Supreme Court Upholds Arbitration Award with Post-Award Interest

The Supreme Court upheld the award of Rs. 10,17,461/- without pendente lite interest but with post-award interest at 12% per annum. The claim of Rs. 12.50 lakhs was left to be determined according to the agreed procedure between the parties. The Court validated the jurisdiction of the arbitrators to adjudicate specific claims and clarified that the earlier arbitration did not bar these claims.

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Issues Involved:
1. Jurisdiction of Arbitrator to adjudicate claims.
2. Entitlement to the sum of Rs. 10,17,461/-.
3. Entitlement to the sum of Rs. 12.50 lakhs.
4. Grant of interest on awarded amounts.

Summary:

1. Jurisdiction of Arbitrator to adjudicate claims:
The appellants contended that the claims for unpaid amounts and security deposit were subject to an earlier arbitration and that the second arbitration was without authority of law. The Supreme Court held that the specific claims of Rs. 10,17,461/- and Rs. 12.50 lakhs were not barred by the earlier arbitration. The arbitrators had recorded that both parties agreed to adjudicate these disputes, thus validating the jurisdiction of the arbitrators.

2. Entitlement to the sum of Rs. 10,17,461/-:
The award passed on 29th January 1996, held the respondent-contractor entitled to Rs. 10,17,461/- with interest. The learned District Judge upheld this claim, and the High Court maintained it. The Supreme Court found no reason to interfere with this part of the award.

3. Entitlement to the sum of Rs. 12.50 lakhs:
The arbitrators did not adjudicate this claim, stating it was beyond the scope of the arbitration and should be resolved amicably or through a civil suit. The learned District Judge erroneously decreed this amount, which the High Court reversed, remanding the issue to an arbitrator appointed by it. The Supreme Court held that the High Court should have left the determination of this claim to the agreed procedure between the parties, not appointing an arbitrator itself.

4. Grant of interest on awarded amounts:
The appellants argued that Clauses 1.2.14 and 1.2.15 of the contract barred the grant of interest. The Supreme Court agreed, stating that the award of pendente lite interest was not justified due to the express bar in the contract. However, the grant of post-award interest from the date of the award till the date of the decree or payment was upheld at a rate of 12% per annum, as determined in the arbitration.

Conclusion:
The Supreme Court modified the High Court's order, upholding the award of Rs. 10,17,461/- without pendente lite interest but with post-award interest at 12% per annum. The claim of Rs. 12.50 lakhs was left to be determined according to the agreed procedure between the parties.

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