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2013 Supreme(Mad) 3371
High Court of Judicature at Madras
N. PAUL VASANTHAKUMAR & M.M. SUNDRESH, JJ.
Ennore Port Limited Chennai
Versus
H.C.C. Van Oord ACZ Joint Venture Mumbai & Others
Original Side Appeal No. 279 of 2010 & M.P. No. 1 of 2011
Decided On: 20-09-2013
For the Appellant:Ravindran, SC for Krishna Ravindran, Advocate.
For the Respondents:K. Subramani, SC for D. Balaraman, Advocate.
Headnote:
Interest - Arbitration - Arbitration and Conciliation Act, 1996 - Section 31(7)(a) and (b) - Sub-Clause 60.8 of the Conditions of Particular Application - [McDERMOTT INTERNATIONAL INC. VS. BURN STANDARD CO. LTD. AND OTHERS, KRISHNA BHAGYA JALA NIGAM LTD. VS. G.HARISCHANDRA REDDY AND ANOTHER, SAYEED AHMED AND CO. VS. STATE OF UTTAR PRADESH AND OTHERS, MSK PROJECTS INDIA (JV) LTD. VS. STATE OF RAJASTHAN AND ANOTHER, NAND CONTRACTORS AND ENGINEERS VS. NORTHERN COALFIELD LIMITED AND ANOTHER, SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT OF ORISSA AND OTHERS VS. RAGHUNATH MOHAPATRA, BHAGAWATI OXYGEN LTD. VS. HINDUSTAN COPPER LTD., TEHRI HYDRO DEVELOPMENT CORPORATION LTD. AND ANOTHER VS. JAI PRAKASH ASSOCIATES LTD., HUDA VS. RAJ SINGH RANA, STATE OF RAJASTHAN VS. FERRO CONCRETE CONSTRUCTION PVT. LTD., STATE OF HARYANA VS. S.L.ARORA AND COMPNAY] - The court discussed the applicability of Sub-Clause 60.8 of the Conditions of Particular Application and the discretion of the Arbitral Tribunal in awarding interest under Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996. The court considered various judgments to determine the appropriate percentage of interest payable and the circumstances surrounding the case. The court concluded that the interest awarded by the Arbitral Tribunal and confirmed by the learned single Judge was just and reasonable, and modified the interest payable at 10% per annum instead of 15% for the period from the date of Award to the date of actual payment.
Fact of the Case:
The case involved a dispute over the payment of interest following the completion of work by the First Respondent. The Appellant contended that excess payments had already been made, resulting in the Respondent invoking the Arbitration Clause. The learned Arbitrator passed an Award in favor of the First Respondent, directing the Appellant to pay 12% interest for the pre-reference period and pendente lite period, and 15% interest from the date of the Award till the date of actual payment. The Appellant filed a petition challenging the Award, which was confirmed by the learned single Judge. The only issue before the court was the appropriate percentage of interest that the Appellant was liable to pay.
Finding of the Court:
The court found that the interest awarded by the Arbitral Tribunal and confirmed by the learned single Judge was just and reasonable. The court modified the interest payable at 10% per annum instead of 15% for the period from the date of Award to the date of actual payment.
Issues: The main issue was the appropriate percentage of interest that the Appellant was liable to pay.
Ratio Decidendi: The court considered the applicability of Sub-Clause 60.8 of the Conditions of Particular Application and the discretion of the Arbitral Tribunal in awarding interest under Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996. The court also relied on various judgments to determine the appropriate percentage of interest payable and the circumstances surrounding the case.
Final Decision: The Appeal was allowed in part with the modification that the interest payable was fixed at 10% per annum instead of 15% for the period from the date of Award to the date of actual payment. No costs were awarded, and the connected Miscellaneous Petition was closed.
M.M. Sundresh, J.
1. This Appeal has been preferred against the dismissal order dated 14.8.2009 passed in O.P. No. 487 of 2008, which, in turn, was filed challenging the Award dated 22.5.2008 passed by the Arbitral Tribunal in favour of the First Respondent / Claimant.
2. Facts in brief:-
(a) Pursuant to the proposal of the Appellant to construct two Breakwaters, a contract was entered into between the Chennai Port Trust on behalf of the Appellant and the First Respondent M/s HCC Van Oord ACZ Joint Venture on 22.8.1997. A Memorandum of Understanding was also entered into between the parties on 30.3.2002 subsequent to which, the work was duly completed by the First Respondent. Pursuant to the completion of work, Taking Over Certificates as well as Defect Liability Certificates were issued by the Engineer concerned. While the First Respondent / Claimed due payment, the Appellant contended that already excess payments have been made which resulted in the Respondent invoking the Arbitration Clause and the matter went to the learned Arbitrator.
(b) The learned Arbitrator, after considering the entire materials placed before him, was pleased to pass an Award in favour of the First Respondent with a further direction to the Appellant to pay 12% interest for the pre-reference period as well as pendente lite period and 15% interest from the date of the Award till the date of actual payment. Challenging the Award passed, the Appellant filed a petition in O.P. No. 487 of 2008.
(c) Before the learned single Judge, two contentions were raised by the learned counsel for the Appellant on the grounds of limitation and percentage of interest awarded. The learned single Judge, by order dated 14.8.2009, was pleased to confirm the Award passed by the learned Arbitrator. Feeling aggrieved, the Appellant has come before us.
(d) During the pendency of the Appeal, the parties were advised by the Co-ordinate Bench to settle the dispute regarding the interest component. Even though there was an agreement on the principal amount awarded, no settlement could be arrived at on the payment of interest. Thereafter, the matter was directed to be posted before this Court for hearing.
3. Even before us, learned Senior Counsel appearing for both sides made submissions only on the percentage of interest payable. Therefore, the only issue to be considered in this Appeal is with regard to the appropriate percentage of interest that the Appellant is liable to pay.
4. Learned Senior Counsel appearing for the Appellant would submit that taking into consideration the fact that the Appellant is a statutory Corporation, the Award passed by the Arbitral Tribunal, as confirmed by the learned single Judge, requires a modification insofar as the interest portion is concerned and awarding of 15% interest per annum during the pendency of the proceedings and thereafter, is excessive. According to the learned Senior Counsel, the learned single Judge did not take into consideration all the relevant materials for fixing the interest payable. He also submitted that on an earlier occasion, between the same parties, this Court has fixed 9% interest per annum on the Award amount payable. In support of his contention, the learned Senior Counsel placed reliance upon the following judgments:-
1.McDERMOTT INTERNATIONAL INC. VS. BURN STANDARD CO. LTD. AND OTHERS [(2006) 11 SCC 181]
2.KRISHNA BHAGYA JALA NIGAM LTD. VS. G.HARISCHANDRA REDDY AND ANOTHER [(2007) 2 SCC 720]
3.SAYEED AHMED AND CO. VS. STATE OF UTTAR PRADESH AND OTHERS [(2009) 12 SCC 26]
4.MSK PROJECTS INDIA (JV) LTD. VS. STATE OF RAJASTHAN AND ANOTHER [(2011) 10 SCC 573]
5.NAND CONTRACTORS AND ENGINEERS VS. NORTHERN COALFIELD LIMITED AND ANOTHER [(2012) 9 SCC 494]
5. Per contra, learned Senior Counsel appearing for the First Respondent would submit that while considering the issue of fixation of interest, this Court will have to take into account the circumstances surrounding the case. As far the present case is co
