IMPORTANT POINTS
1. Arbitrator has no jurisdiction to grant any interest for the pre-reference period.
2. When the terms of arbitration agreement did not exclude the jurisdiction of arbitrator to entertain a claim for interest the arbitrator is complaint to award interest pendente lite.

JUDGMENT

Mrs. Sujata V. Manohar, J.-Delay in filing S.L.P. (C) No. 20055/97 (CC 6248/97) is condoned.

Leave in both the petitions is granted.

2. These cross appeals arise from a common judgment of the Allahabad High Court. For the sake of convenience, the appellant, M/s. Ram Nath International Construction Pvt. Ltd. in the appeal arising from S.L.P.(C) No. 4328 of 1997 is referred to as the appellant while the State of U.P. is referred to as the respondent.

3. The appellant entered into an agreement with the respondent dated 17.2.1989 for the work of lining of the Upper Ganga Canal from kilometres 189.50 to 197.00 at Gesupur in Bulandshahr. The total amount payable to the appellant under the agreement was Rs. 48,14,312. Clause 32 of the tender which related to "Extra Items" stated, "Extra items of work shall not vitiate the contract. The contractor shall be bound to execute extra items of work as directed by the Engineer Incharge. The rates of extra items are to be mutually agreed". Clause 51 which provides for arbitration is as follows:

ARBITRATION :

All the disputes in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows.

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The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The decision of the arbitrator shall be final and binding on the parties thereto. The arbitrator shall determine the amount of costs of arbitration to be awarded to either parties.

Performance under the contract shall continue during the arbitration proceedings and payments due to the contractor by the owner shall not be withheld unless they are the subject matter of the arbitration proceedings.

All award shall be in writing and in case of awards amounting to Rs. 100 lakhs above, such awards shall state reasons for the amounts awarded.

Neither party is entitled to bring a claim to arbitration if the arbitrator has not been appointed before the expiration of thirty days after defect liability period.

4. Disputes arose between the appellant and the respondent in connection with the execution of the work specified in the tender as also in relation to payment for extra items of work. Ultimately by an Office Memorandum dated October 4, 1992 disputes between the parties were referred to the sole arbitration of Shri Thakur Das, Chief Engineer, Design and Research, I.D.U.P., Lucknow. The terms of reference as recorded in the Office Memorandum are as follows :

"As such Shri Thakur Das, Chief Engineer, Design and Researh, I.D., U.P., Lucknow is hereby appointed as Arbitrator for the following claims as raised by the contractor vide his letter dated 13.12.1991 against the agreement No. B-2-02A-033 dated 17.2.1989 according to para 51 of the Agreement.

(i) Rate for extra item of earth work beyond lip cutting in reach km. 189.50 to km. 190.70.

(ii) Bailing out of standing water.

(iii) Earth work beyond lip cutting in reach km. 190.70 to km. 197.00.

(iv) Claims of idle labour due to non supply of cement."

5. The arbitrator has given a detailed speaking award dated 25.5.1994 under which, inter alia, in respect of the extra item of earth work beyond lip cutting in reach km. 189.50 to km. 190.70, the arbitrator has awarded a sum of Rs. 72,22,740/. The arbitrator has also awarded to the appellant interest at the rate of 18% per annum on the total amount of claim. (Rs. 1,71,11,208/-) with effect from 1.1.1991 to the date of the award and further interest at the rate of 6% per annum on the said amount from the date of the award till the date of the decree or payment whichever is earlier.

6. The appellant applied for a decree in terms of the award while the respondent filed objections. The District Judge granted decree in terms of the award. In the appeal which was filed before the High Court, t