{"id":83163,"date":"1990-04-24T00:00:00","date_gmt":"1990-04-23T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/hind-builders-etc-vs-union-of-india-and-vice-versa-on-24-april-1990"},"modified":"2015-03-10T16:10:34","modified_gmt":"2015-03-10T10:40:34","slug":"hind-builders-etc-vs-union-of-india-and-vice-versa-on-24-april-1990","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/hind-builders-etc-vs-union-of-india-and-vice-versa-on-24-april-1990","title":{"rendered":"Hind Builders Etc vs Union Of India And Vice-Versa on 24 April, 1990"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Hind Builders Etc vs Union Of India And Vice-Versa on 24 April, 1990<\/div>\n
Equivalent citations: 1990 AIR 1340, \t\t 1990 SCR (2) 638<\/div>\n
Author: S Rangnathan<\/div>\n
Bench: Rangnathan, S.<\/div>\n
           PETITIONER:\nHIND BUILDERS ETC.\n\n\tVs.\n\nRESPONDENT:\nUNION OF INDIA AND VICE-VERSA\n\nDATE OF JUDGMENT24\/04\/1990\n\nBENCH:\nRANGNATHAN, S.\nBENCH:\nRANGNATHAN, S.\nAHMADI, A.M. (J)\n\nCITATION:\n 1990 AIR 1340\t\t  1990 SCR  (2) 638\n 1990 SCC  (3) 338\t  JT 1990 (2)\t186\n 1990 SCALE  (1)788\n\n\nACT:\n    Arbitration:   Award--Error\t  on   the   face   of\t the\naward--Clause in the contract open to two equally  plausible\ninterpretations--Legitimate for Arbitrators to accept one or\nthe  other of the available interpretations and even if\t the\ncourt may think that the other view is preferable, the court\nwill not and should not interfere.\n    Award--Error on the face of award  Annexure setting\t out\nthe award as against various items of claim--Mere fact\tthat\nstatement  of claim refers to various items in the  schedule\nto the contract does not result in the contract itself being\nincorporated  in  the award--No error can be  found  in\t the\naward.\n    Pendente  Lite Interest: Power of Arbitrator--Not  enti-\ntled  to  grant pendente lite interest unless  reference  is\nmade in the course of a suit--Same powers to grant  interest\npendente  lite as the courts when matter is referred by\t the\nCourt.\n\n\n\nHEADNOTE:\n    Certain  disputes  having arisen between  the  Union  of\nIndia and the Contractors in respect of the Contract awarded\nto  the\t letter\t for the execution of  certain\tcivil  works\npertaining  to\tthe Metro Railway Project in  Calcutta,\t the\nsame were referred for decision to two Arbitrators appointed\nby  the High Court of Calcutta. The Contractors filed  their\nitemised  claim\t before the Arbitrators for a total  sum  of\nRs.2,05,67,554.\t  The\tArbitrators   awarded\ta   sum\t  of\nRs.57.47,198 to the contractors in full and final settlement\nof  all their claims which included a sum of Rs.6.76,540  as\ninterest  vide item (1). They directed that the award  shall\nbe complied with within sixty days of its publication  fail-\ning  which  simple  interest @ 11 percent  per\tannum  shall\naccrue\tthereon (excluding interest amount  of\tRs.6.76,540)\ntill the date of payment or decree upon award which ever  is\nearlier. On an application being made to the High Court\t for\nmaking\tthe  Award a rule of the Court. the  learned  single\njudge  confirmed  the award except that\t the  principal\t sum\nawarded\t was reduced by Rs.5,20,000 with the direction\tthat\nthe  amount so awarded will carry interest @ 11%  per  annum\nfrom the date of reference till the date of the award.\n639\n    The\t Union of India preferred an appeal to the  Division\nBench, which  reduced the amount awarded under item (c)(xii)\nfrom Rs.23.96.000 to Rs.2.39,000. Thus the principal  amount\nto  be\tawarded\t to  the  contractors  was  finally  put  at\nRs.30.70,798 and this amount was directed to carry  interest\n@ 11% per annum from the date of the reference till the date\nof the award.\n    Aggrieved  by the order of the Division  Bench  reducing\nthe amount awarded under item (c)(xii) from Rs.23,96,000  to\n239,600\t the contractors preferred an appeal to this  Court.\nThe  Union  of Indian on the other hand preferred  a  cross-\nappeal\tpraying (i) that interest should not be\t payable  on\nthe amount of Rs.30,70,798 fixed by the High Court but\tonly\non Rs.23,94,258 left after deducting therefrom the amount of\nRs.6,76,540  awarded by the Arbitrators in respect  of\titem\nNo.  (L)  and  (ii) that. though the  arbitrators  had\talso\nawarded\t interest  on  the principal sum till  the  date  of\npayment\t or  decree on award in case payment  was  not\tdone\nwithin\tsixty  days  of the publication of  the\t award.\t the\ncontractors  should  be held entitled to interest  upto\t the\ndate  of the award only and not beyond it because  both\t the\nlearned single judge and the Division Bench have held so and\nthe contractors have preferred no appeal therefrom.\n    Taking up the contractor's appeal first, this Court came\nto  the conclusion that the Division Bench had exceeded\t its\njurisdiction in interfering with this part of the award\t and\nrestored  the amount awarded by the arbitrators\t under\titem\n(c)(xii).\n    Dealing with the appeal of the Union of India this Court\nruled  that there was really no dispute left about Union  of\nIndia's\t first contention as to what was the correct  amount\non  which interest was payable to the contractors after\t its\nfindings in the contractor's appeal and placed the figure at\nRs.45,50,658.\n    Dealing  with the second contention as to what  was\t the\nperiod with reference to which interest would be payable  to\nthe contractors on the above amount it was noticed that\t the\narbitrators  had  allowed  interest from  5.10.82  (date  of\ntermination  of contract) to 26.3.84 (date of  award)  under\nitem (L) and had also allowed interest from the date of\t the\naward till the date of payment or decree whichever is earli-\ner.The learned single judge had deleted the interest for the\nperiod\t5.10.82 to 6.5.83 (date of reference) but held\tthat\nthe arbitrators had jurisdiction to award interest from\t the\ndate of the reference till the date of award and also  post-\naward interest. As the objection of the Union of India\n640\nbefore\tthe  Division Bench in the LPA on  the\tquestion  of\ninterest was only that the arbitrators had erred in awarding\ninterest  from 6.5.1983 to 26.3.1984 the High Court had\t not\ndecided\t that the contractors were not entitled to  interest\nbeyond\tthe date of award and therefore this  contention  of\nthe Union of India failed and was rejected. The Court.\n    HELD:  The\tgrant  of pendente lite\t interest  would  be\njustified only when reference to arbitration is made in\t the\ncourse\tof a suit. The principle indicated is that  since  a\ncourt has. under S. 34 of\npower to grant pendente lite interest in a suit. an arbitra-\ntor to Whom a reference to arbitration is made in the course\nof  the\t suit would be clothed with all the  powers  of\t the\ncourt including one to grant such interest. Generally speak-\ning.  it would only seem reasonable that the power to  grant\ninterest pendente lite should be treated as ancillary to the\naward of damages or compensation which. but for the delay in\nthe litigation (Whether in court or by way of  arbitration).