{"id":157507,"date":"2011-07-18T00:00:00","date_gmt":"2011-07-17T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/state-vs-j-on-18-july-2011"},"modified":"2018-03-13T19:35:42","modified_gmt":"2018-03-13T14:05:42","slug":"state-vs-j-on-18-july-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/state-vs-j-on-18-july-2011","title":{"rendered":"State vs J on 18 July, 2011"},"content":{"rendered":"
Gujarat High Court<\/div>\n
State vs J on 18 July, 2011<\/div>\n
Author: Jayant Patel, R.M.Chhaya,<\/div>\n
  \n Gujarat High Court Case Information System \n    \n  \n    \n\n \n \n    \t      \n         \n\t    \n\t\t   Print\n\t\t\t\t          \n\n  \n\n\n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t\n\n\n \n\n\n\t \n\nFA\/44\/1989\t 9\/ 9\tJUDGMENT \n \n \n\n\t\n\n \n\nIN\nTHE HIGH COURT OF GUJARAT AT AHMEDABAD\n \n\n \n\n\n \n\nFIRST\nAPPEAL No. 44 of 1989\n \n\n \nFor\nApproval and Signature:  \n \nHONOURABLE\nMR.JUSTICE JAYANT PATEL \n\n \n\n \nHONOURABLE\nMR.JUSTICE R.M.CHHAYA\n \n \n=========================================================\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n1\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tReporters of Local Papers may be allowed to see the judgment ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n2\n\t\t\n\t\t \n\t\t\t \n\nTo be\n\t\t\treferred to the Reporter or not ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n3\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\ttheir Lordships wish to see the fair copy of the judgment ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n4\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tthis case involves a substantial question of law as to the\n\t\t\tinterpretation of the constitution of India, 1950 or any order\n\t\t\tmade thereunder ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n5\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tit is to be circulated to the civil judge ?\n\t\t\n\t\n\n \n\n \n=========================================================\n\n \n\nSTATE\nOF GUJARAT - Appellant(s)\n \n\nVersus\n \n\nJ\nC PATEL & 1 - Defendant(s)\n \n\n=========================================================\n \nAppearance\n: \nMR\nSONI, AGP for Appellant(s) : 1, \nMR PR THAKKAR for Defendant(s) :\n1, \nMR KG SUKHWANI for Defendant(s) :\n2, \n=========================================================\n\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\nCORAM\n\t\t\t: \n\t\t\t\n\t\t\n\t\t \n\t\t\t \n\nHONOURABLE\n\t\t\tMR.JUSTICE JAYANT PATEL\n\t\t\n\t\n\t \n\t\t \n\t\t \n\t\t\t \n\nand\n\t\t\n\t\n\t \n\t\t \n\t\t \n\t\t\t \n\nHONOURABLE\n\t\t\tMR.JUSTICE R.M.CHHAYA\n\t\t\n\t\n\n \n\n \n \n\n\n \n\nDate\n: 18\/07\/2011 \n\n \n\n \n \nORAL\nJUDGMENT<\/pre>\n
(Per
\n: HONOURABLE MR.JUSTICE JAYANT PATEL)<\/p>\n
The
\n\tpresent appeal arises from the judgement and decree dated 20.7.1988
\n\tpassed by the lower Court in Special Civil Suit No.167\/88, whereby
\n\tthe suit is decreed for the amount of Rs.17,70,186\/- with the
\n\tinterest at the rate of 11% per annum for the pre-arbitration period
\n\ton the amount of Rs.8,32,086\/- and with the interest at the rate of
\n\t18% per annum from 29.12.1987 with the clarification that no
\n\tinterest is allowed from 19.9.1986 to 29.12.1987 for the period of
\n\tpendente lite before the Arbitrator.\n<\/p>\n
The
\n\trelevant facts are that one Mr.J.C. Patel was appointed as
\n\tSole-Arbitrator upon the dispute arose between the parties for the
\n\twork of constructing earth work and lining of Vapi Distributory for
\n\tcertain area for Damanganga Reservoir project.  It appears that
\n\tthereafter, the award was passed by the Arbitrator on 29.12.1987.
