Full Judgment Text
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PETITIONER:
STATE OF ORISSA
Vs.
RESPONDENT:
SHR. B.K.ROUTRAY
DATE OF JUDGMENT: 12/01/1999
BENCH:
Sujata V. Manohar, R.C. Lahoti.
JUDGMENT:
D E R
The only question which has been raised in this
appeal pertains to the award of interest by the Arbitrator
for the pre-reference period. The pre-refcrence period, in
the present case, is from 31.3.1977 to 20.3.1980. This
entire period is prior to coining into force of the interest
Act, 1978. The interest Act, 1978 came into force during
the pendency of the reference and the award is made on
12.10.1982 when the Interest Act, 1978 was in force.
The short question is whether the Arbitrator in
1982, could have awarded interest for the pre-reference
period in view of the provisions of the Interest Act, 1978,
although the entire pre-reference period is prior to the
coming into force of the Interest Act, 1978.
In this connection, our attention has been drawn to
the decision of this Court in State of Orissa vs.
B.N.Agarwalla reported in (1997) 2 SCO 469. In paragraph
18, this Court has held that interest cannot be given for
the period prior to the coming into force of the Interest
Act, 1973. This Court has also held that the decision in
the case of Executive Engineer (Irrigation) vs. Abhaduta
Jena reported in (1938) 1 SCO 418 has not been over-ruled in
so far as it deals with interest for the pre-reference
period. This Court has upheld the view taken in Abhaduta
Jena’s case to the effect that in respect of pre-reference
period, interest cannot be awarded in respect of the period
not covered by the Interest Act, 1978. Our attention was
also drawn to a decision in the case of State of Orissa vs.
Niranian Swain reported in (1989) 4 SCC 269 where also this
Court said that where reference to arbitration was made
prior to the commencement of the Interest Act, 1978,
Arbitrator is not empowered to grant interest for the period
upto the date of submission of claim to arbitration.
In this connection, we would also like to refer to
Section 6(2) of the Interest Act, 1978 which provides as
follows:
Section 6(1) .................
Section 6(2? : The provisions of this
Act shall not apply to any suit or other
legal proceeding pending at the
commencement of this Act and the
provisions of the corresponding law
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applicable immediately before such
commencement shall notwithstanding the
repeal of such law by sub-section (1),
continue to apply to such suit or other
legal proceeding.
This section also clearly provides that the
provisions of the Interest Act, 1978 shall not apply to any
legal proceeding pending at the commencement of the said
Act. Since the definition of "Court" under Section 2(a)
includes a Tribunal or Arbitrator, the proceedings before
the Arbitrator would also be covered by the expression legal
proceedings in Section 6(2). Therefore interest Act, 1978
does not apply to pending arbitration proceedings.
In the premises, the present appeal is allowed and
the award of interest for the pre-reference period, namely,
31.3.1977 to 20.3.1.980 is disallowed. The award and the
decree are modified accordingly to this effect,