\nthe  claimant  should have received much  earlier.  However.\nthough pendente\ninterest  has been made available in court proceedings.\t its\nextension  to arbitration law appears to have acquired\tsome\ntechnical  limitations resulting in denial of pendente\tlite\ninterest  in most arbitration cases. Pendent  lite  interest\ncannot\tstill be awarded by an Arbitrator appointed  by\t the\nparties under a private agreement for which there may be  no\njustification  in  equity.  Anomalies  have  arisen  because\nformerly  an Arbitrator could not be treated as a  court  to\nwhich  the code of civil procedure applied and\tbecause\t now\nthe Interest act, 1978, while including arbitration proceed-\nings within its ambit, has, apart from a reference to S.  34\nomitted to provide specifically for pendente lite  interest.\nThis has been clearly brought out by Chinnappa Reddy, J., in\nAbhaduta Jena which outline the principle the learned  judge\nhad  in mind for permitting pendente lite interest by  arbi-\ntrator. Abhaduta Jena has been followed in later cases\talso\nand  its scope has been recently explained in Sharma's\tCase\n(1988-4 SCC 353), and the Gujarat Water Supply case  (1989-1\nSCC  532)  where pendente lite interest was  denied.  [655H;\n656A-F]\n    Gujarat Water Supply & Sewage Board v. Unique  Erectors,<\/a>\n[1989]\t1 S.C.C. 532; Firm Madan Lal Roshan Lal\t Mahajan  v.\nHukumchand  Mills Ltd.,<\/a> lndore, [1967] 1 S.C.R.\t 105;  Allen\nBerry & Co. Pvt. Ltd v. Union of India,<\/a> [1971] 3 S.C.R. 287;\nN. Chellappan v. Secretary, Kerala State Electricity Board &\nAnr.,<\/a>  [1975]  1 S.C.C. 289; Hindustan Tea Co.\tv.K.  Shashi\nKant  Co. & Anr., [1986] Suppl. S.C.C. 506; Hindustan  Steel\nWorks  Construction  Ltd.  v. C. Rajasekhar  Rao,<\/a>  [1987]  4\nS.C.C.\t93; Sudarsan Trading Co. v. Government off Kerala  &\nAnr.. [1989] 2 S.C.C. 38: M\/s. Alppi Prashad & Sons, Ltd. v.\n641\nUnion  of India, [1960] 2 S.C.R. 793; Bhagat Trading Co.  v.\nUnion of India, AIR 1984 Delhi 358; Union of India v. Bakshi\nRam,<\/a>  [1957] LIX P.L.R. 572; Executive Engineer v.  Abhaduta\nJena,<\/a> [1988] 1 S.C.C. 418; Nachiappa v. Subramaniam,  [1960]\n2 S.C.R. 290; Satinder v. Amrao,<\/a> [1961] 3 S.C.R. 676;  Union\nv. Bungo Steel Furniture P. Ltd.,<\/a> [1967] 1 S.C.R. 324; Ashok\nConstruction Co. Ltd. v. Union, [1971] 3 S.C.C. 66; State v.\nSaith & Skelton P. Ltd.,<\/a> [1972] 3 S.C.R. 233; Food  Corpora-\ntion of India v. Surendra, Devendra & Mohendra Tansport Co.,\n[1988] 1 S.C.C. 547 and State of Rajasthan v. Sharma &\tCo.,<\/a>\n[1988] 4 S.C.C. 353, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  1280  &
\n1281 of 1988.\n<\/p>\n
    From  the  Judgment\t and Order dated  21.4.1987  of\t the
\nCalcutta High Court in Appeal from Original Order No. 128 of
\n1985, Award Case No. 151 of 1987.\n<\/p>\n
    A.K. Sen, Dr. Shankar Ghosh, Ajay K. Jain, Praveen Kumar
\nand Pramod Dayal for the Appellant.\n<\/p>\n
M.K. Banerjee and G.S. Chatterjee for the Respondent.
\nThe Judgment of the Court was delivered by
\n    RANGANATHAN,  J.  These are cross appeals by  M\/s.\tHind
\nBuilders (hereinafter referred to as ‘the contractors’)\t and
\nthe  Union of India. from an order of Division Bench of\t the
\nCalcutta High Court in an arbitration matter.
\n    The\t contractors  had been awarded a  contract  for\t the
\nexecution  of  certain civil works in  connection  with\t the
\nMetro  Railway Project in Calcutta. Certain  disputes  arose
\nbetween\t the Union and the contractors. These disputes\twere
\nreferred  for decision to two arbitrators appointed  by\t the
\nHigh  Court  of Calcutta. The arbitrators entered  upon\t the
\nreference  on 27th June. 1983. The contractors had  filed  a
\nclaim before the arbitrators for a sum of Rs.2,05,67,554. On
\n26.3.1984  the arbitrators awarded a sum of Rs.57,47,198  to
\nthe contractors.\n<\/p>\n
    The\t claim of the contractors filed before the  arbitra-
\ntors  was an itemised claim in respect of various  items  of
\nworks  executed by them. The body of the award made  by\t the
\narbitrators reads as follows:\n<\/p>\n
     “We …..\tmake and publish our Award, as below:\n<\/p>\n
642<\/span><\/p>\n
      (i) That the Respondent  ……….  shall pay   …..
\nthe    Contractors    a\t  sum\tof    Rs.57,47,198     …..
\nonly  in full and final settlement of all their\t claims\t and
\ndues under the above mentioned contract agreement. In  addi-
\ntion,  the  three  Bank Guarantees   ……….\t  issued  by
\nVijaya\tBank,  Cuttack,\t on behalf of  the  contractors,  in
\nfavour\tof Metro Railway, Cuttack, shall be released by\t the
\nRespondent  Railway,  as detailed in the  Annexure  to\tthis
\nAward.\n<\/p>\n
XXX\t\t\t\t\t\t\t XXX\nXXX\n<\/pre>\n
The Award shall be complied with within 60 (Sixty) days from
\nthe date of publication of this Award, failing which  simple
\ninterest @ 11 per cent per annum on the amount of the  Award
\n(excluding  interest  vide  item (1) of\t the  Annexure\ti.e.
\nRs.6,76,540) shall accrue till the date of payment or decree
\nupon Award whichever is earlier.”\n<\/p>\n
In the annexure to the award, the arbitrators tabulated\t the
\nvarious\t items of the claim before them, the amount  claimed
\nagainst each item and the amount awarded against each  item.
\nUnder item (1) in the annexure, the arbitrators had  awarded
\nan  interest  of Rs.6,76,540 and that is why  the  direction
\nregarding  interest by the arbitrators excluded this  amount
\nfrom  the  principal amount which was to bear  interest.  As
\nstated earlier, the total amount awarded was Rs.57,47,198 in
\nrespect\t of  items (a) to (q) of the award  as\tagainst\t the
\nclaim of Rs.2,05,67,554 made by the contractors.
\n    On\tan application being made to the High Court of\tCal-
\ncutta  on the Original Side for making the award a  rule  of
\ncourt, the learned single Judge sitting on the Original Side
\nconfirmed  the\taward except to the extent  of\tRs.5,20,000.
\nThis  is  no longer in issue. The  learned  Judge.  however,
\nconcluded his judgment with the following words:
\n“The principal sum awarded stands reduced by Rs.5,20,000  as
\nmentioned above. The respondent will be entitled to interest
\nat the rate of 11 per cent per annum from the date of refer-
\nence till the date of the award.”\n<\/p>\n
    The Union of India preferred an appeal from the order of
\nthe  learned  single Judge. The Division Bench\twas  of\t the
\nopinion that the arbitrators were not justified in  awarding
\na sum of Rs.23,96,000 to the contractors (as against a claim
\nof  Rs.42,65,957 made by them) in respect of  item  (c)(xii)
\nviz.  “cost  towards consolidation of earth by\tramming\t and
\nrolling” and that they could have awarded under the
\n643<\/span>
\ncontract only a sum of Rs.2,39,600 in respect of this  item.
