Union of India v. Pradeep Vinod Const., Co.

Delhi High Court · 30 Jul 2018 · 2018:DHC:4659

Prathiba M. Singh

O.M.P. 296/2005

2018:DHC:4659

civil appeal_dismissed Significant

AI Summary

The Delhi High Court held that pre-reference and pendente lite interest cannot be awarded by an arbitrator where the contract expressly bars interest on amounts payable under the contract, upholding the contractual clause and Section 31(7)(a) of the Arbitration Act, while affirming post-award interest.

Full Text

O.M.P. 296/2005
HIGH COURT OF DELHI
Date of Decision: 30th July, 2018

O.M.P. 296/2005 & I.A. 6390/2005
UNION OF INDIA ..... Petitioner
Through: Ms. Geetanjali Mohan, Advocate.
(M-9810017132)

VERSUS

PRADEEP VINOD CONST., CO. ..... Respondent
Through: Mr. S. W. Haider, Advocate.
(M-9311307710)

CORAM:

JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral)

JUDGMENT

1. The present petition has been filed under Section 34 of the Arbitration & Conciliation Act, 1996 („1996 Act‟), challenging the award dated 16th May, 2005 passed by the Arbitral Tribunal. The only issue that has been raised in the present petition is in respect of award of interest by the Tribunal.

2. The submission of Ms. Geetanjali Mohan, learned counsel for the Petitioner, is that the pre-reference interest and pendente lite interest cannot be granted by the Arbitrators in view of clause 16 of the General Conditions of Contract (hereinafter, „GCC‟). She relies upon the judgment of the Supreme Court in Sri Chittaranjan Maity vs. Union of India 2017 (12) SCALE 216 (hereinafter, „Chittaranjan Maity‟) wherein the Supreme Court considered an identical clause i.e. clause 16(2) and held that interest is not payable, in view of Section 31(7)(a) of the 1996 Act.

3. The matter was adjourned from time to time for awaiting the decision Union of India vs. M/s Pradeep Vinod Construction Co. [Civil Appeal 2018:DHC:4659 No.2099/2017, Decided on - 3rd August, 2017] (hereinafter, „Pradeep Vinod Construction Co.‟), which was between the same parties. The said decision was rendered by the Supreme Court on 3rd August, 2017 wherein the award of interest was upheld. Learned counsel for the Respondent has placed on record a copy of the judgment of the Supreme Court.

4. The Parties have been heard. Learned counsel for the Petitioner however submits that in view of the subsequent judgment in Chittaranjan Maity (supra), interest cannot be awarded either for the pre-reference period or pendente lite. However, insofar as post-award interest is concerned, she does not dispute that the same can be awarded. She further submits that the judgment in Chittaranjan Maity (supra) considers an identical clause of the GCC and is subsequent to the Supreme Court’s decision in Pradeep Vinod Construction Co. (supra), and, would therefore be binding on this Court.

5. On the other hand, learned counsel for the Respondent submits that clause 16 has to be considered in its entirety. The said clause relates only to earnest money and security deposit and does not relate to other claims which may be adjudicated/rejected by the Tribunal. Clause 16(2) and 16(3) cannot be expanded in their scope and made applicable to all claims. According to him, since the judgment in Pradeep Vinod Construction Co. (supra) was between the same parties, the said judgment would be applicable. According to him, Chittaranjan Maity (supra) does not consider clause 16(1) and hence he submits that the said judgment should not be applied.

6. Mr. S.W. Haider, learned counsel for the Respondent also submits that the judgment in Pradeep Vinod Construction Co. (supra) has been followed by this Court in Union of India vs. M/s. Manraj Enterprises [O.M.P.330/2011 decision dated 20th September, 2017] (hereinafter, „Manraj Enterprises‟) wherein a learned Single Judge of this Court has applied the judgment. Ms. Mohan, however, submits that the decision in Manraj Enterprises (supra) was rendered prior to the judgment in Chittaranjan Maity (supra) and hence there was no occasion for the learned Single Judge to consider the said judgment.

7. Clause 16(3) of the agreement reads as under: "(3) No interest will be payable upon the earnest money of the security deposit or amounts payable to the contractor under the contract, but Government Securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereto."

