Allowed

M/S. Y.Ramchandra Reddy Yeture v. State of Maharashtra

Bombay HC2 Dec 2014FA/485/1999

Case brief

AI extract

What is this about?

This High Court allowed appeals by a contractor challenging the lower court's failure to expressly include interest awarded by an arbitration panel in its operative order. The court held that when an arbitral award is made a rule of court, the interest component must be incorporated, and further interest from the decree date must be granted.

What did the court decide?

Both appeals allowed; operative orders modified to include interest awarded by arbitrators; further interest granted at 8% per annum from decree date till realization.

M/S. Y.Ramchandra Reddy Yeture Vs State of Maharashtra — Specific Performance | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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BENCH AT AURANGABAD

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 FIRST APPEAL NO.485/1999
WITH

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CIVIL APPLICATION NO.3122/2014

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M/s Y. Ramchandra Reddy Yeture.
27 Banjara Avenue Banjara
Hills, Hyderabad.

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...Appellant..
(Orig. Plaintiff)

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Versus

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The Government of Maharashtra
Irrigation Department Represented
by the Executive Engineer,
Majalgaon Canal Dn.No.7,
Gangakhed,
Dist. Parbhani..

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...Respondent..
(Orig. Defendant)

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 .....

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Shri P.R. Patil, Advocate for appellant.

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Shri Vishal Badakh, Advocate h/f Shri G.B. Rajale,
Advocate for Respondent.

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=========================================================

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FIRST APPEAL NO.486/1999 WITH

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CIVIL APPLICATION NO.3123/2014

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M/s Y. Ramchandra Reddy Yeture.
Engineer & Builder,
27, Banjar Avenee, Banjara Hills,
Hyderabad – 500 034. (Andhra Pradesh)

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...Appellant..
(Orig. Plaintiff)

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FA 485/99 with CA 3122/14 & another

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Versus

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The Government of Maharashtra
Irrigation Department,
Represented by the Executive Engineer,
Majalgaon Canal Dn.No.7,
Gangakhed,
Dist. Parbhani..

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...Respondent...
(Orig. Defendant)

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 .....

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Shri P.R. Patil, Advocate for appellant.
Shri Vishal Badakh, Advocate h/f Shri G.B. Rajale,
Advocate for Respondent.

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 .....

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CORAM: B.P. DHARMADHIKARI & A.M. BADAR, JJ.

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JUDGMENT RESERVED ON: 20.11.2014 JUDGMENT PRONOUNCED ON: 02.12.2014

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JUDGMENT(Per A.M. Badar, J.) :

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1]By these appeals, under Section 39 of the

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Arbitration Act, 1940, plaintiff/contractor is taking

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exception to the judgment and order passed by the learned

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Civil Judge (Senior Division), Gangakhed in R.C.S. No.

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199 of 1998 and R.C.S. No. 261 of 1998, on 4.1.1999 and
5.1.1999, respectively; so far as non inclusion of

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interest part in the operative part of the order in those
judgments. As parties to both these appeals are same and

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FA 485/99 with CA 3122/14 & another

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as the issue involved in both these appeals is same, they
are being disposed of by the common judgment. For the
sake of convenience, the parties shall be referred
hereinafter in their original capacity.

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2]The facts leading to the institution of the present
appeals can be summarized thus :-

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[a]In both these matters, several claims made by
appellant/plaintiff/contractorwerereferredfor

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arbitration in terms of the arbitration agreement by
present respondent/defendant/State. So far as R.C.S. No.
199/1998 (F.A.No.485/99] is concerned, the claims were
relating to work of construction of earth work, CC Lining

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and structures in Km. Nos. 88 to 90 of Majalgaon Right
canal. In terms of arbitration agreement those were
referred to the Board of Arbitrators. So far as R.C.S.
No. 261 of 1998 {F.A. No. 486/99] is concerned, claims
made by plaintiff/contractor regarding construction of
canal for Km. Nos. 88 to 99 and 100 to 101 of Majalgaon,

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District Beed, were referred to sole arbitrator, Shri
S.Y. Kulkarni, in terms of the Arbitration Agreement by
defendant/State of Maharashtra.

