IMPORTANT POINT
It is not proper to rely on Judgment pertaining to different period on different statutory provisions.

JUDGMENT

ANIL R. DAVE, J.

1. Being aggrieved by the judgment delivered in Appeal (Lodging) No.124 of 2006 in Arbitration Petition No.321 of 2005 dated 7th August, 2006, delivered by the High Court of Judicature at Bombay, this appeal has been filed wherein the issue is whether the appellant is liable to pay interest to the respondent though there was a provision in the contract that no interest should be paid on the amount payable to the contractor. The facts which are relevant for the purpose of deciding the issue, in a nutshell, are as under.

2. The appellant and the respondent had entered into a contract whereby the respondent had to construct certain structures, which had been more particularly described in the agreement entered into by the parties on 20th January, 1997.

3. In the course of execution of the contract, a dispute had arisen between the appellant and the respondent contractor and as agreed by the parties, the dispute had been referred to the Arbitral Tribunal. After hearing the concerned parties, the Arbitral Tribunal declared an award on 17th May, 2005, whereby it also awarded interest to the respondent contractor on the amount awarded, from the date of the reference till the date of the award.

4. Relying upon the judgment delivered in the case of Secretary, Irrigation Department, Government of Orissa and Ors. v. G.C. Roy (1992) 1 SCC 508, the Arbitral Tribunal awarded interest on the amount of the award. In the said case, this Court had considered the provisions of Section 29 of the Arbitration Act, 1940, which dealt with payment of interest pendente lite. After analyzing the scheme of the said Act, various earlier decisions and after considering the very same issue, namely, whether an arbitrator has power to award interest pendente lite and, if so, on what principles, this Court had observed that the Arbitral Tribunal had power to award interest.

5. Being aggrieved by the Award and especially because of interest being awarded by the Arbitral Tribunal, the appellant filed Arbitration Petition No.321 of 2005 in the High Court of Judicature at Bombay. The said arbitration petition was dismissed on 13th December, 2005.

6. Being aggrieved by the dismissal of the Arbitration Petition, the appellant filed an appeal which was also dismissed by the Division Bench of the High Court of Judicature at Bombay on 7th August, 2006. Judgment of a Division Bench of the High Court of Judicature at Bombay dated 2nd July, 1997, delivered in the case of Union of India v. Anand Builders was relied upon and except for stating the above reason, no other reason was recorded by the High Court while dismissing the appeal.

7. According to the learned counsel appearing for the appellant, it was not open to the Arbitral Tribunal to award any interest to the contractor in view of a specific condition incorporated in the contract entered into between the parties that no interest would be paid to the contractor.

8. On the other hand, the learned counsel appearing for the respondent contractor submitted that the Division Bench of the High Court had rightly upheld the order passed by the learned Single Judge as well as the Arbitral Tribunal.

9. On the aforesaid contentions, this Court has to decide whether the contract between the parties contained an express bar regarding award of interest and if so, whether the Arbitral Tribunal was justified in awarding interest for the period commencing from the date of reference till the date of the award.

10. Clause 13 (3) of the contract entered into between the parties reads as under:

“13(3). No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but Government Securities deposited in terms of sub-clause(1) of this clause will be repayable with interest accrued thereon.”

11. Thus, it had been specifically understood between the parties that no interest was to be paid on the earnest money, security deposit and the amount payable to th