An arbitrator can award pre-reference interest only if there is an agreement to pay interest, a usage or custom having the force of law, or under substantive law like Section 61 of the Sales of Goods Act, etc., or if a notice of demand for interest as contemplated in Section 3(1)(b) of the Interest Act, 1978 is given in writing.

( 1 ) ON a petition under Sections 8 and 20 of the Arbitration Act, 1940 in Suit No. 701-A/81, arising out contract dated 30th June, 1976 between the parties, containing an arbitration clause, this court vide order dated 12th April, 1985, appointed Shri T. U. Mehta, Retd. Chief Justice, as the sole arbitrator to adjudicate the claims set out in the suit, except

( 2 ) CLAIM No. 3. The Id. arbitrator made his award on 16th July, 1987, issued notices to the parties and caused the award to be filed in this court.

( 3 ) NOTICE of the filing of the award was given to the parties. Notice was accepted for the claimant on 4th December, 1987. It was served on the respondent on 19th February, 1988. The respondent filed the objections against the award on 18th March, 1988. These have been resisted of the claimant. On the pleadings of the parties following issues were framed :

(1) Is the award liable to be set aside for any of the reasons set out in the objection petition ? (2) Have the objections been filed within the period of limitation ? if not, what is its effect ? (3) Relief.

( 4 ) EVIDENCE was directed to be led by way of affidavits. Affidavits in support and in resistance to the objections have been filed by the parties. I have heard ld. counsel for the parties.

( 5 ) ISSUE No. 2 It would be convenient to dispose of this issue first. It is common ground that the respondent was served with the notice of filing of the award on 19th February, 1988. The objections petition, as per endorsement of the registry, appears as received on 18th March, 1988. The objections, thus, were filed within Fairly, as such, no arguments were addressed on the issue. The issue is, accordingly, found in favour of the Objector.

( 6 ) ISSUE No. 1 There were two claims, in main, besides of interest and costs for adjudication by the Id. arbitrator, namely :

(I) Claim No. I-for refund of Rs. 15,000 paid by the claimant towards their contribution of the proposed joint venture along with interest at 1. 5% per mensem for the period 30th June, 1976 till payment calculated upto 30th June, 1985 at Rs. 36,000.

( 7 ) IT has been allowed in full along with interest at 12% per annum with yearly rests instead of interest at 1. 5% per month as claimed but held unjustifiable. (ii) Claim No. 2-falling under four heads mentioned below ; allowed to the extent mentioned against each of them.

( 8 ) IN the objections filed, the grounds of attack generally taken are (1) misconduct by the arbitrator on the pleas that the award is perverse and based on no evidence and the arbitrator was biased towards the respondent and (2) that there are mistakes apparent on the face of the record .

( 9 ) ON the general and vague pleas of misconduct or award being perverse, no arguments were addressed by the Id. counsel. The alleged plea of bias was faintly touched with reference to observations in the award made while rejecting the contentions put forth on behalf of the respondent, I have gone through the award, which is detailed and well reasoned and do not find anything to show that the Id. arbitrator was biased against the respondent. Nothing substantial was pointed out in this behalf.

( 10 ) THE real challenge to award on Claim No. 1 is to the award of interest for the period prior to the reference. It was urged that there being no stipulation in the contract to pay interest, no interest could be allowed unless a notice demanding interest was issued ; and in any case the interest awarded with yearly rests is without jurisdiction.

( 11 ) AN arbitrator has to act according to law. It is well settled that pre-reference interest can be awarded by an arbitrator only (i) if there is an agreement to pay interest (ii) if there is a usage on custom having the force of law or (iii) under substantive law like Section 61 of the Sales of goods Act etc. or if a notice of demand for interest as contemplated in Section 3 (l) (b) of the Interest Act, 1978 is given in writing.

( 12 ) ADMITTEDLY, there is