The High Court dismissed an S.B. Civil Miscellaneous Appeal challenging an order upholding the rejection of an award for pendente lite interest. The bench held that such interest lies in the Arbitrator's discretion and its non-award does not constitute misconduct under the Act.
The appeal was dismissed.
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S.B. CIVIL MISC. APPEAL NO.166/2004 (Om Prakash Gupta Vs. The State of Rajasthan)
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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JAIPUR
O R D E R
IN
S.B. CIVIL MISC. APPEAL NO.166/2004 (Om Prakash Gupta Vs. The State of Rajasthan)
Date of Order : September 22nd , 2014
HON'BLE MR. JUSTICE ALOK SHARMA
Mr. B.L. Agarwal, for the appellant-applicant. Mr. Saurabh Saraswat, Dy.G.C. for the State. BY THE COURT
The appellant-applicant-claimant (hereinafter 'the claimant') is aggrieved of the order dated 18.10.2001, passed by the District Judge, Jaipur City, Jaipur dismissing the objections of the claimant filed under Section 30 of the Arbitration Act, 1940 (hereinafter 'the Act of 1940') seeking grant of pendente lite interest denied by the Arbitrator in his award dated 26.05.1994. The case of the claimant is that he was entitled to pendente lite interest on amounts found due and payable by the respondentnon-applicant-non-claimant (hereinafter 'the non-claimant') to him under the award in issue.
Counsel for the claimant has submitted that the learned court below has failed to appreciate that as there was admittedly no prohibition under the agreement between the parties on the power of the Arbitrator to grant pendente lite interest, it was the duty of the Arbitrator to have granted such interest on the amount found due, as grant of interest on the
S.B. CIVIL MISC. APPEAL NO.166/2004 (Om Prakash Gupta Vs. The State of Rajasthan)
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amounts unpaid commencing the time they became due to the time the amounts were actually paid was an implied condition of the agreement between the parties. He submits that the Arbitrator thus failed to exercise his discretion under the award dated 26.05.1994 in failing to grant pendente lite interest to the claimant. It was submitted that the learned court below similarly erred in not rectifying the award dated 26.05.1994, passed by the Arbitrator on this count. This Court thus ought to do justice to the claimant and award pendente lite interest for the duration of the pendency of the arbitration proceedings on the amount of Rs.1,47,498/- in the aggregate as found due and payable by the Arbitrator, from the non-claimant to the claimant.
Heard. Considered.
I am afraid that there is no substance in the submissions of the counsel for the claimant. It is no doubt true that where an arbitration agreement does not prohibit grant of interest on unpaid amounts under a contract and found due by the Arbitrator, the Arbitrator indeed can invoke an implied condition in his discretion for payment of interest on delayed payment and grant pendente lite interest. That however is not a matter of substantive law, but lies in the discretion of the Arbitrator. A Constitution Bench of the Hon'ble Supreme Court in the case of Secretary, Irrigation Department, Government of Orissa & Ors. Vs. G.C. Roy [(1992) 1 SCC 508] has so enunciated the law holding that pendente lite
S.B. CIVIL MISC. APPEAL NO.166/2004 (Om Prakash Gupta Vs. The State of Rajasthan)
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interest is not a matter of substantive law and it is not thus necessary for the Arbitrator as a rule to award pendente lite interest in all cases. The award of interest pendente lite lies in the discretion of the Arbitrator to be exercised no doubt judicially in the overall facts and circumstances of the case. In Shree Kamatchi Amman Constructions Vs. Divisional Railway Manager (Works), Palghat & Ors. [(2010) 8 SCC 767] the Hon'ble Supreme Court has held that where an Arbitrator in his discretion does not grant interest pendente lite, no interference in respect thereof can be made by the Court.
In the context of the law on the grant of pendente lite interest by the Arbitrator under the Act of 1940, in my considered view, in the facts obtaining in the present case, the non-grant of pendente lite interest by the Arbitrator was a matter of his discretion and cannot tantamount to a misconduct within the meaning of the term under Section 30 of the Act of 1940. Absent misconduct in arbitration proceedings, interference by the courts with the award has to be of necessity eschewed. It was so rightly done by the court below under its order dated 18.10.2001.
There is no force in the civil misc. appeal.
Dismissed.
(ALOK SHARMA), J
MS/-
All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.- Manoj Solanki, P.A.
2 issues framed by the court
Whether the non-grant of pendente lite interest by the Arbitrator amounts to misconduct under Section 30 of the Arbitration Act, 1940 justifying court interference.
Whether the court has the jurisdiction to grant pendente lite interest which the Arbitrator declined to award.
Colour shows how this judgement treated each authority
Secretary, Irrigation Department, Government of Orissa & Ors. Vs. G.C. RoyExplained¶16
(1992) 1 SCC 508 · Who else cites this
1 provisions across 1 enactments
Om Prakash Gupta
The State of Rajasthan
Allok Sharma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
