TaxTMI 
TaxTMI 
1972 (1) TMI 99
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....wo applications may be adverted to The erstwhile State of Madhya Bharat and entered into a contract with M/s. Saith & Skelton (-P.) Ltd., the first respondent, for the supply and erection of Pen, stocks for Gandhi Sagar Power Station, Chambal Hydel works. The acceptance of the contract was by tender No. Project/SE/2522-F/II/25 dated June 5, 1956. Under the said contract, the first respondent firm was required to supply material for the five penstocks of P.O.R. Jhalwar Road, Railway Station at Rs. 1,570 per M. Ton within the time stipulated, the total quantity being 463.939 M. Tons. The material was to be transported from Jhalwar Road Railway Station to the works site by the consignee, ,,he Madhya Bharat Government, and the work of erection was to commence on the receipt at the work site of running length of 96 ft. for any of the penstocks. Clause 21 of the contract provided for any question or dispute, arising under the conditions of the contract or in connection therewith, to be referred to the arbitrators, one to be nominated by the State and the other by the firm The said clause also provided for the matter being referred to an Umpire to be appointed by the arbitrators in case o....
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....ole Arbitrator under s. 12(2) of the Act and accordingly modified the order of the Addl. District Judge, Mandsaur. The appellant filed Special Leave Petition No. 2370 of 1970 in this Court for grant of Special Leave to Appeal against the order of the High Court dated August 6, 1970. The firm entered caveat. On January 29, 1971, this Court ranted Special Leave land, by consent of parties, appointed an arbitrator, whose Award is sought to be made a decree of the Court by the respondent in its application C.M.P. No. 5801 of 1971 and is sought to be set aside by the appellant by C.M.P. No. 5802 of 1971. As the terms of the order passed by this Court are material, it is reproduced below : Special Leave is granted. The appeal is allowed The appointment of Shri R. C. Soni as the sole arbitrator is set aside by consent of the parties. Mr. V. S. Desai, Senior Advocate, is appointed Arbitrator by consent of the parties to go into all the questions in this matter and make his awar. The remuneration for the arbitrator would be Rs. 5,000, which will be shared by both the parties equally. The arbitrator will make his award within t....
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....arned counsel for the appellant, in support of the application C.M.P. No. 5802 of 1971. Mr. Shroff has raised the following four contentions: (1) The arbitrator had no power to suo motu file his Award, as he has done in this case, and as such no action can be taken on such an Award; (2) This Court is not the Court as contemplated by s. 14(2) read with S. 2(c) of the Act. Hence the filing of the Award in' this Court is illegal and ineffective in law; (3) The arbitrator had no jurisdiction to award interest from a period anterior to the date of the award or reference; and (4) The Arbitrator has committed a manifest error in directing the refund of Rs. 15,414.19 P. when this amount has already been taken into account in arriving at the figure of Rs. 1,79,653.18 P. We will now proceed to deal with these contentions scriatim. With regard to the first contention, which relates to the validity of the filing of the Award in this Court suo motu, reliance is placed by Mr. Shroff on s. 14(2) of the Act. It is the contention of the counsel that under this section an arbitrator can cause an award to be filed in court only under two circumstances : (a) when a request to do so is made by any par....
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....ion Act, 1908, as not having been filed within 90 days of the date of service of the notice of the making of the Award. It is also seen that the arbitrator on July 3, 1951 filed the original Award before the Court suo motu. The Subordinate Judge rejected the application filed on March 30, 1951 as barred by time. That order was confirmed by the High Court. This Court, after a consideration of s. 14(1) of the Act held that the serving, by the arbitrator on the appellant before this Court of a signed copy of the Award amounted to giving him notice in writing of the making of the Award. This Court further upheld, as correct, the view of the Subordinate Judge and the High Court that the application filed by the appellant, beyond the period prescribed under Art. 178 of the Indian Limitation Act, 1908, was barred. This Court did not express any view regarding the action taken by the arbitrator in filing suo motu the Award and left open the question as follows : "....... But we make it clear that the other part of the case, namely what is to happen to the award sent by the Arbitrator himself to the court has yet to be determined....