\nThe  amount  awarded  to the contractors  was  thus  further
\nreduced\t by  the  Division Bench by a  sum  of\tRs.21,56,400
\n(Rs.23,96,000–Rs.2.39,600).  The Bench then  observed\tthat
\nthe principal sum to be awarded to the contractors would now
\nstand  at  Rs.30,70,798\t and directed  that  the  respondent
\ncontractor should be entitled to interest at the rate of  11
\nper  cent per annum on the said amount from the date of\t the
\nreference till the date of the award.\n<\/p>\n
    The\t contractors  have appealed from the  order  of\t the
\nDivision  Bench\t being\taggrieved by the  reduction  of\t the
\namount\tawarded\t under\titem (c)(xii)  to  Rs.2,39,600\tfrom
\nRs.23,96,000.  The  Union of India has preferred  an  appeal
\ncontending  principally that, since the principal amount  on
\nwhich  the arbitrator awarded interest was not\tRs.57,47,198
\nbut only Rs.50,70,658 (i.e. Rs.57,47,198–Rs.6,76,540),\t the
\ncontractors  would be entitled to interest, after the  judg-
\nment  of the Division Bench, not on Rs.30,70,798 as held  by
\nthe Division Bench but only on Rs.23,94,258. In addition, at
\nthe tune of the hearing before us, counsel for the Union  of
\nIndia raised two further points:\n<\/p>\n
       (1) that the Division Bench erred in awarding  inter-
\nest  to the contractors from the date of the reference\ttill
\nthe date of the award.\n<\/p>\n
       (2)  That  though the arbitrators  had  also  awarded
\ninterest on the principal sum till the date of payment,\t the
\ncontractors  should  now be held entitled to  interest\tonly
\nupto the date of the award because the learned single  Judge
\nand the Division Bench have held so and the contractors have
\npreferred no appeal therefrom.\n<\/p>\n
    Taking  up\tthe  contractor’s appeal  first,  the  point
\nraised\tfalls within a very narrow compass and turns on\t the
\ninterpretation\tof  item  No. -.09 of the  annexure  to\t the
\ncontract  containing the schedule of rates. This item  reads
\nas follows.<\/p>\n
\nItem Brief description\t       Approx-\tUnit of\t Rate of\nNo.  of work\t\t       imate\tpayment\t payment in\n\t\t\t       Qty.\t\t \"words\" &\n\t\t\t\t\t\t \"figures\"\n\t\t\t\t\t\t    Rs. P.\n1\t  2\t\t\t  3\t    4\t      5\n644<\/span>\n4.09 (a)Earthwork in open excava  235000    10\t    Rs.180\n      tion for forming garbage\t  cubic\t    cubic  (Rupees\n      tanks in all kinds and\t  metres    metres  one\n      conditions of soils upto\t\t\t    hundred\n      depth varying from 0 to 3\t\t\t    eighty\n      3 metres from the existing\t\t    only)\n      ground level and disposing\n      of the spoils so as to\n      raise land required for\n      piling work, to fill up the\n      existing low lying areas\n      and ponds, to form embank-\n      ments for roads, etc of the\n      Car Depot complex includ-\n      ing spreading in layers,\n      breaking clods, levelling,\n      dressing, all lifts\/descents\n      and all leads etc. complete\n      Note:\n      No  extra\t payments will be\n      made  if wet excavation is\n      met  with or for baling\/\n      pumping out of water of all\n      sorts including rain water.\n<\/pre>\n
 (b) Extra over item (a) above,\t  135000  10\t  Rs.20
\n     for consolidation of the\t  Cubic\t  Cubic\t  (Rupees
\n     filled up areas or some of\t  metres  metres  Twenty
\n     the top layers of the filled\t\t  only).\n<\/p>\n
     up areas or road embank-\n<\/p>\n
     ment portions by watering
\n     and ramming\/rolling as
\n     directed.\n<\/p>\n
In  respect of these items the statement of claim  filed  on
\nbehalf of the contractor was in the following terms:\n<\/p>\n
(b)  Earthwork in excavation measured but not paid in  full:
\nThat under agreement item No. 4.09 (a) the claimants as\t per
\ninstructions, specifications and agreement excavated
\n645<\/span>
\nearthwork  in open excavation for forming garbage  tanks  in
\nall kinds of soil for a quantity of 2, 15,000 Cum and there-
\nafter  the  contract  was rescinded  against  which  reduced
\nquantity  has been measured provisionally upto 17th CC\tbill
\nfor  2,09,523  Cum measured on 24.5.82 and as per  the\tsaid
\nmeasurements the claimants are yet to be paid for a quantity
\nof  5,477 Cum over and above the payments already made\tupto
\n17th CC. The claimants claim payment for 5,477 Cum of  exca-
\nvation @ Rs. 18 per each Cum. amounting to Rs.98,586.00.\n<\/p>\n
\t\t\t     CLAIM AMOUNT… Rs. 98,586.00\n<\/p>\n
(c)(xii) Cost towards consolidation of earth by ramming\t and
\nrolling:\n<\/p>\n
That  as  per agreement item No. 4.09(b) the  claimants\t are
\nrequired  to fill up the low lying areas etc., as  specified
\nunder  General Conditions of the Contract at para 3.05\twith
\nthe excavated spoils obtained out of earthwork in excavation
\nunder agreement item No. 4.09(a). The payment for  earthwork
\nin  open excavation for work executed under  agreement\titem
\nNo.  4.09(a) is to be made on sectional measurements  calcu-
\nlated  by level sections. The excavated earth obtained\tfrom
\ngarbage\t excavation,  a\t quantity of 2, 15,000\tCum  as\t per
\nprovisions  made in agreement item No. 4.09(b) was  consoli-
\ndated  in different areas as per instructions  and  approved
\nplan.  The  claimants  claim payment for  this\tquantity  of
\nconsolidation  at Rs.20 per Cum i.e. Rs.2 extra over Rs.  18
\nper  Cum as specified in agreement item No. 4.09(a)  &\t(b),
\namounting to Rs.43,00,000.00 against which payment has\tbeen
\nmade  in  CC  bills  for  reduced  quantity  and  amount  of
\nRs.34,043.00.  The  claimants\tclaim\tpayment\t  for\t the
\nbalance\t amount\t of Rs.42,65,957.00 not paid for.\n<\/p>\n
\t\t\t     CLAIM AMOUNT Rs.42,65,957.00
\nIn other words, the contractors claimed payment at the\trate
\nof  Rs.18 per cubic metre in respect of the excavation\twork
\ndone by them under item No. 409(a). Again, in respect of the
\nsame  quantity.\t of 2,15,000 cubic metres,  the\t contractors
\nmade a claim at Rs.20 per cubic metre as the amount  payable
\nto them in respect of the consolidation of
\n646<\/span>
\nexcavated  earth by ramming and rolling. The Division  Bench
\nwas of the view that under item No. 4.09(b), the contractors
\nwere  entitled to an additional payment of Rs.2 only,  since
\nthe  contractors had already been paid at the rate of  Rs.18
\nper  cubic metre in respect of the excavation done by  them.