8. The question of grant of interest under clause 16 of the General Conditions of Contract has been considered in a large number of decisions. The first and foremost issue to be highlighted is that under Section 31(7) of the 1996 Act, the power of the Arbitral Tribunal to award interest has been clearly provided. Section 31(7)(a) of the 1996 Act deals with interest that the Arbitral Tribunal can award “for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made”. This period thus includes the entire period prior to making of the award which is, for ease of reference referred to as pendente lite. The interest can therefore be awarded by the Tribunal, for example from the date when the first claim is raised by the contractor or when a legal notice is issued or when the arbitration clause is invoked or the protest against the nonclearance of certain amounts as part of a bill. Thus, the entire period from the date when the cause of action arises till the date of award i.e., passing through all stages of correspondence, invocation of arbitration clause, reference is made, Arbitration Tribunal entering reference, pendency of proceedings, and passing of the award is included in the scope of this clause.

9. Section 31(7)(b) of the 1996 Act, however refers to interest payable “from the date of award to the date of payment” i.e. the period after the passing of the award which is for ease of reference referred to as future interest.

10. In Sayeed Ahmed & Company v. State of Uttar Pradesh & Ors. (2009) 12 SCC 26 (hereinafter referred as „Sayeed Ahmed‟), the Supreme Court has categorically held that by virtue of Section 31(7), there exists no difference between pre-reference period and the pendente lite period. Paragraphs 13 and 14 of the said decision are set out below:

“13. The legislature while enacting the Arbitration

and Conciliation Act, 1996, incorporated a specific

provision in regard to award of interest by arbitrators.

Sub-section(7) of Section 31 of the Act deals with the

arbitrator's power to award interest. Clause (a) relates

32,304 characters total

to the period between the date on which the cause of

action arose and the date on which the award is made.

Clause(b) relates to the period from the date of award

to date of payment. The said sub- section (7) is

extracted below :

“31. (7)(a) Unless otherwise agreed by the

parties, where and insofar as an arbitral award is for

the payment of money, the Arbitral Tribunal may

include in the sum for which the award is made

interest, at such rate as it deems reasonable, on the

whole or any part of the money, for the whole or any

part of the period between the date on which the cause

of action arose and the date on which the award is

made.

(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 annum

from the date of the award to the date of payment.” Having regard to sub-section (7) of Section 31 of the Act, the difference between pre-reference period and pendentee lite period has disappeared insofar as award of interest by arbitrator. The said section recognises only two periods and makes the following provisions: (a) In regard to the period between the date on which the cause of action arose and the date on which the award is made (pre-reference period plus pendentee lite), the Arbitral Tribunal may award interest at such rate as it deems reasonable, for the whole or any part of the period, unless otherwise agreed by the parties. (b) For the period from the date of award to the date of payment the interest shall be 18% per annum if no specific order is made in regard to interest. The arbitrator may however award interest at a different rate for the period between the date of award and date of payment.

14. The decisions of this Court with reference to the awards under the old Arbitration Act making a distinction between the pre-reference period and pendentee lite period and the observation therein that arbitrator has the discretion to award interest during pendentee lite period inspite of any bar against interest contained in the contract between the parties are not applicable to arbitrations governed by the Arbitration and Conciliation Act 1996.”

11. Thus, as per Sayeed Ahmed (supra), the difference between the Arbitration Act, 1940 and 1996 Act is clear insofar as it relates to the periods for which the interest can be awarded prior to the passing of the award, no longer exists. In Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat Ors. (2010) 8 SCC 767 (hereinafter, „Kamatchi Amman Constructions‟), the Supreme Court upheld the discretion of the Arbitral Tribunal in refusing to award interest for the pendente lite period. Thereafter, in Union of India v. Bright Power Projects (India) Private Limited (2015) 9 SCC 695 (hereinafter, „Bright Power Projects‟), the Supreme Court considered clause 13(3) of the contract therein, which is similarly worded to clause 16(3). The said clause 13(3) is set out herein below: “No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but government securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon”

12. In the context of this clause, the Supreme Court distinguished the decision in Secretary, Irrigation Department, Government of Orissa & Ors. v. G.C. Roy (1992) 1 SCC 508 (hereinafter, „G.C. Roy‟) which was decided under the 1940 Act and observed in para 13, 17 and 21 which read as under:

“13. Section 31(7) of the Act, by using the words “unless otherwise agreed by the parties”, categorically specifies that the arbitrator is bound by the terms of the contract so far as award of interest from the date of cause of action to date of the award is concerned. Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest. … 17. It is also pertinent to note that G.C. Roy‟s case had been decided on 12-12-1991 on the basis of the provisions of the Arbitration Act, 1940, which was not operative at the time when the dispute on hand was decided by the Arbitral Tribunal. …

21. For the aforestated reasons, we set aside the impugned judgment and the award so far as it pertains to payment of interest pendente lite and direct that no interest would be paid on the amount payable under the contract to the respondent from the date of the reference till the date of the award.”

