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Executive Engineer, Rural Engineering Division, Dhenkanal Vs. Biswanath Agarwalla - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 17 of 1981
Judge
Reported inAIR1982Ori263
ActsArbitration Act, 1940 - Sections 13 and 29
AppellantExecutive Engineer, Rural Engineering Division, Dhenkanal
RespondentBiswanath Agarwalla
Appellant AdvocateIndrajit Ray, Standing Counsel
Respondent AdvocateB. Agarwalla, ;M. Agarwalla and ;S.C. Ghosh, Advs.
DispositionAppeal partly allowed
Cases ReferredHyderabad v. State of Orissa). On
Excerpt:
.....mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - but that direc-tion shall hold good in respect of the total principal sum awarded in favour of the claimant under item nos......and granted further interest at the rate of 12 per cent per annum from the date of the decree till payment of the awarded amount 3. on going through the award i find that the arbitrator has not given any reasons for his decision. it is the settled position of law that the arbitrator is the sole judge of the facts and law involved in the case before him and his decision when not supported by reasons is not open for review by the court.4. the only point urged by the learned standing counsel is that the arbitrator and the learned subordinate judge acted illegally in awarding interest on interest and in support of this contention reliance is placed on a decision of this court reported in air 1981 orissa 32, (andhra civil construction co., hyderabad v. state of orissa). on the question.....
Judgment:

B.N. Misra, J.

1. This appeal under Section 39(1)(vi) of the Arbitration Act, 1940 thereinafter referred to as the Act) is directed against the judgment dated 10-10-1980 passed by the learned Subordinate Judge, Bhubaueswai in Title Suit No. 87 of 1980.

2. The respondent is a contractor. The appellant had entrusted the work of 'Renovation to Kishore Sagar M.I.P.' to the respondent under Agreement No. 73/F.2 of 1973-74, In course of execution of the work, disputes arose between the parties and as per Clause 23 of the F.2agreement, the concerned Chief Engineer appointed an arbitrator to decide the disputes between the parties. The Arbitrator called for the statement of claims and counter-claims from both parties and finally passed an award for Rs. 98,501.00. This amount includes interest of Rs. 34,121.00. The Arbitrator's further direction Is that if the award was not paid up within three months from the date of its filing, interest at the rate of 12 per cent on the amount should be payable by the appellant till the date of the decree. After the award was received in the Court of the learned Subordinate Judge, Bhubaneswar, the appellant filed objection under Sections 30 and 33 of the Act. By his judgment dated 10-10-1980, the learned Subordinate Judge upheld the award and granted further interest at the rate of 12 per cent per annum from the date of the decree till payment of the awarded amount

3. On going through the award I find that the Arbitrator has not given any reasons for his decision. It is the settled position of law that the Arbitrator is the sole judge of the facts and law involved in the case before him and his decision when not supported by reasons is not open for review by the Court.

4. The only point urged by the learned Standing Counsel is that the Arbitrator and the learned Subordinate Judge acted illegally in awarding interest on interest and in support of this contention reliance Is placed on a decision of this Court reported in AIR 1981 Orissa 32, (Andhra Civil Construction Co., Hyderabad v. State of Orissa). On the question of interest, it was held (at p. 39) -

'The direction of the arbitrator appearing in the second paragraph at p. 69 of the paper book to pay further interest on the total amount of award granted in favour of the claimant, for the period from 2-3-1978 till payment of the said amount to the claimant or till the date of the decree whichever is earlier evidently entails payment of interest on interest granted under item No. 22 of the contractor's claim. This is challenged by Mr. Patnaik as an illegality on the face of the record. I agree that the said award, so far as it relates to payment of interest on the Interest amount calculated under item No. 22. cannot bo sustained Hence the said direction to that extent is set aside. But that direc-tion shall hold good in respect of the total principal sum awarded in favour of the claimant under item Nos. 1 to 3, 6 to 9, 11. 15, 16, 18 (as modified) to 20 and 21 (a). So the above direction of the arbitrator for the payment of interest for the period beginning from 2-3-1978 stands modified as stated above and the award be modified accordingly.

In the facts of this case the claimant should get interest on the principal amount as permissible under Section 29 of the Arbitration Act, It is accordingly hereby ordered that apart from making the abovementioned payments to the claimant, the respondent shall also pay interest on the said principal sum at the rate of 6 per cent per annum from the date of the decree till the payment of the entire decretal dues to the claimant.'

In the present case, ten items of claims have been noted in the award. The last item deals with interest and Rs. 34,121.00 have been awarded under it. Therefore. the principal sum in respect of items 1 to 9 works out at Rs. 64,380.00. The Arbitrator's direction on interest is as follows :

'The amount due to the claimant as per awards is to be Paid within three months from the date of filing of the award failing which an interest of 12% (Twelve per cent) on award amount will be payable by the Respondent till the date of decree.'

It appears from the above direction that the expression 'award amount' does not refer to the principal sum of Rs. 64,380.00 but to the total amount of Rs, 98,501.00 inclusive of interest. As pointed out in the aforesaid decision of this High Court, award of interest on interest cannot be sustained. The interest can be awarded only in respect of the principal sum of Rs. 64,380.00. The order of the learned Subordinate Judge suffers from the same defect. According to the order, the respondent is entitled to interest at the rate of 12% per annum from the date of the decree till payment on the 'awarded amount'. Section 29 of the Act authorises the Court to award interest from the date of the decree, but the said interest is to be paid only on the principal sum and not on the total amount which includes interest.

5. For the reasons stated above, the award of the Arbitrator in so far as it directs payment of interest at the rate of 12% on the 'award amount', is modified to interest at the rateof 12% per annum on the principal sum of Rs. 64,380.00 from the date of filing of the award till the date of the decree. The order of the learned Subordinate Judge is also modified to extent that the respondent shall be entitled to interest at the rate of 12% per annum from the date of the decree till payment on the principal sum of Rs. 64,380.00. Subject to the modifications indicated above, the award and the judgment of the learned Subordinate Judge are upheld. The appeal is accordingly allowed in part. There should be no order as to costs.


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