\n\tThe application was made to pass the decree based on the award being
\n\tSpecial Civil Suit No.167\/88.  The original respondent –
\n\tappellant herein filed objection and resisted the prayer.  The lower
\n\tCourt ultimately at the conclusion of the proceedings passed the
\n\taforesaid decree.  Under these circumstances, the present appeal
\n\tbefore us.\n<\/p>\n
Heard
\n\tMr.Soni, learned AGP for the appellant and Mr.Sukhwani, learned
\n\tCounsel for the respondent. We have considered the reasons recorded
\n\tby the lower Court and we have also considered the R & P.\n<\/p>\n
Mr.Soni,
\n\tlearned AGP, during the course of hearing, mainly raised the
\n\tgrievance for maintaining the decision of the Arbitrator for
\n\tawarding of interest for the pre-reference period and also interest
\n\tafter the award and he also made grievance for awarding of high rate
\n\tof interest.\n<\/p>\n
Whereas,
\n\tMr.Sukhwani, learned Counsel for the respondent, has supported the
\n\tjudgement and decree of the lower Court.\n<\/p>\n
In
\n\tour view, the examination of the contention raised on behalf of the
\n\tappellant shows that for the pre-reference period as per the reasons
\n\trecorded by the lower Court, the interest award is at the rate of
\n\t11% per annum.  As per Clause 8 of General Condition, it was
\n\texpressly provided.  However, the lower Court reduced the said rate
\n\tof interest for the post award period from 20% to 18% per annum.
\n\tThe reasonings for such purpose are available at paragraph 19 of the
\n\tjudgement, which read as under:-\n<\/p>\n
“19.\tThe
\n\tlearned Advocate for the defendant No.1 has argued out that in file
\n\tNo.5 page 147 and relevant page 153 rate of interest is shown 20%
\n\tand he has further argued out that the claim of interest was
\n\tspecifically referred to the learned arbitrator as per the
\n\tGovernment Resolution and hence the objection of the defendant No.2
\n\thas to claiming interest pendentelite by the defendant No.2 is not
\n\ttrue and correct.  He has further argued out that the learned
\n\tArbitrator has rightly allowed the interest from 26.10.85.  He has
\n\tfurther argued out that the learned Arbitrator has ample power to
\n\taward the interest.  The learned Advocate for the defendant No.1 has
\n\tfurther argued out that in this connection the arbitrator clarified
\n\tin his award that the rate of 20% interest is just and proper.  Now
\n\tas per clause 8 of the General condition of the contract advanced
\n\tgiven by the respondent for mobilization plant and machinery
\n\tacc.beaf interest at the rate of 20% per annum. The defendant No.1
\n\talso claimed interest at 20% per annum.  On the costs of
\n\tnon-judicial items issued by them vide deft. No.2’s counter claim
\n\tNo.7.  The rate of interest claimed by the defendant No.1 is 20% per
\n\tannum.  The defendant No.1 is entitled to interest.  The learned
\n\tAdvocate for the defendant No.1 has argued out that the principles
\n\tof equity is required to be maintained and hence interest at 20% per
\n\tannum is just and proper and hence it should be allowed.  In my
\n\topinion the rate of interest at 18% per annum as just and proper.
\n\t18% interest can be adopted while working out the decree in terms of
\n\taward.  As regards the period to the commencement of the arbitration
\n\tthe learned Advocate for the deft. No.1 argued out that the rate of
\n\tinterest be awarded and there is no bar to award the pre-arbitration
\n\tinterest.  Do agree with the argument No.1 it will be just and
\n\tproper to award interest for the period from the date of applying
\n\tfor the arbitration up to the date of commencement of the
\n\tarbitration at the rate of 11% per annum, which will be the rate of
\n\tinterest a reasonable in view of the interest available in the
\n\tmarket and in view of the interest Act no interest will be payable
\n\tfrom 19.9.1986 to 29.12.1987 i.e. the date of appointment of the
\n\tarbitrator till the date of award.  The interest from 29.12.1987
\n\ttill the date o realization of the amount will be 18% per annum, as
\n\tdiscussed above.”\n<\/p>\n
We
\n\tmay, at this stage, refer to the decision of the Apex Court in the
\n\tcase of Uttar Pradesh Cooperative Federation Limited Vs. Three
\n\tCircles, reported in (2009) 10 SCC, 374,
\n\twherein the Apex Court has observed at paragraphs 27 to 30 as
\n\tunder:-\n<\/p>\n
“27.\tSo
\n\tfar as the payment of interest is concerned, the Division Bench of
\n\tthe High Court after analyzing the decisions of this Court, namely,
\n\tExecutive Engineer, (Irrigation) Balimela & Ors. vs. Abhaduta
\n\tJena & Ors.<\/a> [1988 (1) SCC 418], Secretary, Irrigation
\n\tDepartment, Government of Orissa & Ors. vs. G. C. Roy [1992 (1)
\n\tSCC 508] came to the conclusion of law which was that the Arbitrator
\n\thas power to award pendente
\n\tlite interest and where the contract was silent as to the awarding
\n\tof interest, the Arbitrator has the power to award interest for the
\n\tpre-reference period if there is a substantive law which empowers
\n\thim to do so or if there is a usage of trade for payment which has
\n\tthe force of law. In our view, the High Court was perfectly
\n\tjustified in holding that the Arbitrator has the power to award
