P.K. Musahary, J.@mdashHeard Mr. D. Choudhury, learned CGSG for the Appellant and Mr. C.T. Jamir, learned Counsel for the Respondent.
2. Some dispute between the Appellant Union of India and the Respondent contractor M/s. S.M. Construction Company, Guwahati, were referred to the sole arbitrator for adjudication. The final award was published on 10.12.1997 awarding Rs. 2,93,260 in favour of the Appellant department and Rs. 9,18,990 in favour of the Respondent-contractor. The Appellant filed an application under Sections 30 and 33 of the Arbitration Act, 1940 on 13.2.1998 for setting aside the award dated 10.12.1997. The said application was rejected by the Addl. Deputy Commissioner (J), Kohima, vide judgment and order dated 14.8.2003 passed in Misc. Case No. 1 of 2000 arising out of Arbitration Case No. 1/1998 and 1999 and passed a decree for Rs. 2,93,260 in favour of the Appellant-department and Rs. 9,18,990 in favour of the Respondent-contractor and held that the parties are also entitle to get further interest at the rate of 10% per annum till realization of the decreetal amount, i.e., award amount plus interest as awarded by the arbitrator from the date of decree.
3. Thereafter the Respondent-contractor as decree holder in respect of the award of Rs. 9,18,990 file an execution petition, being Execution Case No. 1/2000 on 29.6.2005 before the court of ADC(J) Kohima, for execution of the aforesaid decree dated 14.8.2003. The Appellant department contested the said execution case by filing a counter with a prayer to adjust the decretal amount of Rs. 65,68,015 which is payable by the Respondent as judgment debtor to the Appellant in Execution Case No. 21/1993 in the court of Sub-Judge-1, Manipur (East). The Executing court, after hearing the parties passed its judgment and order on 17.10.2005 directing to draw a decree computing interest from 10.12.1997, i.e., from the date of passing of the award, with simple interest of Rs. 10% per annum on the awarded amount, i.e., (Rs. 9,08,267 - Rs. 2,93,250) = Rs. 6,15,017.
4. The present appeal is preferred against the above judgment and order dated 17.10.2005 passed by the Executing court questioning its power to grant interest from the date of passing of the award, i.e., 10.12.1997 which is beyond the civil court''s order dated 14.8.2003 awarding interest from the date of decree i.e., 14.8.2003. Mr. D. Choudhury, learned Counsel for the Appellant, on a specific query made by this Court, clarified that the Appellant has no objection as such on �he award dated 10.12.1997 as made by the arbitrator and had simply requested for adjustment of the decretal amount of Rs. 9,18,990 made in favour of the Respondent with the decretal amount of Rs. 65,68,015 jpade in favour of the Appellant in Execution Case No. 21 of 1993 before the Sub-Judge-1, Manipur (East). The Appellant is aggrieved by the order dated 17.10.2005 passed by the Executing court by turning down the said prayer for adjustment and also computing interest from the date of passing of award, i.e., 10.12.1997 contrary to decree passed on 14.8.2003 by the ADC (J), Kohima, as a civil court.
5. Mr. Choudhury learned Counsel confines his submission to the authority, propriety and legality of the Executing court in drawing a decree for payment of interest on the awarded amount from the date of award. He submits that the judgment dated 14.08.2003 passed by the ADC (J), Kohima, in Misc. Case No. 1 of 2000 is a decree passed by the civil court within the meaning of Section 31 of the Arbitration Act, 1940, and the said civil court while rejecting the ground of challenge to the award specifically and clearly directed to prepare the decree and release the decretal amount plus interest from the date of decree. The Execution court submits Mr. Choudhury, by passing the impugned judgment and order dated 17.10.2005 has gone behind the decree which is not authorized under law. In support of his submission, the learned Counsel for the Appellant cites the case of Mustt. Rafia Shah v. Hemraj Nahati (1995) 3 GLR 243 , wherein an observation was made by this Court to the effect that the is no justification for the Executing court to go behind the decree and declare the decree arrived at by way of compromise a nullity and refusing to execute the same. He also places reliance on the case of
6. Appearing for the Respondent contractor Mr. C.T. Jamir, learned Counsel submits that since the arbitrator granted award along with simple interest at the rate of 10% per annum from the date of award the learned ADC (J), Kohima, while exercising the jurisdiction and power of the civil court in arbitration case, has no authority under the law to order that the award and the interest should be realised from the date of decree and the learned Executing court passed the impugned judgment and order dated 17.10.2005 directing payment of the awarded amount and the interest there on from the date of award, i.e., 10.12.1997 as was passed originally by the arbitrator.
