TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 52
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....ready paid an amount of Rs.3,36,465/. 3. The respondent, on 25th July 1989, issued a notice to the appellant regarding his claim. The said notice was replied to by the appellant on 10th August 1989 stating therein that, as against the claim of Rs.3,34,744/, the respondent had been paid an amount of Rs.3,36,465/. The respondent thereafter filed a suit being O.S. No. 206 of 1989 before the Court of Civil Judge (Senior Division), Bhubaneswar (hereinafter referred to as the "trial court") under Section 20 of the Arbitration Act, 1940 (for short, "the 1940 Act") seeking reference of the dispute to arbitration. By order of the trial court dated 14th February 1990, the suit was decreed in favour of the respondent and he was directed to file the original F2 agreement in the court for referring the dispute to arbitration. However, the respondent did not file the original F2 agreement as directed. In the meantime, the 1940 Act was repealed and the Arbitration and Conciliation Act, 1996 (for short, "the 1996 Act") came into force. 4. The respondent thereafter filed an application in the disposed of suit before the trial court, praying for appointment of an arbitrator under the provisions of....
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.... of 18% per annum is totally unreasonable. It is submitted that the interest amount of Rs.46,90,000/is almost five times that of the main award amount of Rs.9,20,650/. He relies on the judgment of this Court in the cases of Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority and Others (2005) 6 SCC 678, Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy and Another (2007) 2 SCC 720 and Mcdermott International Inc. v. Burn Standard Co. Ltd. and Others (2006) 11 SCC 181 in support of the proposition that the exorbitant amount of interest awarded by the Arbitrator and upheld by the learned Single Judge of the High Court would be contrary to the interest of justice. 8. Shri Panigrahi, on the contrary, submitted that there is no reason to interfere with the rate of interest awarded by the learned Arbitrator, which has been concurrently upheld by the District Judge as well as the High Court. He submitted that in view of the provisions of subsection (7) of Section 31 of the 1996 Act, which has been construed by a threeJudges Bench of this Court in the case of Hyder Consulting (UK) Limited v. Governor, State of Orissa Through Chief Engineer (2015) 2 SCC 189,....
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....uch exercise has been done. The learned Arbitrator, without assigning any reasons, has awarded the interest at the rate of 18% per annum for the period during which the proceedings were pending and also at the same rate after the award was made till the actual payment. 12. The undisputed position is that though final measurement was done on 30st August 1977, for a period of twelve years, i.e., till 25th July 1989, the respondent did not take any step to raise his claim. It is only on that date, i.e., 25th July 1989, the respondent issued a notice to the appellants regarding his claim. As such, the very conduct of the respondent for remaining silent for such a long period would disentitle him for the interest during the said period. 13. Similarly, though a decree was passed on 14th February 1990 and the respondent was directed to file the original agreement, he took no step till 4th February 2000. In the meantime, the 1996 Act came into force. Thereafter, the respondent filed an application in the disposed of suit which came to be dismissed on 4th February 2000. Thereafter, he moved an application being MJC No. 36 of 2000 before the High Court for appointment of arbitrator under S....
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....eld that the arbitrator had power to award interest. Keeping in view the facts and circumstances of the present case that the contract was entered into in 1987, the work was completed in 1990 after extension granted by MHADA and the arbitrator passed awards in 1995, it would be proper, equitable and in the interest of justice if we reduce the rate of interest to 10 per cent per annum." 16. This Court, after referring to the earlier decisions on the power of the Arbitrator to award interest at all the three stages that is prereference period, pendente lite and post award period, found that, in the facts and circumstances of the said case, it would be proper, equitable and in the interest of justice to reduce the rate of interest to 10% from 18% per annum. 17. This Court, in the case of Mcdermott International Inc., has observed thus: "154. The power of the arbitrator to award interest for preaward period, interest pendente lite and interest postaward period is not in dispute. Section 31(7)(a) provides that the Arbitral Tribunal may award interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date....
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....me, it will be in furtherance of justice to reduce the rate of interest to 7½ %." 18. It could thus be seen that while exercising the jurisdiction under Article 142 of the Constitution of India, this Court has reduced the rate of interest to 7.5% per annum. 19. Again, in the case of Krishna Bhagya Jala Nigam Ltd. (supra), this Court, while reducing the rate of interest, observed thus: "11. On the merits of the claims made by the contractor we find from the impugned award dated 2562000 that it contains several heads. The arbitrator has meticulously examined the claims of the contractor under each separate head. We do not see any reason to interfere except on the rates of interest and on the quantum awarded for letting machines of the contractor remaining idle for the periods mentioned in the award. Here also we may add that we do not wish to interfere with the award except to say that after economic reforms in our country the interest regime has changed and the rates have substantially reduced and, therefore, we are of the view that the interest awarded by the arbitrator at 18% for the prearbitration period, for the pendente lite period and future interest be reduced to ....