BIHAR STATE ELECTRICITY BOARD Vs. MODERN INDIA CONSTRUCTION COMPANY LIMITED

JUDGEMENT

(1.) THIS is an appeal by the Bihar State Electricity Board, under Section 39 (1) (ii) of the Arbitration Act, 1940, against the judgment and order dated the 31st March, 1979, passed by the First Subordinate Judge, Patna, in 'Title Suit No. 41 of 1978, decreeing the plaintiff's suit in terms of an award dated the 18th Aug., 1977. The appeal has been, admitted only on a limited question. The question is whether the rate of interest at 9 per cent given by the arbitrator and decreed by the Court below from the date of the award until the date of the decree is legal and reasonable.

(2.) BRIEFLY stated, the facts of this case are these. Modern India Construction Company Limited, the respondent in this appeal, entered into an agreement with the appellant, Bihar State Electricity Board, in May, 1962, for the construction of Nalkari Dam and site, levelling for the Patratu Power Station. The agreement contained an arbitration clause for referring disputes and differences arising out of or in connection with the said contract to an arbitrator. Some differences arose between the contractor and the Bihar State Electricity Board regarding the payment of the claims preferred by the contractor. The dispute was referred to the sole arbitrator, Shree U. K. Verma, the then Chief Engineer. The arbitrator finally made and published his award on the 18th Aug., 1977 in favour of the contractor (respondent) for payment of Rs. 6,98,500/- and payment of interest at the rate of 9 per cent per annum on the above amount from the date of the award till the decree in terms thereof or payment of the amount by the Board, whichever was earlier.

(3.) AS stated above, the appeal was also confined to the question relating to the rate of interest and was admitted on this limited question only.