Jagdamba Singh v. Municipal Corporation of Delhi

2. The grievance of the petitioner is two fold; (1) that the learned Arbitrator has not granted interest on the amount awarded; (2) the petitioner despite paying Rs.75,000/- as Arbitrator's fee in terms of the order dated November 22, 2004 of this Court in Arbitration Application No. 216/2004, the learned Arbitrator has not even awarded 50% of the amount paid by the 2015:DHC:11819 Vpetitioner to the Arbitrator.

3. Insofar as the first issue is concerned, I note that the learned Arbitrator has only awarded a sum of Rs. 2,99,032/-. No interest has been awarded by the learned Arbitrator on the ground that the petitioner has failed to prove that he is entitled to recover interest from the respondent on that account. It was also observed by the learned Arbitrator that there was no proof of any agreement between the parties to pay interest nor any foundation has been laid for the purpose. The claim No.2 pertains to loss suffered on account of advance of Rs.3,60,000/- paid for providing 30 persons by Royal Detective and Securities for the period August 02, 2001 to December 01, 2001 but the services of the attendants were taken only till August 22, 2001 i.e. for Rs.60,968/- and, therefore, he has sustained loss of Rs.2,99,032/-, which according to the petitioner was attributable to the respondent. The learned Arbitrator in its award given on May 02, 2007 did hold that the petitioner had suffered a loss of Rs.2,99,032/-.

4. Section 31(7)(b) of the Act stipulates as under:- "31(7)(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annumfrom the date of the award to the date ofpayment. v.-'

5. On reading of Section 31(7)(b), it is clear that the learned Arbitrator in its discretion could have directedpayment of interest @ 18%p.a., as there was no agreement betweenthe parties on interest. Even otherwise I note that the arbitral proceedings which started on the filing of claim on January 25, 2005 culminated on May 02, 2007 after almost 2 years. Surely if the petitioner was not entitled to pendent-lite interest for those two years, the learned Arbitrator could have awarded the future interest from the date of award till the date of payment. Regrettably the same was also not done on the ground that no foundation has been laid for the purpose. This is clearly untenable. The petitionerwould at least be entitled to fiiture interestfrom the date of award till the date of payment. I order accordingly. The petitioner would be entitled to pay interest @ 9% p.a on Rs.2,99,032/- till the date of payment.

6. Insofar as the second issue is concerned, no doubt this Court while disposing of the Arbitration Application No.216/2004 had fixed the Arbitrator's fee at Rs.75,000/- and had called upon the petitioner to pay initially the fee of the Arbitrator and to await the final decision on costs when the award is published. The relevant portion of the order of this Court dated November 22, 2004 is reproduced as under:- V ' 7^ "I appoint Ms. Kanwal Inder, retired District & Sessions Judge, D-1/106, Rabindra Nagar, New Delhi, Phone No.24694005 as the Arbitrator. Her fees are fixed at Rs.75,000/- to be paid initially by the Petitioner to await thefinal decision on costs when the Award ispublished. "

7. In deference to the order of this Court referred above, the petitioner had paid an amount of Rs.75,000/- to the learned Arbitrator, the details of which have been filed by the petitioner by way of an affidavit on February 11, 2015, wherein the petitioner has stated that he had paid an amount of Rs.10,000/- on February 18, 2005, Rs.15,000/- on February 23, 2005, and Rs.50,000/- on July 23, 2005. In view of the affidavit now filed by the petitioner, it is clear that the petitioner in fact had paid an amount of Rs.75,000/- to the Arbitrator. I note that the learned Arbitrator while giving the award had directed the parties to bear their own costs. I agree with the learned counsel for the petitioner that the learned Arbitrator could have at least awarded 50% of the costs paid by the petitioner to the learned Arbitrator. Surely a person who had raised a claim would not be called upon to pay the Arbitrator her fee especially when the learned Arbitrator had accepted one claim ofthe petitioner and granted an amount of Rs.2,99,032/-. In other words, the claim was justified by the learned Arbitrator That apart Section 31(8) ofthe Act stipulates as under:- "31(8) Unless otherwise agreed by theparties,— (a) the costs ofan arbitration shall befixed by the arbitral tribunal; (b) the arbitral tribunal shall specify—

(i) the party entitled to costs,

(ii) theparty who shallpay the costs,

(iv) the manner in which the costs shall be paid.

(i) thefees and expenses ofthe arbitrators and witnesses,

(ii) legalfees and expenses,

(iv) any other expenses incurred in connection with the arbitralproceedings and the arbitral award. "

8. The explanation given under Section 31(8) of the Act would become relevant inasmuch as the word "costs" has been defined to mean the fee and expenses of the Arbitrators and witnesses. The costs may not be actual costs incurred by the petitioner, surely reasonable costs could have been awarded in favour of the petitioner which this Court feel should have been 50% ofthe n/i costs as paid by the petitioner to the learned Arbitrator i.e. Rs.37,500/-. I;:?si order so. The petitioner shall be entitled to the costs of Rs.37,500/- along with interest @ 9% p.a. from the date of award till the date of payment. Suffice to state, the impugned award dated May 02, 2007 is modified to the extent stated above. The petition is disposed ofaccordingly.

V. KAMESWAR RAO, J

MARCH 17, 2015