This revision is filed against the order dated 22-11-2012 passed by the learned Chief Judge, City Civil Court, Hyderabad in E.P No. 25 of 2013.

The petitioners awarded a civil contract to the respondent for certain works in the ordnance factory at Eddumylaram. The cost of the work, as per the tender schedule was Rs.4,04,24,188/-. Disputes arose in respect of execution of the work. The respondent filed O.P No. 55 of 1995 before the Court of III Additional Chief Judge, City Civil Court, Secunderabad, with a prayer to appoint an Arbitrator, in terms of the agreement. The trial Court appointed one Mr. A.J. Kumarasen as Arbitrator. That was challenged by the respondent in C.R.P No. 3777 of 1997. The C.R.P was allowed and through an order dated 08-10-1988, a learned single Judge of this Court appointed Hon’ble Dr. Justice K. Ramaswamy, a retired judge of the Supreme Court as Arbitrator. The learned Arbitrator passed award dated 29-04-2001 and allowed claim Nos.1, 2, 13 and 17 in their entirety and claim No.12 in part. Apart from determining the amounts payable towards the respective claims, the Arbitrator has also awarded interest at 18% from different dates till the date of payment in respect of different sums, payable.

The respondent filed O.P No. 3 of 2001 under Sections 14 to 17 of the Indian Arbitration Act, 1940 before this Court, with a prayer to make the award as the Rule of Court. The petitioners did not file any petition for setting aside the award. O.P 3 of 2001 was allowed through judgment dated 27-12-2002, making the award of the Arbitrator, as the Rule of Court. The interest was however reduced to 12% from the date of decree. The respondent filed E.P No. 25 of 2003 before the Chief Judge, City Civil Court, Hyderabad for execution of the decree in the O.P. During the pendency of the E.P., the petitioners filed L.P.A No.44 of 2003 challenging the order passed in O.P No. 3 of 2001. A Division Bench of this Court dismissed the L.P.A through judgment dated 11-04-2011. When the L.P.A was pending, certain amounts have been deposited to the credit of the E.P.

After the dismissal of the L.P.A, the respondent filed calculation memo in the E.P. It was pleaded that by 28-04-2003 i.e., the date of filing of the E.P., the amount payable is Rs.14,92,64,270/- and the amount that has been deposited from time to time does not have the effect of satisfying the decree. The petitioners, on the other hand, pleaded that the principal amount is Rs.4,24,24,342/-. Interest thereon as awarded by the Arbitrator at 18% per annum and reduced in the O.P to 12% per annum from the date of decree is Rs.11,24,44,448/- and as against those amounts, Rs.6,00,00,000/- was paid on 13-06-2004 and Rs.7,92,45,130/- was paid on 24-01-2002. Both the parties filed their calculation memos from time to time.

The area of controversy was mainly as to whether the interest at 12% per annum, as ordered by the learned single Judge of this Court, in O.P No. 3 of 2001, must be calculated on the principal amount awarded by the learned Arbitrator i.e., Rs.4,24,24,342/- or on the aggregate of principal and the interest that has accrued up to the date of decree in the O.P, at 18% per annum and at 12% per annum thereafter. Through the order under revision, which is named as ‘intermediary orders’, the executing Court directed the petitioners herein to deposit a sum of Rs.5,67,25,858/-. The said order is challenged in this revision.

Sri B. Narayan Reddy, learned Assistant Solicitor General submits that the principal amount is only Rs.4,24,24,342/-, and interest, be it at the rate of 18% as directed by the Arbitrator or at 12% as directed by this Court, must be on the principal amount and not on the aggregate of the principal and interest up to the date of filing of the E.P. He submits that phenomenal loss to the department is evident from the fact that though the entire amount stipulated in the agreement itself was just about Rs.4,00,00,000/-, the respondent has amassed s