IMPORTANT POINTS
Plea not raised before the arbitral Tribunal oor the High Court cannot be raised before the Supreme Court for the first time.
Award of interest is not a ground of challenge u/s 34.

JUDGMENT

Abhay Manohar Sapre, J.

This appeal is filed by the Union of India against the final judgment and order dated 11.02.2005 passed by the High Court of Bombay in Appeal (Ld) No.666 of 2003 in Arbitration Petition No.96 of 2003 whereby the Division Bench of the High Court allowed the appeal filed by respondent No.1 herein and set aside the order dated 21.04.2003 passed by the Single Judge in Arbitration Petition No.96 of 2003.

2. The issue involved in the appeal is short and, therefore, it is not necessary to set out the entire factual scenario of the case except to the extent necessary to appreciate the issue.

3. In short, the question, which arises for consideration in this appeal, is whether the Arbitral Tribunal was justified in awarding interest on various claims for different periods to the claimant (respondent No.1), namely, (i) for a pre-reference period, i.e., 04.03.1996 to 05.05.1999 @ 15% p.a.; (ii) pendent lite, i.e., for the period from 06.05.1999 to 09.09.2002 @ 12% p.a.; and (iii) post reference period, i.e., 09.09.2002 till payment @ 18% p.a., total (first and second) Rs. 12,89,033/- on the awarded sum.

Brief facts:

4. A works contract (repairing work of 25 No. stators of TAO-659 Traction Motors of Electric Locomotives type WCAMI of Electric Loco Shed-Valsad) was awarded by the Union of India (Railways) - the appellant herein to respondent No.1 (claimant) on 19.12.1994.

5. In execution of the works contract, various disputes arose between the parties. Since the General Conditions of Contract (in short, "GCC") contained Clause 56(1) to decide the disputes arising out of the contract through arbitration, respondent No.1(claimant) invoked the arbitration clause and filed an application in the High Court of Bombay under Section 11(5) of the Arbitration and Conciliation Act (hereinafter referred to as "the Act") praying therein for appointment of the Arbitral Tribunal in terms of Clause 56(1) and to make a reference to the Arbitral Tribunal for deciding the disputes which had arisen between the parties.

6. The High Court, by order dated 27.07.2001, with consent of both the parties allowed respondent No.1's application and referred the various claims (1 to 17) made by the respondent (claimant) against the appellant for their adjudication by the Arbitral Tribunal, which consisted of three Arbitrators (Railway Officials). The order making the reference to the Arbitral Tribunal reads as under:

"There is no dispute that claims Nos. 1 to 13 which are mentioned in the letter dated 19th August, 1999, Exhibit "B" to the Application, are already referred for arbitration to Shri B.B. Verma, Presiding Joint Arbitrator & FA & CAO (I), Churchgate and two other Arbitrators, (i) Shri Arunendra Kumar, Jt. Arbitrator & CRSE, Churchgate and (ii) Shri S.K. Kulshrestha, Jt. Arbitrator & CE, N.F. Railway.

2. By Consent, claim at Sr. No. 16 (Claim No. 2.1) and at Sr. No. 17 (Claim No. 2.2) are also referred for arbitration to the same Arbitrators who shall decide these claims along with claim Nos. 1 to 15. They shall also be free to decide pre-reference interest, Pendente lite interest, further interest and costs considering the agreement. The Respondent shall be free to file counter-claim, if any."

7. Parties submitted to the jurisdiction of the Arbitral Tribunal, filed their statement of claim/reply etc. and adduced evidence. The Arbitral Tribunal, by their unanimous reasoned award dated 11.09.2002, partly allowed the claims of respondent No.1 against the appellant as under: