Arbitral award granted pre-reference and pendente lite interest but no post-award interest. The decree court nonetheless granted post-award interest. The Supreme Court held the executing court went beyond the award and its jurisdiction; appeal dismissed.
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(2009) 14 (ADDL.) S.C.R. 155
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COAL LINKER
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COAL INDIA LIMITED (Civil Appeal No. 1146 of 2003)
SEPTEMBER 7, 2009
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[MARKANDEY KAT JU AND ASOK KUMAR GANGULY, JJ.]
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Arbitration Act, 1940 - ss. 29, 17 and 30 - Pendente lite interest .,.., Power of court to grant - Arbitrator while passing c award granting interest for pre award period but not for post award period-from. the date of award till the date of the decree -Awardee instead of filing objection to the award uls. 30, filing application u/s. 17 for decree in terms of the award - Executing court passing decree and directing payment of D interest from the date of award till the date of decree - Correctness of - Held: Not correct - Executing court could not have gone beyond the award and granted interest for the post award period - Thus, it went beyond its jurisdiction and passed decree which is a nullity. E
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Parties entered into a work contract. Disputes arose between the parties and was referred to the arbitrator. Arbitrator passed an award and granted interest to the appellant for the pre-reference period and during pendency of the arbitration proceedings but not after the F date of award till the date of the decree. Respondent challenged the same but was unsuccessful. Appellant filed application u/s. 17 of the Arbitration Act, 1940 for passing decree in terms of the award. Single Judge of High Court passed a decree, confirming the award. It G directed payment of interest from the date of the award till the date of the decree. Both the Single Judge and the Division Bench of High Court set aside the order of the
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156 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.
A executing court directing payment of interest from the date of the award till the date of the decree. Hence the ' present appeal.
Dismissing the appeal, the Court
B HELD: In the instant case, interest has been granted by the arbitrator in the award for the first two periods-pre reference period and interest during pendency of the arbitration proceedings. But interest has not been granted by the arbitrator in the award for the last period, C from the date of award till the date of the decree. The awardee-appellant filed an application under section 17 of the Arbitration Act, 1940 for pronouncing a judgment in terms of the award. It did not file any objection u/s. 30 of the Act to the award about denial of such interest. So o there is no scope for the executing court to· go beyond the award and grant interest for the post award period which was not granted in the award. The executing court has gone beyond the award and thus had gone beyond its jurisdiction and passed a decree which thus, becomes E a nullity. [Paras·9, 11, 13~ 14, 15 and 17) [159-C-D; 160-B,; 161-E-G; 162-8-C)
Visakapatnam Municipal Corporation vs. K. Satyanarayana and Co. (1995) 2 SCC 385, relied on.
F Executive Engineer (Irrigation), Balimela and Ors. vs. Abhaduta Jena and Ors. (1988) 1 SCC 418; Gujarat Water Supply and Sewerage Board vs. Unique Erectors (Gujarat) (P) Ltd. and Anr. (1989) 1 SCC 532, distinguished.
G Secretary, Irrigation Department, Government of Orissa and Ors. vs. G.C. Roy (1992) 1 SCC 508, referred to.
Case Law Reference:
(1988) 1 sec 418 Distinguished. Para 11
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157
COAL LINKER v. COAL INDIA LIMITED
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(1989) 1 sec 532 Distinguished. Para 11 (1992) 1 sec 508 Referred to. Para 12 (1995) 2 sec 385 Relied on. Para 16
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1146 of 2003.
From the Judgment & Order dated 8.3.2001 of the High Court at Calcutta in G.A. No. 2489 of 1996.
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K.V. Vishwanathan, Amit Bansal, Navin Chawla for the c Appellant.
Mathai M. Paikeday, Sunil Roy for the Respondent.
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The Judgment of the Court was delivered by
GANGULY, J. 1. The appellant herein, a proprietary concern, was given a work order on or about 5.7.1982 by Coal India Limited (hereinafter referred to as "the respondent") for transportation of coal/coke by road to the respondent's stockyard at Kanpur and also for operation of the said stockyard.
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158 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.
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A application, but the same was dismissed by the learned Single Judge of the Calcutta High Court by a judgment and order dated 3.11.1995. Thereafter, an appeal was preferred before the Division Bench of the Calcutta High Court and the Division Bench also dismissed the appeal of the respondent on B25.04.1996. Thereafter, a decree was passed by the learned Single Judge of the Calcutta High Court confirming the said award. The said decree directed payment of interest@ 18% per annum from the date of the said award till the date of the decree.
