Equal treatment in arbitration-related interest awards enhances finality and discourages prolonged litigation.

JUDGMENT

Manmohan, J. (Oral)--Present appeal has been filed challenging the order dated 13th March 2020 passed by the learned Single Judge.

2. Learned senior counsel for the Appellant submits that the learned Single Judge instead of granting a similar rate of interest @ 12% per annum to the Appellant, has asked it to re-agitate the matter as per law despite appreciating that both the Appellant and the Respondent were to be treated on the same footing. He points out that Section 34 of the Arbitration and Conciliation Act, 1996 allows this Court to correct the Award atleast to the extent of directing that same rate of interest shall be granted to both the Respondent and the Appellant.

3. He submits that in the alternate, even if the learned Single Judge felt compelled to direct the Appellant/Counter Claimant to re-agitate its claim for interest, then in that case, the same direction ought to have been issued to the Respondent as well, and the amount of interest of Rs.74.12 lakhs ought to have been disallowed, and both the parties should have been permitted to re-agitate the matter before a freshly appointed arbitral tribunal.

4. Learned senior counsel for the appellant also contends that there is a calculation error in computing the external development charges by the Arbitrator inasmuch as the factum of the claimant completing only 41.9% work was not taken into account.

5. Issue notice. Mr. Uday Gutpa, Advocate accepts notice on behalf of the Respondent. He submits that as far as interference with an order made under Section 34 , as per Section 37 of Arbitration and Conciliation Act is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34 . In other words, the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision.

6. He further submits that as the counter-claim is in the nature of damages, the appellant is not entitled to any interest on the same. In the alternative, without prejudice to his rights and contentions, he would submit that if at all the appellant is held entitled to any interest then the same ought to be calculated from 26th October, 2015 when the original counter-claim was replaced with the amended counter-claim and not from 19th May, 2011. In support of his submission, he relies upon a judgment of the Supreme Court in State of Goa vs. Praveen Enterprises, AIR 2011 (SC) 3814 wherein it has been held as under:

"17. As far as counter-claims are concerned, there is no room for ambiguity in regard to the relevant date for determining the limitation. Section 3(2)(b) of the Limitation Act, 1963 provides that in regard to a counterclaim in suits, the date on which the counterclaim is made in court shall be deemed to be the date of institution of the counterclaim. As the Limitation Act, 1963 is made applicable to arbitrations, in the case of a counter-claim by a respondent in an arbitral proceeding, the date on which the counter-claim is made before the arbitrator will be the date of "institution" insofar as counterclaim is concerned. There is, therefore, no need to provide a date of "commencement" as in the case of claims of a claimant. Section 21 of the Act is therefore not relevant for counter-claims. There is however one exception. Where the respondent against whom a claim is made, had also made a claim against the claimant and