- (1.)THE present petition is challenging an award dated 27-3-2004 under section 34 of Arbitration and Conciliation Act, 1996. Some of the few facts in the present case are as under :
(2.)A contract was executed by and between the Petitioner and Respondent in respect of the work of replacing of A. C. placed at INS Karanja. Under the terms of the contract stipulated date for commencement of the work was 30-7-1996 and stipulated date for completion was 20-1-1998. The work however was completed on 1-10-1999. In view of certain disputes and differences between the parties an arbitration Clause being Clause No. 17 of IAFW 2249 was invoked on 27-8-2002 by the respondent herein. On 28-8-2002 letter was addressed to the engineer-in-Chief for appointment of arbitrator by the Respondents enclosing therewith the claims which are required to be referred to an Arbitrator. On 21-11-2002 an application under section 11 for appointment of arbitrator was filed before this Court being Application No. 211 of 2002. On 31-1-2003 this Court directed the petitioner to appoint arbitrator in accordance with Clause 17 of the arbitration Clause within the period of six weeks therefrom. Accordingly on 27-3-2003 Shri T. K Saha CE was appointed as arbitrator to decide the dispute between the parties. On 16-4-2003 the arbitrator entered upon the reference. After various meetings and hearings the Arbitrator has published the award on 27-3-2004. On 23-4-2004 the learned Arbitrator amended the award by carrying out certain corrections therein. By the present petition, petitioners are challenging the award of the arbitrator dated 27-3-2004 as amended by further amending the award on 23-4-2004. The learned Counsel Mr. Sureshkumar appearing for the Petitioner has placed before me three contentions. Firstly he contended that the Arbitrator has wrongly granted the award of claim of escalation under Item No. 2. It is contended that claim for escalation made by the Respondent partially pertains to the period subsequent to the date of completion stipulated in the contract. According to him under Clause 1 l (c) of the General Terms and Conditions of the contract, the arbitrator is not entitled to grant such claim. The learned counsel appearing for the respondents has drawn my attention to the said Claim No. 2. It was an admitted position before the arbitrator and also before me that the petitioner Union has worked out the claim for escalation upto the date of contract to be Rs. 8,23,817. 56. Mr. Sureshkumar appearing for the Petitioners have accepted that the said figure of Rs. 8,23,817. 56 mentioned in the award as correct figure for the claim if escalation upto the date of contract and according to him there is no objection in the said amount being granted to the Respondent herein. However, he contends that the Arbitrator has granted claim of Rs. 8,76,795. 48 which includes the claim of escalation subsequent to the date of the completion of the contract. The learned counsel for the respondent has stated before me that he gives up the claim over and above the claim of Rs. 8,23,817. 56 and accepts the claim as worked out by the Petitioner. In view thereof, the award to that extent will be required to be modified.
2a. Insofar as second contention is concerned, the same pertains to granting of claim of interest at the rate of 18% p. a. the learned counsel for the petitioner has contended before me that the said claim could not have been granted because 18% is not the current rate of interest. In my view, the aforesaid argument has already been considered by the learned Single Judge in the case of godrej Properties and Investments Ltd. vs. Tripura Construction, Mumbai, 2003 (2) Mh. L. J. 306 in which a similar argument was rejected and it was held that in view of the provisions of section 31 (7) (b) of the Arbitration and Conciliation act, 1996 which inter alia provides for granting of interest at the rate of 18%) the argument advanced of current rate of interest in respect of awards which are passed subsequent to the enactment of Arbitration and Conciliation Act, 1996 is not valid and accordingly the same argument has been rejected. The Paragraph 8 and 9 of the said judgment are reproduced herebelow : "8. That brings us to the last issue of interest awarded by the Tribunal. There was no provision for interest. In U. P. Co-operative Federation Ltd. vs. M/s three Circles, 2000 (3) Mh. L. J. 730 = 2000 (3) Bom. C. R. 360 a Division bench of this Court after noting the provisions of the Interest Act, 1978 held that insofar as pre-reference interest is concerned, if there was no provision for interest it would not be more than the current rate of interest. In the instant case, the Arbitral Tribunal has not awarded interest for the pre-reference period. The question then remains in respect of interest pendente lite and