7. I have perused the records made available at the time of hearing. The arbitration proceeding in this case commenced in November 1983, under the old Act, namely Arbitration Act, 1940, and the award was published u/s 14(1) of the said Act of 1940 on 10.12.1997 after the new Act, namely, the Arbitration and Conciliation Act, 1996, came into force. The Respondent-contractor as decree holder filed petition u/s 14(2) and 17 of the old Act, 1940 on 14.1.1998 before the ADC (J) for judgment and pronouncement of decree. The Appellant Union of India, as Judgment Debtor also initially filed an application under Sections 30 and 33 of the old Act on 13.2.1998 for setting aside the award dated 10.12.1997. The Appellant withdrew the said application on 17.11.1998 and filed a fresh petition on 11.3.1999 u/s 34 of the new Act supported by a petition for condonation of delay in filing the said new application. The Appellant again made a prayer for withdrawal of the said application u/s 34 of the new Act and sought to restore the earlier application filed u/s 30 and 33 of the old Act. This would clearly lead to hold that the Appellant also agreed to the applicability of the old Act to the present case.
8. The provision of repeal and saving made u/s 85(2)(a) of the new Act makes the above position clear and the same is quoted below:
85(2) Notwithstanding such repeal-
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force.
In this regard I would refer myself to the decision of the Apex Court in the case of
23. Section 85(2)(a) of the new Act is in two limbs: (1) provision of the old Act shall apply in relation to arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties, and (2) the new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. The first limb can further be bifurcated into two: (a) provisions of the old Act came into force and (b) the old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings which commenced before the new Act came into force. The expression "in relation to" is of the widest import as held by various decisions of this Court in Doypack Systems (P) Ltd. Mansukhlal Dhanraj Jain, Dhanrajamal Gobindram and Navin Chemicals Mfg. The expression "in relation to" has to be given full effect to, particularly when reed in conjunction with the words "the provisions" of the old Act. That would mean that the old Act will apply to the whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word "to" could have sufficed and when the Legislature has used the expression "in relation to" a proper meaning has to be given. This expression does not admit of restrictive meaning. The first limb of Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the award under that Act.
9. Thus, it would be justified to come to the conclusion that for adjudication of the present appeal the old Act only would be applicable. The interest on award is provided u/s 29 of the old Act which reads as under:
29. Interest on awards.- Where and in so far as an award is for the payment of money the court may in the decree order interest, from the date of the decree at such rate as the court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree.
There is no doubt that this Section expressly confers power upon the civil court to award interest on the principal sum adjudged by the award from the date of decree onwards but it has made no provision for awarding of interest by the civil court for any period prior to the date of the decree. In other words, it can be said that a civil court has no power to order interest from the date of award made by the arbitrator. Since the old Act is a sell contained code and exhaustive, the civil court has the power to order interest on awarded amount from the date of decree. Neither would it be proper to interpret otherwise to pass an order on interest from that date of award. This is more so because the language employed in this Section is clear and unambiguous to import any other meaning and act by a court in any other manner to negate the purport of the law.
10. The scope and power of the arbitrator and the court u/s 29 of the old Act in the matter of granting of interest are different. The arbitrator has power to award interest from the due date till the date of award, i.e., interest pendent lite and also interest from the period commencing with the date of the award to the date of decree or date of realization, which ever is earlier. The arbitrator, in certain cases, may grant interest for pre-reference period provided there is no prohibition in the arbitration agreement excluding his jurisdiction to grant interest. The arbitrator in certain cases may not grant interest at all at the time of passing award. In such cases the court in exercise of its power u/s 29 can grant interest on the awarded amount at the time of passing its decree from the date of decree onwards.
11. In the preset case, the arbitrator made no order as to interest on the awarded amount to either of the parties. However, the said award was fed before the court of ADC (J) for pronouncement of judgment followed by a decree u/s 17 of the Arbitration Act, 1940. The interest on award was, thus, passed ultimately on 14.8.2003 by the said ADC (J), Kohima, from the date of decree as authorized u/s 29 of the said old Act. The Executing court misread and misinterpreted the award "decree" used by the civil court, i.e., the ADC (J), Kohima to mean it as "award" holding that the court could not arbitrarily do away with five years 8 months interest even without the prayer of the Union of India and it would be bias and cannot be the intent of the civil court. The learned execution court failed to read and apply the law provided u/s 29 which empowers the civil court to grant interest on award from the date of "decree" only and not from the date of award. The executing court by reversing the civil court''s order and directing payment of interest from the date of award, in my considered view, has far exceeded its power and jurisdiction and as such the impugned judgment and order dated 17.10.2005 is liable to be quashed as violative of Section 29 of the old Act.