\nThe extra charges for ramming and rolling were payable\tonly
\nat  the\t rate of Rs.2 per cubic metre instead of  Rs.20\t per
\ncubic metre. The Division Bench accordingly scaled down\t the
\namount awarded by the arbitrator in this regard to 1\/10th of
\nthe amount awarded by him.\n<\/p>\n
    It\tis submitted on behalf of the contractors  that\t the
\nrate payable for the work under item 4.09(b) of the contract
\nwas not at all in dispute between the parties at any  stage.
\nThe  Union  had not raised any plea in this  regard  in\t its
\nreply  to the contractors’ claim, in the objections  to\t the
\naward filed in the High Court or in the arguments before the
\nlearned Single Judge. Clearly, the Division Bench  travelled
\nbeyond\tthe limits permissible for the interference with  an
\naward  by a court of law in reducing the amount\t awarded  on
\nthis  account. It is pointed out that the award itself is  a
\nnon-speaking award. The award does not refer to the terms of
\nthe  contract or incorporate the details of the claims\tmade
\nby  the contractors. Though it is true that the\t arbitrators
\nawarded\t a sum of Rs.23,96,000 against item  (c)(xii),\tthey
\nhave  not given reasons therefore. The award  neither  shows
\nthat the amount has been worked out at the rate of Rs.20 per
\ncubic  metre  nor does it show the quantity  in\t respect  of
\nwhich the amount has been worked out. There is no  reference
\nto the terms of the contract or to item No. 4.09, clause (a)
\nor  (b). No reasons have been given by the  arbitrators\t for
\ndetermining that a sum of Rs.23,96,000 has to be paid to the
\ncontractors  under item (c)(xii). It is therefore  submitted
\nthat there was no error apparent on the face of the  record.
\nLearned counsel vehemently contended that it is now  settled
\nlaw  that an award cannot be said to suffer from a  manifest
\nerror  unless the error appears on the face of the award  or
\nof  some  document incorporated in the award.  Reference  is
\nmade to the decisions of this Court in the following  cases:
\nFirm  Madanlal Roshanlal Mahajan v. Hukumchand\tMills  Ltd.,
\nIndore,<\/a>\t [1967]\t 1 SCR 105; Allen Berry & Co. Pvt.  Ltd.  v.
\nUnion  of<\/a>lndia, [1971] 3 SCR287;N. Chellappan v.  Secretary,
\nKerala\tState  Electricity Board & Anr.,<\/a> [1975] 1  SCC\t289;
\nHindustan  Tea\tCo.  v. K. Shashi Kant Co.  &  Ant.,<\/a>  [1986]
\nSuppl. SCC 506; Hindustan Steel Works Construction Ltd. v.C.
\nRajasekhar Rao, [1987] 4 SCC 93 and Sudarsan Trading Co.  v.
\nGovernment  of Kerala & Anr.,<\/a> [1989] 2 SCC 38. According  to
\nthe contractors, what the Division Bench has done is to give
\nits  own  interpretation to item Nos. 4.09(a) & (b)  of\t the
\ncontract, to read an erroneous interpretation
\n647<\/span>
\nof the said item into the award made by the arbitrators\t and
\nto substitute its opinion in the place of that given by\t the
\narbitrators.  Thus, it is submitted, runs quite contrary  to
\nthe principles enunciated in the above decisions and should,
\ntherefore, be set aside.\n<\/p>\n
    On the other hand, Shri Milon Banerjee, learned  counsel
\nfor the Union of India submitted that the award is really  a
\nspeaking  award\t in  so far as it does\tspecify\t the  amount
\ngranted in respect of each item of claim. He submitted\tthat
\nthe  present case falls within the principle  enunciated  in
\nM\/s  Alopi Prashad & Sons, Ltd. v. Union of India,<\/a> [1960]  2
\nS.C.R. 793, which has been taken note of in the case of\t M\/S
\nSudarsan Trading Co. v. Government of Kerala & Anr.,<\/a>  [1989]
\n2  SCC 38 at p. 54 that an award which overlooks or  ignores
\nthe  terms of the contract is bad. He also made a  reference
\nto  the decision of the Delhi High Court in  Bhagat  Trading
\nCo.  v. Union, AIR 1984 Delhi 358 in this context.  He\talso
\nreferred to a decision of the Punjab High Court in Union  of
\nIndia  v.  Bakshi Ram,<\/a> [1957] LIX P.L.R. 572,  holding\tthat
\n“when  there  are pleadings in an arbitration and  they\t are
\nspecifically  referred to in the award so that it cannot  be
\nunderstood  without reference to them, then those  pleadings
\nare  incorporated in the award and they must be included  in
\nthe consideration whether there is any error apparent on the
\nface of the award” and that “if a lump sum is awarded by  an
\narbitrator  and\t it appears on the face of the award  or  is
\nproved\tby extrinsic evidence that in arriving at  the\tlump
\nsum matters were taken into account which the arbitrator had
\nno jurisdiction to consider, the award is bad.” The  conten-
\ntion  of  Shri Banerjee is that the annexure  to  the  award
\nclearly\t incorporates  the statement of claim  made  by\t the
\ncontractors. Since in turn the statement of claim refers  to
\nthe  clauses of the contract, the contract should also\thave
\nbeen treated as incorporated in the award. It is also appar-
\nent on the face of the award, insofar as it relates to\titem\n<\/p>\n
(c)(xii), that the arbitrators have awarded payment at Rs.20
\nper cubic metres under item 4.09(b) whereas it must obvious-
\nly  be\tat Rs.2 per cubic metre. According  to\tthe  learned
\ncounsel, the decisions relied upon by him clearly show\tthat
\nan  award which ignores or overlooks the express terms of  a
\ncontract  suffers from an error apparent on the face of\t the
\nrecord and can be set aside by this Court. He submitted that
\nthe award, read with the annexure, brings out the  reasoning
\nof  the arbitrators and that an error therein can be  recti-
\nfied  by the court. The arbitrators had no power  to  travel
\nbeyond the authority of the contract and, in order to deter-
\nmine whether they had exceeded their authority, the contract
\ncan be looked into by the court. In support of this  conten-
\ntion,  the learned counsel also referred to a passage at  p.