after the award. Under section 31 (7) will be a guide insofar as that part is concerned. Under section 31 (7) (a) a power is conferred on the Arbitral Tribunal between the date of cause of action and the date of the Award to "award interest which is reasonable. The tribunal has awarded 18% interest both to the Petitioner and to the respondents. It is sought to be contended that considering the interest rates now prevailing the interest awarded would be contrary to the public policy of India. It is secondly contended that between the completion of hearing and the date of the Award the period of 9 months had elapsed and in these circumstances a party should not be made to suffer the consequences of delays or the failure by the Tribunal to dispose of the proceedings expeditiously. Insofar as the contention of the public policy is concerned, a perusal of section 31 (7) (b) would indicate that where the arbitral Tribunal does notj award specific interest after the award the interest payable would be at the rate of 18% per annum. Once that being the case, it can safely be said that it is the policy of the law insofar as arbitral proceedings are concerned to award 18% interest. Once it is the policy of the law then the question of holding that reasonable interest pendente lite would be contrary to public policy would be unsustainable. Pendente lite and interest subsequent to the award is interest which the arbitral Tribunal can award considering section 31 (7) itself. This is so affirmed even under the Act of 1940 by the Judgment of the Apex Court in the case of State of Orissa vs. B. N. Agarwalla, AIR 1997 SC 925 when the Court held that the Arbitrator has jurisdiction to award prereference interest, interest pendente lite and post award interest under the act of 1996 and for that purpose on failure to award interest, statutory, interest is provided at 18% per annum post award. See also Executive engineer, Dhenkanal Minor Irrigation Division, Orissa and Others, vs. N. C. Bhudharaj this Court holding that the amount awarded is unreasonable. The parties went before the forum of their choice. There was no limitation on the forum in deciding the arbitral proceedings. The objection of parties choosing the forum of their choice is no doubt that the matter should be disposed expeditiously. That however, does not mean that once the parties have chosen their forum of their choice and if that forum does not dispose of the matter expeditiously, a party in whose favour the award is made can be denied interest, more so considering section 31 (7) (a ). It perhaps could be within the jurisdiction of the arbitral Tribunal considering the delay to award interest in those circumstances which it considered unreasonable, but that is within their exclusive discretion. Once that discretion has exercised, then it cannot be said that the decision is unreasonable as long as the interest awarded does not exceed the contractual rate of interest or where the contract does not so provide in excess of 18%, which is the rate statutorily fixed if the tribunal does not award interest after the passing of the award. To my mind, therefore, it will be difficult to hold that the interest awarded is unreasonable. 9. Apart from that on behalf of the respondents their learned Counsel points out that in M/s Steeman Ltd. vs. The State of Himachal Pradesh and ors. JT 1997 (3) SC 390 under the Act of 1940 considering the provisions of section 30 of the said Act a contention was raised that the interest awarded was unreasonable. That, contention was rejected as under: "further the jurisdiction of the Court to interfere with the award is confined to matters enumerated in section 30 of the Arbitration Act. We do not think that the last point raised before us would fall within the ambit of section 30 to interfere with the award". If such challenge was not available under section 30 of the Act of 1940 it will be difficult to hold that such a challenge would be available either under any of the provisions of section 34 (2) (a) or section 34 (2 ). Insofar as section 34 (2) (b) (i) is concerned possibly it could be said that the interest awarded is unreasonable if the interest awarded is contrary to the terms of the contract or exceeds 18% if there be no term in the contrary or any statutory limits if it is so provided. As pointed out above, in this case granting of interest at 18% per annum cannot be said to be against the policy of the law and consequently insofar as the facts of this case is concerned, the amount awarded would not be subject to challenge under section 34 (2) (b) (ii ). "

(3.)IN view of the aforesaid position in Law, in my view the contention raised by the Petitioner that the current rate of interest being lower, the Arbitrator could not have granted the interest at the rate of 18% requires to be rejected.