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FA 485/99 with CA 3122/14 & another

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[b]In R.C.S. No. 199/1998 (F.A. No. 485/99) the

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Board of Arbitrators passed an award on 27.5.1998 and the
same, alongwith R & P came to be filed in the Court of
learned Civil Judge (Senior Division), Gangakhed, on
3.7.1998, in view of the provisions of section 14(2) of
the Arbitration Act, 1940. So far as R.C.S. No. 261 of
1998 (F.A. No. 486/99) is concerned, the sole arbitrator
passed an award on 30.7.1998, and filed the same as per
provisions of Section 14(2) of the Arbitration Act, 1940
on 1.8.1998, in the court of Civil Judge (Senior
Division), Gangakhed. After filing of awards, the
learned Civil Judge (Senior Division) Gangakhed, was
pleased to issue notices to both the parties of filing of
award. In pursuance to the notice, defendant – State

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filed objections to both the awards u/s 13(a)(c) of the
Arbitration Act, 1940 and objected awards on various
counts. In nut-shell, according to defendant – State,
the board of arbitrators as well as sole arbitrator in
respective cases have not acted as per arbitration
agreement, they exceeded jurisdiction and gave erroneous
reasons for awarding claims raised by the plaintiff –
contractor. It is contention of defendant – State that

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board of arbitrators as well as sole arbitrator in
respective cases misconducted themselves while awarding
claims, compensation for delay etc. Contending that the
board of arbitrators and arbitrator have misconducted
themselves as well as proceedings and awards have been
improperly procured, defendant - State in both cases
contended that awards should not be made rule of Court
and those be set aside.

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 [c] As the controversy in both these appeals is
restricted to the claim on account of interest not being
expressly included in the operative part of the judgment
and order whereby awards have been made rule of Court, it
would be appropriate to reproduce objection of defendant
- State in respect of the award of interest. In RCS
199/98 (FA 485/99), objection raised by defendant – State
so far as interest part is concerned, can be found in
paragraph no.15 of objection at Exhibit 10 raised by
defendant – State. It reads thus:

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“15. Dispute No.11 :- Payment of interest on
all amounts due on all the demands at the rate of
24% per annum from the date of occurrence to the
date of payment.

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15.1It is submitted that having already denied
their liability to pay the principal amount of

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FA 485/99 with CA 3122/14 & another

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claim there is no question, therefore, of payment
of interest therein.

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15.2It is further submitted that this project
being an activity of the Government which is not
a commercial activity but is for the benefit of
the people. Only 6% interest is payable.

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15.3The Chief Engineer, (SP), Aurangabad on
dt.15.07.95 has also rejected this claim.

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15.4The Arbitrator board did not consider the
say of Department and while awarding the
interest. The Arbitrator board exceeded their
power and jurisdiction and also made a legal
misconduct while awarding the interest at the
rate of 16% on principal amount which is not
acceptable by the respondent/State, and shall be
rejected by the honourable Court.

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15.5It is submitted by the respondent / State
that as per Law, Arbitrator board has not having
jurisdiction to pass interest from the date of
award till realisation. Hence the para 41.0 &
42.0 of award is illegal. Hence denied.

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15.6As per award, amount calculated against
this dispute is as follows -

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i] Interest on Dispute No.1Rs.56,25,967/-
ii] Interest on Dispute No.4 Rs.13,56,037/-
iii] Interest on Dispute No.8 Rs.98,641/-
Amount payable to claimant Rs.70,80,645/-
which is not acceptable.”

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FA 485/99 with CA 3122/14 & another

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So far as RCS 261/98 (FA 486/99), objection raised
by defendant – State to the award of Board of Arbitrators

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can be found in paragraph no.10 of objection at Exhibit

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10. It reads thus:-

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“That it is submitted that having already denied
their liability to pay the principal amount of
claim there is no question, for payment of
interest. It is further submitted that this
project being an activity of the Government which
is not a commercial activity but is for the
benefit of the people. Only 6% interest is
payable. The arbitrator did not consider the say
of Department and while awarding the interest.
The Arbitrator exceeded his power and jurisdiction
and also made a legal misconduct while awarding
the interest at the rate of 18% on principal
amount which is not acceptable by the Respondent /
State. Hence, the above claim of interest shall
be rejected by the Honourable Court.”

