K. N. Singh, Cji - (1.) -These two appeals are directed against the judgment of the Orissa High Court making the award made by the Arbitrator rule of the court. The appellants challenged the validity of the award before this Court on two grounds, namely; (1) the Award was vitiated as it contained no reasons; and (2) the Arbitrator had no jurisdiction to award pendente lite interest.
(2.) The first question was considered by a Constitution Bench of this Court in Raipur Development Authority v. Chokhamal Contractors, (1989) 2 SCC 721. The Constitution Bench held that an award is not liable to be set aside merely on the ground of absence of reasons. The Constitution Bench further held that where the arbitration agreement itself stipulated reasons for the award the Arbitrator is under a. legal obligation to give reasons. Thus the first question stands concluded against the appellants. As regards the second question , when the appeal was taken up for hearing by a Division Bench the appellants placed reliance on a Three-Judge Bench decision of this Court in Executive Engineer Irrigation, Galimala v. Abnaduta Jena, (1988) 1 SCR 253, wherein it was held that the Arbitrator to whom the reference is made without the intervention of the court does not have jurisdiction to award interest pendente lite. On behalf of the respondents the correctness of that view was assailed. The Bench hearing these appeals referred the matter to Constitution Bench by order dated 15th March, 1991, as the learned Judges were of the view that the correctness of the view taken by this Court in Jena's case (supra) in so far as it held that the Arbitrator has no power to award pendentelite interest requires consideration by a larger Bench. That is how these appeals are before this Constitution Bench.
(3.) Before we deal with the submissions raised before us, we consider it appropriate to refer to the facts involved in Civil Appeal No. 1403/86. On 27-4-1977, Government of Orissa the appellant and G.C. Roy respondent entered into an agreement for construction of head works in Phulwani. Clause 23 of the contract contained provision for resolution of disputes through arbitration. Clause 23 is as under: "All questions and disputes relating to the meaning of the specifications etc........ or as to any other question or claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitrator........" The work was completed on 20-2-1980. G.C.Roy's claim for certain amounts was not accepted by the Government as a result of which a dispute arose between the parties. The dispute was referred to the Arbitrator who made his award on 6-8-1982. The Arbitrator held that G. C. Roy, the respondent, was entitled to certain amount of money and in addition he was entitled to receive interest @ 9% on the awarded amount from 20-3-1980 till the date of payment or decree whichever was earlier. It appears that 20-3-1980 was evidently the date on which the amount claimed by G. C. Roy became due to him as the work was completed on 20-2-1980. The respondent made an application before the Court for making the award rule of the Court, which was contested on behalf of the State of Orissa. The subordinate Judge by his order dated 29-11-1982 set aside the award. On appeal by the respondent, the High Court set aside the order of the subordinate Judge and made the award rule of the court. The appellant thereupon filed this appeal by obtaining leave from this Court. As noted earlier two questions were raised in the appeals. The first question has already been decided by a Constitution Bench. The second question relating to the jurisdiction of the Arbitrator to award pendente lite interest is under consideration before us. We do not consider it necessary to refer the facts involved in C.A. 2565/91. Suffice it to say that in that appeal also the High Court held that in the absence of agreement to the contrary, the Arbitrator has jurisdiction to award interest pendente lite.;