Jayant Patel, J.@mdashThe present appeal arises from the judgment and decree dated 20.7.1988 passed by the lower Court in Special Civil Suit No. 167/88, whereby the suit is decreed for the amount of Rs. 17,70,186/- with the interest at the rate of 11% per annum for the pre-arbitration period on the amount of Rs. 8,32,086/- and with the interest at the rate of 18% per annum from 29.12.1987 with the clarification that no interest is allowed from 19.9.1986 to 29.12.1987 for the period of pendente lite before the Arbitrator.
2. The relevant facts are that one Mr. J.C. Patel was appointed as Sole-Arbitrator upon the dispute arose between the parties for the work of constructing earth work and lining of Vapi Distributory for certain area for Damanganga Reservoir project. It appears that thereafter, the award was passed by the Arbitrator on 29.12.1987. The application was made to pass the decree based on the award being Special Civil Suit No. 167/88. The original Respondent - Appellant herein filed objection and resisted the prayer. The lower Court ultimately at the conclusion of the proceedings passed the aforesaid decree. Under these circumstances, the present appeal before us.
3. Heard Mr. Soni, learned AGP for the Appellant and Mr. Sukhwani, learned Counsel for the Respondent. We have considered the reasons recorded by the lower Court and we have also considered the R & P.
4. Mr. Soni, learned AGP, during the course of hearing, mainly raised the grievance for maintaining the decision of the Arbitrator for awarding of interest for the pre-reference period and also interest after the award and he also made grievance for awarding of high rate of interest.
5. Whereas, Mr. Sukhwani, learned Counsel for the Respondent, has supported the judgment and decree of the lower Court.
6. In our view, the examination of the contention raised on behalf of the Appellant shows that for the prereference period as per the reasons recorded by the lower Court, the interest award is at the rate of 11; per annum. As per Clause 8 of General Condition, it was expressly provided. However, the lower Court reduced the said rate of interest for the post award period from 20% to 18% per annum. The reasonings for such purpose are available at paragraph 19 of the Judgment, which read as under:
19. The learned Advocate for the Defendant No. 1 has argued out that in file No. 5 page 147 and relevant page 153 rate of interest is shown 20% and he has further argued out that the claim of interest was specifically referred to the learned arbitrator as per the Government Resolution and hence the objection of the Defendant No. 2 has to claiming interest pendent elite by the Defendant No. 2 is not true and correct. He has further argued out that the learned Arbitrator has rightly allowed the interest from 26.10.85. He has further argued out that the learned Arbitrator has ample power to award the interest. The learned Advocate for the Defendant No. 1 has further argued out that in this connection the arbitrator clarified in his award that the rate of 20% interest is just and proper. Now as per Clause 8 of the General condition of the contract advanced given by the Respondent for mobilization plant and machinery acc. beaf interest at the rate of 20% per annum. The Defendant No. 1 also claimed interest at 20% per annum. On the costs of non-judicial items issued by them vide deft. No. 2''s counter claim No. 7. The rate of interest claimed by the Defendant No. 1 is 20% per annum. The Defendant No. 1 is entitled to interest. The learned Advocate for the Defendant No. 1 has argued out that the principles of equity is required to be maintained and hence interest at 20% per annum is just and proper and hence it should be allowed. In my opinion the rate of interest at 18% per annum as just and proper. 18% interest can be adopted while working out the decree in terms of award. As regards the period to the commencement of the arbitration the learned Advocate for the deft. No. 1 argued out that the rate of interest be awarded and there is no bar to award the prearbitration interest. Do agree with the argument No. 1 it will be just and proper to award interest for the period from the date of applying for the arbitration up to the date of commencement of the arbitration at the rate of 11% per annum, which will be the rate of interest a reasonable in view of the interest available in the market and in view of the interest Act no interest will be payable from 19.9.1986 to 29.12.1987 i.e. the date of appointment of the arbitrator till the date of award. The interest from 29.12.1987 till the date o realization of the amount will be 18% per annum, as discussed above.
7. We may, at this stage, refer to the decision of the Apex Court in the case of
27. So far as the payment of interest is concerned, the Division Bench of the High Court after analyzing the decisions of this Court, namely,
28. It was, however, argued on behalf of the Appellant that the High Court was not justified in awarding interest for pre-reference period in view of Section 3 of the Interest Act, 1978 which was pursuant to a special clause in the Contract. As in the present case there was no such clause in the agreement and hence it was not within the power of the Arbitrator to make an award with respect to interest. In our view, this argument lacks substance.
29. The position of law, as found by the High Court in its impugned judgment on consideration of various other judgments of this Court, would clearly show that in those judgments the High Court relied on also did not stipulate any express agreement with respect to interest as a precondition to the authority of the Arbitrator to award interest for the pre-reference period. The matter would have a different issue altogether if there had been a specific provision prohibiting grant of interest which was, of course, not the case of the Appellant.
30. In the case of
But this Court has held that in the absence of an express bar, the arbitrator has the jurisdiction and authority to award interest for all the three periods - pre reference, pendente lite and future (vide decisions of Constitution Bench in
In view of the above decision in law now settled by this Court, we are unable to hold that the Arbitrator was not entitled to award interest on the prereference period because there was no clause in the agreement prohibiting such awarding of interest. However, the High Court had reduced the rate of interest to the current rate of interest'' and, therefore, it is not open for us to interfere with such rate of interest at this stage in this appeal. Therefore, there is no substance in this argument, accordingly it is rejected."
8. If the facts of the present case are considered in light of the above, it appears that for the prereference period the lower Court has awarded interest at the rate of 11% per annum, such, in our view, can be said as a current rate of interest prevailing then. The another interest awarded for the post award period is at the rate of 18% per annum as against the interest at the rate of 20% per annum expressly provided under the Contract Agreement. Therefore, it was not a case where the contact did not provide for any express stipulation of interest when the Arbitrator had exercised the power. The lower Court has already exercised the discretion by reducing to 18% as against the express stipulation of interest at the rate of 20% per annum.
9. Under these circumstances, we find that the exercise of power by the lower Court for awarding of interest for the pre-reference period and for the post award period is not erroneous, which may call for interference for the appellate jurisdiction.
10. No other contentions are raised.
11. In view of the above, the appeal is meritless. Hence, dismissed.
