JUDGMENT
Badar Durrez Ahmed, J.
Page 875
1. The learned counsel for the petitioner / objector has assailed the impugned award dated 03.01.2001 on several counts. The first count is that claim Nos. 1 and 2 have been clubbed with Claim No. 3 and the Arbitrator has awarded a sum of Rs. 51,500.08 under the last of these heads, i.e., Claim No. 3. Claim No. 1 pertains to the expenditure incurred by the petitioner during the period the site was not being made available to the petitioner, i.e., the period prior to the petitioner being able to commence the work as per the tender. Claim No. 2 pertains to the petitioner’s alleged professional loss for making itself available for this project instead of undertaking some other projects whereby the petitioner could have made profits. Claim No. 3 is in respect of the loss of profit on account of the petitioner not being permitted to complete the work. In other words, Claim No. 3 is for the loss of profit on the balance work which the petitioner was not permitted to complete. The learned counsel for the petitioner pointed out that the learned Arbitrator held in favor of the petitioner under all the three claims, i.e., Claim No. 1, Claim No. 2 and Claim No. 3. However, while making the award of compensation under these heads Along with Claim No. 3, he failed and / or neglected to award any compensation qua claim Nos. 1 and 2 and only computed an 8% loss of profit on the work not done which entirely covers Claim No. 3. According to the learned counsel, this implies that although a finding has been returned in favor of the petitioner in respect of Claim Nos. 1 & 2, no amount whatsoever has been awarded to the petitioner under the said two claims. The learned counsel for the petitioner also stated that Claim No. 5 has not been dealt with properly inasmuch as escalation has not been allowed and he cited a judgment of the Supreme Court in the case of Hyderabad Municipal Corporation v. M. Krishnaswami Mudaliar and Anr. in support of this proposition.
2. Lastly, the learned counsel for the petitioner submitted that interest has not been awarded in respect of other claims and it has been awarded only in respect of claim No. 4 without assigning any reason for this discrimination. Therefore, on all these grounds, the award is liable to be set aside.
3. Ms Salwan, who appeared on behalf of the respondent/DDA, submitted that the position is not as simple as has been sought to be portrayed by the learned counsel for the petitioner. She submitted that the petitioner has been awarded compensation under all the claim Nos. 1, 2 & 3 together under Claim No. 3. What has been awarded by the Arbitrator under Claim No. 3 is not just qua the Claim No. 3, but in respect of Claim Nos. 1 & 2. She submitted that the petitioner was unable to produce any evidence with regard to Claim Nos. 1 & 2 and, therefore, the Arbitrator has taken a reasonable view by awarding 8% of the balance work not done as reasonable compensation towards all the three claims. She also submitted that it is not Page 876 as if interest has not been awarded because the Arbitrator has specifically awarded interest in respect of Claim No. 4 and, therefore, it cannot be construed that the Arbitrator had not applied his mind to the question. Although, she submitted, the Arbitrator did not mention anything with regard to interest on the other claims allowed by him, by implication, it would mean that the Arbitrator had applied his mind and found them to be not tenable.
4. Coming to the first grievance of the petitioner that although the learned Arbitrator has held in favor of the petitioner under Claim Nos. 1 & 2, while clubbing the same under Claim No. 3, the learned Arbitrator has actually not granted any amount in respect of claim Nos. 1 & 2 and has only compensated the petitioner under Claim No. 3, I find that this grievance is not well-founded. The conclusion arrived at under Claim No. 1 by the learned Arbitrator is as under:-
There has been breach on the part of the respondent in not handing over the part site for execution of the work due to stay order. Claimant has claimed extra expenditure incurred on permanent establishment due to prolongation of the contract which has resulted loss of profit to the claimant. The award on this claim is being clubbed under claim No. 3 for loss of profit.
5. Insofar as Claim No. 2 is concerned, the learned Arbitrator has arrived at the following conclusion:-
There has been breach on the part of the respondent in not handing over the part site for execution of the work due to stay order. Claimant has claimed professional loss. This loss is also part of the profit of the claimant, so the award against this claim is also clubbed with claim No. 3.
6. It, therefore, becomes clear that the learned Arbitrator had found both the claims in favor of the petitioner, but, at the same time, had said that the award under these claims would be clubbed under Claim No. 3. Claim No. 1 has been referred to as a claim for loss of profit on account of extra expenditure incurred on the permanent establishment. Claim No. 2 has been referred to as a professional loss on account of breach on the part of the respondent in not handing over part of the site for execution of the work due to a stay order. Claim No. 3 is with regard to the contractor’s loss of profit for the remaining work which the petitioner was not permitted to complete. The learned Arbitrator has considered the award of the amounts under Claim Nos. 1, 2 and 3 altogether while dealing with the Claim No. 3. The learned Arbitrator, after giving his reasons for computing the compensation at 8% of the work not done by the claimant, has awarded an amount of Rs. 51,500.08 in the following words:-
This 8% includes the loss of profit due to permanent establishment, professional loss and the other loss which the claimant has suffered by not allowing the work to be done by the respondent. By allowing this compensation claimant is being brought to its original position. So claimant is awarded compensation as follows:-
Tendered amount of the work Rs. 9,95,141.00
Work done by claimant Rs. 3,51,390.00
Work could not be done by claimant due to stay. Rs. 6,43,751.00
Justified amount Rs. 6,43,751.00×8% = Rs. 51,500.08.
