BANGLADESH AGRICULTURAL DEVELOPMENT CORPORATION Vs. KIBRIA AND ASSOCIATES LTD.

JUDGEMENT

(1.) These two appeals by special leave are from two judgments of the High Court Division of the same date6 September 1992passed respectively in FMA Nos. 695 of 1991 and 21 of 1992. By these judgments the High Court Division modified a judgment of the Subordinate Judge, Dhaka, dated 26 September 1991 in TS No. 321 of 1990, under sections 30 and 33 of the Arbitration Act, 1940. The learned Subordinate Judge had, in his judgment, modified an award dated 20 September 1990 made by an Arbitrator appointed by the parties to a contract for construction work. The main question raised for determination in these two appeals before us relates to the Arbitrator's power to award interest on the award made by him.

(2.) Facts leading to these appeals are briefly set out below. The appellants before us in both the appeals are the Bangladesh Agricultural Development Corporation, briefly, the BADC; and the respondents area construction company, Kibria and Associates Ltd. There was an Agreement between the appellants and the respondents for construction of a low cost Fertilizer Ware House at Tepakhola, Faridpur. Value of the work was estimated at Taka 39 lacs and odd. The work was taken up by the contractors respondents from 21 January 1983 and they submitted completion report on 1 July 1984 stating therein that the work had been completed on 30 April 1984. But though the work had started from 21 January 1983, it was suspended for 47 days from 2.2.83 to 20.3.83 due to a dispute arising between the appellants, BADC, and the Ministry of Land at whose instance the Deputy Commissioner, Faridpur, by applying Police Force, took over possession of the construction site. After prolonged negotiations between the concerned Ministries, the dispute was resolved and the respondents resumed the work from 21 March 1983. The respondents, in addition to their bill for the main construction work under the Agreement, submitted a Bill (Bill No. 1) demanding compensation for their business-loss caused due to the suspension of the work for 47 days; they held the appellants responsible for this partial breach of the contract since, in terms of the contract, the appellants were bound to give undisputed possession of the site of construction. The compensation claimed in Bill No. 1 was estimated at Taka 15,63,737. The respondents submitted three more Bills Nos2, 3 and 4 claiming thereunder their dues for some Non-Tender items of work, which they had admittedly done by verbal instructions of the BADC' s Chairman. The claim under these four Bills was Taka 24,51,570.00 and upon this amount they claimed interest at the rate of 18% from 1 July 1984. Their total claim including interest was Taka 70,54,068.00 upto June 30, 1990. So far as the claim for the main work under the Agreement was concerned, there was no dispute, and it was paid in full including incidental charges. But the claim to Taka 24,51,570.00 along with interest, was disputed particularly, the amount of compensation of Taka 15,63,757.00. The BADC did not seriously dispute the bills for Non-tender works but disputed the interest thereupon. Claim to compensation was disputed on the ground that the BADC had no hand in the matter of dispossession from the site which was a matter between two Ministries concerned. After fruitless negotiation over the Bills between the parties, the dispute was ultimately referred to an Arbitrator in terms of an arbitration clause (Clause No. 17) of the Agreement. A retired Judge of the Supreme Court was appointed the Arbitrator by mutual consent of the parties, and the Arbitrator entered upon the arbitration proceeding from 30 June 1990 and gave his Award on 20 September 1990. By his award, the Arbitrator reduced the respondent's claim of Taka 24,51,570.00 to Taka 20,40,712.00 and thereon he allowed interest at the rate of 16%, from 1 July 1984 till realisation of the money.

(3.) The first party to the Arbitration Proceeding, namely these respondents (contractors) filed an application before the Subordinate Judge for making the award a rule of the Court; the second party to the said proceeding (the BADC) filed an application for setting aside the award under section 33 read with section 30 of the Arbitration Act taking a number of grounds including a ground of limitation. The learned Subordinate Judge, by his judgment as mentioned above, refused to interfere with the award as to the principal sum, but set aside the order for interest altogether taking the view that the Arbitrator got no power to grant interest. Both the parties went to the High Court Division with their respective appeals. The contractors, in their Appeal No. 695 of 1991, challenged the judgment striking off interest; and the BADC, in their Appeal No. 21 of 1992, challenged the judgment maintaining the award in respect of Bill No.1 regarding the compensation for suspension of the work. The con tractors' Appeal was allowed and that of the BADC was dismissed. The ultimate result of the two Appeals was that the Arbitration Award for the principal sum due along with interest was red. In coming to their conclusion the learned judges of the High Court Division noticed that there was no statutory law in Bangladesh empowering an Arbitrator to allow interest on his award, but held that under a doctrine known as doctrine of implied term of the Agreement the Arbitrator got power to award interest on his award. In support of their views, they referred to a great number of decisions from English and Indian Jurisdictions, in particular a decision of the Court of Appeal in England in the case of Chandris Vs. Ishrandisen Moller Co. reported in 1950 (2) All England Reports 618 and held :