13. In Union of India v. Ambica Construction (2016) 6 SCC 36 (hereinafter, „Ambica Construction‟) which was rendered by a three Judge Bench of the Supreme Court, the Court was considering the power of the Arbitrator to award pendente lite interest when the contract contains a bar under the 1940 Act. The Supreme Court considered the judgments in G.C. Roy (supra), Sayeed Ahmed (supra), Bright Power Projects (supra) and Kamatchi Amman Constructions (supra) and observed as under:

“22. In our opinion, it would depend upon the nature of the ouster clause in each case. In case there is express stipulation which debars pendent lite interest, obviously, it cannot be granted by the arbitrator. The award of pendent lite interest inter alia must depend upon the overall intention of the agreement and what is expressly excluded. .............................. 25. …Section 31(7)(a) of the 1996 Act confers the power on the arbitrator to award interest pendent lite, “unless otherwise agreed by parties”. Thus, it is clear from the provisions contained in Section 31(7)(a) that the contract between the parties has been given importance and is binding on the arbitrator. The arbitration clause is also required to be looked into while deciding the power of the arbitrator and in case there is any bar contained in the contract on award of interest, it operates on which items and in the arbitration clause what are the powers conferred on the arbitrator and whether bar on award on interest has been confined to certain period or it relates to

pendency of proceedings before the arbitrator. …

28. …It is apparent from various decisions referred to above that in G.C. Roy the Constitution Bench of this Court has laid down that where the agreement expressly provides that no interest pendete lite shall be payable on amount due, the arbitrator has no power to award interest. …

34. Thus, our answer to the reference is that if the contract expressly bars the award of interest pendent lite, the same cannot be awarded by the arbitrator. We also make it clear that the bar to award interest on delayed payment by itself will not be readily inferred as express bar to award interest pendent lite by the Arbitral Tribunal, as ouster of power of the arbitrator has to be considered on various relevant aspects referred to in the decisions of this Court, it would be for the Division Bench to consider the case on merits.”

14. It is relevant to point out that Ambica Construction (supra) was a case decided under the 1940 Act but a reference in respect of the various decisions of the two Judge Benches of the Supreme Court which had taken varying views and only the reference was answered.

15. In Pradeep Vinod Construction Co. (supra), the Supreme Court again considered a clause which is identical to the clause falling for interpretation in the present case and after considering Ambica Construction (supra) observed as under:

“7. Having given our thoughtful consideration to the contractual obligations entered into by the parties through clause 16, we have no reason to doubt, firstly, that the clause related exclusively to earnest money and security deposit. The above Clause did not relate to the other contractual obligations between the

parties. A perusal of clause 16 (1) further clarifies the position, inasmuch as, even if some payment under the contractual obligation was diverted to make good the security deposit payable, no interest would be payable thereon as well. Therefore, there can be no doubt, that non-payment of interest, contemplated between the parties under clause 16, was exclusively limited to the component of earnest money and the security deposit, which was held by the appellant and nothing else. Even though, there can be no dispute whatsoever, that Clause 16(2) is in pari materia with the clause taken into consideration in Tehri Hydro Development Corpn. Ltd. case (supra), yet in the case before us, having read the clause in its entirety, we are satisfied, that the parties had agreed, that payment of interest would not be due, only with reference to earnest money and security deposit. Thus viewed, we have no hesitation in concluding, that the determination in the arbitral award, of component of interest, payable by the appellant to the respondent, was in terms of the contractual obligation. Nothing in the contract provided for non-payment of interest on the contractual obligations.”

16. Thus, in Pradeep Vinod Construction (supra), the Supreme Court took the view that Clause 16(3) applies only in respect of earnest money and/or security deposit.

