S.S. Sodhi, J. - (1.) The point at issue in this appeal is with regard to the jurisdiction of the arbitrator to award interest.
(2.) Disputes having arisen in a building contract, the matter was referred to arbitration, with the intervention of the court, in terms of the arbitration agreement between the parties. The arbitrator, in the first instance by his award of May 31, 1975, granted Rs. 50,000 to the contractor along with interest at the bank rate from March 26, 1971, that is, the date of the entering upon the reference to May 31, 1975, the date of the award.
(3.) The contractor, therefore, filed an application under Sec. 14 (2) and Sec. 17 of the Arbitrator Act, praying that the arbitrator be directed to file the award in court and that the award be made a rule of the court. On receipt of notice of this application, objections were filed to the award on behalf of the Union of India, included amongst them being one with regard to the award of interest, namely ; that no interest could have been awarded as it was not the subject matter of the reference. These objections were disposed of by the trial court by its order of March 19, 1977, wherein, it was held that the contention of the Union of India that the arbitrator had no power to award interest, was not sustainable as item No. (3) of the Claim of the contractor concerned compound interest at the rate of 9 per cent per annum on the amount due to him. The arbitrator, it was thus held, had authority to award interest. The award was, however, remitted to the arbitrator for fresh decision as the order regarding grant of interest was vague and uncertain. The award, is so far as the principal amount of Rs. 50,000 was concerned, was made the rule of the court.;