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....iction to entertain the suit regarding the subject matter of the reference. We are not inclined to accept this contention of Mr. Shroff. It should be noted that the opening words of s. 2 are "In this Act, unless there is anything repugnant in the subject or context. Therefore the expression "Court' will have to be understood as defined in s. 2(c) of the Act, only if there is nothing repugnant in the subject or context. It is in that light that the expression "Court" occurrmg in s., 14(2) of the Act will have to be understood and interpreted. It was this Court that appointed Shri V. S. Desai on January 29, 1971, by consent of parties, on an arbitrator and to make his Award. It will be seen that no further directions were given in the said order which will indicate that this Court had not divested itself of its jurisdiction to deal with the Award or matters arising out of the Award. In fact the indications are to the contrary. The direction in the order dated January 29, 1971 is that the arbitrator is "to make his Award". Surely the law contemplates further steps to be taken after the Award has been made, and quite naturally the forum for taking the further action is only this Court....
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....ce, were both invalid as the trial court was mot competent to make the order of reference. This Court rejected the said contention and after a reference to ss. 2(c) and 21 of the Act held that the expression "Court" occurring in s. 21 includes also the Appellate Court, proceedings before which are a continuance of the suit. It was further held that the word "suit" in s. 21 includes also appellate proceedings. In our opinion, applying the analogy of the above decision, the expression "Court" occurring in s. 14 (2) of the Act will have to be understood,in the context in which it occurs. So understood, it follows that this Court is the Court under s. 14(2) where the arbitration Award could be validly field. The decision in Union of India v. Surjeet Singh Atwal ([1969] 2 S.C.R. 211) relied on by Mr. Shroff, dealt with a different aspect and therefore, it is not necessary for us to refer to the same. The above reasoning leads us to the conclusion that the filing of the Award in this Court by the arbitrator was valid and legal. The second contention of Mr. Shroff will stand rejected. The third contention of Mr. Shroff is that the arbitrator had no jurisdiction to award interest from a p....
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....the Judicial Committee and to certain decisions of this Court to the effect that s. 34 of the Code of Civil Procedure will not apply to the proceedings before an arbitrator, as he is not a Court and that interest cannot be awarded by way of damages. He further referred to those decisions in support of his contention that in the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest on an amount for a period before the institution of the suit, interest anterior to the date of the suit cannot be allowed. The decisions referred to by Mr. Shroff are Bengal Nagpur Raliway Company Limited v. Ruttanji Ramji and others(L.R. 65 I.A. 66), Seth Thawardas Pherumal v. The Union of India([1955] 2 S.C.R. 48), Mahabir Prashad Rungta v. Durga Datt([1961] 3 S.C.R. 639), Union of India v. A. L. Rallia Ram([1964] 3 S.C.R. 164), Vithal Das v. Rupchand and others([1966] Supp. S.C.R. 164) and Union of India v. Bungo Steel' Furniture Pvt. Ltd. ([1967] 1 S.C.R. 324). It is no doubt true that for awarding interest under the Interest Act, 1939, or under s. 34 of the. Code of Civil Procedure, certain circumstances must exist. But one of the principles....
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....bitrator has power to award interest pendente lite, i.e. during the, pendency of the arbitration proceedings. In the case before there is no controversy that all the disputes including a claim for payment of the amount with interest was referred to the arbitrator. The arbitrator, as pointed out earlier, found that the firm was entitled to the Payment as price in the sum of Rs. 1,79,653.18 P. The arbitrator has further found that this amount became payable as balance price for the goods supplied by the firm on June 7, 1958, on which date the final inspection took place. If that is so, section 61 of the Sat-, of Goods Act, 1930 squarely applies and it saves the right of the seller (in this case the firm) to recover interest, where by law interest is recoverable. Sub-section (2) of s. 61, which is material is as follows : "61 (2) In the absence of a contract to the contrary the Court may award interest at such rate as it thinks fit on the amount of the 'Price-, (a) to the seller in a suit by him for the amount of the price-from the date of the tender of the or from the date on which the price was payable. (b) to the buyer in a suit ....