TMI Blog2018 (7) TMI 2320X X X X Extracts X X X X X X X X Extracts X X X X ..... trator 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. Further, this Court considered an identical Clause in the contract in the case of Ambica Constructions v. Union of India [ 2017 (4) TMI 1423 - SUPREME COURT ] , wherein it observed that the Clause of the GCC did not bar the arbitrator from awarding interest pendente lite and affirmed the award passed by the arbitrator. The three Judge Bench of this Court held that the contention raised by the Union of India based on the Clause of the GCC that the arbitrator could not award interest pendente lite was not a valid contention and the arbitrator was completely justified in granting interest pendente lite. Thus when a dispute is referred to for adjudication to an arbitrator, a term of such a nature as contained in the Clause 16(3) of GCC, that is binding on the parties cannot be extended to bind an Arbitrator. The Arbitrator has the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 of 2001 along with the award dated 22.03.2001 in the Civil Court. The award was made a Rule of the Court by an order dated 29.07.2004 Under Section 17 of the Arbitration Act of 1940 (hereinafter referred to as 'the Act') by the Civil Court. The Respondent challenged the order of the Civil Court dated 29.07.2004 in appeal. The High Court partly allowed the appeal and set aside the order of Arbitrators qua Claim No. 12 under which the Arbitrators had awarded Rs. 44,92,800/- as interest pendente lite. The Arbitrators awarded amounts in favour of the Appellant as follows: Claim No. 1 - Rs. 12 lacs, Claim No. 3 - Rs. 8 lacs and Claim No. 5 - Rs. 10 lacs and interest on the total amount of damages (i.e. Rs. 12 lacs + Rs. 8 lacs + Rs. 10 lacs = Rs. 30 lacs) excluding the amount of security deposits. Thus, interest on Rs. 30 lacs from 26.09.1988 to 23.03.2001 at 12 % amounting to Rs. 44,92,800/-. 6. The Appellant, aggrieved by the High Court's judgment and order dated 23.07.2015 filed a review application before the High Court. The High Court dismissed the review application vide judgment and order dated 05.11.2015. The present SLPs are filed against the High Court judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract. 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 pendente 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madnani Construction Corporation Pvt. Ltd. v. Union of India and Ors. [(2010) 1 SCC 549] held that according to the view taken in the case of Irrigation Deptt., State of Orissa (supra), the arbitrator does have the power to award interest pendente lite. The Court observed that it essentially depends upon the ouster in each clause, which means that unless there is an express bar that provides that the arbitrator cannot award interest pendente lite, the grant of interest pendente lite will predominantly be based on the arbitrator's discretion to award the same. 15. In Sayeed Ahmed Co. v. State of Uttar Pradesh and Ors . [(2009) 12 SCC 26] , this Court referred to the decision in Superintending Engineer and Ors. v. B. Subba Reddy [(1999) 4 SCC 423] and observed thus: 11. Two more decisions dealing with cases arising under the Arbitration Act, 1940 require to be noticed. In Superintending Engineer v. B. Subba Reddy (1999) 4 SCC 423 this Court held that interest for pre-reference period can be awarded only if there was an agreement to that effect or if it was allowable under the Interest Act, 1978. Therefore, claim for interest for pre-reference period, which is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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