2009 Supreme(SC) 1647

2009(7) Supreme 13
SUPREME COURT OF INDIA
V.S. Sirpurkar and Deepak Verma, JJ.
Indian Hume Pipe Co. Ltd. — Appellant
versus
State of Rajasthan — Respondent
Civil Appeal No. 6971 of 2009
[Arising out of S.L.P.(C)No.14269 of 2007]
Decided on : 19-10-2009

IMPORTANT POINT
Two persons, similarly situated, can not be treated differently as the same may amount to discrimination.
2. Arbitrators have the competence, jurisdiction and power to award interest for the period from the date of award to date of payment as also for pre-reference, pendente lite and post award. The only caveat is that the amount of interest so awarded should be reasonable and agreement between the parties should not prohibit grant of such interest.

Headnote:Arbitration Act, 1940 – Section 39 – Award of contract for laying PSC pipeline in Kota Division to Appellant by Respondent/State of Rajasthan – On dispute between parties matter referred to three arbitrators – Arbitrators substantially allowed claim of appellant together with interest for pre – reference on outstanding payment, pendente lite interest and future interest – Objections thereagainst by respondent – State of Rajasthan – Allowed only to the extent of awarding pendente lite interest, future interest and compound interest on total amount awarded by arbitrators – Award was made rule of the Court and appellant was awarded only simple interest at the rate of 9% per annum from the date of decree of the award – Appeal – Single Judge held that even though the arbitrators have got the power to grant interest at all the three stages i.e. pre – reference, pendente lite interest and future interest but it is not mandatory for the arbitrators to have awarded the same – Appeal – Arbitrators have the competence, jurisdiction and power to award interest for the period from the date of award to date of payment as also for pre-reference, pendente lite and post award – Single Judge committed a grave error in coming to conclusion that even though arbitrator was competent to award interest but it was not mandatory on his part to do so – The said reasoning did not appeal to be legally tenable and convincing, for the simple reason, if the amount had been withheld wrongly and without any justification then of course the aggrieved party would be fully justified in claiming interest – Arbitrators are bound to make award in accordance with law and if there is no embargo or legal hurdle in awarding interest for said three stages then there cannot be any justifiable reason to deny the same – Interest awarded by District Judge and Single Judge to the counter claim of respondent was not disturbed but it was set aside only for the appellant-If appellant was not entitled to claim interest then how respondent – State would get powers or competence to receive it – Same doctrine should have been made applicable for respondent’s case also – Impugned orders passed by District Judge in so far as they refused to grant interest pendente lite and future and also by Single Judge of High Court set aside and quashed – Award together with interest as awarded by Arbitrators .restored –Appeal allowed (Paras18 to 23)

       Facts of the Case :

        Issue in consideration in present case was whether arbitrators have got the power to grant interest at all the three stages i.e. pre-reference, pendente lite interest and future interest.

       Findings of the Court :

        Held Arbitrators have the competence, jurisdiction and power to award interest for the period from the date of award to date of payment as also for pre-reference, pendente lite and post award .Single Judge committed a grave error in coming to conclusion that even though arbitrator was competent to award interest but it was not mandatory on his part to do so. The said reasoning did not appeal to be legally tenable and convincing, for the simple reason, if the amount had been withheld wrongly and without any justification then of course the aggrieved party would be fully justified in claiming interest. Arbitrators are bound to make award in accordance with law and if there is no embargo or legal hurdle in awarding interest for said three stages then there cannot be any justifiable reason to deny the same. Interest awarded by District Judge and Single Judge to the counter claim of respondent was not disturbed but it was set aside only for the appellant. If appellant was not entitled to claim interest then how respondent-State would get powers or competence to receive it. Same doctrine should have been made applicable for respondent’s case also. Impugned orders passed by District Judge in so far as they refused to grant interest pendente lite and future and also by Single Judge of High Court set aside and quashed. Award together with interest as awarded by Arbitrators .restored .Appeal allowed