JUDGMENT :

ANUP JAIRAM BHAMBHANI, J.

1. By way of the present petition under section 34 of the Arbitration and Conciliation Act, 1996 (“A&C Act” for short), the petitioners-Union of India (Northern Railways) - impugn arbitral award dated 09.08.2007 (“impugned award”) rendered by the learned Sole Arbitrator, thereby deciding the disputes that had arisen between the petitioners and the respondent from a works-contract for Indoor Signalling Works i.c.w. Yard Remodelling at GZB awarded by the petitioners to the respondent on 07.12.1994. The impugned award variously decides the claims and counter-claims raised by the parties.

2. As recorded in order dated 04.03.2008, the limited challenge raised by the petitioners before this court concerns the award of pendente-lite interest and costs by way of the impugned award.

Challenge to Award of Pendente-Lite Interest

3. Mr. Jitendra Kumar Singh, learned counsel appearing for the petitioners submits that in awarding pendente-lite interest on the principal sum awarded, the learned Arbitrator has acted in breach of the provisions of section 28(3) of the A&C Act (as it stood prior to amendment by way of Amendment Act 3 of 2016 which came into effect from 23.10.2015). To be sure, the award itself pre-dates the amendment, and is therefore governed by the pre-amendment provision.

4. Attention in this behalf is drawn to the pre-amendment sections 28(3) and 31(7)(a) of the A&C Act, which read as under:

“28. Rules applicable to substance of dispute:

(1).............

(2).............

(3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.”

*** *** ***

“31. Form and contents of arbitral award

(1).............

(2).............

(3).............

(4).............

(5).............

(6).............

(7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.”

(Emphasis supplied)

5. Learned counsel for the petitioners submits that the award of interest by the learned Arbitrator is contrary to the express agreement between the parties, since clause 16(2) of the General Conditions of Contract (“GCCs”) governing the parties recites as under:

“Clause 16(2) - No interest will be payable upon the earnest money or the security deposit or amounts payable to the Contractor under the contract, but Government Securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon.”

(Emphasis supplied)

6. It is submitted that on the one hand, in the impugned arbitral award the learned Arbitrator has acknowledged that under the terms of the contract entered into between the parties, the contractor, viz. the respondent, was debarred from receiving any interest upon any amount payable under the contract, on the other hand, the learned Arbitrator has proceeded to award interest. It is pointed-out that taking due notice of clause 16(2) of the GCCs, in Paras 27 and 28 of the award, the learned Arbitrator expressly observes that the contractor is debarred from receiving any interest upon any amount payable under the contract, saying:

“27. In Claim No. 9, the claimant has prayed for award Rs. 1,12,253/- as interest from July 1999 to February 2001 @ 18% per annum on delayed payment of 7th Running Account Bill. As far as claim of interest is concerned for delay in payment of the amount due, there is a clause in the contract. Clause 16(2) in the contract which clearly debarred the contractor from having any interest upon any amount payable to the contractor under the contract.

“28. The learned counsel for the claimant has argued that notices C-27, 31, 34