TMI Blog2012 (2) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... unt awarded under this claim to ₹ 1,75,000/-. Insofar as this part of the order of the learned Single Judge is concerned, there is no dispute. Inthis behalf,though the order of the learned Single Judge sustaining the claims is challenged, the same was not pressed at the time of arguments and only controversy which is raised before us pertains to the award of pendente lite interest by the learned Arbitrator. 2. The submission of the appellants was that the Arbitrators could not have awarded any interest on the awarded amount in view of Section 16 (2) of the General Conditions of Contract (GCC). However, this contention did not find favour with the learned Single Judge who has, by means of impugned order, held that notwithstanding the aforesaid contractual provision, the Arbitrator had the jurisdiction to award the interest. While taking this view various judgments cited by the learned Counsel for the parties on either side have been taken note of and considered, to which we shall be referring to at an appropriate stage. 3. When the matter came up for argument before the Division Bench, the Division Bench took note of the judgments cited on either side and prima facie fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view relying on the judgment in Secretary, Irrigation Department, Govt. of Orissa and Ors. Vs. G.C. Roy (1992) 1 SCC 508. We are thus of the view that this issue needs to be examined by a larger bench of this court to bring about a settled legal position. ThepapersbeplacedbeforeHon‟bletheActing Chief Justice for constitution of a Larger Bench. This is how the matter comes up before this Full Bench. 4. We have heard Mr. A.S.Chandhiok, learned ASG for the appellant and Mr.Vivekanand, learned counsel who appeared for the respondent. 5. The reference order spells out the conflicting approach of this Court and takes note of relevant judgments of the Supreme Court which have to be kept in mind while straightening the controversy. In the first blush, though it may appear that the view taken by the Supreme Court in Engineers-De-Space-Age 9 (1996) 1 SCC 516 and Madnani(supra) is contrary to the ratio of Sayeed Ahmed (supra), a close scrutiny of these judgments which all interpreted the Constitution Bench judgments in Secretary, Irrigation Department, Government of Orissa Vs. G.C. Roy (supra) and Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa Vs. N.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , so long as they are not opposed to law. (The proviso to Section 41 and Section 3 of Arbitration Act illustrate this point). All the same, the agreement must be in conformity with law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement. (iv) Over the years, the English and Indian courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest, the arbitrator must have the power to award interest pendente lite. Thawardas has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. It has been said repeatedly that observations in the said judgment were not intended to lay down any such absolute or universal rule as they appear to, on first impression. Until Jena case almost all the courts in the country had upheld the power of the arbitrator to award interest pendente lite. Continuity and certainty is a highly desirable feature of law. (v) Interest pendente lite is not a matter of substantive law, like i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation in Board of Trustees for the Port of Calcutta (supra) in a case arising under the Arbitration Act, 1940 that the arbitrator could award interest pendente lite ignoring the express bar in the contract. 17. At the end of the argument, learned Counsel for the Respondent heavily relied on the recent decision of this Court in Madnani Construction Corporation Private Limited (supra) which arose under the Arbitration Act, 1940. There also, Clause 30 of SCC and Clause 52 of GCC prohibits payment of interest. Though the Bench relied on all the earlier decisions and considered the very same clause as to which we are now discussing, upheld the order awarding interest by the arbitrator de hors to specific bar in the agreement. 21. In the light ofthe above principleand inview of the specific prohibition of contract contained in Clause 1.15, the arbitrator ceases to have the power to grant interest. We also clarify that the Arbitration Act, 1940 does not contain any specific provision relating to the power of arbitrator to award interest. However, in the Arbitration Conciliation Act, 1996, there is a specific provision with regard to award of interest by the arbitrator. The bar u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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