12. The settled law is that the Arbitrator is competent to grant interest from the date of award and he cannot be faulted. It was so held by the Apex Court in the case of T.P. George v. State of Kerela and Ors. (2001) 2 SCC 758. In the said case it was also held that the power of the court to grant interest from the date of decree is not in doubt. Paragraph 10 of T.P. George case (supra) may be quoted for better appreciation:
10. The next question is whether the High Court was right in setting aside the award of the award. This Court has held in the case of Jagdish Rai and Bros. v. Union of India that the award of interest ought to be granted in all cases when there is a decree of money unless there are strong reasons to decline the same. In the case of Jagdish Rai and Bros. v. Union of India this Court has held that there are four stages of grant of interest, viz., (1) from the stage of accrual of cause of action till filing of the arbitration proceedings, (2) during pendency of the proceedings before the arbitrator, (3) future interest arising between date of award and date of the decree and (4) interest arising from date of decree till realization of the award. The power of court to grant interest from date of decree is not in doubt. In the case of Hindustan Construction Co. Ltd. v. State of J&K this Court has held that the arbitrator is competent to award interest from the day of the award. This Court has held in the case of Secy. Irrigation Deptt., Govt. of Orissa v. G.C. Roy that the arbitrator has power to grant interest pendente lite. Recently in the case of Executive Engineer, Dhenkanal Minor Irrigation Division v. N.C. Budharaj this Court has held that an arbitrator can award interest for the pre-reference period. Thus, as per law laid down by this Court interest can be awarded at all four stages. The reasoning given by the High Court that the interest cannot be awarded by the arbitrator is, thus, fallacious and cannot be sustained. In our view the direction to pay interest from the date of award, cannot be faulted. The impugned judgment to the extent that it disallows the interest from the date of the award, is set aside.
13. The relevant issue is not as regards the power of the arbitrator to grant interest in all the aforesaid stages but as regard the power of the civil court to grant interest from the date of award as per provisions u/s 29. A civil court can examine the interest granted by the arbitrator in all the said four stages but it can pass decree on interest from the date of decree only because this Section expressly provides so and not otherwise. There is, therefore, no scope to read the word "decree" used by the ADC (J), Kohima, in its order dated 14.8.2003 for "award" as directed by the Executing court in its impugned judgment and order dated 17.10.2005. The learned ADC (J) Kohima, sitting as a Civil Judge is found conscious about his power u/s 29 and rightly passed the order dated 14.8.2003 for interest on award from the date of decree which cannot be faulted and said to be illegal. Accordingly, I am unable to persuade myself to accept the view taken by the learned Executing court that the use of the aforesaid word "decree" as observed in its judgment and order dated 17.10.2005, is a malapropism of the word "award". With the making of the award of arbitrator a rule of the court under provision of Section 17 of the old Act, the decree dated 14.8.2003 passed by the ADC (J) reached its finality. The Executing court has to execute the said decree without any interference. The Executing court may refuse to execute a decree if it finds that decree is a nullity on ground of lack of jurisdiction of the court or against a death person. The settled position is that the executing court cannot go into the question of correctness or legality of a decree but it can entertain objection that it is a nullity on the ground that the court which passed it had no jurisdiction to pass the same. In the present case, no plea of lack of jurisdiction of the ADC (J) Kohima, has been taken and, therefore, it can be held that the Executing court has gone behind the decree and accordingly the impugned judgment and order dated 17.10.2005, in so far as it relates to interest part of the award, is liable to be quashed.
14. This Court in the case of
15. In view of the above discussion and the position of law, this Court comes to the conclusion that the learned Executing court traveled far beyond the decree passed in clear and unambiguous terms by a legally authorized civil court having jurisdiction u/s 29 of the old Arbitration Act and gave an absurd and wrong interpretation to the term "decree" replacing it by the term "award" without applying its independent judicial mind to the appropriate provision of law in regard to passing of decree by a civil court in arbitration case and the power and ambit of the executing court in execution of the validly passed decree. The decree dated 14.8.2003 passed by the ADC (J), Kohima, therefore, deserves to be upheld and accordingly it stands upheld. The impugned judgment and order dated 17.10.2005 passed by the Executing court is liable to be quashed and it is quashed accordingly.
16. The appeal stands allowed.
17. The connected miscellaneous cases stand disposed of in terms of this judgment and order.
18. The interim order/orders if any, passed in the connected miscellaneous cases shall stand vacated in terms of this Judgment and Order.