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The plaintiff – contractor duly replied the

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objection to the award raised by defendant – State and
the parties went for trial.

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 [d] The learned trial Court framed issues in both

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these civil suits. Issues along with findings given
thereon by the learned trial Court in both these suits

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FA 485/99 with CA 3122/14 & another - 8 -

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`can be quoted with advantage. Those are as`	`follows:-`
`RCS 199/98 (FA 485/99)`
`Issues`	`Findings`
`1] Does the defendant / State prove` `that the arbitrator has misconducted` `himself or the proceedings ?`	`In the` `Negative.`
`2] Does the defendant prove that the` `award has been improperly procured` `or and is otherwise invalid ?`	`In the` `Negative.`
`3] Can the award of the arbitrator be` `made absolute and rule of the Court?`	`In the` `affirmative.`
`4] Is the objection filed by the` `defendant is within limitation ?`	`In the` `affirmative.`
`…..`
`RCS 261/98 (FA 486/99)`
`Issues`	`Findings`
`1] Does the defendant / State prove` `that the arbitrator has misconducted` `himself or the proceedings ?`	`In the` `Negative.`
`2] Does the defendant prove that the` `award has been improperly procured` `or and is otherwise invalid ?`	`In the` `Negative.`
`3] Can the award of the arbitrator be` `made absolute and rule of the Court?`	`In the` `affirmative.`
`4] Is the objection filed by the`	`In the`
`defendant within limitation ?`	`affirmative.`

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FA 485/99 with CA 3122/14 & another

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[e] After hearing the parties, by impugned judgment
and order dated 4.1.1999 and 5.1.1999, the learned Civil

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Judge, Senior Division, Gangakhed, was pleased to decree

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both these suits bearing RCS Nos.199/1998 and 261/1998
respectively and the arbitration awards in respective
suits were made rule of the Court. Considering the

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controversy involved in these appeals, respective
operative orders passed by the trial Court needs
reproduction and they read thus:

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“RCS 199/98 (FA 485/99)

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ORDER

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1]The suit is decreed with costs.

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2]The award dated 27.5.1998 is made rule of

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the Court.

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3]The defendant/State shall make payments to
the plaintiff/contractor as per the rates

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awarded and mentioned in Annexure II and III of
the award.

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Dated: 4.1.1999 Sd/-

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 (S.G. Bharuka),
 Civil Judge, Senior Divn.,
Gangakhed.”

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FA 485/99 with CA 3122/14 & another

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“RCS 261/98 (FA 486/99)

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ORDER

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1] The suit is decreed with costs.

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2]The arbitration award dated 30.7.1998 filed

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in the Court is made rule of the Court.

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payments to the plaintiff/contractor as per the
award page Nos.6 to 10.

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 (S.G. Bharuka),
 Civil Judge, Senior Divn.,
Gangakhed.”

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3] Being aggrieved by the judgment and order dated
4.1.1999 and 5.1.1999 in RCS Nos.199/1998 and 261/1998

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insofar as those relate to non-incorporation of claim of
interest awarded by arbitrators in the operative order,
the plaintiff – contractor has preferred both these
appeals.

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4] Heard Shri P.R. Patil, learned counsel appearing
for appellant / plaintiff. He contended that when the
learned trial Court has made award as rule of Court, it
was incumbent on the part of the learned trial Court to

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pass an order directing payment of interest in the
operative part of the judgment and order. He further
argued that the learned trial Court has not deleted part

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of the interest by rejecting it. On the contrary, the
learned trial Court accepted the awards as it is and made
them rule of Court. The learned counsel further submits

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that defendant – State has neither filed the appeal nor
filed cross-objections. Shri P.R. Patil, learned counsel

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for the appellant further argued that in fact the
judgment of the trial Court shows that it was inclined to
grant interest, but has not expressly mentioned the same
in the operative part of the judgment and order. This

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according to the learned counsel can at the most be
termed as accidental slip or omission. According to the

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learned counsel for the appellant, in the objection to
the award raised by defendant – State before the learned

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trial Court, there is no plea that interest was waived or

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not payable as per tender conditions and there is nothing
on record that there exists prohibition to award interest

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in terms of contract. Hence, according to the learned

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counsel for the appellant - plaintiff, impugned judgments
and orders of the learned trial Court being not in

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FA 485/99 with CA 3122/14 & another

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consonance with the findings given by the learned trial
Court in the body of the judgment needs to be modified to
that extent.

