PETITIONER:
FOOD CORPORATION OF INDIA
Vs.
RESPONDENT:
SURENDRA, DEVENDRA & MOHENDRA TRANSPORT CO.
DATE OF JUDGMENT10/12/1987
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.
CITATION:
1988 AIR 734 1988 SCR (2) 327
1988 SCC (1) 547 JT 1988 (1) 57
1988 SCALE (1)21
CITATOR INFO :
R 1990 SC1340 (14,16,17)
ACT:
Arbitration Act, 1940 Challenge to award of the
arbitration under section 30, 33-of.
HEADNOTE:
%
The respondent was appointed a transport and handling
Contractor by the appellant subject to the terms and
conditions mentioned in three successive written agreements
entered into by both the parties. After disputes arose
between the parties, an arbitrator was appointed as per the
arbitration clause to adjudicate upon the disputes. The
arbitrator made and published an award which was a speaking
one. He did not allow the appellant's claim for demurrage
and wharfage charges paid to the Railways amounting to
Rs.15,63,863.02 by reason of the alleged wrongful conduct of
the respondent but awarded only 25% of the claim. The
arbitrator also did not allow the appellant's claim for
shortage in transit but reduced the claim by 40% and allowed
only 60% of it amounting to Rs.52,971.99. The arbitrator
awarded to the respondent Rs.12,64,175.97 and pendente lite
interest at 6% per annum.
The appellant filed objections in the High Court under
sections 30 and 33 of the Arbitration Act, 1940 ('The Act')
for setting aside the award. The High Court (Single Judge)
set aside the award. The respondent filed an appeal to the
Division Bench of the High Court which allowed the same,
setting aside the judgment of the learned single judge and
upholding the award. Being aggrieved by the decision of the
High Court, the appellant appealed to This Court for relief
by special leave under Article 136 of the Constitution.
Disposing of the appeal, this Court,
^
HELD: While issuing notice on the application under
Article 136 of the Constitution, it was indicated that only
three questions would be adjudicated upon in this appeal,
viz, Rs.13,94,982.46 being the amount allowed on account of
demurrage and wharfage charges mentioned in the award,
secondly, the sum of Rs.2,35,769.46 and lastly, the question
of interest. [332G]
330
So far as the second question was concerned, counsel
for the appellant did not make any submission before the
Court. The Court also could not find any substance in this
aspect. Therefore, it was not necessary to deal with this
aspect of the matter. [332H; 333A]
So far as the amount of Rs.13,94,982.46 on account of
demurrage and wharfage was concerned, which was allowed, it
appeared that the total demurrage and wharfage charges paid
by the Corporation to the Railways in respect of the wagons
cleared by the claimant firm, respondent herein, after
obtaining such waiver as the Railways were persuaded to make
were Rs.15,63,863.21. There was no dispute about the actual
payment of the charges. The appellant's case was that it was
entitled to recover the entire amount it had to pay on
account of the demurrage and wharfage charges from the
respondent under clause 9(a) of the agreement. [333B-C]
Under clause 9(a) according to the appellant, the Agent
was liable to make good any compensation/demurrage/wharfage
as per Railway rates in force during the period of contract
and other charges or expenses that might be incurred by the
Corporation on account of delay in loading/unloading of
trucks/carts and unloading/loading of wagons unless the
delay was for reasons beyond the Agent's control. It
appeared that the appellant had periodically served notices
upon the respondent of firm calling upon it to pay demurrage
and wharfage charges with liberty prefer objections. Such
objections as the respondent-firm preferred were disposed of
by the District Manager. This procedure continued till the
end of November, 1975. Then the respondent-firm went to the
Civil Court and obtained discontinuance of all proceedings
for the recovery of demurrage and wharfage charges. The
arbitrator noted that as a result of the hearings by the
Corporation upto November, 1975, relief to the tune of
Rs.1,21,884.55 was granted to the respondent-firm and the
recovery of Rs.45,996.20 was made from the respondent-firm's
bills. The Corporation, therefore, claimed before the
arbitrator recovery of the remaining or the claim of
Rs.13,94,982.46. Counsel for the appellant drew this Court's
attention to clauses 9(a) and (b) of the agreement and
submitted that the adjudication made by the Manager was
final and there was no dispute thereafter. According to him,
no further deduction was possible from what had been granted
by the Manager for determination on account of demurrage and
wharfage charges, nor was it arbitrable because it was
final. [334B-E]
It appears on the facts as recorded by the arbitrator
in his award that there was adjudication really by the
Manager of the claims upto
331
November, 1975. Thereafter, there could be no adjudication
as a result of injunction obtained from the Court.
