Supreme Court decision on natural justice, arbitration scope, arbitrator's award, and interest rates. Trust's appeal dismissed. Company's appeal partially allowed.

The Supreme Court upheld the lower court's decision in a case involving violation of natural justice, scope of arbitration agreement, arbitrator's award, and interest. The trust's appeal was dismissed as the court found no merit in the arguments presented. The company's appeal was partially allowed, awarding future interest at 12% per annum and justifying interest from a specific date. Each party was directed to bear its own costs.

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Issues Involved:
1. Violation of principles of natural justice.
2. Scope of arbitration agreement and claims.
3. Arbitrator's award being arbitrary or unsustainable.
4. Award of interest pendente lite and future interest.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The trust argued that the Arbitrator violated natural justice principles by accepting documents without notifying the trust after closing the proceedings. The High Court found that adequate opportunities were given to both parties at each stage, and this argument was abandoned by the trust. The Supreme Court upheld this finding, noting that the parties did not lead any oral evidence and relied on the documents placed before the Arbitrator. Thus, the contention of violation of natural justice was rejected.

2. Scope of Arbitration Agreement and Claims:
The arbitration clause in the agreement was broad enough to cover all disputes between the parties. The trust contended that certain claims (Nos. 2 and 7) were beyond the scope of the agreement. However, the Arbitrator awarded a lump sum amount of Rs. 8,51,315 against a total claim of Rs. 12,93,260, making it impossible to determine if these specific claims were included. The Supreme Court held that the award was within the scope of the arbitration clause and the terms of the contract, rejecting the argument that the award was beyond the scope or arbitrary.

3. Arbitrator's Award Being Arbitrary or Unsustainable:
The Supreme Court reiterated that an Arbitrator's award is binding and can only be set aside under specific circumstances outlined in sections 30 and 33 of the Arbitration Act, 1940. The Court emphasized that it is not open to speculate on the reasons for a non-reasoned award or to investigate the Arbitrator's mental process. The award was found to be neither arbitrary nor unsustainable, and the trust's contention was dismissed.

4. Award of Interest Pendente Lite and Future Interest:
The High Court denied interest pendente lite based on a precedent, which was later overruled by a Constitution Bench. The Supreme Court agreed that the Arbitrator had the power to award such interest but upheld the High Court's denial due to the lack of a specific claim or argument for it. However, the Supreme Court found no valid reason to deny future interest and awarded it at 12% per annum from the date of the decree until payment. The award of interest from 28-9-1982 to 10-1-1985 at 18% per annum was justified, as the trust repudiated the contract on the former date.

Conclusion:
The Supreme Court dismissed Civil Appeal No. 3683 of 1996 filed by the trust, finding no merit in the arguments presented. Civil Appeal No. 4144 of 1996 filed by the company was allowed to the extent of awarding future interest, modifying the High Court's order accordingly. Each party was ordered to bear its own costs.

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