I
IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 47" DAY OF OCTOBER 2010
PRESENT
THE HONBLE MRJUSTICE K.L.MANJUNAffH D
AND
THE HONBLE MR. JUSTICE
MFA.NO.963O OF {AA}. % '
BETWEEN: ' D
Union of India, _ »
Represented by V
Chief Administrative 0f_fi'_cer,l;_ 1:
Bangalore. ' O' .3'. " _'""...APPELLANT
(By Sri.N.S.Séanj ay
AND: A A
1.41 ""Subbéire,.ddy'-,.. """" "
No'.'8Q¢i czfdss.
1 I1 Nagar.
Bangal0re~756(}: O43.
; GL Of'o§:1$;D.V O
.. j'jT1fiV€2:;drurn- 19.
M
3. R.Se1Varaj,
DFA/CAO/MTP.
Egmore, Chennai 08.
4. T. Ravindran,
DCE / MT P,
Chennai-04. ~ _ V¥: "
(By Sri.Somasundar Dixit 3: Sri.D.Shank--ar, :;Aa?vs"iotra-R1)'
MFA filed U/s. 37(1) of Arbitrat'iot1 and Coricii-iatio'ri"Act,
against the Order dated: 30.5.2006~paseed°in_A.SNo.1&5/2003
on the file of the VI Addif Bangalore,
(CCCH.No.11), dismissing 11178.34 of the
Arbitration and " Qgtiehaltleffiging the award
dated: 30. 12.2o0:2'iVpasaé'ti'-'bytt1ia%2:maitraia.;L.
This «hea_rd -and reserved and coming
on for pronourieeinerit~V.ot'~~;jud'geti1ent this day, B.MANOHAR
J . , deliveredthe
*V,j-fJUDGMENT
V .V Apfiellarit isiithe petitioner before the Court below, being
order dated 3091 May 2006. made in AS.
No.19/2003 passed by the VI Additional City Civil_J___udge,
Bangalore, preferred this appeal.
2. The brief facts of the Case are as' foiiowsf_ _ V d
An agreement dated 8-l2«2(3{)5::'--_lV_\AK'ras
between the appellant and the iefsponderitsl for'; of V
transportation of rails front} Section to
Turnkur-Arasikere Seetionth Vharose between
the parties and reference to the
arbitration as in the agreement.
The responvdlenytsfifggtdi and the appellant
has raised the matter was referred to the
Arbitral flribunal by the General Manager,
Vlllheddrespondents have filed their claim
stat’e.mxei1t’.i’ V”apjpellant had putforth its counter Claim
V:v.Vp:””~”before the The mbitral Tribunal after considering
–«.il’.j’th«g_Vcase of parties and holding necessary enquiry passed
M
the award. In the award, the Tribunal has awarded interest
at the rate of 18% p.a. on the withheld amount.
3. The appellant being aggrieved by the ‘
interest on the withheld amount
under Section 34 of the Arbitration Act beforethev’City°’:(iixrii”=.p
Court, Bangalore. The V1 Additlivonjal after
considering the arguments partliesixand after
framing necessary issues, was
pleased to disniiss’ is no reason to
interfere with Tribunal. The
interest at by the Tribunal is
reasonable. l V V it it
order made in A.S.No.19/2003,
the this appeal.
‘.V.S1~i.N.SV.S.aniay Gowda, learned counsel appearing for
‘[_”i:h_e{fappe}.l.ant contended that the contract entered into
/§./«
I
between the parties has clearly barred the payment of interest
on any sums payable under the contract. Clause 52
empowers the Railways to withhold the amountdueéi .
Railways in any other contract and in view. of this:claus€,’_’_the._
Tribunal ought not to have awarded’interelstfl
passed by the Arbitral Tribunal is to Court ” it
below without considering’._Clau:s’e -75:>.”l”‘aa_nd “64.5..~’of GCC
dismissed the suit and sought setitinpgsaspide the same
while allowing the
6. On the Dixit, learned
counsel appearinslor. first”respondent contended that the
dispute raisedllby in this appeal is only with
regard interelsptwpportion awarded by the Arbitral
Tribunal «on» ,t41″1~ft3:’1.-“iI”l.1(3″L11’1t withheld by the appellant payable to
resp’ondle1;ifsVp’nnder various bills and under different
coiitractsl any justification. Clause 64.5 of GCC is
‘jflnotilfapplieable to the case of the appellant, since clause 64.5
ll come to effect subsequent 1996. Further, clause 52 of
o
6
GCC is also not applicable. The said clauses clearly
enunciate that Withholding is permissible only till its”.