Therefore, it appeared that there was in fact no
adjudication of all the disputes. The remaining points were
arbitrable because of the amplitude of the arbitration
clause. It was not brought to the notice of the Court that
there was an adjudication by the Manager of the claim for
the period beyond November, 1975, as mentioned hereinbefore.
Therefore, the arbitrator was not in error in proceeding in
the manner he did. There was no other aspect of law on this
aspect of the matter to which the attention of the Court was
drawn. The submission on this aspect was, therefore,
negatived and the challenge to the award on this aspect must
fail. [337C-D; 338B]
So far as the grant of interest pendente lite in the
award was concerned, reliance was placed on various
decisions of this Court. In deference to the latest
pronouncement of this Court, which is a pronouncement of
three learned Judges, in Executive Engineer Irrigation
Galimala & Ors. v. Abaadute Jena, (J.T. 1987 4 S.C. 8), the
Court held that the grant of pendente lite interest in this
case was was not justified. Though the award in this case
was a speaking award, it was not made clear on what basis
the interest was awarded. The arbitrator was in error in
granting the interest in the manner he did . It was true
that in specific terms there was no denial on this right to
grant interest, but there was denial as to get it in
accordance with law.[338C-D; 340E-F]
In awarding the interest the arbitrator committed an
error of law. With this modification, the judgment and order
of the High Court were affirmed. [340F-G]
Wadsworth v. Smith, L.R. Vol. VI Q.B. 332; State of
Orissa and others, v. Construction India, J.T. [1987] 4 S.C.
588; Executive Engineer Irrigation Galimala & Ors. v.
Abaaduta Jena, J.T. 1987 4 S.C. 8, Firm Madan lal Roshanlal
Mahajan v. Hukumchand Mills Ltd., Indore, [1987] 1 S.C.R.
105; State of Madhya Pradesh v. M/s. Saith & Skelton (P)
Ltd., [1972] 3 S.C.R. 233; M/s. Ashok Construction Company
v. Union of India, [1971] 3 S.C.C. 66 and M/s. Alopi Parshad
JUDGMENT:
referred to.
&
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4096 of
1987.
From the Judgment and order dated 2.6.1987 of the
Calcutta High Court in Appeal NQ. 344 of 1980.
332
A.K. Sen, S.k. Gambhir and Vivek Gambhir for the
Appellant.
Dr. Shankar Ghosh and Rathin Das for the Respondent.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. Special leave granted.
The respondent was appointed a transport and handling
contractor by the appellant subject to the terms and
conditions mentioned in three successive agreements in
writing entered into by both the parties. After disputes
arose between the parties, as per the terrns of arbitration
clause an arbitrator was appointed to adjudicate upon the
disputes. Both the respondent and the appellant filed their
respective claims and counter-claims before the arbitrator.
After considering the documents and evidence filed before
the arbitrator, he made and published an award which was a
speaking one. The arbitrator did not allow the appellant’s
claim for demurrage and wharfage charges paid to Railways
amounting to Rs.15,63,863.02 by reason of the alleged
wrongful conduct of respondent but the arbitrator awarded
only 55% of the claim. The arbitrator also did not allow the
appellant’s claim for shortage in transit but reduced the
claim by 40% and allowed only 60% of it amounting to
Rs.52,971.99. By the award the arbitrator awarded to the
respondent Rs.12,64,175.97 and pendente lite interest at 6%
per annum. The appellant filed objections in the High Court
of Calcutta under sections 30 and 33 of the Arbitration Act,
1940 (hereinafter called ‘the Act’) for setting aside the
award. On 18th September, 19.80, the learned single judge of
the High Court by his judgment and order set aside the
award. There was an appeal to the Division Bench of the High
Court. On 2nd June, 1987 the Division Bench of the High
Court allowed the respondent’s appeal by its judgment and
order and set aside the judgment of the learned single judge
and upheld the award. Being aggrieved thereby the appellant
has come up before this Court by special leave under Article
136 of the Constitution. While issuing notice on the
application under Article 136 of the Constitution it was
indicated that only three questions will be adjudicated upon
in this appeal viz. Rs.13,94,982.46 which was the amount
allowed on account of demurrage and wharfage charges
mentioned in the award and secondly, the sum of
Rs.2,35,769.46 and lastly on the question of interest.
