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K.G. Agarwal Vs. the Divisional Superintendent, South Central Railway, Solapur and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 463 of 1977
Judge
Reported inAIR1982Bom281
ActsArbitration Act, 1940 - Sections 13
AppellantK.G. Agarwal
RespondentThe Divisional Superintendent, South Central Railway, Solapur and anr.
Excerpt:
the case questioned whether the arbitrator had a power to award the interest on the subsequent to the date of the award under section 13 of the arbitration act, 1940 - the dispute that was raised out of contract regarding the claim referred to the arbitration was included - although, the disputes in the suit and question of interest subsequent to date of award were not included in reference - it was held that under the above mentioned situation, the arbitrator had no power - .....arbitration and there is nothing to indicate the question of interest subsequent to the date of the award has been referred to the arbitrator, the arbitrator no power to award interest upon the principal amount he awards subsequent to the date of his award.5. the appeal has no merit and is dismissed with no order as to costs.6. appeal dismissed.
Judgment:

Bharucha, J.

1. A dispute between the parties regarding a claim arising out of a contract was referred to sole arbitration. On 25th Feb., 1976 the arbitrator made an award in favour of the appellant in the sum of Rs. 59,500/- He prescribed 'that the amount shall be paid to Shri K. C Agarwal (the appellant) not later than 31st May, '76 and for any delay beyond this date, the money in Award will carry a simple interest at the rate of 5% per annum. The arbitrator applied to the Civil Judge, Senior Division, Pune, for a decree in terms of the award. The respondents contended before the court that the arbitrator had no power to award interest after 31st May. 1976. The court accepted the contention and passed a decree in terms of the award excluding the direction for payment of interest. It directed that the amount of Rs. 59,500/- deposited by the respondents in the court should be paid over to the appellant without delay. Being aggrieved by this decision, the appellant has preferred this appeal.

2. It was contended before us that the arbitrator has power to direct payment of interest for the period subsequent to the date of the award. In this behalf Mr. Naik. Learned counsel for the appellant, cited the judgment of the Supreme Court in Union of India v. Bungo Steel Furniture. AIR 1957 Sc 1032. In that case disputed in a suit, including the question if interest, were referred to an arbitrator. The arbitrator awarded interest on the principal amount awarded from the date of the award till the date of the decree. The Supreme Court held that the arbitrator had jurisdiction to do so. A reference in respect of such interest had been made to hi. It was an implied term of the reference that the arbitrator would decide the dispute according to existing law and give such relief with regard to interest as a court could give if it decided the dispute. The principle of S. 34 of the Code of Civil Procedure could be applied by the arbitrator in a case where a Court in a suit could grant a decree for interest.

3. Power in respect of interest on an award is given by Section 29 of the Arbitration Act, 1940. Thereunder, where an award is for the payment of money, the Court may, in passing a decree on the award, order interest from the date of the decree at such rate as it deems reasonable to be paid on the principal sum adjudged by the award and confirmed by the decree.

4. Where, therefore, as in the instant case, disputes in a suit are not referred to arbitration and there is nothing to indicate the question of interest subsequent to the date of the award has been referred to the arbitrator, the arbitrator no power to award interest upon the principal amount he awards subsequent to the date of his award.

5. The appeal has no merit and is dismissed with no order as to costs.

6. Appeal dismissed.


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