S. Acharya, J.
1. The Misc. Appeal No. 175/79 has been filed under Section 36(6) (39) (vi)) of the Arbitration Act (hereinafter referred to as the 'Act') by the State of Orissa against the order of the court below overruling the objection of the appellant under Section 30 of the Act to the award dated 31-1-79 passed in favour of the respondent.
2. The Civil Revision has been filed by the claimant as the court below while confirming the award by its order dated 13-7-79 has kept silent about granting interest under Section 29 of the Act on the principal amount payable to the claimant on the award.
3. Both the Misc. Appeal and the Civil Revision arise out of a common order passed by the court below; they were taken up together for hearing and one set of arguments were advanced by the counsel appearing for both the parties. Hence both the Misc. Appeal and the Civil Revision are disposed of by this common judgment.
Misc. Appeal No. 175/79.
4. In view of the points required to be decided in this appeal it is not necessary to narrate all details of the case. The facts relevant to dispose of this appeal are that by the award dated 31-1-79 the arbitrator awarded Rs. 59,311-00 in favour of the claimant-respondents on issues 3 to 11 of the award. On that amount he under the last issue No. 12 of the award, has granted interest at the rate of 8 per cent per annum from 1-7-74, (which is held to be the due date of payment) till 31-1-1979, (the date of the award). The interest on this account has been calculated at Rs. 21,747,00. Adding up the said principal sum and the interest amount a total sum of Rs. 81,058.00 has been awarded in favour of the claimants. By the next two paragraphs in the award it has been ordered that the said sum of Rs. 81,058.00 be paid within 90 days from the date of the award, i. e. on or before the 1st May, 1979, and if that is not so paid then the State will pay interest on Rs. 81,058.00 at the rate of 9 per cent per annum from 2-5-1979 till the date of payment or the date of the decree whichever is earlier. The objection filed by the State of Orissa to the said award has been rejected by that court by a cryptic order which is impugned in this appeal.
5. It is contended by Mr. A. Rath, the learned Addl. Standing Counsel appearing for the appellant, that the court below has failed to appreciate that the award under Issue No. 4 is erroneous on the face of the record, as enhanced rate by way of escalation beyond the contracted rate has been allowed under the said item, which is not permissible according to the law laid down in the decision reported in AIR 1960 SC 588. This decision is on entirely different facts and so the law laid down in that case is not applicable to the present case. The award made under Issue No. 4 in the present case is in respect of various items of claim, such as excess quantity of work over the quantity specified in the agreement, 'omission of a portion of road from the originally tendered quantity where soil was soft' and 'for escalation caused due to delay in land acquisition and delay in handing over lands, and the arbitrator, on a consideration of various facts and features mentioned in the award, has granted an award of Rs. 6,000/- under the said item. Therefore, the amount awarded is not only on enhanced or escalated rate on earth work, as contended by the learned Additional Standing Counsel. In the Supreme Court decision the award which was challenged and set aside was only in respect of one item, i. e. payment for additional work at enhanced rate, and the award on this item was disallowed as by the subsequent agreement, by which the original agreement had been modified, a graded scale was fixed and additional and enhanced rates for such work were specifically agreed to be paid and accepted by the parties and there was no scope for charging higher rates over the agreed rates. As the facts on which the award on Issue No, 4 in this case has been made are entirely different from the facts on which the above Supreme Court decision was given, the latter decision would not apply to the present case. Hence the above contention of the learned Additional Standing Counsel is without any force or substance.
6. It is next submitted by the learned Additional Standing Counsel that the arbitrator by directing payment of interest on Rs. 81,058.00 at the rate of 9 per cent per annum from 2-5-1979 till the date of payment or the date of the decree has in effect directed payment of interest on the interest amount of Rs. 21,747.00 included in the said amount of Rs. 81,058.00, and that illegality and error being evident on the face of the record that has to be set aside.
7. As stated above, the aforesaid amount of Rs. 81,058.00 is inclusive of Rs. 21,747.00 granted as interest to be paid on the said principal sum of Rupees 59,311.00. So the arbitrator by again granting interest on Rs. 81,058.00 has in effect directed payment of interest also on the interest amount of Rs. 21,747.00, which is not just, fair and ordinarily permissible under the law, as is very fairly conceded by Mr. R.K. Rath, the learned counsel for the claimant-respondents. Thus the award directing payment of interest at the rate of 9 per cent per annum from 2-5-79 till the date of the decree or till the date of payment, whichever is earlier, on the amount of Rs. 21,747/- included in the aforesaid amount of Rs. 81,058.00 is hereby set aside. The appellant shall therefore pay to the claimant-respondents the aforesaid amount of Rs. 81,058.00 plus interest on Rs. 59,311/- at the rate of 9 per cent per annum from 2-5-79 till 6-8-79 which is the date of the decree. The award and the decree passed in this case be modified accordingly.
8. No other point to assail the award or the decision of the court below is urged in this appeal.
9. The appeal therefore is partly allowed. Each party to bear his own costs of this appeal.
Civil Revision No. 531 of 1979.
10. As stated above, the court below while confirming the award by its order dated 13-7-1979 has kept silent about the express prayer of the claimants for granting interest under Section 29 of the Act on the principal amount payable to them on the award. The claimants had filed a petition in the court below to grant interest under Section 29 of the Act in this case, but that court has not passed any order on that petition.
11. It is submitted by the learned Additional Standing Counsel that silence on the part of the court to pass any order on the said petition amounts to rejection of the said petition, and Section 29 being a discretionary provision this Court should not grant interest under the said provision.
12. Section 29 of the Act is a wholesome provision to compensate the claimant for the loss sustained by him due to non-payment of the amount by the other side even after a decree is passed on the arbitrator's award. Thus the provision serves as a pressure for satisfying the decree at the earliest convenience. Though the power to grant interest under Section 29 of the Act is discretionary, as this power is vested by a statute, the court in dealing with such a matter should act judiciously, and if it decides to reject the prayer to this effect it must do so by expressly stating the reasons for the same. As the Court has not passed any order whatsoever on the petition under Section 29 of the Act filed by the claimants, it appears that the court has not at all applied its attention to this aspect of the matter and has thus failed to perform a duty entrusted to it under the law.
13. In this case the decree was drawn up on 6-8-1979. The State of Orissa obtained an order of stay of the execution of this decree in Miscellaneous Appeal No. 175 of 1979 of this Court. As there was an apparent error in the award and consequently in the decree appealed against, the filing of the appeal (Miscellaneous Appeal No. 175 of 1979) was justified. Considering the facts of this case and on hearing the counsel appearing for both the parties and in view of the provisions of Section 29 of the Act. I hereby direct that, apart from making payment of the decretal amount as it now stands corrected and further interest as ordered above in Miscellaneous Appeal No. 175 of 1979, the State of Orissa shall also pay interest on Rs. 59,311.00 (the principal sum) at the rate of 9 per cent per annum from today, i. e. from the date of the corrected decree, till the date of payment of the decretal amount to the claimants.
The Civil Revision is allowed accordingly. Each party to bear his own costs of this Revision. The L. C. R. be sent back immediately.