\n42 1 in the Law of Arbitration by Bachawat (Second Edition).\n<\/p>\n
648<\/span><\/p>\n
    We\thave  considered the respective contentions  of\t the
\nparties\t and we are of the opinion that the  Division  Bench
\nerred in setting aside the award insofar as it relate to the
\nsum of Rs.25,96,000. Though the annexure sets out the  award
\nof  the arbitrators as against various items of claims,\t the
\nmere enumeration of the heads of claims cannot be equated to
\nan  incorporation of the statement of claim by the  contrac-
\ntors into the award. At any rate, the award does not  relate
\nthe  claims to the various clauses of the contract  and\t the
\nmere  fact  that the statement of claim\t refers\t to  various
\nitems in the schedule to the contract does not result in the
\ncontract itself being incorporated as part of the award.  No
\nerror  can  be found in the award unless one reads  into  it
\nfirst  the statement of claim and then the relevant  clauses
\nof the contract. But this cannot be done unless these  docu-
\nments are treated as incorporated in the award. This  cannot
\nbe  done. That apart even if the contract can be  read\tinto
\nthe award, we doubt whether this case can be treated as\t one
\nof an error on the face of the award. All that the award has
\nstated\tis that for the extra work involved in\tramming\t and
\nrolling,   the\tcontractors  were  to  be  paid\t a  sum\t  of
\nRs.23,96,000. The award does not mention how this amount  is
\narrived\t at. There is no mention of the quantity in  respect
\nof  which this is awarded nor the rate at which the  payment
\nhas  been calculated. It is, however, pointed out that\tcon-
\ntractors had claimed payment at the rate of Rs.20 per  cubic
\nmetres in respect of 2,15,000 cubic metres and that, even if
\nit is assumed that the ramming and rolling had been done  in
\nrespect\t of the entire volume of 2,15,000 cubic metres,\t the
\ncontractors  could  have, on a proper  construction  of\t the
\ncontract, been awarded only a sum of Rs.4,30,000 and nothing
\nmore. Obviously, the award is calculated at Rs.20 per  cubic
\nmetres in respect of 1,19,800 cubic metre. It is clear, says
\ncounsel for the Union, that the volume of the item for which
\npayment has to be made has been cut down but the amount\t has
\nbeen  calculated at Rs.20 per cubic metre which exceeds\t the
\namount of Rs.2 stipulated in the contract and this is  erro-
\nneous on the face of it.\n<\/p>\n
    We are afraid that, in putting forward this\t contention,
\nthe respondents are really trying to analyse the reasons  of
\nthe arbitrator for making the award under this head when  no
\nsuch  reasons  have been stated in this award. In  fact,  it
\ndoes  not necessarily follow that the payment has  been\t di-
\nrected at the rate of Rs.20 per cubic metre in respect of 1,
\n19,800 cubic metre. Theoretically, it could have been award-
\ned,  in\t respect  of the entire volume of  2,  15,000  cubic
\nmetre, at the rate of Rs.11 and odd per cubic metre. It\t is,
\nhowever,  clear that the payment has been granted at a\trate
\nin  excess of Rs.2 per cubic metre. We shall, however,\ttake
\nit that the arbitrators have awarded at the rate
\n649<\/span>
\nof  Rs.20  per cubic metre in respect of this item  of\twork
\nfor,  as  pointed out by Dr. Ghosh, the Union of  India\t had
\nnever  put forward the case either before the arbitrator  or
\nbefore\tthe learned single Judge that the  contractors\twere
\nnot entitled to payment at the rate of Rs.20 per cubic metre
\nas  claimed  and it was before the Division  Bench  for\t the
\nfirst  time that a question arose that the payment  for\t the
\nitem should be at Rs.2 and not Rs.20 per cubic metre. Wheth-
\ner the payment should be made at the rate of Rs.20 per cubic
\nmetre  or at Rs.2 per cubic metre will depend upon a  proper
\ninterpretation\tof the contract. It is argued that the\tmain
\nitem  of work viz. excavation and distribution of the  exca-
\nvated work has been paid for under item No. 4.09(a) and that
\nitem  4.09(b)  envisages an additional payment of  Rs.2\t per
\ncubic metre if the excavated soil, instead of being  loosely
\ndistributed, is rammed and rolled by applying some pressure.
\nThis  seems,  prima  facie, a  plausible  interpretation  of
\nclause 4.09(b). But we cannot assume, in the absence of\t any
\nevidence  or expert knowledge, that the ramming and  rolling
\nwas  not an independent, heavy or cumbersome piece  of\twork
\nand merely involved a minor addition to the work under\titem
\n4.09(a).  On the other hand, in the grounds of appeal  filed
\nby the contractors it is contended:\n<\/p>\n
“The  High  Court failed to appreciate that the\t process  of
\nramming and rolling is a very expensive specialised  process
\nas it has to be done layer by layer not exceeding six inches
\nat  a time and requires watering, breaking of clods and\t use
\nof specialised road rollers, bulldozers and other equipment.
\nThe work of ramming and rolling is much more expensive\tthan
\nthat of earth excavation provided for in item 4.09 (a).\t The
\nHigh Court further failed to appreciate that in its reply to
\nthe statement of claim of the petitioner, the respondent No.
\n1 had not disputed that the rate applicable for ramming\t and
\nrolling was Rs.20 per cubic metre. The respondent No. 1\t had
\nonly  raised  a dispute with regard to the quantity  of\t the
\nramming\t and rolling done by the petitioner. The High  Court
\nmisinterpreted the contract and erred in reducing the  award
\nfor ramming and rolling by erroneously applying the rate  of
\nRs.2 per cubic metre.”\n<\/p>\n
This  may  be fight or wrong but this is  also\ta  plausible
\nview. Unfortunately, this was an aspect not urged before, or
\nconsidered by, the arbitrators. There was no evidence before
\nthe  arbitrators or material adduced before the Court as  to
\nthe  nature of these operations. It is difficult to say,  by
\nmerely reading the terms of contract that the
\n650<\/span>
\narbitrators  have erroneously interpreted the terms  of\t the
\ncontract. It is not without significance that the departmen-
\ntal officers did not dispute the rate of the claim. Equally,
\nthe  arbitrators  were experienced engineers and  would\t not
\nhave  passed,  what is now said to be, an  astounding  claim
\nwithout\t thought. It is difficult to assume that  all  these
\npersons have overlooked that the contractor had already been
\npaid  at Rs.18 under item 4.09(a) especially when it  is  so
\nstated\ton the face of the claim. This, therefore. is not  a
\ncase  where tile arbitrators can be said to have ignored  or
\noverlooked  a  term of the contract; on the  contrary,\tthey
\nhave  acted  upon  a particular\t interpretation\t of  certain
\nclauses\t of  the contract on which two views  are  possible.
\nThis  case certainly cannot be brought under  the  principle
\nthat the arbitrators have ex facie exceeded the authority or
\njurisdiction  conferred on them by the Contract.  At  worst,
\nwhat can be said is that they may have committed an error in
\ndeciding  the  issue referred to them but the error  is\t not
\napparent  on the face of the award even if the\tcontract  is
\nread  as  part of it both because the arbitrators  have\t not
\ngiven their reasoning and because the view taken by them  of
\nthe  relevant  terms of the contract cannot be\tsaid  to  be
\nclearly erroneous. In a matter on which the contract is open
\nto  two equally plausible interpretations, it is  legitimate
\nfor  the  arbitrators  to accept’ one or the  other  of\t the
\navailable  interpretations and, even if the Court may  think
\nthat  the other view is preferable, the Court will  not\t and
\nshould not interfere. This view is too well settled to\tneed
\nany reference to any precedent other than Sudershan  Trading
\nCo’s  case  referred to earlier. That is why we\t think\tthat
\nthis case does not fall within the principle referred to  by
\nShri Banerjee and that Dr. Ghosh is right in his  submission
\nthat the Division Bench exceeded its jurisdiction in  inter-
\nfering with this part of the award.\n<\/p>\n
    Turning  now to the appeal of the Union of India,  there
\nis  really no dispute about the first  contention  regarding
\nthe amount on which interest is payable to the\tcontractors.
\nThe correct computation should stand as follows in the light
\nof our findings in the contractors’ appeal:\n<\/p>\n
     Compensation awarded\t57,47,198
\n     by arbitrator
\n     Less: Interest element
\n     therein [item (1)]\t\t  6,76,540
\n     Net principal amount
\n     awarded\t\t\t  50,70,658
\n651<\/span>
\n      Less:Amount deleted
\n      by learned Single Judge\t   5,20,000\n<\/p><\/blockquote>\n
\t\t\t\t—————
\n\t\t\t\t  45,50,650\n<\/p><\/blockquote>\n
\t\t\t\t—————\n<\/p><\/blockquote>\n
\t\t\t\t—————\n<\/p><\/blockquote>\n
The contractors will be entitled to interest on this amount.