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 Per contra, according to Shri Vishal Bhadale,
learned counsel h/f Shri G.B. Rajale, Advocate for
respondent – State, as per terms and conditions of
contract entered into between the parties, no interest on
money due to the plaintiff was payable and the appellant
– plaintiff has waived interest as per condition No.10.3
of the special condition of contract. Learned counsel
for defendant – State handed over photocopy of unsigned
document titled as International Competitive Bidding and
placing reliance on Condition No.10.3 from the said
document has supported his argument and contended that
the plaintiff – contractor was not entitled to get
interest on payment in arrears or on any guarantee bond
or on any balance, which may be found due to him on the
final settlement. Said Condition No.10.3 reads thus:-

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10.3NO INTEREST ON MONEY DUE TO THE CONTRACTOR:

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No omission by the Engineer-in-charge to pay the
amount due upon measurements or otherwise shall
vitiate or make void the contract, nor shall
contractor be entitled to get interest on any

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FA 485/99 with CA 3122/14 & another

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guarantee bond or payment in arrears nor on any
balance which may, on the final settlement of his
account be found to him.

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As such, according to the learned counsel for defendant –

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State, the learned trial Court has rightly not

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incorporated award of interest in the operative order.
Both the parties relied on some judgments, which shall be
dealt with at appropriate place. We perused record and
proceedings.

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5] Let us now examine whether the learned trial Court
erred in not incorporating award of interest in the
operative part of the impugned judgments and orders.

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6] So far as controversy involved in RCS 199/1998 is
concerned, reference therein was to the board of
arbitrators. Award therein was passed on 30.7.1998 by

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the said board. Dispute No.11 before the Board of
Arbitrators in the said matter was regarding payment of
interest on all amounts due on all the demands made by

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the plaintiff – contractor. Paragraphs 40.0 to 42.0 of

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the award of Board of Arbitrators deals with this claim
and the Board of Arbitrators has held thus while awarding

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FA 485/99 with CA 3122/14 & another

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the interest to the plaintiff – contractor as under :-

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40.0Dispute No.11 : Payment of interest on all
amounts due on all the demands at the rate of 24%
per annum from the date of occurrence to the date
of payment.

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40.1The Claimants had earlier asked for
interest at the rate of 36% per annum on all the
amounts due on all the demands and from the date
of occurrence to the date of payment. However,
this demand was reduced later on to interest at
the rate of 24% per annum. This demand has also
been repeated by the Claimants in their prayer 'P'
on p.43 of Exh.C-1.

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40.2It is seen from the record that the
Claimants sought decisions for their various
Claims, including interest, under Clause No.56 of

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the Contract, from the Executive Engineer
M.C.Dn.No.7, Gangakhed, under their letter dated
21/12/1994. After correspondence and discussions
with the relevant authorities, the decisions were

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given by the C.E., (S.P.), Aurangabad on
15/07/1995 (vide pages nos.344 to 348 of Ex.C-1)
and the Claim for interest was rejected.

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40.3As would be seen from the paragraphs above,
the Respondents are considered by us to be liable
for payment to the Claimants, certain sums for

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some of the disputes / claims while some
disputes / claims have been rejected by us. For
the Claims admitted, it is hereby awarded that

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FA 485/99 with CA 3122/14 & another

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simple interest at the rate of 16% (Sixteen
Percent) per annum will be paid by the Respondents
to the Claimants for the various sums awarded in
the paragraphs above from 15/07/1995 (or later as
indicated below) till the date of award. No
interest shall however be payable for the sums
awarded for the Dispute Nos.1(b) (Award Para
No.29.3 and for the Dispute No.7 (Award Para
no.35.3) which are interest sums. For the
remaining disputes for which sums are awarded,
simple interest at the rate of 16% per annum would
be payable from 15/07/1995 onwards for the sums
due prior 15/07/1995 and for the sums becoming due
after 15/07/1995, interest will be payable from
the dates from which they become due as per the
award.