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COAL LINKER v. COAL INDIA LIMITED [ASOK KUMAR GANGULY, J.]
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the same judgment and order the present appellant filed an appeal before the Calcutta High Court and the Division Bench of the Calcutta High Court by judgment and order dated 8.3.2001 was pleased to dismiss the appeal.
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160 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.
A coming after the commencement of the Interest Act of 1978 an arbitrator has the same power as the Court to award interest up to the date of institution of the proceedings. In cases which arose prior to the commencement of the Interest Act 1978, the arbitrator has no such power under provisions of the previous 8 Interest Act of 1839. In the instant case, as pointed out above, there is no dispute about the competence of the arbitrator to grant interest. The arbitrator, as noted above, granted interest but did not grant any interest after the date of the award till the date of the decree. Therefore, the decision in Abhaduta Jena C (supra) has no relevance. Reference was also made to the decision of this Court in the case of Gujarat Water Supply and Sewerage Board vs. Unique Erectors (Gujarat) (P) Ltd. and another - (1989) 1 SCC 532, wherein a two-Judge Bench of this Court relied on the previous decision of this Court in · Abhaduta Jena (supra) and dealt with the aspect of grant of D interest by the arbitrator in paragraphs 14, 15 and 16 of the said judgment. In Gujarat Water Supply (supra), this Court held that an arbitrator can award. the interest which can cover three periods namely; (a) the perio,d prior to the commencement of the arbitration proceeding, (b) period during which the E arbitration proceeding was pending and (c) the period between the date of the award to the date of the decree i.e. the post award period. The learned Judge has held that in the light of the decision in At. 1aduta Jena (supra) the arbitrator could not have awarded interest "for the period between August 22, 1984 F and till the date of the publication of the award i.e. July 1985". That was the period during which the arbitration proceeding was pending. Ultimately, the Court deleted the interest awarded by the arbitrator for the period from August 22, 1984 till the date of the award. (See para 16 of the report). It may be again G pointed out here that in this case the award in which interest has been given by the arbitrator has been finally upheld. Therefore, the principles decided in Gujarat Water Supply (supra) have no application to the facts of the case.
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COAL LINKER v. COAL INDIA LIMITED [ASOK KUMAR GANGULY, J.]
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Department, Government of Orissa and others vs. G.C. Roy A - ( 1992) 1 SCC 508, the Constitution Bench of this Court overruled the decision of the Abhaduta Jena (supra) and held on construction of Section 14 and 29 of the said Act that the arbitrator can 9rant pendente lite interest. In paragraph 8 in the judgment of G.C. Roy (supra) the Constitution Bench of this B Court clearly mentioned three periods for which the question of award of interest by the arbitrator may arise. The said periods have been clearly pointed out in paragraph 8 of G. C. Roy (supra) and the same is set out as below:
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" ... (i) for the period commencing from the date of dispute till the date the arbitrator enters upon the reference; (ii) for the period commencing from the date of the arbitrator's entering upon reference till the date of making the award; and (iii) for the period commencing from the date of D making of the award till the date-the award is made the rule of the court or till the date of realisation, whichever is earlier ... "
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162 SUPREME COURT REPORTS {2009] 14 (ADDL.) S.C.R.
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A the report, the Court held:
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"On the admitted facts, viz., that the respondent had not preferred any objection to the award in question under Section 30 of the Act and, in fact, had applied for a decree in terms of the award, the trial court could not have granted B pendente lite interest which was not a part of the award. To that extent, the trial court had exceeded its jurisdiction".
N.J.
Appeal dismissed.
1 issue framed by the court
Could the executing court grant post-award interest not awarded by the arbitrator when the decree was passed in terms of the award under s.17?
Colour shows how this judgement treated each authority
Executive Engineer (Irrigation), Balimela and Ors. vs. Abhaduta Jena and Ors.Distinguished¶11
(1988) 1 SCC 418 · Who else cites this
Gujarat Water Supply and Sewerage Board vs. Unique Erectors (Gujarat) (P) Ltd. and Anr.Distinguished¶11
(1989) 1 SCC 532 · Who else cites this
Secretary, Irrigation Department, Government of Orissa and Ors. vs. G.C. RoyReferred¶12
(1992) 1 SCC 508 · Who else cites this
Visakapatnam Municipal Corporation vs. K. Satyanarayana and Co.Relied on¶16
(1995) 2 SCC 385 · Who else cites this
4 provisions across 2 enactments
Coal Linker
Coal India Limited
Markandey Katju
Asok Kumar Ganguly
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