17. Subsequent to the decision in Pradeep Vinod Construction (supra), the Supreme court in Chittaranjan Maity (supra), was considering a case where there were various claims which were raised and amounts awarded even beyond security deposit and earnest money. This is evident from a perusal of the table in paragraph 10 of the said judgment. On the issue of interest, the Supreme Court considered Section 31(7)(a) of the 1996 Act and clause 16 of the GCC. In Chittaranjan Maity (supra), the Supreme Court, was considering clause 16(2) which is similarly worded to Clause 16(3) and held as under:

“19. In Sayeed Ahmed and Co. v. State of Uttar Pradesh and Ors. (2009) 12 SCC 26, this Court noted that the 1940 Act did not contain any provision relating to the power of the Arbitrator to award interest. However, now a specific provision has been created Under Section 31(7)(a) of the 1996 Act. As per this Section, if the agreement bars payment of interest, the Arbitrator cannot award interest from the date of cause of action till the date of award. The Court has observed that in regard to the provision in the 1996 Act, the difference between pre-reference period and the pendente lite interest has disappeared insofar as award of interest by the Arbitrator is concerned. Section 31(7)(a) recognizes only two periods, i.e. pre- award and post-award period. 20. In Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat and Ors. (2010) 8 SCC 767, this Court was dealing with an identical case wherein Clause 16 of the GCC of Railways had required interpretation. This is the same Clause 16(2) of the GCC prohibiting grant of interest which is also applicable in the facts of the present case. The Court held that where the parties had agreed that the interest shall not be payable, the Arbitral Tribunal cannot award interest between the date on which the cause of action arose to the date of the award. 21. In Union of India v. Bright Power Projects (India) Private Limited (2015) 9 SCC 695, a three- Judge Bench of this Court, after referring to the provisions of Section 31(7)(a) of the 1996 Act, held that when the terms of the agreement had prohibited award of interest, the Arbitrator could not award interest for the pendente lite period. It has been held thus:

“10. Thus, it had been specifically understood between the parties that no interest was to be paid on the earnest money, security deposit and the amount payable to the contractor under the contract. So far as payment of interest on government securities, which had been deposited by the Respondent contractor with the Appellant is concerned, it was specifically stated that the said amount was to be returned to the contractor along with interest accrued thereon, but so far as payment of interest on the amount payable to the contractor under the contract was concerned, there was a specific term that no interest was to be paid thereon. 11. When parties to the contract had agreed to the fact that interest would not be awarded on the amount payable to the contractor under the contract, in our opinion, they were bound by their understanding. Having once agreed that the contractor would not claim any interest on the amount to be paid under the contract, he could not have claimed interest either before a civil court or before an Arbitral Tribunal.”

Therefore, it is clear that the Appellant is not entitled for any interest on the amount awarded by the Arbitral Tribunal”

18. More recently however, in Raveechee and Co. v. Union of India [C.A. 5964-5965 of 2018, decision dated 3rd July, 2018] (hereinafter, „Raveechee and Co.‟), the Supreme Court was considering a case where the Arbitrator had awarded interest @ 12% p.a. on the award excluding the amount of security deposit. The Court considered clause 16(3) of the GCC and held that the Arbitral Tribunal did not award interest on security deposits in view of clause 16(3). The observation is in para 8, which is reproduced below:

“8. In the present case, the Arbitral Tribunal giving effect to the purport of Clause 16(3) did not award any interest on security deposits. The clause in terms states that no interest will be payable on earnest money, security deposits or on any amounts payable to the contractor under the contract. The Arbitrators in their award have relied on Clause 16(3) of the contract to deny interest on the security deposit. The Arbitrators held that what was intended under Clause 16(3) barred the grant of interest on earnest money, security deposit and amounts payable to the appellant, it does not in any way bar grant of interest pendent lite.”

19. However, in Raveechee and Co. (supra) it was argued that no pendente lite interest could have been awarded at all. In this context, the Supreme Court interpreted clause 16(3) and held that the term `or amounts payable‟ does not include damages that are awarded by the Arbitral Tribunal. The court held as under:

“10. On behalf of the Union of India, it is contended that the Arbitrators by reason of Clause 16(3) could not have awarded interest pendente lite. This contention is incorrect. Ex facie the clause does not deal with interest pendente lite. In terms, the clause only bars interest upon earnest money and security deposits or amounts payable to the contractor under the contract. The above mentioned amounts are amounts which in a sense belong to the contractor. They are amounts voluntarily deposited with the other contracting party in order to be refunded or forfeited depending on performance of the contract. As such they are not amounts of which the contractor is deprived the use of against his wishes, so as to attract interest. It is not the case of the Government before us that interest has been awarded to the contractor under

any of the three heads. Neither does any question of interest payable on Government security arise in the present case. The contention put forth by the Government is that the above clause in the agreement bars the Arbitrators from awarding interest pendete lite. On a plain reading we find that there is no such bar.

