The main legal point established in the judgment is the interpretation of the applicability of amended provisions of the Arbitration and Conciliation Act, 1996, particularly section 31(7)(b) and section 26 of the Amendment Act of 2016, to pending arbitration proceedings.

JUDGMENT

(Mangesh S. Patil, J.) :

1. Heard.

2. Admit.

3. Learned advocate for the respondent Mr. Sabnis waives service.

4. At the joint request of the parties, the appeal is being disposed of finally.

5. Facts, as are relevant, may be summarized as under:-

The appellant is an automobile manufacturing company. It had appointed the respondent as a dealer on 19-10-2005. The respondent committed defaults in its performance under the dealership agreement pursuant to which the appellant terminated the contract. The respondent invoked the arbitration clause and this Court appointed an Arbitrator in a proceeding under section 11(6) of the Arbitration and Conciliation Act, 1996 (‘The Act of 1996’). The arbitrator allowed the respondent’s claim partly. He held the respondent entitled to recover an amount of Rs.12,80,480/- being aggregate of the amount of dues with interest @ 18% per annum from 31-03-2012.

The appellant challenged the award under section 34 of the Act of 1996 before the Commercial Court and the District Judge, Aurangabad. It dismissed the application by the impugned judgment and order. Hence this appeal under section 37 of the Act of 1996.

6. The learned advocate Mr. Adwant submitted that the appellant is seeking to challenge the award as also the order in the proceeding under section 34 only to the extent of the interest awarded in favour of the respondent @ 18% per annum. It is necessary to note that he did not make any attempt to assail any other part of the award or the finding of the Commercial Court. He would, therefore, endeavour to demonstrate that the interest awarded was contrary to the statutory provision contained in section 31(7)(b) of the Act of 1996. He would submit that there is no stipulation as to the interest to which a party would be entitled in the contract between the parties.

He would, therefore, submit that in the absence of such stipulation in the contract regarding payment of interest, the provision of section 31(7)(b) of the Act of 1996 would regulate the aspect and since it refers to rate of interest to be payable @ 2% higher than the current rate of interest, the respondent was entitled to the pendente lite and future interest only @ 9% per annum and not 18% per annum. He would place reliance on the following decisions:-

(1) Oriental Structural Engineers Private Limited Vs. State of Kerala; (2021) 6 SCC 150,

(2) MSK Projects India (JV) Limited Vs. State of Rajasthan and another; (2011) 10 SCC 573,

(3) State of Rajasthan and another Vs. Ferro Concrete Construction Private Limited; (2009) 12 SCC 1,

(4) Kranti Associates Private Limited and another Vs. Masood Ahmed Khan and others; (2010) 9 SCC 496,

(5) Dyna Technologies Private Limited Vs. Crompton Greaves Limited; (2019) 20 SCC 1,

(6) Vedanta Limited Vs. Shenzhen Shandong Nuclear Power Construction Company Limited; (2019) 11 SCC 465,

(7) Krishna Bhagya Jala Nigam Ltd. Vs. G. Harischandra Reddy and another; (2007) 2 SCC 720,

(8) Hindustan Construction Company Limited Vs. Union of India and others; (2020) 17 SCC 324.

7. Per contra, learned advocate Mr. Sabnis for the respondent would strenuously submit that clause (b) of sub-section (7) of section 31 of the Act of 1996 was substituted in place of the earlier provision by the Arbitration and Conciliation (Amendment) Act of 2015 (Act No. 3 of 2016) (‘Amendment Act of 2015’) with effect from 23-10-2015. He would submit that the clause that existed originally empowered the arbitral tribunal to award interest @ 18% per annum. He would submit that the arbitration proceeding had commenced in the year 2014 as is contemplated under section 21 of the Act of 1996. Therefore, even if the award was passed in the year 2016, after coming into force of the new clause (b), by virtue of section 26 of the Amendment Act of 2016, the amended provision was not applicable to the arbitration proceedings which had commenced prior to the cut off date of 23 October 2015.

He would place reliance on the decision in the matter of Board of