Judgment :-

R.V. Raveendran, J.

Leave granted. Heard the parties.

2. The appellants awarded a construction contract to the respondent. The work which had to be completed within 18 months from 18.3.1985, was actually completed on 30.11.1989. The delay led to claims by the contractor and counter-claims by the employer (appellants). The disputes were referred to a sole Arbitrator who made an awarded dated 22.06.2000. The Arbitral Tribunal rejected the counter claims of the appellants. It awarded in all Rs. 14,94,000/- with interest to the respondent-contractor. The operative portion of the award is extracted below:

"I award Rs. 14.94 lacs (Rupees Fourteen Lacs Ninety Four Thousand only) along with interest at the rate of 12% with effect from 19.12.1990 till the date of award in favour of M/s. S.L. Arora and Company, 5E-10, Bunglow Plot, N.I.T., Faridabad(Claimant) to be paid by the Haryana PWD B&R Branch Department (respondent). In case the total amount of award together with this interest is not paid within 30 days from the date of making this award, future interest shall be paid @18% per annum on the sums due to the claimant from the date of Award upto the actual date of payment.............."

(emphasis supplied)

3. The application filed by the appellants to set aside the said the award, under Section 34 of the Arbitration and Conciliation Act 1996 (Act for short), was rejected by the civil court. Thereafter, on 26.10.2004, the respondent levied execution against the appellants, to recover the following amount:

(i) Principal amount : Rs. 14,94,000/-

(ii) Interest at 12% per annum on Rs. 14,94,000/- from 19.12.1990 to

22.6.2000 (date of the award) : Rs. 14,04,879/-

(iii) Interest at 18% per annum on Rs. 14,94,000/- from 23.6.2000 to

23.10.2004 (date of execution petition : Rs. 11,67,039/-

TOTAL : Rs. 43,65,918/-

The appellants paid to the respondent, a sum of Rs. 44,59,587/- on 1.3.2005, which was made up Rs. 14,94,000/- plus interest thereon at the rate of 12% per annum from 19.12.1990 to 22.6.2000 plus interest at the rate of 18% per annum from 23.6.2000 to 28.2.2005. According to the appellants, the said payment was in full and final settlement, though full satisfaction of the decree was not entered.

4. On 25.5.2000, the respondent made an application for modification of the amount claimed, contending that due to inadvertence, a lesser amount had been claimed in the execution petition. The respondent alleged that earlier, due to oversight, it had calculated the future interest at the rate of 18% per annum from 23.6.2000 to date of execution petition (24.10.2004), only on the principal sum of Rs. 14,94,000/-; that the future interest ought to have been calculated on a higher sum of Rs. 31,98,879/-(made up of Rs. 14,94,000/- being the principal amount plus Rs. 17,04,879/- being the interest at 12% per annum which had accrued due up to the date of Award); and that therefore the amount due as on the date of execution petition was Rs. 56,97,685/- instead of Rs. 43,65,918/- claimed therein. The Executing Court after hearing the parties, by its order dated 5.9.2007 accepted the revised calculation made by the respondent. The revision petition filed by the appellants against the said order was dismissed by the High Court by the impugned order dated 9.9.2008 without examining the issue on merits, on the assumption that what was claimed was the balance o an admitted liability under the award.

5. The appellants did not dispute their liability to pay interest. They however contended that Section 31(7) of the Act does not contemplate award of interest on interest; that an arbitral tribunal can award future interest only on the principal amount but not on the interest thereon which had accrued due up to the date of award; and that the Arbitral Tribunal in this case has in fact awarded interest only on the principal of Rs. 14,94,000/-and not on the interest which had accrued due up to the date of the award. It was also submitted that even if t