CR 127/03 - M/s Chaudhary Construction Co., Jaipur Vs. State & Anr. Judgment dt.3.3.09
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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JODHPUR.
JUDGMENT
M/s Chaudhary Construction Company, Jaipur
VERSUS
The State of Rajasthan & Anr.
S.B. CIVIL REVISION PETITION NO.127/2003
Date of judgment : 3rd March, 2009
PRESENT
HON'BLE DR. JUSTICE VINEET KOTHARI
Ms. Rekha Borana) for the petitioner.
Mr. M.S. Panwar )
Mr. Mukul Singhvi for the respondents.
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1. Heard learned counsels.
2. This revision petition is directed against the order dated
01st June, 2002 passed by the learned District Judge, Udaipur who
while allowing the application under Section 17 of the Arbitration
Act, 1940 made the arbitration award dated 26.3.1999 a rule of Court,
however, reduced the rate of interest from 18% per annum as awarded
by the Arbitrator to 9% per annum pendente lite from 25.3.1996 to
the date of payment in the impugned order.
3. The learned counsel for the petitioner contractor urged
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that the Court had no power to reduce the rate of interest from 18% to
9% per annum without assigning any reason in the impugned order.
Unless the arbitration award itself is found to be wrong so as to not to
make a rule of Court, the learned District Judge could not reduce the
rate of interest while not disturbing the amount of arbitration award
itself. She relied upon the judgment of the Hon’ble Supreme Court in
the case of B.L. Gupta Construction (P) Ltd. Vs. Bharat
Cooperative Group Housing Society Ltd. – 2003(3) Arb. LR 570
(SC) and judgment of the Hon’ble Supreme Court in the case of
Paradip Port Trust and others Vs. Unique Builders – 2001(1) Arb.
LR 505 (SC) and the judgment of coordinate Bench of this Court in
Alim & Co. Vs. State of Rajasthan – 1998 (Suppl.) Arb. LR 67.
4. As against this, Mr. Mukul Singhvi, learned counsel
appearing for the respondents relying upon the decision of the
Hon’ble Supreme Court in case of Krishna Bhagya Jala Nigam Ltd.
V. G. Harischandra Reddy and Anr. – AIR 2007 SC 817 referring to
para 11 of the said judgment submitted that the Hon’ble Supreme
Court in that case had reduced the rate of interest from 18% to 9% at
all the three stages of the arbitration namely pre-arbitration, pendent
lite and post-award period. He, therefore, submitted that since the
Bank rates have been constantly falling and the present Banks also
paid interest at the rate of 9% per annum, the impugned order of
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learned District Judge does not require to be interfered with in the
revisional jurisdiction of this Court.
5. The Hon’ble Supreme Court in B.L. Gupta Construction
Company’s case (Supra) held that the arbitrator had exercised his
jurisdiction under Section 34 of the C.P.C. by grant of pendente lite
interest at the rate of 18% per annum and the High Court could not
have interfered with the said discretionary order where no reason was
assigned for the same. The Hon’ble Supreme Court, however,
reduced the rate for pre-reference stage and pre-arbitration stage to
10% per annum payable to the party. In Paradip Port Trust’s case
where High Court modifying the award, denied the interest on the
ground that there was no claim for interest pendente lite, the Hon’ble
Supreme Court modified that part of the order of the High Court and
awarded 18% interest per annum pendente lite and future interest or
post-award interest at the rate of 12% per annum from the date of
decretal payment. Similarly this Court in Alim & Company’s case
(supra) modified the impugned order of the learned District Court and
modified the arbitration award by awarding interest at the rate of 18%
per annum and awarding the arbitrator award also made rule of Court.
6. The judgment relied upon by the learned counsel for the
respondents of course indicates that the Hon’ble Supreme Court
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reduced the rate of interest from 18% per annum to 9% per annum by
observing that “Here also we may add that we do not wish to interfere
with the Award except to say that after economic reforms in our
country the interest regime has changed and the rates have
substantially reduced and, therefore, we are of the view that the
interest awarded by the Arbitrator at 18% for the pre-arbitration
period, for the pendente lite period and further interest to be reduced
to 9%”, however, with great respects, this reduction of interest by the
Hon’ble Supreme Court in the facts of the peculiar case without
laying down it is a matter of law that the learned District Court or for
that matter the High court in revisional jurisdiction to reduce the rate
of interest as awarded by the learned Arbitrator in the arbitration
award, cannot be applied in the facts of the present case. On the other
hand the judgments relied upon by the learned counsel for the
petitioner clearly indicate that the rate of interest awarded by the
arbitration in his discretion as per Section 34 of the C.P.C. cannot be
reduced without assigning cogent reasons for that. In the present
order impugned in the revision petition before this Court, no such
reason is found by this Court and simply in the operative part of the
impugned order the same has been directed to be paid with pendent
lite interest at the rate of 9% per annum.
7. In these facts and circumstances of this case and in view
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of the judgments cited at the Bar, this Court is of the view that the
learned District Judge was not right in reducing the rate of interest
from 18% per annum to 9% per annum.
8. Consequently, this revision petition is allowed and the
impugned part of the order dated 1.6.2002 is set aside and the rate of
interest instead of 9% per annum shall be substituted by 18% per
annum as awarded by the learned Arbitrator. No costs.
[ DR. VINEET KOTHARI ], J.
item No.1
babulal/-