Tulsi Constructions vs Oil and Natural Gas Corpn. Ltd. and Another

A.S. Anand, C.J.-Leave granted.

The issue involved in the present appeal, by special leave, is whether the arbitrator could award interest both pre-reference and pendente lite, when the same had not been claimed by the respondent in his counter-claim submitted before the arbitrator.

The fact that in the counter-claim filed by the respondents, they did not claim interest, is not disputed. In this view of the matter, the award of interest by the arbitrator, when the same was not even claimed in the counter-claim by the respondents, is not justified. That part of the award should not have been made rule of the court. In taking this view, we are fortified by a judgment of this Court in Paradip Port Trust v. Unique Builders1 wherein speaking for the Bench, Patil, J. specifically laid down that the power of an arbitrator to award interest pendente lite as well as pre-reference must precede with a claim for grant of interest pendente lite or pre-reference in the claim/counter-claim petition. We are in respectful agreement with the view so expounded.

Consequently, this appeal succeeds to the limited extent that the amount of interest awarded in respect of the counter-claim for the period from 1-10-1989 to 23-3-1994 is hereby set aside. The decree shall stand modified to that extent.

The appeal is disposed of. No costs.