Indian Railway Construction Company Limited vs. National Buildings Construction Corporation Limited - (Supreme Court) (17 Mar 2023)
Unless there is a specific bar under the contract, it is always open for the Arbitrator/Arbitral Tribunal to award pendente lite interest
The Indian Railway Construction Company Limited ("IRCON") has preferred the present appeal feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court. Appellant has submitted that, both, the learned Single Judge and the Division Bench of the High Court have materially erred in upsetting/quashing and setting aside the award passed by the learned Arbitral Tribunal rejecting the Claim Nos. 33 and 34. It is submitted that, Division Bench of the High Court has set aside the award of interest on the amount advanced against hypothecation of equipments, on the ground that there is no such provision of award of interest in the contract/supplementary Agreements.
High Court has not considered Section 31(7)(a) of the Arbitration And Conciliation Act, 1996 (Arbitration Act), which permits the arbitrator that unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the Arbitral Tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. Thus, unless there is a specific bar under the contract, it is always open for the arbitrator/Arbitral Tribunal to award pendente lite interest.
Once it was found that the advance amount was paid for hypothecation of equipment and thereafter when the Arbitral Tribunal awarded the interest on advance for hypothecation of equipment, the same was not required to be interfered with by the learned Single Judge in exercise of the powers under Section 34 of the Arbitration Act and even by the Division Bench of the High Court while exercising the powers under Section 37 of the Arbitration Act. However, at the same time to award the interest @ 18% can be said to be on a higher side. In the facts and circumstances of the case, if the interest is awarded @ 12% on advance for the hypothecation of equipment, the same can be said to be reasonable interest.
The impugned judgment and order passed by the learned Single Judge as well as the Division Bench of the High Court quashing and setting aside the award passed by the Arbitral Tribunal rejecting Claim Nos. 33 and 34 are quashed and set aside. Appeal allowed.
Tags : AWARD INTEREST GRANT