JUDGMENT
Subhro Kamal Mukherjee, J.
1. A dispute arose out of the contract for provisions of seven numbers of walk-in-cooler for BVY at Minnie Bay, Port Blair.
2. This eight months duration contract was awarded to the contractor on August 15, 1994.
3. The contract was scheduled to commence on September 7. 1994. The contract was scheduled for completion by May 6, 1995. However, mutually, the completion date was extended to September 23, 1995. The work was completed on September 15, 1995.
4. On September 15, 1995, the Garrison Engineer concerned certified that the works have been satisfactorily completed and taken over.
5. The final bill was paid to the contractor, subject to a reservation for escalation payment to be made separately. The payment was not released to the contractor. The contractor sought for such payment by raising disputes.
6. The Union of India resisted the claim of the contractor.
7. It was contended that immediately after coolers have been installed some major defects were detected and the contractor was directed to rectify the defects in terms of the guarantee clause of the contract.
8. Under Clause 32 of the Contract, the contractor was responsible to remove the defects in the efficient working for the whole plant and for achieving the specified inside conditions for a period of 12 months starting from the date when the installation was finally taken over after satisfactory completion of tests.
9. Certain defects were detected. The contractor rectified certain defects. The last replacement of compressor was made in August, 1996.
10. The Union of India contended that the contractor was liable, under the guarantee clause, for removal of the defects for the period of 12 months from August 1996. As the Union of India had to incur expenses for removal of defects because of inaction on the part of the contractor, the contractor was liable towards the cost or rectification of such defects.
11. On the contrary, the contractor contended that its liability ceased as on September 14, 1996.
12. The disputes between the parties were referred to the arbitration of the Chief Engineer and the Arbitrator made and published his award on July 11, 2000.
13. The Arbitrator concluded that the defect liability period or the guarantee period stipulated in the contract was for 12 months reckoning from September 15, 1995 and such period had expired on September 14. 1996.
14. Accordingly, the Arbitrator awarded Rs. 3,88,923.89 paise (Rupees Three Lakhs Eighty Eight Thousand Nine Hundred Twenty Three and Eighty Nine paise) only to the contractor against its claim.
15. The Arbitrator did, however, not accept the counter-claim of the Union of India. The Arbitrator found that the contract nowhere suggested that the period of 12 months of defect liability and guarantee period would get enhanced and start afresh from the date when the contractor removed the notified defects and re-placed the compressor.
16. The Arbitrator granted interest, past and pendent elite, at the rate of 10 per centum on the amount of award from January 1, 1998 till the date of the award and granted, further, interest at the rate of 14 per centum per annum on the amount of arbitral award from December 1, 2000 to the date of payment.
17. Being aggrieved, the Union of India filed an application under Section 34(2) of the Arbitration and Conciliation Act, 1996. The said application was registered as other Suit No. 16 of 2000 in the Court of learned District Judge at Port Blair.
18. The learned District Judge ‘allowed’ the suit in part on contest. The award was affirmed excepting the paragraphs No. 63(a) and 63(b) of the said award. Paragraphs 63(a) and 63(b), which relates to direction of payment of interest was modified as follows:
(a) Past and pendente lite interest, as simple interest at six percent, per annum is awarded on the amount of arbitral award against the contactor’s claim No. 1 from 1.1.1998 to the date of award.
(b) Future interest as simple interest at six per cent, per annum is awarded on the amount of arbitral award against contractor’s claim No. 1 from 1.12.2000 to the date of payment. No future interest is awarded on the amount worked out as past and pendente lite interest under para (a) above.
19. Being aggrieved by the order of the learned District Judge, the Union of India has preferred an appeal, which has been registered as FMA No. 2 of 2005. Similarly, the contractor has, also, preferred an appeal, which has been registered as FMA No. 1 of 2006.
20. For the sake of convenience, both the appeals were heard analogously by consent of the parties.
21. Mr. Bimal Kumar Das learned advocate appearing on behalf of the Union of India, submits that the Arbitrator as also the learned District Judge misconstrued the contract and erroneously held that the defect liability period of the contract was up to September 14, 1996. Mr. Das submits that in August, 1996 one compressor was replaced and, therefore, guarantee period continued for a period of 12 months from that date.
22. Mrs. Anjili Nag, learned advocate appearing for the contractor argued in support of her appeal that the learned District Judge acted without jurisdiction in modifying the provisions for payment of interest made by the learned Arbitrator.
23. It is well settled principles of law that the award made and published by the Arbitrator, who is the chosen judge of facts and law between the parties, cannot be set aside, unless an error is apparent on the fact of the award or it can be inferred form the award that the Arbitrator has misconducted himself or the proceedings or that he has not applied his mind to the materials on record.
24. While considering the application for setting aside an award, the Court does not sit in appeal on the award nor it is necessary to re-examine or re-assess the materials placed before the Arbitrator by the parties. The Arbitrator being the final judge of the facts and law the Court will be slow to interfere with the award.
25. Our attention was drawn to a letter dated September 21, 1995 issued by the Garrison Engineer to the contractor asking to rectify certain defects. By the said letter, for the first time, after the installation of the coolers, the contractor was asked to remove certain defects.
26. Peculiarly, in the said letter itself there was an admission that provision of seven numbers of walk-in-coolers were satisfactorily completed by the contractor on September 15. 1995 and were taken over by the Military Engineering Services.
27. The certificate dated September 15, 1995 was before the Arbitrator. The Arbitrator, therefore, rightly held that the provisions of the contract nowhere suggested that the defect liability and guarantee period would get enhanced and start afresh from the date when defects were rectified and the materials were replaced.
28. The learned District Judge in the order impugned held that the petitioner in the application under Section 34 of the Arbitration and Conciliation Act, 1996 had not taken any ground as envisaged under the said section and, further, held that the Arbitrator had not acted arbitrarily in passing the order.
29. Nevertheless, he interfered with the award in so far as it relates to the directions for payment of interest. The learned District Judge was of the opinion that the public policy of India had been involved in the awarded money in relation to the payment of interest and, therefore, in the interest of public policy of India, the said portion of award deserved to be interfered with by the Court.
30. The power to award interest by the Arbitrator is envisaged under Sub-section (7) of Section 31 of the Arbitration and Conciliation Act. 1996. The provision leaves the initial choice to the parties to make their own agreement on matters of interest. Subject to any agreement where the award is for payment of money, the Arbitrator is entitled to award interest at the rate the Arbitrator deems reasonable. Under Subsection (7)(b), unless the award otherwise directs, the arbitral award shall carry interest at the rate of 18 per centum per annum from the date of the award to the date of payment.
31. We have considered the award. We do not think that the Arbitrator in making the provisions of payment of interest in the award has either acted arbitrarily or erroneously requiring interference by the Court.
32. Therefore, the appeal filed by the contractor being FMA No. 1 of 2006 is allowed. The appeal filed by the Union of India being FMA No.2 of 2005 is dismissed. The award passed by the Arbitrator is restored.
In view of the disposal of the said appeals, the interlocutory application for stay, which has been registered as CAN No. 101 of 2005, and the interlocutory application under Section 151 of the Code of Civil Procedure, which has been registered as CAN No. 18 of 2006 become infructuous. and they are dismissed as infructuous.
We direct, the parties to bear their respective costs in these appeals.
Later:
After the Judgment is pronounced, Mr. Bimal Kumar Das, learned advocate appearing for the Union of India prays for stay of the operation of this order.
We have carefully considered his prayer.
The prayer is rejected.
Arun Kumar Bhattacharya, J.
I agree.