11. In fact, the Arbitrators have awarded amounts to the claimant on account of the losses suffered by them for various reasons, mainly due to the ban on mining. These amounts are not awarded on account of any payment due under the contract but are awarded on losses determined in the course of arbitration or the „lis‟. A claimant becomes entitled to interest not as compensation for any damage done but for being kept out of the money due to him. Obviously, in a case of unascertained damages such as this, the question of interest would arise upon the ascertainment of the damages in the course of the lis. Such damages could attract interest pendente lite for the period from the commencement of the arbitration to the award. Thus, the liability for interest pendente lite does not arise from any term of the contract, or during the terms of the contract, but in the course of determination by the Arbitrators of the losses or damages that are due to the claimant. Specifically, the liability to pay interest pendente lite arises because the claimant has been found entitled to the damages and has been kept out from those dues due to the pendency of the arbitration i.e. pendente lite.

12. We are, therefore, of the view that the Arbitrators rightly awarded interest pendente lite for the period from 26.09.1988 to 23.03.2001 which is the date of the award, on the amounts found due to the claimant. Undoubtedly, such a power must be considered inherent in an Arbitrator who also exercises the power to do equity, unless the agreement expressly bars an Arbitrator from awarding interest pendente lite. An agreement which bars interest is essentially an agreement that the parties will not claim interest on specified amounts. It does not bar an Arbitrator, who is never a party to the agreement from awarding it. We are not called upon, in this case, to decide whether parties can agree that they will not claim interest pendente lite even in respect of unascertained damages determined in the course of arbitration. The present case must be decided on the general rule that an arbitrator has the power to award interest unless specifically barred from awarding it; and the bar must be clear and specific.”

20. The Supreme Court concluded as under:

“18. Thus, when a dispute is referred for adjudication to an arbitrator, a term of such a nature as contained in clause 16(3) of GCC, that is binding on the parties cannot be extended to bind the Arbitrator. The Arbitrator has the power to award interest pendente lite where justified.”

21. Since the clause itself has not been challenged, this Court is not venturing into the legality of the same. The legal position, upon a cumulative reading of all the judgments can be summarized as under: i) There is no distinction between the pre-reference and pendente lite period under the 1996 Act (Sayeed Ahmed); ii) If the contract has a specific stipulation in respect of award of interest, the same would be applicable and the Arbitral Tribunal under Section 31(7) would be bound by the same (Bright Power Projects and Ambica Construction); iii) The express exclusion in a contract has to be determined after a reading of a clause and the overall intention of the agreement as also the exact exclusion (Ambica Construction); iv) Clause 16 primarily relates to earnest money and security deposits and does not relate to other payments (Pradeep Vinod Construction Co.); v) In respect of security deposit, earnest money deposit and other amounts payable under the contract, no interest is payable (Chittaranjan Maity). vi) In respect of security deposit, earnest money deposit and amounts payable under the contract, no interest is payable. However, in respect of unascertained damages, the same would not be an amount payable under the contract, hence interest would be payable (Raveechee and Co.).

22. The above conclusions are arrived at after looking at the factual background and the findings in the decisions of the Supreme Court referred to above. There may be a few observations which could lead to an argument that there are conflicting interpretations by coordinate Benches of the Supreme Court in decisions iv), v) and vi) above. For the time being, however, after appreciating the factual background in each of the decisions, and the fact that some of the earlier judgements may not have been brought to the notice of the Benches rendering the subsequent decisions, the above conclusions can be arrived at.

23. In Union of India v. N.K. Garg 2016 (155) DRJ 197, a Learned Single Judge of this Court has held that clause 16(2) which is in pari materia to clause 16(3), here, is contrary to law and is illegal in view of the various provisions of the Interest Act, 1978 and the judgment of the Supreme Court in G.C. Roy (supra). The said judgment is under challenge before a Division Bench of this court and has been stayed. Before this Court, the legality and validity of clause 16 has not been challenged and the same is being argued as being applicable. Only its interpretation is being contested. The legality as to whether a clause such as Clause 16(3) which bars grant of interest, would stand the test of reasonableness, is not therefore being gone into in the present case.

24. Applying the principles laid down by the various decisions of the Supreme Court, to the facts of the present case, it is seen that the award of amounts in favour of the Respondent, are in respect of the following claims: Claim No. Title Amount Claimed (in Rs.) Amount Awarded (in Rs.) Reasons for award

1 Extra/additional expenses for bailing out water other than sub soil at different bridge locations. 6,00,000/- 1,50,000 Claim partly allowed. The claimant had executed work of bailing out water which was more than the reasonable quantities expected in sub soil water.

