The court ruled that an unsubstantiated claim for set off cannot affect the enforceability of an arbitral award, and interest on decreed amounts runs from the date the claim arose.

JUDGMENT

Vibhu Bakhru, J. (Oral)--The Decree Holder (hereafter `JAL') has filed the present petition seeking enforcement of an Arbitral Award dated 19.02.2018, which was made a rule of the court by a judgment dated 08.04.2019 in CS(COMM.) 907/2018 captioned "M/s Jaiprakash Associates Limited v. NHPC Limited".

2. JAL and the Judgment Debtor (hereafter `NHPC') had entered into a contract on 27.05.1986 for construction of the main concrete dam and coffer dam at Chamera Hydroelectric Projects at Dalhousie, District Chamba, Himachal Pradesh. The disputes between the parties, essentially, relate to JAL's claim for payment of 25% mark up on the market rate of material utilised in execution of extra and deviated items of work under the contract in question. The petitioner claimed a sum of Rs.6,47,00,648.87/- as mark-up on materials, which was not accepted by NHPC. NHPC contended that in terms of the contract between the parties, a mark-up would apply only to material supplied by the contractor and not by NHPC. JAL's claim for markup was finally rejected by NHPC by a letter dated 13.09.1993.

3. In view of the disputes, JAL invoked the Arbitration Clause by a letter dated 28.10.1993. NHPC appointed Justice (Retired) Hari Swarup as the Sole Arbitrator. And, on 03.11.1993, JAL referred its claim to the Arbitral Tribunal.

4. The Arbitral Tribunal delivered the arbitral award on 21.12.1996. JAL filed objections under Sections 30 and 33 of the ARBITRATION ACT , 1940 against the said award before this Court.

5. The said objections were accepted; this Court set aside the aforementioned arbitral award by a judgment dated 11.02.2010 and remanded the matter to the Arbitral Tribunal. NHPC appealed against the said judgment dated 11.02.2010 before the Division Bench of this Court. NHPC's appeal was rejected by an order dated 04.11.2011 and the learned Single Judge's interpretation of Clause 11.8(iii) of the Contract between the parties was upheld.

6. NHPC challenged the judgments passed by this Court (Judgment dated 11.02.2010 passed by the Single Judge and the Judgment dated 04.11.2011 passed by the Division Bench) before the Supreme Court by filing a Special Leave Petition. The said SLP was dismissed by the Supreme Court by an order dated 18.11.2014.

7. In the meantime, the learned Sole Arbitrator (Justice Hari Swarup) had expired. Consequently, on 25.04.2015, NHPC appointed another Arbitrator to fill the vacancy caused by Justice Hari Swarup's demise. And, the arbitral proceedings recommenced. JAL pursued its claim before the Arbitral Tribunal in view of the relevant clauses as interpreted by this Court.

8. The arbitral proceedings culminated in the Arbitral Award dated 19.02.2018 (`the Arbitral Award'). In terms of the Arbitral Award, JAL was awarded a sum of Rs.6,23,39,157/- along with interest at the rate of 14% per annum from the date of reference till realization.

9. Thereafter, NHPC filed an application, inter alia, for rectification of the Arbitral Award as according to NHPC, there was calculation error in computing the quantum of mark-up claimed by JAL. The said application was accepted and the Arbitral Award was rectified to award a sum of Rs.5,90,40,294/- in favour of JAL instead of

Rs.6,23,39,157/-.

10. NHPC filed its objection under Sections 30 and 33 of the ARBITRATION ACT , 1940 against the Arbitral Award as rectified in terms of the order dated 28.03.2018.

11. One of the issues raised before this Court was regarding payment of interest as awarded by the Arbitral Tribunal. NHPC claimed that the interest was not payable in terms of Clause 49.