S. Nagamuthu, J.

An important legal issue as to whether a Registrar acting under Section 87 of The Tamil Nadu Cooperative Societies Act, 1983, while passing an award, could order for payment of interest from the date of institution of the surcharge proceedings at the rate of interest lesser than the rate of contractual interest, has arisen for consideration.

2. The petitioner, a Co-Operative Society, governed under the Tamil Nadu Co-Operative Societies Act [in short, "the Act"], initiated a proceeding under Section 87 of the Act before the Deputy Registrar/Chief Revenue Officer / Arbitrator, Erode, in A.R.C. No.6982/2003-2004, claiming a sum of Rs.74,19,020/- with interest at the rate of 17% p.a. and penal interest at the rate of 3% p.a. Admittedly, the respondent had secured loan from the petitioner by mortgaging his properties. In the said mortgage deed, he had agreed to pay interest at the rate of 17% and penal interest at the rate of 3% p.a. The arbitrator passed an award on 26.03.2011 directing the respondent to pay a sum of Rs.74,19,020/- with interest at the rate of 13.50% p.a. from 27.03.2011 which was the date of institution of the surcharge proceedings. As against th