So far as the second question of the matter is
concerned Sree A.K. Sen, counsel appearing for the appellant
has not made any sub
333
mission before us. We also cannot find any substance in this
aspect. Therefore, it is not necessary for us to deal with
this aspect of the matter.
So far as the amount of Rs. 13,94,982.46 on account of
demurrage and wharfage is concerned, which was allowed, the
award dealt with the question as set out in the paper-book.
It appears that the total demurrage and wharfage charges
paid by the Corporation to the Railways, in respect of the
wagons cleared by the claimant firm, respondent herein,
after obtaining such waiver as the Railways were persuaded
to make was for Rs.15,63,863.21. The charges were alleged to
have been paid under Credit Notes which were produced before
the arbitrator. There was no dispute about the actual
payment of the charges. The appellant’s case was that it was
entitled to recover the entire amount it had to pay on
account of the demurrage and wharfage charges from the
respondent under clause 9(a) of the agreement.
Clauses 9, 9(a) and 9(b) of the agreement are as
follows:
9. The Agent shall commence to load and/or unload
all the wagons and trucks as well as all
streamers, flats, barges and boats or any other
conveyance on the day of these arrival and shall
carry out the orders and directions of the Manager
with all possible despatch and shall be
responsible for and make good all demurrage or
other waiting charges and expenses that may accrue
and all other charges that may in the opinion of
the Manager be payable because of or through any
reasonable detention or delay.”
“9(a) The Agent shall be responsible for
unloading/loading the wagons within the free
period allowed by the Railways and also for
loading/unloading for trucks/carts or any other
transport vehicles expeditiously. The Agent shall
be liable to make good any
compensation/demurrage/wharfage as per Railway
rules in force during the period of contract other
charges or expenses that may be incurred by the
Corporation on account of delay in
loading/unloading of truck/carts and
unloading/loading of Wagons unless the delay is
for reason beyond the Agents’ control. The
decision of the manager in this respect shall be
final and binding on the Agent.”
“9(b) The Agent be present himself or send his
duly
334
authorised representative to be present at all
weighments A with which the Agent is concerned
under this Agreement and in case he fails or
chooses not to do so, no claim what soever shall
lie against the Corporation in this regard.”
Under clause 9(a), according to the appellant, the
Agent was liable to make good any
compensation/demurrage/wharfage as per Railway rates in
force during the period of contract, other charges or
expenses that might be incurred by the Corporation on
account of delay in loading/unloading of trucks/carts and
unloading/loading or wagons unless the delay was for reasons
beyond the Agent’s control. It appears that the appellant
and periodically served notices upon the respondent firm
calling upon it to pay demurrage and wharfage charges with
liberty to prefer objections. Such objections as the
respondent-firm preferred were heard and disposed of by the
District Manager. This procedure continued till the end of
November, 1975. Then the respondent-firm went to the Civil
Court and obtained discontinuance of all proceedings for
recovery of demurrage and wharfage charges. The arbitrator
noted that as a result of the hearings by the Corporation
upto November, 1975 relief to the tune of Rs.1,21,884.55 was
granted to the respondent-firm and recovery of Rs.46,996.20
was made from the respondent-firm’s bills. The Corporation,
therefore, claimed before the arbitrator recovery of
remaining of the claim of Rs.13,94,982.46.
The respondent on the other hand claimed refund of the
amount already deducted from the bills on the ground that it
was not liable for any part of the demurrage and wharfage
charges. The claim of the respondent was that the demurrage
and wharfage charges accrued invariably in circumstances
beyond its control and accordingly under clause 9(a) of the
agreement it could not be made liable for such charges. The
arbitrator noted that the respondent-firm had impressive
documentary evidence in support of its case. It had produced
numerous letters in which it fully explained to the
authorities concerned the difficulties it was experiencing
in timely clearance of goods from railway wagons and sheds.
It was claimed that it had produced month-wise report of its
work accounting for nearly all cases of demurrage and
wharfage. On 9th of October, 1975 the respondent had
informed the Corporation by a letter Exhibit 128 which
inadvertently was not marked exhibit that it was resuming
work (there had been a break in his contract) on the
condition that it would not be required to clear more than
10 c.c. Or 4 box wagons, i.e. 200 m.t. approximately daily.