\n    What  is  the period with reference\t to  which  interest
\nwould  be payable on the above amount? The  arbitrators\t had
\nallowed interest on the amount awarded by them from  5.10.82
\nto 26.3.84 under item (1) and had also allowed interest from
\nthe  date of the award till the date of payment\t or  decree,
\nwhichever is earlier. Of this, the learned Single Judge\t had
\ndeleted\t the interest for the period 5.10.82 to\t 6.5.83\t and
\nwhat  remains is the award of interest from 6.5.83 till\t the
\ndate  of  payment. There are two disputes as  to  this.\t The
\nfirst  objection raised on behalf of the Union is  that\t the
\ncontractors  will  not be entitled to any interest  for\t the
\nperiod from the date of reference to arbitration  (6.5.1983)
\ntill  the  date of the award (26.3.1984). On behalf  of\t the
\ncontractors,  Dr  Ghosh refutes this contention.  He  relies
\nupon  the  decision of this Court in Executive\tEngineer  v.
\nAbhaduta  Jena.<\/a> [1988] 1 SCC 418 and contends that,  in\t all
\ncases  where, as in this case, arbitrators are appointed  by
\nCourt  and disputes referred to them for  arbitration,\tpen-
\ndente  lite interest can and should be awarded by the  arbi-
\ntrator. He points out that, though initially in Seth Thawar-
\ndas’ case [1955] 2 SCR 48 some doubts were raised about\t the
\ncompetence  of the arbitrator to award interest, this  Court
\nhas subsequently consistently held that an arbitrator can do
\nthis:  vide,  Nachiappa v. Subramaniam, [1960]\t2  SCR\t209;
\nSatinder  v.  Arnrao,  [1961] 3 SCR 676;  Firm\tMadanlal  v.
\nHukamchand  Mills  Ltd., [1967] 1 SCR 105;  Union  v.  Bungo
\nSteel  Furniture P. Ltd.,<\/a> [1967] 1 SCR 324; Ashok  Construc-
\ntion Co. Ltd. v. Union, [1971] 3 SCC 66 and State v. Saith &
\nSkelton P. Ltd.,<\/a> [1972] 3 SCR 233. After referring to  these
\nand  other  cases,  Chinnappa Reddy, J.\t in  Abhaduta  Jena,
\n(supra) summed up the position thus:\n<\/p>\n
“15. As a result of the discussion of the various cases,  we
\nsee that Bengal Nagpur Railway Co. Ltd. v. Ruttanji  Ranjit,
\n65 IA 66; Union of India v. West Punjab Factories,<\/a> [1966]  1
\nSCR 580 and Union of India v. Watkins & Co., AIR<\/a> 1966 SC 275
\nwere cases of award of interest not by an arbitrator, but by
\nthe court. It was laid down in those three cases that
\n652<\/span>
\ninterest  could not be awarded for the period prior  to\t the
\nsuit  in  the  absence of an agreement for  the\t payment  of
\ninterest  or any usage of trade having the force of  law  or
\nany provision of the substantive law entitling the plaintiff
\nto  recover interest. Interest could-also be awarded by\t the
\ncourt under the Interest Act if the amount claimed was a sum
\ncertain\t payable  at a certain time by virtue of  a  written
\ninstrument. In regard to pendente lite interest, the  provi-
\nsions of the Civil Procedure Code governed the same.\n<\/p>\n
16.  The question of award of interest by an arbitrator\t was
\nconsidered in the remaining cases to which we have  referred
\nearlier. Nachiappa Chettiar v. Subramaniam Chettiar,<\/a>  [1960]
\n2 SCR 209; Satinder Singh v. Amrao Singh,<\/a> [1961] 3 SCR\t676;
\nFirm  Madanlal Roshanlal Mahajan v. Hukumchand\tMills  Ltd.,<\/a>
\n[1967]\t1 SCR 105; Union of India v. Bungo  Steel  Furniture
\nPvt. Ltd.,<\/a> [1967] I SCR 324; Ashok Construction Co. v. Union
\nof India, [1971] 3 S.C.C. 66 and State of Madhya Pradesh  v.
\nM\/s.  Saith & Skelton Pvt. Ltd.,<\/a> [1972] 3 SCR 233  were\t all
\ncases in which the reference to arbitration was made by\t the
\ncourt, of all the disputes in the suit. It was held that the
\narbitrator  must be assumed in those circumstances  to\thave
\nthe  same  power to award interest as the court. It  was  on
\nthat basis that the award of pendente lite interest was made
\non  the\t principle  of Section 34 Civil\t Procedure  Code  in
\nNachiappa Chettiar v. Subramaniam Mills Ltd., (supra);\tFirm
\nMadanlal   Roshanlal  Mahajan  v.  Hukumchand  Mills   Ltd.,<\/a>
\n(supra);  Union\t of  India v.  Bungo  Furniture\t Pvt.  Ltd.,<\/a>
\n(supra)\t and State of Madhya Pradesh v. M\/s Saith &  Skelton
\nPvt. Ltd.,<\/a> (supra). In regard to interest prior to the suit,
\nit  was\t held in these cases that since\t the  Interest\tAct,
\n1839, was not applicable, interest could be awarded if there
\nwas an agreement to pay interest or a usage of trade  having
\nthe  force of law or any other provision of substantive\t law
\nentitling the claimant to recover interest. Illustrations of
\nthe provisions of substantive law under which the arbitrator
\ncould  award interest were also given in some of the  cases.
\nIt  was said, for instance, where an owner was\tdeprived  of
\nhis  property, the right to receive interest took the  place
\nof the right to retain possession, and the owner of  immova-
\nble  property  who  lost possession of\tit  was,  therefore,
\nentitled  to claim interest in the place of right to  retain
\npossession. It was further said
\n653<\/span>
\nthat it would be so whether possession of immovable property
\nwas  taken away by private treaty or by compulsory  acquisi-
\ntion.  Another instance where interest could be awarded\t was
\nunder Section 61(2) of the Sale of Goods Act which  provided
\nfor the award of interest to the seller or the buyer, as the
\ncase  may  be,\tunder the circumstances\t specified  in\tthat
\nsection.\n<\/p>\n
XXX\t\t\t\t\t\t\t XXX\nXXX\n<\/pre>\n
18. While this is the position in cases which arose prior to
\nthe  coming into force of the Interest Act, 1978,  in  cases
\narising after the coming into force of the Act, the position
\nnow  is that though the award of pendente lite\tinterest  is
\nstill governed by the same principles, the award of interest
\nprior to the suit is now governed by the Interest Act, 1978.