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40.4 As the date of reference for this Arbitration is 04/11/1996, the Past and the Pendente lite interests are inevitably getting merged as would be seen from the above paragraphs. 41.0 The Claimants have also included in Prayer P, the request to award future interest @ 24% per annum from the date of award till the date of payment. We award, future simple interest at rate of 16% (Sixteen Percent) per annum on the awarded amount (excluding those of interests i.e. dispute no.1(b(), dispute no.4 and claim no.11) from the date of award till it is paid or until the decree of Court, whichever is earlier.

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42.0If, however, the amount of the award, as

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FA 485/99 with CA 3122/14 & another

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indicated in para 41 above, is not paid within a
period of two months from the date of award,
future simple interest on the amount of award
(excluding interests as indicated in para 41
above) will be paid at 18% (Eighteen Percent) p.a.
(beyond 2 months), until the payment or decree of
the Court, whichever is earlier.”

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Perusal of the award passed by board of arbitrators thus

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shows that interest was awarded to the plaintiff –
contractor for various sums awarded. Interest for the

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past and pendente lite came to be granted so also future interest from the date of award till payment of the awarded amount or until the decree of the Court whichever is earlier came to be awarded to the defendant – contractor by the Board of Arbitrators.

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7] So far as RCS No.261/98 is concerned, the sole

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arbitrator has made an award on 30.7.1998. Claim No.8

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regarding interest was dealt by the sole arbitrator in
paragraph no.15.0 of the said award. It reads thus:-

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“15.0 Claim No.8 - Interest :-

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15.1 I award that the interest at 18% per
annum on the sums payable as per the payments
awarded in respect of claim Nos.1, 1(a), 1(b),
2, 3, 4, 5 and 6 shall be paid to the Claimants

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FA 485/99 with CA 3122/14 & another

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from 30.1.1995 upto 8.11.1995, the pendente lite interest for period from 9.11.1995 to 30.7.1998, the date of publishing the award and from the date filing 30 days as grace period after the date of publishing this award to the date of actual payment or the date of decree by the competent court which ever is earlier.”

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8] We have already reproduced objection of defendant
– State to the award of interest to the plaintiff –
contractor in foregoing paragraph. It was not the case
of defendant – State that the arbitrators have
misconducted themselves or awards have been improperly
procured because of existence of clause prohibiting award
of interest in the contract entered into between the
parties. Though the learned trial counsel for defendant
– State has tried to press in service the document titled
as International Competitive Bidding containing special
conditions of contract handed over to us during hearing
wherein Condition No.10.3 regarding prohibition to award
interest to the contractor is incorporated, said
document is a photo copy having no signature either of

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the contractor or the officers of defendant – State. As
such said document has no evidentiary value and it cannot

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FA 485/99 with CA 3122/14 & another

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be held by any stretch of imagination that the clause
prohibiting award of interest to the contractor was a
condition of contract entered into between the parties.

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The learned counsel for defendant – State has placed reliance on Union of India V/s M/s Crafters Engineering and Leasing (P) Ltd . reported at 2011 (5) Mh.L.J., 707 wherein Hon'ble Supreme Court in paragraph no.14 after considering similar clause prohibiting award of interest to the contractor has held thus:

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“14 ..... ….. On the other hand, we fully accept the stand of the Union of India as rightly projected by Mr.A.S. Chandhiok, learned ASG. We reiterate that where the parties had agreed that no interest shall be payable, the arbitrator cannot award interest for the amounts payable to the contractor under the contract. Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and the said dispute is referred to the arbitrator, he shall have the power to award interest pendente lite . As observed by the Constitution Bench in G.C. Roy's case (supra),

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FA 485/99 with CA 3122/14 & another

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in such a case, it must be presumed
that interest was an implied term

¶165

of the agreement between the
parties. However, this does not
mean that in every case, the
arbitrator should necessarily award

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interest pendente lite . In the subsequent decision fo the Constitution Bench i.e. , N.C. Budharaj's case (supra), it has been reiterated that in the absence of any specific stipulation or prohibition in the contract to claim or grant any such interest, the arbitrator is free to award interest.”