This is a belated and rather grudging acceptance of this
condition by the letter, Exhibit 44 dated 3rd of August,
1976.
335
The Arbitrator noted that from the letters and reports
it appeared that timely clearance was hampered, and often
made impossible by arrival of too many wagons at a time,
congestion at the sidings and at the weighbridges with
consequent detention of lorries, labour unrest and chronic
want of space in the Corporation’s godowns and by others.
The arbitrator noted that there was insistent complaint
about this want of space in the Corporation’s godown, which
led to the goods being left in railways sheds for days
together incurring unusually heavy wharfage charges. The
Corporation sometimes prepared over ambitious programmes of
work for the contractors, as if unaware. Of the existing
situation. The arbitrator noted that the appellant had
examined several witnesses from the sidings. But they did
not according to the Arbitrator, prove anything beyond the
procedure of work generally adopted at the sidings. The
arbitrator further noted about the foregoing explanations
that the very often the objection of the railway shed staff
to the claimant regarding not clearing of the wagons timely
from the railway shed because of non-space there owing to
heavy stock kept therein remaining uncleared, and further
that the claimant under the direction and order of the
respondent being given limited programme because of non-
space in the receiving depots/ godowns were causes of delay.
The arbitrator noted that it would be fair to make the
claimant firm liable for only 25% of the demurrage and
wharfage charges sought to be recovered by the Corporation,
leaving the remaining 75% to be borne by the Corporation
itself. Therefore, out of Rs.13,94,982.46 the Corporation,
according to the arbitrator, could recover only
Rs.3,48,745.61. The appellant felt aggrieved thereby and
challenges this grant of 25%. So far as respondent’s claim
for refund of Rs.46.996.20 already recovered, the arbitrator
felt that there was no ground for interference. The
arbitrator noted that after hearing the claimant firm’s
objections the deductions had been made. The claimant firm
had been granted relief in respect of Rs.1,21,884.55. The
arbitrator had not been able to ascertain precisely the
total claim of the appellant till the end of November, 1975
but he noted that the sum of Rs.46,996.20 represented not
much more than 25% of the total claim. Therefore, the
arbitrator noted that the claimant, namely, the respondent
was not entitled to any refund and that the appellant could
recover only Rs.3,48,745.61 on account of demurrage and
wharfage charges. As mentioned hereinbefore that is the main
contention in this challenge before this Court. The
appellant claimed that it should have been entitled to the
benefit of Rs.13,94,982.46 and not to 25% of the same.
Sree Sen, counsel for the appellant drew out attention
to clauses
336
9(a) and (b) as set out hereinbefore and submitted that the
respondent was only entitled to the amount as determined by
the Manager which was described as final. Sree Sen submitted
that according to clause 9(a) aforesaid the adjudication
made by the manager was final and there was no dispute
thereafter and therefore, there could be no determination
beyond 25%. He drew our attention to that part of the 13
clause 9(a) to the following effect “the decision of the
manager in this respect shall be final and binding on the
Agent.” So according to Sree Sen apart from what had been
granted by the Manager for determination on account of
demurrage and wharfage charges, no further deduction was
possible nor was it arbitrable because it was final. He drew
our attention to certain observation in Wadsworth v. Smith,
L.R. Vol. . Vl Q.B. 332. There by a written agreement the
plaintiff therein had agreed to build four houses on land of
defendant and the defendant to grant plaintiff a lease when
the houses were completed; the architects of the defendant
for the time being were to certify as to the progress of the
work, and if there should be any unnecessary delay or
unsatisfactory conduct on the part of the plaintiff with
regard to the erection of the buildings, on any matter or
thing connected therewith “the fact of such delay or
unsatisfactory conduct to be ascertained and decided in
writing by the architects, against whose decision there
shall be no appeal”, then it should be lawful for defendant
to employ other persons to execute the works, and to sell
the buildings and lease the land to other persons. On an
application to make the agreement a rule of court under
section 17 of the Common Law Procedure Act, 1854 of England,
it was held by Cockburn, C.J., Blackburn and Mellor, JJ.
that assuming the agreement to be “an agreement or
submission to arbitration” within the section, the clause
that there was to be no appeal against the decision of the
architects amounted to “words purporting that the parties
intended that it should not be made a rule of court.” The
question was raised whether the agreement was not a
submission to arbitration. Cockburn, C.J. Observed that this
clause was certainly more like a submission to arbitration’
it was on the confines of the two classes’ but on the whole
it seems to His Lordship to savour more of a mere
architect’s certificate than of a judicial proceeding.
