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2009 (7) TMI 1329 - SUPREME COURTArbitration Proceedings - interest upto and from the date of award - Disputes arose between the parties by reason by rejection of claims of appellant and they were referred to Arbitration - whether the Arbitrator can award interest for pre-reference period and pendente lite, when the contract prohibits the employer from entertaining any claim for interest? - Aggrieved by the deletion of interest upto the date of award and reduction of interest from the date of award to 6% per annum, the appellant has filed this appeal. HELD THAT:- Clause G-1.09 makes it clear that no interest or damages will be paid by Government, in regard to : (i) any money or balance which may be lying with the Government; (ii) any money which may become due owing to any dispute, difference or misunderstanding between the Engineer-in-charge on the one hand and the contractor on the other hand; (iii) any delay on the part of the Engineering Charge in making periodical or final payment; or (iv) any other respect whatsoever. The clause is comprehensive and bars interest under any head in clear and categorical terms. In view of clause (a) of sub-section (7) of section 31 of the Act, it is clear that the Arbitrator could not have awarded interest upto the date of the award, as the agreement between the parties barred payment of interest. The bar against award of interest would operate not only during the preference period that is up to 13.3.1997 but also during the pendente lite period that is from 14.3.1997 to 31.7.2001. The arbitrator awarded interest at the rate of 18% per annum on ₹ 24,18,586/-, 14% per annum on amount found due on finalisation the final bill and 12% per annum on the security deposit amount if any that has to be refunded. As noticed above, clause (b) of sub-section (7) of section 31 of the Act provides that if the award does not otherwise direct, the amount awarded shall carry interest as directed by the award and in the absence of any provision of 18% per annum. Any provision in the contract barring interest, will therefore operate only till the date of award and not thereafter. The arbitrator has awarded interest at three different rates on three different amounts which are all less than 18% per annum. The said award of interest by the arbitrator is not contrary to section 31(7)(b) of the Act. Unless the award of interest is found to be unwarranted for reasons to be recorded, the court should not alter the rate of interest awarded by the Arbitrator. The High Court has not assigned any reasons for reducing the rate of interest to 6% per annum. Therefore, such reduction cannot be sustained. We allow this appeal in part and modify the judgment of the High Court as follows : (a) The Judgment of the High Court setting aside the award of interest upto the date of award is affirmed. (b) The decision of the High Court reducing the rate of interest to 6% per annum from the date of award is set aside. The rate of interest on the amounts due and payable under the award, from the date of award till date of payment shall be in terms of the award of the Arbitrator.
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