TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 728
X X X X Extracts X X X X
X X X X Extracts X X X X
....That the Union of India preferred an appeal under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the '1996 Act') challenging the award made on claim no.5 vide award dated 17.01.2011 pertaining to pre-suit, pendente lite and future interest awarded on the balance due payment, from the due date of payment. 2.2 The learned Single Judge of the High Court dismissed the said appeal. The matter was carried further before the Division Bench by way of FAO(OS) No. 52/2018 under Section 37 of the 1996 Act. By the impugned judgment and order, the Division Bench of the High Court has dismissed the said appeal and has confirmed the award made by the learned arbitrator awarding pendente lite interest and future interest awarded on the balance due payment. Hence, the present appeal. 3. Shri K.M. Nataraj, learned Additional Solicitor General appearing on behalf of the appellant - Union of India has vehemently submitted that as agreed between the parties and as per clause 16(2) of the General Conditions of Contract (for short, 'GCC') governing the contract between the parties, there was a bar against payment of interest. It is submitted that as agreed between th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e said period. It is contended that in the aforesaid case, the expression used was "any moneys due to the contractor" by the employer which includes the amount awarded by the arbitrator. Therefore, where the contract contains a specific clause which expressly bars payment of interest, then it is not open for the arbitrator to grant pendente lite interest. 3.5 It is further submitted by Shri Nataraj, learned ASG that the expression "amounts payable to the contractor under the contract" cannot be read with "earnest money deposit" or "security deposit" by applying the principle of ejusdem generis. It is urged that the expressions have been employed in clause 16(2) of the GCC disjunctively by use of the word "or" and are intended to cover different situations which may arise. It is submitted that the earnest money deposit and security deposit are the amounts which are payable by the contractor whereas the amount awarded by the arbitrator or any other amounts payable under the contract could be under different circumstances and could be payable by either party. It is submitted therefore that the expression "amounts payable to the contractor under the contract" has been employed to cove....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssly bars the arbitrator from awarding interest pendente lite, the arbitrator has all the powers to grant pendente lite interest. It is urged that in the present case, clause 16 does not bar an arbitrator to award interest pendente lite. It is submitted that the arbitrator is never a party to the agreement and therefore it does not bar the arbitrator from awarding pendente lite interest. It is contended that the bar is on the parties from claiming interest on security deposits and earnest money and not on the arbitrator from awarding interest pendente lite on other amounts. In support of the same, reliance is placed on the decision of this Court in the case of Kailash v. Nanhku, (2005) 4 SCC 480, wherein this Court while dealing with Order VIII Rule 1 CPC, has held that the bar is on a party before the Court and not on the court's inherent powers. It is submitted that even on a fair reading of Section 31(7)(a) of the 1996 Act, it is clear that the bar to claim interest is on the parties and not the arbitrator specifically. 4.4 It is contended that in the present case, the High Court has correctly placed reliance on Union of India v. M/s Pradeep Vinod Construction Co., Civil Appeal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n rendered prior to the three Judges Bench decision in the case of Jaiprakash Associates Ltd. v. Tehri Hydro Development Corporation (India) Ltd. (supra). 6. We have heard learned counsel for the respective parties at length and pondered over the issues raised before us. 6.1 The short question which is posed for the consideration of this Court is in view of the specific clause 16(2) of the GCC, whether the contractor is entitled to any interest pendente lite on the amounts payable to the contractor other than upon the earnest money or the security deposit. 6.2 Clause 16 of the GCC reads as under: "16: Earnest Money and Security Deposit- (1) The earnest money deposited by the Contractor with his tender will be retained by the Railway as part of security for the due and faithful fulfilment of the contract by the contractor. The balance to make up this security deposit which will be 10 per cent of the total value of the contract, unless otherwise specified in the special conditions, if any, may be deposited by the Contractor in case or in the form of Government Securities or may be recovered by percentage deduction from the Contractor's "on account" bills provided also that in ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for consideration before this Court in the recent decision of this Court in the case of Garg Builders (supra). In the said case, this Court considered clause 17, which reads as under: "Clause 17 : No interest shall be payable by BHEL on Earnest Money Deposit, Security Deposit or on any moneys due to the contractor." [Bold letters are ours] After considering various decisions on award of interest pendente lite and the future interest by the arbitrator and after discussing the decisions of this Court in the cases of Ambica Construction v. Union of India, (2017) 14 SCC 323 and Raveechee and Company (supra) and other decisions on the point, this Court has observed in paragraphs 9 to 18 as under: "9. On the other hand, Mr. Pallav Kumar, learned counsel for the respondent, submitted that Section 31(7)(a) of the 1996 Act gives paramount importance to the contract entered into between the parties and categorically restricts the power of an arbitrator to award prereference and pendente lite interest when the parties themselves have agreed to the contrary. He argued that if the contract itself contains a specific clause which expressly bars the payment of interest, then it is not open....