Sabyasachi Mukharji, J. - (1.) THE petitioner is a company registered under the Indian Companies Act, 1913. During the year 1968-69 ending on 31st March, 1969 the liability on account of interest on hank overdraft, to the extent of R.s. 60,580.39 was deducted out of the income for that year on the ground that it. was an item of expenditure under sub-paragraph (xi) of paragraph XVII (2) (b) of the Sixth Schedule to the Electricity (Supply) Act, 1948 and was deductible for working out the clear profit. Such deduction was disputed on behalf of the State of Uttar Pradesh. According to the State of Uttar Pradesh such amount was not deductible. THE said dispute was referred to arbitral ion under the provisions of Section 76 of the Electricity (Supply) Act, 1948. One of the questions referred, inter alia, was as follows : "Whether the amount of Rs. 60,580.39 being the interest on overdraft is admissible as an item of expenditure during 1968-69 under sub-paragraph XVII (2) (b) (xi) of the Sixth Schedule."
(2.) THE arbitrators have made the award by holding, inter alia, as follows : "THE amount of R.s. 60,580.39 being the interest on overdraft for the year 1968-69 is not admissible as an item of expenditure under paragraph XVII (2) (h) (xi) of the Sixth Schedule to the Electricity (Supply) Act, 1948." The said award has been challenged in this application under the Arbitra- tion Act, 1940 on the ground that there is an error of law apparent on the face of the award. Paragraph XVII of the Sixth Schedule to the said Electricity (Supply) Act, 1948 provides for certain definitions. Under Sub-clause (2) oi paragraph XVII clear profit has been indicated to mean the difference between the amount of income and the sum oi expenditure plus appropriations, made up in each case as indicated in the different Sub-clauses. Several expenditures property incurred under different heads have been allowed to be deducted. But Sub-clause (xi) provides as follows : "(xi) other expenses (excluding interest on debentures and loans), admissible under the law for the time being in force in the assessment of Indian Income-tax and arising from and ancillary or incidental to the business of electricity supply." Sub-clause (iv-a) provides as follows : "(iv-a) interest on loans borrowed from organisations or institutions approved by the State Government"
(3.) IT was, therefore, contended that inasmuch as the arbitrators had excluded Bs. 60.580.39 which was interest on overdraft, the arbitrators had committed an error of law because what was excluded was not interest on overdraft but interest on debentures and loans. IT was submitted that overdraft was not loan and in proceeding on the said basis the arbitrators had committed an error of law apparent on the face of the award. In considering whether overdraft was loan it may be mentioned that in Hals-bury's Laws of England 4th Edn., Vol. 3 at paragraph 155 it has been stated that a customer might borrow from a banker by way of loan or by way of overdraft. A loan was a matter of special agreement. In the absence of agreement, express or implied from a course of business, a banker was not bound to allow his customer to overdraw.;