The main legal point established in the judgment is that arbitrators do not have jurisdiction to award interest pendente lite, and any such award made by the arbitrators in this regard should be set aside.

( 1 ) THIS appeal is filed under Section 39 (1) of the Arbitration Act questioning the legality and correctness of the judgment and decree dated 18-4-1987 made by the learned Civil Judge, Yadgir, in Misc. No. 2/ 1987, on his file, making award Rule of the Court.

( 2 ) THE essential facts, in brief, are as follow: the construction work in respect of Upper Krishan Project Narayanapur Left Bank Canal Reach No. 1 from Km 35. 5 to Km 41 excluding Rajankollur Tunnel from Ch. 26. 231 to 39. 834, was granted to the respondent under an agreement dated 7-1-1980. The value of the contract was fixed at Rs. 115. 12 lakhs which increases by 3. 22 per cent above the estimated cost. The agreement dated 7-1-1980 stipulated that the contract was to be executed within thirty months fixing the date of completion of the contract on 23-7-1982. Disputes arose between the contractors and the appellants during the progress of the work which could not be settled between them. Clauses 71 and 72 of the agreement provided that in the event of disputes the matters in dispute could be arbitrated in the manner provided therein. Consequently, a panel of three arbitrators was appointed to go into the dispute.

( 3 ) BEFORE the arbitrators the contractors filed their statement of claims and the appellants filed their counter statement. Neither party adduced any oral evidence, but wholly relied on documentary evidence. The arbitrators concluded the proceedings by making an award which was filed into Court and a decree in terms thereof was made by the Court. Before the trial Court the appellants raised several objections. The trial Court, however, did not find any substance in any of the objections, overruled them and made a decree in terms of the award. Aggrieved by the said award as affirmed by the decree of the civil Court the appellants have approached this Court in this appeal.

( 4 ) THE appellant's grievance is confined to three claims of the contractors, which are as follows : (I) Payment for excavation in overbreakages and filling in cement concrete or uncoursed rubble masonry; (ii) Payment of compensation for damages in respect of tendered items executed after the expiry of the original contract period; and (iii) The award of interest made by the arbitrators.

( 5 ) THE learned counsel for the appellants contended that there are errors apparent on the face of the record in that the conclusions reached by the arbitrators in regard to items referred to above are wholly unjustified and submitted that the arbitrators could not have granted claim No. 1 regarding excavation in overbreakages and filling in cement concrete or uncoursed rubble masonry. Further, placing reliance on Clause 39 of the contract agreement which provides for satisfaction of the contractors regarding infrastructure and data of works and conditions of the work site, it was also submitted that no payment could have been made towards overbreakages. Secondly, he contended that the arbitrators and the Court below could not have granted any compensation by way of damages for the work done in the extended period of contract. According to the learned counsel, what the arbitrators at best could have done is to award damages only at the rate as provided under Clauses 19a and 67 of the contract dated 7-1-1980. Lastly, the learned Government Advocate relying on decisions of the Supreme Court in Food Corporation of India v. M/s. Surendra Devendra and Mohendra Transport Co. , AIR 1988 SC 734, Executive Engineer, Irrigation v. Abhaduta Jena, AIR 1988 SC 1520, State of Orissa v. Construction India, AIR 1988 SC 1530 and State of Orissa v. Dandasi Sahu, AIR 1988 SC 1791 submitted that the arbitrators could not grant interest for period between commencement of reference and date of award or future interest.

( 6 ) THE learned counsel for the respondent, per contra, submitted that : (I) any enquiry into a matter of this nature falling u/s. 39 of the Indian Arbitration Act, 1940 (hereinafter r