ORDER :

PRAYER: Petition filed under Section 34(2)(a)(iv), (b)(ii) of the Arbitration and Conciliation Act, 1996 as amended by amendment Act 2015, praying to set aside the Arbitral Award passed by the learned Arbitrator herein dated 20.04.2021 made in relation to disputes arising out of Agreement No.329/CN/2005 dated 13.10.2005 in so far as Claim No.4(award of pendente lite interest @ 12% p.a.) for a sum of Rs.7,31,785/- from 28.08.2007 to till the date of award (i.e.) 20.04.2021 is concerned.

The dispute before this Court lies within a narrow compass: the petitioners assail the arbitral award dated 20.04.2021 (the Award) in respect of the grant of pendente lite interest under Section 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act).

2. A contract was awarded by the petitioners to the respondent in relation to the collection, supply and related activities as regards machine crushed hard granite stone ballast between specified segments of the Turinjapuram and Thiruvannamalai stations, Reach VIII. In this connection, letter of acceptance dated 10.06.2005 (the LoA) was issued to the respondent. This was followed by an agreement dated 13.10.2005 (the Agreement). The Agreement was terminated by notice dated 15.05.2007. Thereupon, the respondent invoked the arbitration clause by communication dated 28.08.2007. At least on two occasions, the arbitral tribunal constituted to adjudicate the matter could not proceed further. Eventually, the Arbitral Tribunal, which pronounced the Award, was constituted.

3. Before the Arbitral Tribunal, the petitioner made five claims. The challenge in the present petition is confined to the verdict on the fourth claim, which pertained to interest on the security deposit pendente lite and in the post award period, but was allowed only as regards pendente lite interest. In response to the statement of claim, the petitioners herein filed a counter statement. In such counter statement, the petitioners herein contended that the demand for refund of security deposit is not reasonable and cannot be accepted. However, the issue relating to interest was not expressly dealt with. The respondent herein adduced documentary evidence by exhibiting 27 documents as Exs.C1 to C27 and the petitioners herein exhibited five documents as Exs.R1 to R5. Neither party adduced oral evidence before the Arbitral Tribunal. The petitioners were directed to refund the security deposit of Rs.7,31,785/- and pay simple interest thereon at 12% per annum from 28.08.2007 until the date of the Award. The admitted position is that the security deposit was refunded while the present petition was pending adjudication before this Court. It should be noticed that the Award does not grant post award interest.

4. The main basis of challenge by learned counsel for the petitioners is that the General Conditions of Contract (the GCC) prohibit the grant of interest either in the pre-reference period or pendente lite. In support of this contention, learned counsel refers to and relies upon Clause 16(3) of the GCC, which reads as under:

''(3) No interest will be payable upon the Earnest Money and 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 payable with interest accrued thereon.''

Learned counsel also relies upon Clause 64(5) of the GCC, which reads as under:-

''64.5. Where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made.''

By relying upon a recent judgment of the Hon'ble Supreme Court in Union of India v. Manraj Enterprises (Manraj Enterprises), (2022) 2 SCC 331, learned counsel contends that a claim for pendente lite interest had been entertained in the said case in spite of a similar clause prohibiting the grant of interest. In those circumstances, the Hon'ble Supreme Court concluded that the learned Arbitra