are cleared. In the present case, even after c1ea_rjin’g the
claims, the appellant has failed to mreturny’ ‘»
amount and thereby the appellant has
substantial amount depriving tlé-‘e’«-respo1i.den_t
the same. Hence, the Arbitral ‘E’ri_3_:_3iu-n_al..lf1as.’ri~gl1’iVtly Jétwarded
the interest. Further, c1aus’el:~%34.’5 revised GCC
is not pressed into _eservice””befo:re” the The new
grounds cannot. riaisedl;b_efore.” this :lI?Illon’ble Court and
sought for The Hon’ble Supreme
Court, in catena of «has held that awarding of
interest atthe rate of V18-%A”p.a’.: is in accordance with law.
7; V. We ‘l’2.av_e cvarefully*,.___gone through arguments addressed
bv.”the.l’lear’nged;”vco”unsel for the parties and perused the
ix”t.__jp,leadings”‘land documentary evidence led by the
– i.onipafii¢s-
éfl,
8. It is not in dispute that as per the agreement’-tti’ate.d
8~«12-1995 certain work was entrusted to the
Since, there was some dispute, the V.i*esp–ond’ents to, 2
refer the dispute to the Arbitration
Manager, Southern Railways ‘V i
Tribunal. The Tribunal after..ho1d.i1″igiineeessarya ef1’qu1i’y found
that the respondents are entitled and the
appellant the huge
amount and :t’G]Jpa3rtithewithheld amount with
interest at ‘ Thxetapzpellant being aggrieved
by the awatding of the Civil Court in
A.s.No.19/2.Q03;’t” A
9. after considering the matter held that
t”wr”there is”-.no V__ir1iiifinity in awarding the interest on withheld
Without any authority of law and even after
of the dispute, the money has been wrongly
/to
withheld by the appellant. Accordingly, dismissed the suit.
The said order has been questioned in this appeal.
10. The appellant has contended that the ybara ” ‘V
the payment of any interest on any S~um,’_”payable’~
Contract. In View of the SpECi’fi,C Cla~:15€. the» L’
agreement, the payment of intereé.’t._ _.€Without
considering the agreement the parties,
the Tribunal has gxvar;led;:’ihtelf::sf: of 1.8% p.a..
which is parties.
11. We the lnterest has been awarded
due to the «illegalof the amount by the appellant.
Elfl matter of the agreement. If the,
appellantllviilevgallygwlthholds any amount, it cannot take any
T’ ‘r”p1’otectiAo-n un’der.’.~’the agreement stating that it is not liable to
lH”‘:payVV’theV,interest. The case of the appellant is that the rails
not-A”deIivered, for which, the amount payable to the
£4
9
respondents has been withheld. However, the Tribunal found
that the rails have been actually delivered to the
Hence, withholding of such amount by the appellant”is.fiil.e§a.l _
and when it has iilegally withheld the arif1ount.~ ‘*
to have been paid on such amount.
12. The Hon’ble SupremesCourt_inj’a’ju_dg1r1’entV’_repbrted in
2005 AIR sew -1966 berléxzeeifip V%;e1,aAt;;»iwATH1 OXYGEN
LIMITED V/s HIND£_IvSTAl:\1~e–~–f.;2(:)P’§’–E_i§_ held that
awarding of interest? l§p.’a;; for pre-reference
pendente The arbitration
agreement any payment of interest.
However, _it_ ” wliithin “power of arbitrator to award
iiiltere-st’ an: three and the rate fixed on the ground
thatthe.ad~;§§n_eell’was given to 1301. by HCL at 18% and the
‘v.__A”award deservesno interference. Hence, We do not find that
‘ insppangiizirlregularity in awarding interest on the illegally
/4(~/
withheld amount. The Court below has considered the rr_1_at.t.er
in a, proper perspective and dismissed the petition.
13. We find no ground to interfere with ”
Accordingly, We dismiss the appeal.