¶167

This judgment is of no assistance to defendant – State as

¶168

in present cases, existence of clause prohibiting award
of interest in the contracts entered into by the parties
is not established. Objection of defendant – State filed
before the learned trial Court is not containing such
pleading. Terms of contract contending such terms were

¶169

not proved before the learned trial Court. As such we

¶170

find no substance in contention of defendant – State that
the arbitrators exceeded their jurisdiction in awarding
interest to the plaintiff-contractor and thereby

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FA 485/99 with CA 3122/14 & another

¶172

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misconducted themselves and the arbitration proceedings.
It is not proved that the awards are improperly procured.

¶174

Finding in that regard recorded by the learned trial
Court is perfectly correct. More over, such contentions

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cannot be gone into as defendant – State has not challenged the judgments and decrees passed by the learned trial Court by filing appeals or crossobjections. Shri P.R. Patil, learned counsel for the appellant relied on State of U.P. V/s Harish Chandra & Co. reported in (1999) 1 SCC 63 and Union of India V/s

¶176

Concrete Products and Construction Company & others

¶177

reported at (2014) 4 SCC 416 to contend that the clause prohibiting interest is not a bar to grant the claim regarding interest. In State of U.P. (supra), Hon'ble

¶178

Supreme Court, upon examining Clause 1.9 in the contract,
came to the conclusion that the claim for damages or

¶179

claim for payment for the work done and which was not
paid for, would not obviously cover any money which may

¶180

be said to be lying with the Government. In the light of

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such finding, the Hon'ble Supreme Court has held that

¶182

claim for interest can be granted. In the matter of

¶183

Union of India (supra) in paragraph no.21 of its

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FA 485/99 with CA 3122/14 & another

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¶186

judgment, after considering Clauses 2401 and 2403 of the
contract in that matter, the Hon'ble Apex Court has held
that the interest would have been payable from the date
when the award was made till the money was deposited in
the High Court. These rulings are not applicable to the
facts of the instant case because this Court has come to

¶187

the conclusion that the clause prohibiting interest was
not proved before the learned trial Court and the learned
trial Court had not rejected award of interest on that
count.

¶188

9] Shri P.R. Patil, learned counsel for the appellant has relied on State of Orissa V/s B.N. Agarwalla reported in (1997) 2 SCC 469 for contending that the arbitrator can award interest for post award period as well as future interest till the date of decree or date of payment, whichever is earlier. Paragraph nos.37 and 38 thereof need reproduction and read thus:

¶189

“37.When the arbitrator makes an
award, it is not necessary that in
every case the award has to be filed
in a court and a decree, in terms
thereof, is passed. It does happen
that when an award is made, the party

¶190

FA 485/99 with CA 3122/14 & another

¶191

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¶192

against whom it is made, may accept the award and comply with the same. It is rightly not disputed that from the date of passing of the award, future interest can be awarded by the arbitrator as held by this Court in the cases of Unique Erectors (Gujarat) (P) Ltd . and Hindustan Construction Co. Ltd . The future interest till the date of the decree or the date of payment, whichever is earlier. The effect of this would be that if the award is voluntarily accepted, which may not result in a decree being passed, then payment of interest would be made from the date of award till the date of payment. Where, however, as in the present case, the award is filed in the court and a decree is passed in terms thereof, then Mr.Sanyal has rightly contended that it is for the court to determine under Section 29 of the Arbitration Act as to whether interest should be ordered to be paid and if so at what rate.

¶193

38.Under Section 29 of the
Arbitration Act, the court can, even
where the arbitrator has awarded

¶194

FA 485/99 with CA 3122/14 & another

¶195

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¶196

interest from the date of the award
till the date of payment, disallow
interest from the date of the decree
or determine a different rate at which
the interest is to be paid or confirm
the grant of interest as awarded in
the award. When the court does not
modify the award with regard to grant
of interest from the date of the award
up to the date of payment, the effect
would be as if the court itself has
granted interest from the date of the
decree till the date of payment at the
rate which was determined by the
arbitrator. The future interest would
be regarded as having been ordered to
be paid under Section 29 of the
Arbitration Act when the court does
not modify the award in this respect.”

