TMI Blog2012 (9) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... t-Corporation on 27th April, 1986. As the final bill of the respondent-contractor had not been prepared and security money, furnished by way of bank guarantee was not released, the parties went to arbitration in accordance with the Arbitration clause under the contract/agreement. In the course of the aforesaid Arbitration proceeding the appellant-Corporation submitted a final bill which according to the respondent-Contractor entitled it to receive a sum of ₹ 10,17,461.09 on account of work done besides a sum of ₹ 12.50 lakhs that was lying in deposit with the Corporation. As the amounts due. according to the respondent-contractor, had become crystallized, another arbitration proceeding between the parties for the aforesaid specific claims commenced in accordance with the arbitration clause of the agreement. 3. The award in the aforesaid arbitration proceeding was passed on 29th January, 1996 holding the respondent contractor to be entitled to the sum of ₹ 10,17,461/- with the interest at the rate of 6% per annum from the date of invocation of the claim till the date of the award and at the rate of 12% per annum from the date of the award till payment or till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the respondent - contractor for the unpaid amounts under the final bill as well as for return/refund of security deposit, including amounts furnished by way of bank guarantee, was the subject matter of an earlier arbitration between the parties. In the course of the said arbitration the final bill was placed before the arbitrators by the Corporation. On scrutiny of the aforesaid final bill the respondent-contractor claimed the two specific amounts in question and resorted to another process of arbitration without seeking leave in the first arbitration proceeding to have recourse to a second round of arbitration. The arbitration proceeding leading to the award is, therefore, without any authority of law. Specifically, insofar as the amount of ₹ 12.50 lakhs is concerned, according to the learned counsel for the appellants, the said amount was not adjudicated upon by the Arbitrators and the same was to be recovered by an amicable process or by resorting to a civil suit. In such a situation it was clearly beyond the power of the learned trial court to hold the said claim in favour of the respondent-contractor. Though the High Court was justified in setting aside the said cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in Indian oi l Corporation Ltd. vs. Amritsar Gas service and others [(1991) 1 SCC 533) , State of Orissa vs. B.N. Agarwalla [(1997) 2 SCC 469] and Asian Techs Limited vs . Union of India and others (2009 10 SCC 354) (para 21) in support of the contentions advanced. 8. Para 7A of the U.P. Civil Laws (Reforms and Amendment) Act, 1976 referred to above may now be reproduced : 7A. Where and in sofar as an award is for the payment of money, the arbitrators of the umpire may, in the award, order interest at such rate as the arbitrators or umpire may deem reasonable to be paid on the principal sum awarded, from the date of the commencement of the arbitration as defined in sub-section (3) of section 37, to the date of award, in addition to any interest awarded on such principal sum for any period prior to such commencement, with further interest at such rate not exceeding six per cent per annum as the arbitrators or umpire may deem reasonable on such principal sum from the date of the award to the date of payment or to such earlier date as the arbitrators or umpire may think fit, but in no case beyond the date of the decree to be passed on the award. 9. Insofar as the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis for the view taken by the High Court that the entitlement of the respondent-contractor to the said amount should now be determined by the Arbitrator nominated by it. Rather, according to us, the aforesaid issue should have been left for determination in accordance with the procedure agreed upon by the parties, if the parties are, at all, inclined to go into a further round of adjudication at this stage. We, therefore, interfere with the aforesaid part of the order of the High Court and, subject to our observations above, we leave the parties to work out their remedies as may be considered best and most appropriate in the facts and circumstances of the case. 11. This will lead the court to a consideration of what is the principal bone of contention between the parties in the present case, namely, the issue with regard to payment of interest. Clauses 1.2.14 and 1.2.15 on which much arguments have been advanced by learned counsel for both sides may now be extracted below : PART II CONDITIONS OF CONTRACT NO CLAIM FOR DELAYED PAYMENT DUE TO DISPUTE ETC. The contractor agrees that no claim for interest of damages will be entertained or payable by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is tenable can be examined by the arbitrator in the reference made to him. The aforesaid view, specifically, is with regard to pendente lite interest. In the subsequent decision of the Constitution Bench in N.C. Budhraj s case (supra) a similar view has been taken with regard to interest for the pre reference period. 14. In Krafters Engineers case (supra) the somewhat discordant note struck by the decisions of this court in Board of Trustees for the Port of Calcutta vs. Engineers-De- Space-Age (1996) 1 SCC 516) and Madnani Construction Corporation Private Limited vs. Union of India and others (2010) 1 SCC 549) were also taken note of. Thereafter, it was also noticed that the decision in Engineers-De-Space-Age s case (supra) was considered in Sayeed Ahmed Co. vs. State of Uttar Pradesh Ors. (2009) 12 SCC 26) and the decision in Madnani Construction case (supra) was considered in Sree Kamatch i Amman Constructions vs. Divisional, Railway manager (Works), Palghat and others (2010) 8 SCC 767). In Sayeed Ahmed s case (supra) (para 24) it was held that in the light of the decision of the Constitution bench in GC Roy s case and NC Budhraj s case it is doubtful whether the observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned counsel for the respondent, once again, does not assist the claim of the respondent to interest pendente lite inasmuch as in BN Agarwalla s case (supra) the views of the Constitution Bench in GC Roy s case (supra) with regard to interest pendente lite could not have been and, infact, were not even remotely doubted. The observation of the bench in B.N. Agarwalla s case that in G.C.Roy s case (supra) the decision in Executive Eningeer (Irrigation), Balimela and others vs . Abhaduta Jena and others (1988) 1 SCC 418) was not overruled was only in the context of the issue of award of interest for the pre reference period. The decision in Asian Techs Limited case (supra) also relied on by the respondent takes note of the decision in Engineers- De-Space-Age case (supra) to come to the conclusion the prohibition on payment of interest contained in clause 11 of the agreement between the parties was qua the department and did not bar the Arbitrator from entertaining the claim. It has already been noticed that the correctness of the propositions laid down in Engineers-De-Space-Age case (supra) have been doubted in the subsequent decisions of this court, reference to which has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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