Page 877
So claimant’s claim is justified for Rs. 51,500.08 (Rs. Fifty one thousand and five hundred and paise eight only) which respondent do pay to the claimant.
7. From the above extract, it becomes clear that the 8% compensation computed on the work which could not be done by the claimant amounting to Rs. 6,43,751.00 clearly included: (a) the loss of profit due to permanent establishment; (b) professional loss; and (c) other losses which the claimant had suffered because of the respondent in allowing the claimant to complete the work. It becomes immediately clear that the loss of profit due to permanent establishment has reference to Claim No. 1. The professional loss has reference to Claim No. 2 and the other losses referred to above have reference to Claim No. 3. Therefore, the contention of the learned counsel for the petitioner that the learned Arbitrator has not awarded any amounts under Claim Nos. 1 & 2 is not correct.
8. As regards the objection with regard to Claim No. 5, I find that this objection is also not tenable. The decision referred to by the learned counsel for the petitioner is also not apposite. Upon examining the discussion contained in the award in respect of Claim No. 5, one finds that the petitioner / claimant had sought increased rates for the period beyond the stipulated period at Rs. 1,16,097. This was claimed generally as well as under Clause 10 c c. As regards the claim under clause 10 c c, one finds that the Arbitrator held that the same was not applicable inasmuch as the same would apply only to those cases where the stipulated period was in excess of six months. The work entrusted to the petitioner was stipulated to be completed within four months and, therefore, the learned Arbitrator came to the conclusion, and rightly so, that clause 10 c c would not be applicable. As regards the other claim under this head, the learned Arbitrator came to the following conclusion:-
Respondent further argued that they have not agreed for increase in rate beyond the stipulated period is accepted and claimant’s claim is not justified. The claimant’s claim for increase of rate is also not justified because about 70% of the cost of material i.e. Stipulated material is being issued on the fixed rate where there is no increase. Further the reference of increase in cost index issued by Director General (C.P.W.D.) is applicable in case of building works and cost index issued is not applicable for the work of under reamed piles, so the claimants claim is not justified.
Examining the conclusion set out above, one finds that the arguments of the respondent have been accepted on two counts and I do not find any infirmity in the reasoning adopted by the learned Arbitrator. As such, the objection with regard to Claim No. 5 is also not tenable.
9. Lastly, I come to the objection raised by the learned counsel for the petitioner that the learned Arbitrator has awarded interest but only in respect of Claim No. 4 and not in respect of the other claims. This, according to the learned counsel for the petitioner, the Arbitrator could not do. He referred to Section 4(1) of the Interest Act, 1978 which provides that notwithstanding anything contained in Section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law. The learned counsel for the petitioner Page 878 also referred to a decision of the Supreme Court in the case of Secretary, Irrigation Department, Government of Orissa and Ors. v. G.C. Roy to show that a person deprived of use of money to which he is legitimately entitled has a right to be compensated for the deprivation. Such compensation may be called interest, compensation or damages. He submitted, on the basis of this decision, that if the Arbitrator had held in favor of the petitioner, then interest also ought to have been awarded for the pre-suit and pendente lite periods in respect of all the other claims also (i.e., claims other than Claim No. 4) inasmuch as the petitioner was deprived of the amounts to which it was legitimately entitled. However, upon reading the said decision of the Supreme Court, one finds that the following principles were set out with regard to the award of the interest pendente lite by an Arbitrator:-
…On a conspectus of aforementioned decisions, the following principles emerge:-
(i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of s. 34, C.P.C., and there is no reason or principle to hold otherwise in the case of arbitrator.
(ii) an arbitrator is an alternative form for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the Court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator. This would lead to multiplicity of proceedings.
(iii) An arbitrator is the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, 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 pendent lite. Thawardas has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis 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. Page 879 Until Jena’s 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 pendent lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred.
Having regard to the above considerations, we think that the following is the correct principle which should be followed in this behalf:
Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute Along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes ‘or refer the dispute as to interest as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view.
10. This in itself makes it clear that it is not necessary that in every case, that the Arbitrator should necessarily award interest pendente lite. It is a matter within the Arbitrator’s discretion to be exercised in the light of the facts and circumstances of each case keeping the ends of justice in view. In the present case, the Arbitrator consciously came to a decision to award interest (pre-suit and pendente lite) in respect of Claim No. 4 and not to award similar interest in respect of the other claims. He has, however, awarded post-award interest @ 18% which is in keeping with the provisions of Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. So, on this ground also, the award cannot be faulted.
11. Accordingly, the objections raised by the petitioner are not tenable. This petition stands dismissed. No order as to costs.