\nUnder  the Interest Act, 1978, an arbitrator is\t by  defini-
\ntion,  a court and may now award interest. in all the  cases
\nto which the Interest Act applies.”\n<\/p>\n
    Sri\t Milon Banerjee, appearing for the Union  of  India,
\nhowever,  contends  that the above principle  is  applicable
\nonly in cases where an arbitrator is appointed on  interven-
\ntion of count as contemplated in Chapter IV of the  Arbitra-
\ntion  Act.  It is only in these cases that  the\t arbitration
\nproceedings  can be considered to be a continuation  of\t the
\ncourt proceedings, empowering the arbitrator to do all\tthat
\nthe  court  could do. For, even in cases arising  after\t the
\nInterest Act, 1978, the award of pendente lite interest\t can
\nonly  be in terms of the provisions of s. 34 of the Code  of
\nCivil  Procedure  and  this cannot be invoked  in  cases  of
\narbitration except in cases falling under Chapter IV  merely
\non the ground that the appointment of the arbitrator is made
\nunder  S. 8, 12 or 20 of the said Act. Counsel submits\tthat
\nChinnappa Reddy, J. has pointed out in Abhadhuta Jena’s case
\n[  [1988]  1  SCC at pp. 434-5] that in\t all  cases  whether
\narising\t before\t or after the Interest\tAct,  the  claimants
\nwould not be entitled to interest from the date of reference
\nto  the\t date of the award for the simple reason  that\t“the
\narbitrator  is not a court nor were the references to  arbi-
\ntration\t made in the course of suits”. It is this  principle
\nthat  has  been reiterated in Food Corporation of  India  v.
\nSurendra,  Devendra & Mohendra Transport Co.,<\/a> [1988]  1\t SCC
\n547  (at pp. 554 et seq) and Gujarat Water Supply  &  Sewage
\nBoard v. Unique Erectors,<\/a> [1989] 1 SCC 532.\n<\/p>\n
There  is  force in the contention urged  by  Sri  Banerjee.
\nThere are
\n654<\/span>
\npassages  in Abhaduta Jena which indicate that the grant  of
\npendente  lite\tinterest would be justified  only  when\t the
\nreference  to arbitration is made in the course of  a  suit:
\nvide, the last sentence on p. 428, the first sentence on  p.
\n429,  the emphasis added in the extracts from earlier  judg-
\nments  on pp. 430-1, and the summings up at p. 433 and\t435.
\nThe principle indicated in these passages apparently is that
\nsince  a  Court has, under s. 34, of the  C.P.C.,  power  to
\ngrant  pendente\t lite interest in a suit, an  arbitrator  to
\nwhom a reference to arbitration is made in the course of the
\nsuit  would  be\t clothed with all the powers  of  the  Court
\nincluding  the one to grant such interest. This is how\tthis
\nCourt has also looked at the matter in a subsequent case. In
\nState  of Rajasthan v. Sharrna & Co., [1988] 4 SCC 353,\t the
\nparties had entered into a compromise in certain proceedings
\nin  Court agreeing that their disputes would be\t settled  by
\narbitration but the arbitrators were appointed\tsubsequently
\nby  the parties themselves and a reference made to  them.  A
\nBench  of this Court (of which one of us was a\tmember)\t re-
\nviewed\tthe  earlier  cases and explained  the\tdecision  in
\nAbhaduta Jena thus:\n<\/p>\n
“12.  This was awarding interest pendente lite. This  is  in
\nviolation  of  the principles enunciated by  this  Court  in
\nExecutive Engineer (Irrigation), Balimela v. Abhaduta  Jena.
\nOur<\/a>  attention was drawn by Shri Soli J.  Sorabjee,  counsel
\nfor  the respondent, to the decision of this Court  in\tFood
\nCorporation  of India v. M\/s Surendra, Devendra\t &  Mohendra
\nTransport  Co.,<\/a>\t where at pages 555-556 of the\treport,\t the
\nCourt  referred\t to  certain decisions\tcited  by  Chinnappa
\nReddy, J. in Executive Engineer (Irrigation) in which he had
\nexpressed the view that those were cases in which the refer-
\nences  to  arbitration were made by the court  or  in  court
\nproceedings of the disputes in the suit. In that context  it
\nwas  held  in those cases that the arbitrator had  power  to
\ngrant  interest. It was contended before us that this was  a
\nsimilar\t case.\tThere was a court proceeding  in  this\tcase
\nregarding the appointment of the arbitrator and, as such, on
\nthe  same analogy it should be treated that  the  arbitrator
\nhad power to grant interest. We are unable to accept this.\n<\/p>\n
13. What Mr. Justice O. Chinnappa Reddy meant to say by\t the
\nlatter\tjudgment  in Executive Engineer\t (Irrigation)  case,
\nreferred  to  in  Food Corporation of India  was  where\t the
\ndisputes regarding the merit of the case were pending in the
\ncourt and such disputes instead of being decided by the
\n655<\/span>
\ncourt,\tadjudication had been referred to an  arbitrator  by
\nthe  court,  in such cases the arbitrators deciding  in\t the
\nplace of court, would have the same powers to grant interest
\npendente  lite\tas the courts have under Section 34  of\t the
\nCivil\tProcedure   Code.  Instant  case  is  not   such   a
\nproceeding.”\n<\/p>\n
This  principle\t would logically be applicable,\t as  rightly
\ncontended  by Shri Banerjee, only to cases where the  refer-
\nence to arbitration arises in the course of a suit.
\n    Dr.\t Ghosh, however, submits that, except for  Nachiappa
\nv.  Subramaniam,  [1960]  2 SCR 209  and  Hukumchand  Mills,
\n[1967]\t1 SCR 105, the other cases referred to by  Chinnappa
\nReddy,\tJ.  were all only cases in which an  arbitrator\t had
\nbeen appointed under s. 8 or 20 of the Arbitration Act.\t The
\nprinciple  enunciated,\the submits, was\t actually  a  little
\nwider  than that contended for by Shri Banerjee. It is\tthis
\nthat  where  an arbitrator is appointed by the Court  and  a
\nreference  is  made  to him, he has all the  powers  of\t the
\nCourt.\tHe invites attention to the observations  in  Hukum-
\nchand  Mills,  case  [1967] 1 SCR 105,\treiterated  (in\t the
\ncontext of post-award interest) in Union v. Bungo  Furniture
\nCo.,<\/a> [1967] 1 SCR 324 at p. 329) that it is “an implied term
\nof the reference that the arbitrator will decide the dispute
\naccording  to law and would give such relief with regard  to
\npendente  lite interest as a Court could give if it  decided
\nthe dispute”. He urges that Abhaduta Jena related to a batch
\nof cases, arising out of references made prior to, and later
\nthan, the commencement of the Interest Act, 1978, but by the
\nparties themselves under the terms of the contract,  without
\nreference  to  court and so it was held that  pendente\tlite
\ninterest  could\t not be granted. But that is not so  in\t the
\npresent case. He says that this decision was simply followed
\nin  State v. Construction India,<\/a> [1987] Suppl. SCC  708,  in
\nthe  Food Corporation case [1988] 1 SCC 547 and in State  v.