\n\tinterest for the pre-reference period. It needs to be repeated at
\n\tthis juncture that the arbitration in question was governed not by
\n\tthe present Act of 1996 but by the provisions of Arbitration Act,
\n\t1940. However, as this power emanates from Section 3 of the Interest
\n\tAct, 1978, the High Court noted that the rate of interest cannot be
\n\tmore than `the current rate of interest’ as stipulated by the said
\n\tSection. Accordingly the High Court had reduced the rate of interest
\n\tfor pre-reference period from 18% to 15%.\n<\/p>\n
28.\tIt
\n\twas, however, argued on behalf of the appellant that the High Court
\n\twas not justified in awarding interest for pre-reference period in
\n\tview of Section 3 of the Interest Act, 1978 which was pursuant to a
\n\tspecial clause in the Contract. As in the present case there was no
\n\tsuch clause in the agreement and hence it was not within the power
\n\tof the Arbitrator to make an award with respect to interest. In our
\n\tview, this argument lacks substance.\n<\/p>\n
29.\tThe
\n\tposition of law, as found by the High Court in its impugned judgment
\n\ton consideration of various other judgments of this Court, would
\n\tclearly show that in those judgments the High Court relied on also
\n\tdid not stipulate any express agreement with respect to interest as
\n\ta precondition to the authority of the Arbitrator to award interest
\n\tfor the pre-reference period. The matter would have a different
\n\tissue altogether if there had been a specific provision prohibiting
\n\tgrant of interest which was, of course, not the case of the
\n\tappellant.\n<\/p>\n
30.In
\n\tthe case of State of Rajasthan and Anr v. Ferro
\n\tConcrete Construction Pvt. Ltd,<\/a> [2009 (8) SCALE 753], the same work
\n\twas advanced in which this Court observed:\n<\/p>\n
“But this Court has held that in
\n\tthe absence of an express bar,     the arbitrator has the
\n\tjurisdiction and authority to award     interest for all the three
\n\tperiods – pre reference, pendente lite and future (vide decisions of
\n\tConstitution Bench in Secretary, Irrigation Department, Government
\n\tof Orissa vs. G. C. Roy –     1992 (1) SCC 508, Executive Engineer,
\n\tDhenkanal Minor Irrigation Division vs. N. C. Budharaj – 2001 (2)
\n\tSCC 721 and the subsequent decision in Bhagawati Oxygen vs.
\n\tHindustan     Copper Ltd -2005 (6) SCC 462). In this case as there
\n\twas no express bar in the contract in regard to interest, the
\n\tArbitrator could award interest.”\n<\/p>\n
In
\n\tview of the above decision in law now settled by this Court, we are
\n\tunable to hold that the Arbitrator was not entitled to award
\n\tinterest on the pre-reference period because there was no clause in
\n\tthe agreement prohibiting such awarding of interest. However, the
\n\tHigh Court had reduced the rate of interest to the current rate of
\n\tinterest’ and, therefore, it is not open for us to interfere with
\n\tsuch rate of interest at this stage in this appeal. Therefore, there
\n\tis no substance in this argument, accordingly it is rejected.”\n<\/p>\n
\tIf
\n\tthe facts of the present case are considered in light of the above,
\n\tit appears that for the pre-reference period the lower Court has
\n\tawarded interest at the rate of 11% per annum, such, in our view,
\n\tcan be said as a current rate of interest prevailing then.  The
\n\tanother interest awarded for the post award period is at the rate of
\n\t18% per annum as against the interest at the rate of 20% per annum
\n\texpressly provided under the Contract Agreement.  Therefore, it was
\n\tnot a case where the contact did not provide for any express
\n\tstipulation of interest when the Arbitrator had exercised the power.
\n\t The lower Court has already exercised the discretion by reducing to
\n\t18% as against the express stipulation of interest at the rate of
\n\t20% per annum.\n<\/p>\n
\tUnder
\n\tthese circumstances, we find that the exercise of power by the lower
\n\tCourt for awarding of interest for the pre-reference period and for
\n\tthe post award period is not erroneous, which may call for
\n\tinterference for the appellate jurisdiction.\n<\/p>\n
\tNo
\n\tother contentions are raised.\n<\/p>\n
\tIn
\n\tview of the above, the appeal is meritless. Hence, dismissed.\n<\/p>\n
  (Jayant Patel, J.)<\/p>\n
  (R. M. Chhaya, J.)<\/p>\n
 vinod<\/p>\n
\t\t   \u00a0\u00a0\u00a0<\/p>\n
\t\t   Top<\/p>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court State vs J on 18 July, 2011 Author: Jayant Patel, R.M.Chhaya, Gujarat High Court Case Information System Print FA\/44\/1989 9\/ 9 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 44 of 1989 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL HONOURABLE MR.JUSTICE R.M.CHHAYA ========================================================= 1 Whether Reporters of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-157507","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nState vs J on 18 July, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/state-vs-j-on-18-july-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State vs J on 18 July, 2011 - 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