Moreover, even if this were a submission within section 17,
the Chief Justice thought that it could not be made a rule
of court, because it was clear that the parties intended
that the matter should be left to the decision of the
architects without appeal; but to make it a rule of court
would be to submit the decision to the jurisdiction of the
Court. Blackburn, J. agreed. His Lordship observed that
where by an agreement the right of one of the parties to
have or to do a particular thing was made to depend on the
determination of a third person, that
337
was not a submission to arbitration, nor was the
determination an award; but where there was an agreement
that any dispute about a particular thin shall be enquired
into and determined by a person named, that might amount to
a submission to arbitration, and the determination though in
the form of a certificate, be an award. Hannen, J. was of
the view that this is not an agreement or submission to
arbitration; the clause in question appeared to be no more
than an extension of the ordinary clause in building
contracts, that the certificate of the architect should be
conclusive as to work done and the mode of doing it.
If we proceed on this basis then the logical conclusion
of this would be that where there is a decision by the
manager as in the instant case that would be final. Where a
dispute has been adjudicated by the manager in this aspect
there was nothing for the arbitrator to decide. It appears
to us on the facts as recorded by the arbitrator in his
award that there was adjudication really by the Manager of
the claims upto November, 1975. Thereafter there could be no
adjudication as a result of injunction obtained from the
court. Therefore, it appears to us that there was really, in
fact, no adjudication of all the disputes. The remaining
points were arbitrable because of the amplitude of the
arbitration clause. The relevant arbitration clause in this
case contained, inter alia, as follows: .
“In the event of any question or dispute arising
under this Agreement regarding the construction
thereof or any clause herein or in respect of any
act, matter or thing relating to this agreement
the same shall be referred to the Sole Arbitration
of any person appointed by the Managing Director
of the Food Corporation of India …………..
The Award of such Arbitrator shall be final and
binding on the parties to this Agreement …..”
The point there having been decision before the
Manager, that disallowance of the claim beyond 25% was
beyond the jurisdiction of arbitration was not agitated
before the High Court. Prabir Kumar Majumdar, J. speaking
for the Division Bench of the High Court of Calcutta
observed at page 24 of the paper book as follows:
“It has not been brought to our notice whether
there has been any such decision by the Manager.
Further, taking all the relevant materials into
consideration, the learned arbitrator has made a
finding in respect of the appellant’s
338
claim and respondent’s counter-claim in respect of
demur rage and wharfage charges.”
It has not been brought to our notice that there has
been any such decision by the Manager beyond the claim for
the period of November, 1975 as mentioned hereinbefore.
Therefore, in our opinion, the arbitrator was not in error
in proceeding in the manner as he did. There was no other
aspect of law on this aspect of the matter to which our
attention was drawn. The submission on this aspect is,
therefore, negatived. The challenge to the award on this
aspect must, therefore, fail.
So far as the grant of interest pendente lite in the
award is concerned, reliance was placed on various decisions
of this Court. Reliance was placed on State of Orissa and
others v. Construction India, (J.T. 1987 4 S.C. 588) where
the award of interest from the commencement of the
proceedings before the Arbitrator to the date of the award
was disallowed in consonance with the views expressed by
this Court in the case of Executive Engineer Irrigation
Galimala & Ors. v. Abaaduta Jena,) J.T. 1987 4 S.C. 8).
Our attention was drawn by Dr. Ghosh counsel for the
respondent firstly, to the decision in the case of Firm
Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore,
[1967] 1 S.C.R. 105. There the respondent had filed a suit
against the appellant claiming two sums as losses in respect
of two items and interest on the same. The disputes were
referred to an arbitrator, before whom the respondent did
not press for interest prior to the institution of the suit,
but pressed its claim for the two sums and interests from
the date of the institution of the suit till recovery.
Bachawat, J. speaking for the three learned Judges of this
Court held that though in terms, section 34 of the Code of
Civil Procedure did not apply to arbitrations, it was an
implied term of the reference in the suit that the
arbitrator would decide the dispute according to law and
would give such relief with regard to pendente lite interest
as the Court could give if it decided the dispute. This
power of the arbitrator, it was held, was not fettered
either by the arbitration agreement or by the Arbitration
Act, 1940.