2 Extra/additional supplying labour for removing and putting ballast, replacement of M.C. girders with P.S.C. slabs at various bridges 60,000 20,000 Claim partly allowed. Claimant could not give sound proof of full amount of the claim of Rs.60,000, however since the Respondent had admitted that labour was provided by the claimant and they had processed payment only for the work done, the relief was granted.

3 Extra/additional shifting of ballast stacks coming in the alignment of new platform at Bijwasan and Palam Railway station to new location including stacking as identified by the administration Qty. 2000 m 3 @Rs.70/- per cum 1,40,000 35,000 The Respondents admitted that the ballast stacks were removed/shifted during the course of the work. Respondents had processed for the payment of Rs. 5,440/for the work done which was not agreed to by the claimant. Ballast register could not be produced by the respondents. Based on the documents produced before us, Rs.35,000/- is considered reasonable compensation.

4 Extra/additional expenses providing examination pits for bridges to verify the foundation details as there was inconsistency in the approved plans and site plans Qty.

13 Extra/additional 7,25,000 1,80,000 Claimant could not give carrying earth manually as vehicle with earth not allowed to ply on platform. Qty. 14500 m[3] @Rs.50,000 per cum sound proof of his claim, however, based on the facts and documents in the case, the claim was partly allowed.

18 Extra/additional providing controlled concrete instead of nominal mix as provided in the agreement Qty. 2100 cum @Rs.600/- per cum 12,60,000 3,15,000 Claimant could not give sound proof for the entire claim, but based on the documents on record, partial relief was granted.

21 Claim as difference in rate as some quantity of N.S.[9] had been in correctively paid as NS item -7 Qty 708 m[3] @Rs.2250 Rs.1200 Rs.1050- 99 per cum 7,43,400 7,43,400 Claim fully allowed as the Respondents could not give justification for having paid the item of control concrete in an item which concerns concreting with nominal mix. Total amount awarded Rs.14,93,400

25. In view of Section 31(7)(a) of the 1996 Act, if there is an agreement between the parties, insofar as award of interest is concerned, then the said agreement prevails. Since clause 16(3) refers to an amount payable to the contractor under the contract, and not merely to earnest money and security deposit, though clause 16(3) falls in the same clause which relates to earnest money and security deposit, the decision in Chittaranjan Maity (supra) is applicable in the facts of the present case.

26. Moreover, none of the above amounts constitute un-ascertained damages as contemplated in Raveechee and Co. (supra). Neither do they relate to damages awarded for loss suffered. They are amounts payable under the contract, which were claimed and partially awarded. Apart from the above claims, several of the claims made were also rejected by the Tribunal. These amounts would be covered clearly under clause 16(3) and as per the judgment in Chittaranjan Maity (supra) and Raveechee and Co. (supra), no interest would be awardable. The decision of Raveechee and Co. (supra) is relied upon by the Respondent to argue that a clause such as 16(3) cannot extend to bind the Arbitrator. However, the dictum in Raveechee and Co. (supra) is as under:

27. The power of Arbitrator to award pendente lite interest is contemplated and recognized, only “where justified”. Under section 31(7)(a) of the 1996 Act, if there is an agreement between the parties excluding interest, the same would prevail. The various judgments of the Supreme Court in Pradeep Vinod Construction Co. (supra), Chittaranjan Maity (supra) and Raveechee and Co. (supra) lead this Court to conclude that insofar as the amounts, which are covered by Clause 16(3) of the GCC are concerned, no interest would be payable even by the Tribunal as there is a bar under Section 31(7)(a) of the 1996 Act. The question as to whether clause 16(3) is itself legally valid is something that has not been raised in the present petition and hence the same is not being gone into. Under such circumstances, on the amounts awarded, no pre-award interest is payable.

28. Present petition was initially heard on 30th July, 2018 and the order disposing of the OMP was dictated in open Court. However, while finalizing the order, the judgment of the Supreme Court in Raveechee and Co. (supra) came to the notice of the Court and counsels were allowed to make additional oral submissions dealing with findings in Raveechee and Co. (supra).

29. The arbitral award in the present case grants interest to the Claimant, pre-reference and pendente lite. The said amount of interest is liable to be set aside i.e. as contained in paragraph 9 of the award. However, the principal amount and the future interest i.e., post the award, is upheld as the same is not questioned before this Court.

30. The petition is, accordingly, disposed of. All pending I.A.s also stand disposed of.

PRATHIBA M. SINGH JUDGE JULY 30, 2018 Rekha/Rahul/dk

Union of India v. Pradeep Vinod Const., Co.

AI Summary

Full Text

JUDGMENT

Contact Us for a Free Consultation