\nSharma\tand Co., [1988] 4 SCC 353. The Gujarat Water  Supply
\ncase   [1989]  ISCC 532 was, he urges, also a  similar\tcase
\n(see  para 5) though in that case there appear to have\tbeen
\nsome  proceedings in Court earlier. In short,  he  virtually
\nsubmits\t that  Abhaduta Jena and Sharma’s case\thave  unduly
\nrestricted  the grant of pendente lite interest and  require
\nreconsideration\t and that pendente lite interest  should  be
\nawarded\t in  all cases where the intervention  of  Court  is
\nsought\tfor  the  appointment of  arbitrators,\tdirectly  or
\nindirectly, at any stage.\n<\/p>\n
    Generally  speaking, it would only seem reasonable\tthat
\nthe power to grant interest pendente lite should be  treated
\nas ancillary to the award of damages or compensation  which,
\nbut for the delay in the
\n656<\/span>
\nlitigation (whether in Court or by way of arbitration),\t the
\nclaimant should have received much earlier. However,  though
\npendente  lite\tinterest has been made\tavailable  in  Court
\nproceedings,  its  extension to arbitration law\t appears  to
\nhave acquired some technical limitations resulting in denial
\nof pendente lite interest in most cases of arbitration. Even
\nif  we\taccept the contention of Dr.  Ghosh,  pendente\tlite
\ninterest cannot still be awarded by an arbitrator  appointed
\nby the parties under a private agreement for which there may
\nbe  no justification in equity. These anomalies have  arisen
\nbecause\t formerly  an arbitrator could not be treated  as  a
\nCourt  to  which  the Code of Civil  Procedure\tapplied\t and
\nbecause now the Interest Act, 1978, while including arbitra-
\ntion proceedings within its ambit, has, apart from a  refer-
\nence to s. 34, omitted to provide specifically for  pendente
\nlite interest. This has been clearly brought out by Chinnap-
\npa  Reddy,  J.\tWe have earlier referred  to  passages\tfrom
\nAbhaduta Jena which outline the principle the learned  Judge
\nhad  in\t mind for permitting pendente lite  interest  by  an
\narbitrator.  It is interesting, in fact, to notice that\t the
\npresent\t contentions of Dr. Ghosh (based on certain  earlier
\ndecisions of this Court) appear to have been advanced by him
\nin  the Food Corporation case [1988] 1 SCC 547 to support  a
\nwider  contention  that\t pendente lite\tinterest  should  be
\nawarded\t even in an arbitration by private agreement (as  in
\nthat case) so long as the terms of the arbitration agreement
\ndid not exclude the jurisdiction of the arbitrator to enter-
\ntain such a claim. But the Court did not accept the  conten-
\ntion  and  followed Abhaduta Jena. Abhaduta  Jena  has\tbeen
\nfollowed in later cases also and its scope has been recently
\nexplained  in Sharma’s case [1988] 4 SCC 353. We  may  point
\nout  that  in the latter case, a specific point\t was  raised
\nthat since the Court had been concerned with the appointment
\nof  the arbitrator at some stage it should be treated  as  a
\nreference  to arbitration by court warranting the  grant  of
\npendente lite interest but this contention was negatived and
\nthe  principle confined only to cases where a  reference  to
\narbitration is made in the course of suits. The position was
\nsimilar\t in the Gujarat Water Supply case [1989] 1  SCC\t 532
\nbut  pendente lite interest was denied. In view of  Abhaduta
\nJena  and the clarification specifically set out in para  13
\nof Shartna’s case, we are unable to accede to the contention
\nof Dr. Ghosh, attractive as it is an equitable proposition.
\n    The Division Bench of the High Court had no occasion  to
\nconsider  the  above recent pronouncements  of\tthis  Court.
\nFurther,  it  is seen that, before the Division\t Bench,\t the
\nUnion  took  an\t objection that under clause  16(2)  of\t the
\ngeneral conditions of contract, the contractors could  claim
\nno interest on the amounts that may be determined as
\n657<\/span>
\npayable\t to them. The Division Bench met this contention  by
\nrelying\t on  a circular issued by the  Government  of  India
\nmaking\tthe claim for interest entertainable in\t arbitration
\n“if   notice  had  been\t issued\t in  this  behalf   by\t the
\narbitrator”.  There is, however, no finding and\t nothing  on
\nrecord\tbrought\t to  our notice to show\t that  any  specific
\nnotice, claiming interest, had been given as contemplated by
\nthe contract. Having regard to all these considerations,  we
\nare unable to uphold the order of the Division Bench on this
\nissue.\n<\/p>\n
    This takes us to the second point urged on behalf of the
\nUnion  in  regard to interest. The contention  is  that\t the
\nlearned\t Single Judge had restricted it to the date  of\t the
\naward,\tand  that this has become final as  the\t contractors
\nhave  preferred no appeal therefrom. The grounds  of  appeal
\nbefore\tus by the Union are confined only to the mistake  in
\nnot  taking into account the sum of Rs.6,76,540 and  do\t not
\nraise  any  question regarding post-award interest.  It\t is,
\ntherefore, not open to Shri Banerjee to raise this question.
\nThat apart, on merits also the contention raised that  post-
\naward  interest has been declined by the High Court  is\t not
\ncorrect.  The contention overlooks the course  of  pleadings
\nbetween the parties. The arbitrators had, in the annexure to
\nthe  award, computed interest from 5.10.82 to  26.3.84\ti.e.
\nfrom  the date of the termination of the contract  till\t the
\ndate of the award and in the award, had granted interest  on
\nthe  amount awarded from the date of award till the date  of
\ndecree\tor payment. A point had been raised before the\tHigh
\nCourt  in  the memo of objections that the  arbitrators\t had
\nerred  in awarding interest in the manner mentioned  in\t the
\naward  but  the\t objection urged by  the  Union\t before\t the
\nlearned\t Single\t Judge\twas a different one  viz.  that\t the
\narbitrators  ought  not\t to have granted  interest  for\t the
\nperiod prior to the date of reference without any  agreement
\nor  right in law to claim such interest. It is this  conten-
\ntion  that  was\t accepted by the learned  Single  Judge\t who
\ndeleted\t the interest award prior to the date of the  refer-
\nence and held that the arbitrators had jurisdiction to award
\ninterest from the date of the reference till the date of the
\naward. This did not affect the arbitrator’s direction in the
\nmain  part  of the award, that interest will accrue  on\t the
\namount of the award (if the said amount was not paid  within
\n60  days) till the date of payment or decree,  whichever  is
\nearlier. This part of the award was not questioned. In fact,
\nthe  decree  drawn  up in consequence of the  order  of\t the
\nlearned\t Single Judge, specifically directs (a) interest  on
\nthe  awarded  amount  from 6.5.83  (date  of  reference)  to
\n26.3.84\t (date of the award ); (b) “thereafter, interest  on
\nthe  amount’ awarded at 11% from 27.3.84 to 11.12.84”  (date
\nof the decree); and (c) interest thereafter at
\n658<\/span>
\n9%  per annum. The objection of the Union in the LPA on\t the
\nquestion of interest was only that the arbitrators had erred
\nin awarding interest from 6.5.1983 to 26.3.1984. It is\tthis
\ncontention that was accepted by the Division Bench. The High
\nCourt had, therefore, not decided that the contractors\twere
\nnot entitled to interest beyond the date of the award.\tThis
\ncontention of the Union, therefore, fails and is rejected.
\n    In the result C.A. 1280\/88 is allowed and C.A. 128\t1\/88
\nis allowed in part. There will be no order as to costs.\n<\/p>\n
R.N.J.\t\t\t\t\t\t     Appeals\nallowed.\n659<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Hind Builders Etc vs Union Of India And Vice-Versa on 24 April, 1990 Equivalent citations: 1990 AIR 1340, 1990 SCR (2) 638 Author: S Rangnathan Bench: Rangnathan, S. PETITIONER: HIND BUILDERS ETC. Vs. RESPONDENT: UNION OF INDIA AND VICE-VERSA DATE OF JUDGMENT24\/04\/1990 BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. AHMADI, A.M. (J) […]<\/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":[30],"tags":[],"class_list":["post-83163","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nHind Builders Etc vs Union Of India And Vice-Versa on 24 April, 1990 - 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\/hind-builders-etc-vs-union-of-india-and-vice-versa-on-24-april-1990\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hind Builders Etc vs Union Of India And Vice-Versa on 24 April, 1990 - 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