. George Vs. State of Kerala and Another, ,wherein the Honorable Supreme Court has held as follows:- The next question is whether the High Court was right in setting aside the Award of the interest from the date of the Award. This Court has held in thecae of Jadish Rao and Brothers v. Union of India reported in (1999 (1) Arb. LR 696), that the Award of interest ought to be granted in all cases when there is a decree of money unless there are strong reasons to decline the same. In the case of M/s. Jagdish Rai and Brothers Vs. Union of India, , this Court has held that there are four stages of grant of interest viz. (1) from the stage of accrual of cause of action till filing of the arbitration proceedings, (2) during tendency of the proceedings before Arbitrator, (3) future interest arising between date of Award and date of the decree and (4) interest arising from date of decree till realisation of Award. The power of Court to grant interest from date of decree is not in doubt. In the case of Hindustan Construction Co. Ltd. Vs. State of Jammu and Kashmir, this Court has held that the Arbitrator is competent to Award interest from the date of the Award. This Court has held in the case of Secretary, Irrigation Department, Government of Orissa and others Vs. G.C. Roy, that the Arbitrator has power to grant interest pendente lite. Recently in the case of Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa, Vs. N.C. Budharaj (Dead) by Lrs. etc. etc., this Court has held that Arbitrator can Award interest for the pre-reference period. Thus as per law laid down by this Court, interest can be awarded at all four stages.
Further, as per the recent judgment of the Honourable Supreme Court reported in Union of India (UOI) Vs. Krafters Engineering and Leasing (P) Ltd., in the absence of any prohibition in the contract about the grant of interest, the arbitrator is entitled to grant interest. Admittedly, in this case, there is no prohibition in the contract between the parties prohibiting from granting any interest. Therefore, the court below has rightly allowed the application filed byte respondent and dismissed the application filed by the revision petitioners and I do not find any reason to interfere with the order of the court below.
In the result, the order of the court below is confirmed. The civil revision petitions are dismissed. No costs. The connected miscellaneous petition is also dismissed.