Our attention was also drawn to the decision in the
case of State of Madhya Pradesh v. M/s. Saith & Skelton (P)
Ltd., [1972] 3 S.C.R. 233. There disputes had arisen between
the appellant and the respondent with reference to the
performance of a contract which provided for arbitration.
Steps were taken to appoint arbitrators and an umpire.
339
The appellant filed a petition in the District Judge’s
Court, having jurisdiction over the matter for Setting aside
the nominations. When the matter came up to this Court in
appeal, this Court appointed a sole arbitrator with consent
of the parties. Thereafter in the presence of counsel for
both the parties, this Court gave directions in the appeal
that the arbitration records be sent to the sole arbitrator
and later extended the time for making the award and gave
directions regarding the venue. The arbitrator gave his
award, directing the payment of a certain sum by the
appellant to the respondent with simple interest at 9% from
the date anterior to the reference and filed the award in
the Court the next day. One of the question that arose
before this Court was whether the arbitrator had any
jurisdiction to award the interest from a date anterior to
the date of award or reference. This Court held that the
claim for the payment of interest had been referred to the
arbitrator. The contract did not provide that no interest
was payable on the amount that might be found due.
Therefore, the respondent was entitled under section 61(2)
of the Sale of Goods Act, 1930, to claim interest from the
date on which the price became due and payable. The
arbitrator had found that the price had become payable from
a date anterior to the date of the award. Therefore, the
award of interest from the anterior date was justified. The
Court further held that the award of interest at 9% was also
not exorbitant because the parties themselves claimed
interest at 12%.
Our attention was also drawn to M/s. Ashok Construction
Company v. Union of lndia, [1971] 3 S.C.C. 66 where a bench
of three learned Judges at page 68 of the report held that
the terms of the arbitration agreement did not exclude the
jurisdiction of the arbitrator to entertain a claim for
interest, on the amount due under the contract and on this
ground this Court upheld the grant of interest.
Our attention was drawn by Dr. Ghosh to the
observations in the case of M/s. Alopi Parshad & Sons, Ltd.
v. The Union of India, [1960] 2 S.C.R. 793. This Court
reiterated the well-settled principle that an award was
liable to be set aside because of an error apparent on the
face of the award. An arbitration award may be set aside on
the ground of an error on the face of it when the reasons
given for the C, decision, either in the award or in any
document incorporated with it, are based upon any legal
proposition which is erroneous.
In a recent decision, Chinnappa Reddy, J. speaking for
a bench of three learned Judges in Executive Engineer
Irrigation Galimala’s case (supra) at paragraph 15 of the
judgment considered the ques- ll
340
tion of award of interest by an arbitrator. The learned
Judge noted the decisions in Firm Madanlal Roshanlal Mahajan
v. Hukamchand Hills Ltd. (supra) Ashok Construction Company
v. Union of India, (supra. and the State of Madhya Pradesh
v. M/s. Saith & Skelton Private Limited, (supra) and
expressed the view that these were cases in which the
references to arbitration were made by the court or in court
proceedings of the disputes in the suit. It was held that
the arbitrator must be assumed in these cases to have the
same power to award interest as the court. Therefore, the
grant of pendente lite interest on the analogy of section 34
of the Civil Procedure Code was permissible. In regard to
interest prior to the suit, it was held in most of these
cases that since the Interest Act, 1839 was not applicable,
interest could be awarded if there was an agreement to pay
interest or a usage of trade having the force of law. This
Court held in the last mentioned case that they are not
entitled to claim interest for the period prior to the
commencement of the arbitration proceedings for the reason
that the Interest Act did not apply to their case and there
was no agreement to pay interest or any usage of trade. It
was further held that the claimants were not entitled to
claim pendente lite interest as the arbitrator was not a
court nor were the references to arbitration made in suits.
In deference to the latest pronouncement of this Court
which is a pronouncement of three learned Judges, we must
hold that the grant of pendente lite interest in this case
was not justified. Though the award in this case is a
speaking award, it was not made clear on what basis the
interest was awarded. We are of the opinion that the
arbitrator was in error in granting the interest in the
manner he did. It is true that in specific term there was no
denial of this right to grant interest but there was denial
as to get it in accordance with law.
In the aforesaid view of the matter so far as the
interest of the award is concerned we are of the opinion
that in awarding the interest the arbitrator committed an
error of law. With this modification the judgment and order
of the High Court are confirmed. The appeal is disposed of
in these terms without any order as to costs.
S.L. Appeal disposed of.
341