IMPORTANT POINT
Arbitrator has power and jurisdiction to grant pre reference interest in reference made after the coming into force of the Interest Act, 1978 (The Interest Act, 1978 came into force w.e.f. 19.8.1981).
[Editorial Note : Now the law is that arbitrator has no power to award interest for the pre-reference period if award was made prior to coming into force of the Interest Act, 1978 but he has power to grant pre-reference interest in Post Interest Act, 1978 era.]

ORDER

Leave granted.

2. The only issue involved in this appeal relates to the power and jurisdiction of an Arbitrator to award interest for the period between the making of the reference to the artbitrator and his entering upon the reference (pre-reference period) after the coming into force of The Interest Act, 1978 (post Interest Act era).

3. A reference to brief facts for deciding the issue would be apropos. The first respondent - Delhi Development Authority - awarded certain work of construction of middle income houses at Pitam Pura, New Delhi to the appellant and entered into a contract with him. Differences and disputes arose between the parties relating to the exexution of the contract on 1.4.1984, when a reference to arbitration was sought by the appellant and in terms of Clause 25 of the General conditions of contract, the same were referred to arbitration of the second respondent. The arbitrator entered upon the reference on 8.2.1985. He made an award on 15.7.1987. The award together with the proceedings was filed in the court by the learned arbitrator. The award was substantially in favour of the appellant. The arbitrator also awarded 12% simple interest on the amount awarded from 1.4.1984 to the date of payment. The appellant filed an application under Sections 14 and 17 of the Arbitration Act for making the Award a Rule of the Court. On notice being issued to respondent No. 1, objections were filed to the award being made a Rule of the Court. On 21.12.1990, the learned Single Judge of the Delhi High Court made the award Rule of the Court except in respect of claims under Clauses 1, 3, and 4. The Court also rejected the claim of the appellant relating to both the award of pendente-lite interest as well as the pre-reference interest and set aside the award to that extent. On appeal before the division bench, pendente-lite interest, (between 8.2.1985 and 15.7.1987) as awarded by the arbitrator, was restored but the order of the learned Single Judge refusing the pre-reference interest as well as the claims under Clauses 1, 3 and 4 amounting to Rs. 23,685/- was upheld. The division bench opined :

"In view of the decision of the Supreme Court in Secretary, Irrigation Department. Government of Orissa and others v. G.C. Roy1, the Artbitrator had the jurisdiction to award interest during the pendency of the reference before him i.e., from 8th February, 1985 till 15th July, 1987 when he gave the Award. However, the Arbitrator had no jurisdiction to award interest from 1st April, 1984 till before 8th February, 1985, the date when he entered into reference".

4. This order of the Division Bench has been put in issue in this appeal.

5. Learned counsel for the appellant submitted that the division bench fell in error in interpreting the judgment in G.C. Roy s case (supra) to have laid down that the arbitrator had no jurisdiction to award interest from 1.4.1984 to 8.2.1985 (pre-reference period) because no such proposition of law was either under consideration or decided in G.C. Roy s case (supra). In our opinion, the grievance projected by Dr. Singhvi is well founded.

6. In Executive Engineer (Irrigation). Balimela and Others v. Abhaduta Jena & Others2, a three Judge Bench of this Court while dealing with pre-reference interest observed :

"Out of the remaining cases, we find that in all cases except two (Civil Appeal Nos. 6019-22 of 1983 and Civil Appeal No. 2257 of 1984, the reference of arbitration, were made prior to the commencement of the new Act which was on August 19, 1981. In the cases to which the Interest Act, 1978 applies. It was argued by Dr. Chitale, learned counsel for the respondents, that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument and, therefore, interest was payable under the Interest Act for the period before the commencement of the proceedings. In support of his contention that the amount claimed was a sum certain payable at a certain time by virtue of