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10] Let us now consider how the issue regarding award

¶198

of interest by arbitrators came to be dealt with by the learned trial Court. This aspect is dealt with by the learned trial Court in both the suits in similar way. In fact, findings given by the learned trial Court on this aspect in both the impugned judgments are ad verbatim same . After considering the case law on this aspect

¶199

cited by the parties, the learned trial Court has held that the arbitrator is well within his jurisdiction in awarding interest pendente lite . It is also held by the learned trial Court that for the period during which arbitration proceedings are pending the arbitrator has power to award interest so also the arbitrator can award

¶200

interest for post award period. These findings can be
found in paragraph no.17 of the judgment in RCS No.199/98
and paragraph no.21 of the judgment in RCS No.261/98. It

¶201

is thus clear from both these impugned judgments that the
learned trial Court has also accepted awards so far as
they relate to grant of interest to the plaintiff –
contractor. Perusal of both the impugned judgments
clearly shows that the learned trial Court has not set
aside or deleted interest awarded to the defendant –
contractor by the arbitrators. On the other hand, the
learned trial Court was very much inclined to grant
interest awarded by the arbitrators. However, it is seen
from the operative orders in both the suits as reproduced
above, interest awarded by the arbitrators has not been
incorporated therein. When the learned trial Court held
that the awards are required to be made absolute and rule

¶202

FA 485/99 with CA 3122/14 & another

¶203

- 25 -

¶204

of the Court, necessary consequence of incorporating the

¶205

award of interest in final order ought to have followed.
However, it is seen that the operative orders are not in

¶206

consonance with the findings given in the body of the
judgment. It is trait that operative order of the
judgment has to be in conformity with the findings given
by the Court. Final operative order cannot be

¶207

inconsistent or contrary to the findings arrived at by
the Court. In RCS No.199/98, the direction to the

¶208

defendant is restricted to make payment as per rates
awarded and mentioned in Annexures II and III, which are

¶209

item-wise revised rates awarded by the board of

¶210

arbitrators. Thus, interest part is found missing in
operative order. In a similar way, in RCS No.261/98, the

¶211

direction in the operative order is to make payment as
per the award page Nos.6 to 10, which are in respect of
rates demanded and awarded by the plaintiff – contractor

¶212

before the sole arbitrator. Here also the direction

¶213

regarding payment of interest awarded by the sole
arbitrator is missing in the operative order, though the

¶214

entire award is made rule of the Court. In such a
situation, both the appeals need to be allowed by

¶215

FA 485/99 with CA 3122/14 & another

¶216

- 26 -

¶217

modifying the operative orders so as to include direction
regarding payment of interest awarded by the arbitrators
as well as grant of further interest from the date of
decree till realization of the amount awarded.

¶218

11] In the result, both appeals are allowed with
costs. The defendant – State is directed to make payment
to the plaintiff – contractor as per the awards including
the interest granted by the Board of Arbitrators in award
which was the subject matter of RCS No.199/98 and as
granted by the sole arbitrator in award which was the
subject matter of RCS No.261/98. Impugned judgments and
orders dated 4.1.1999 and 5.1.1999 respectively in RCS
No.199/98 and RCS No.261/98 between the parties stand
modified accordingly by maintaining remaining part of the
operative orders. In addition, defendant – State shall
pay interest at the rate of 8% per annum on the principal
sum as adjudged by the awards which remained to be paid
to the appellant – plaintiff from the date of decree till
its realization. In view of disposal of appeals,pending
civil applications also stand disposed of.

¶219

ndk/ fa.doc

M/S. Y.Ramchandra Reddy Yeture v. State of Maharashtra

Case brief

What is this about?

What did the court decide?

M/S. Y.Ramchandra Reddy Yeture v. State of Maharashtra

Case brief

What is this about?

What did the court decide?

What the court decided

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Cases cited

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