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ttar Pradesh, (2009) 12 SCC 26, this Court has held that a provision has been made under Section 31(7)(a) of the 1996 Act in relation to the power of the arbitrator to award interest. As per this section, if the contract bars payment of interest, the arbitrator cannot award interest from the date of cause of action till the date of award. 13. In Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat, (2010) 8 SCC 767, it was held by this Court that where the parties had agreed that the interest shall not be payable, the Arbitral Tribunal cannot award interest between the date on which the cause of action arose to the date of the award. 14. Bharat Heavy Electricals Limited v. Globe Hi-Fabs Limited, (2015) 5 SCC 718, is an identical case where this Court has held as under: "16. In the present case we noticed that the clause barring interest is very widely worded. It uses the words "any amount due to the contractor by the employer". In our opinion, these words cannot be read as ejusdem generis along with the earlier words "earnest money" or "security deposit"." 15. In Sri Chittaranjan Maity v. Union of India, (2017) 9 SCC 611, it was categorically....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounsel appearing on behalf of the respondent herein, shall have no application as the same were under the Arbitration Act, 1940. It is not in dispute that in the present case, the parties are governed by the 1996 Act. 8. In the case of Bright Power Projects (India) (P) Ltd. (supra), while considering pari materia clause with clause 16(2) of the GCC, a three Judge Bench of this Court has held that when the parties to the contract agree to the fact that interest would not be awarded on the amount payable to the contractor under the contract, they are bound by their understanding and having once agreed that the contractor would not claim any interest on the amount to be paid under the contract, he could not have claimed interest either before a civil court or before an Arbitral Tribunal. In the aforesaid case, this Court considered clause 13(3) of the contract, which reads as under: "13.3 - No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but government securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon." 8.1. In the said decision, this C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expression "amounts payable to the contractor under the contract" has to be read independently and disjunctively to earnest money deposit and security deposit as the word used is "or" and not "and" between "earnest money deposit", "security deposit" and "amounts payable to the contractor under the contract". Therefore, the principle of ejusdem generis is not applicable in the present case. On the principle of ejusdem generis, this Court in the case of Tehri Hydro Development Corporation (India) Ltd. (supra), in paragraphs 22 and 23, has observed and held as under: "22. Insofar as argument based on the principle of ejusdem generis is concerned, the Division Bench has held that that is not applicable in the present case. We find that it is rightly so held. Ejusdem generis is the rule of construction. The High Court has negated this argument in the following manner: [Jaiprakash Associates Ld. V. Tehri Hydro Development Corpn. (India) Ltd., 2012 SCC OnLine Del 6213] "18. The rule of ejusdem generis guides us that where two or more words or phrases which are susceptible of analogous meaning are coupled together, a noscitur a sociis, they are to be understood to mean in their cogna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ris rule is not applicable does not necessarily mean that the prima facie wide meaning of the word "other" or similar general words cannot be restricted if the language or the context and the policy of the Act demand a restricted construction. In the expression "defect of jurisdiction or other cause of a like nature" as they occur in Section 14(1) of the Limitation Act the generality of the words "other cause" is cut down expressly by the words "of a like nature", though the rule of ejusdem generis is strictly not applicable as mention of a single species "defect of jurisdiction" does not constitute a genus. Another example that may here be mentioned is Section 129 of the Motor Vehicles Act which empowers any "police officer authorised in this behalf or other person authorised in this behalf by the State Government" to detain and seize vehicles used without certification of registration or permit. The words "other person" in this section cannot be construed by the rule of ejusdem generis for mention of single species, namely, "police officer" does not constitute a genus but having regard to the importance of the power to detain and seize vehicles it is proper to infer that the word....