M.L. Singhal, J. - Vide order dated 23.1.1992, Sh. D.S. Sethi, S.E. National High Ways Circle, Jalandhar was appointed arbitrator between Krishan Kumar Bansal (contractor) and Municipal Committee, Patiala for determining the amount due to him from the latter in re : construction of roads in Anand Nagar Near Blue Wing School, Patiala allotted to him vide agreement dated 29.3.1985. He submitted claim to the SE PWD (B&R) Patiala on 29.10.1987 for adjudication. SE PWD Circle, Patiala informed both the parties of his un-willingness to act as arbitrator vide his letter No. 2910-11 dated 28.6.1991. It was, thereafter that vide order dated 23.1.1992 Shri D.S. Seth, SE National Highways Circle, Jalandhar was appointed as arbitrator by the Court. Shri D.S. Seth gave award dated 20.5.1992. In respect of claims No. 2 to 6 (a), (b), (c), he awarded Rs. 24, 549/-, 1, 31, 905/-, 17, 132/-, 9600/-, nil, nil and 2000/- respectively. He awarded 18% compound interest yearly on Rs. 24, 549/- w.e.f. 1.10.1986 to 20.5.1992. He awarded 18% compound interest yearly on Rs. 1, 58, 637/- w.e.f. 13.6.1986 to 20.5.1992. He also awarded 18% compound interest yearly on the total amount of the award from the date of the award to the date of actual payment to Krishan Kumar Bansal-contractor. Sh. Krishan Kumar Bansal made application under Sections 14, 17 and 18 of the Indian Arbitration Act, 1940 for filing of the award by Sh. D.S. Sethi-petitioner and for making it rule of the Court.

JD-Municipal Committee, Patiala put in objections to the award under Sections 30 and 33 of the Arbitration Act Sub Judge Ist Class, Patiala vide order dated 6.5.1993 dismissed the objections and made the award rule of the Court. He did not tinker with the interest awarded by the arbitrator either with regard to the periods for which interest was awarded or the rate on which interest was awarded. Municipal Committee, Patiala went in appeal, Additional District Judge, Patiala vide order dated 8.11.1993 dismissed the appeal.

Still not satisfied, Municipal Committee, Patiala has come up in revision to this Court.

This revision was admitted qua interest alone vide order dated 20.1.1994.

In this revision, therefore the focus will be - "whether the arbitrator could award interest for the period before the reference had been made to him and further whether he could award interest for the period from the date of reference till the date of award, further for the period subsequent to the date of award to the date of actual payment and further whether he could award interest to be compounded annually and that too at the rate of 18% per annum."

It was submitted by the learned Counsel for the petitioner that as per the clause 24 of the arbitration agreement where the matter involves a claim for or the payment or recovery or deduction of money "only the amount if any awarded in such arbitration shall be recoverable in respect of the matter so referred. It was submitted that the arbitrator could award only the principal amount. On the principal amount, he could not award any interest. It was submitted that the arbitrator could not award interest for the pre-reference period and for the period during which arbitration proceedings remained pending. Learned counsel also submitted that arbitrator could not award interest for the period subsequent to the delivery of the award. It was submitted that arbitrator had no jurisdiction to award interest for these periods. In support of this submission, he drew my attention to State of Orissa v. B.N. Agarwalla, AIR 1997 SC 925 where it was held that arbitrator has the jurisdiction to award pre-reference interest in cases which arose after the Interest Act, 1978 has become applicable. With regard to those cases pertaining to period prior to the applicability of the Interest Act, 1978, in the absence of any substantive law, contract or usage, the arbitrator has no jurisdiction to award interest. For the period during which the arbitration proceedings