Full Judgment Text
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PETITIONER:
M/S JAGDISH RAI & BROTHERS
Vs.
RESPONDENT:
UNION OF INDIA
DATE OF JUDGMENT: 19/03/1999
BENCH:
S.Rajendra, S.N.Phukan
JUDGMENT:
RAJENDRA BABU, J. :
A claim has been made for grant of interest in respect
of an amount awarded pursuant to arbitration in an
application under Section 29 of the Arbitration Act, 1940
read with Section 34 CPC. However, such a claim does not
seem to have been made before the Court of the Sub-Judge
when the proceedings were pending for making the award the
rule of the court. The Subordinate Judge passed a decree in
terms of the award and against which an appeal was filed in
the High Court. When that appeal was pending in the High
Court an application was made as stated earlier but was
rejected firstly on the ground that the appellant is not
entitled to award of interest when such a claim had not been
made before the court of the Sub-Judge by challenging the
award and secondly on the ground that when interim relief
was granted against the order making the award a rule of the
court to make payment to an extent of 50% which could be
withdrawn after furnishing security to the satisfaction of
the court and having withdrawn the money the appellant would
not be entitled to claim interest.
There are four stages of grant of interest. Firstly,
from the stage of accrual of cause of action till filing of
the arbitration proceedings; secondly, during pendency of
the proceedings before arbitrator; thirdly, future interest
arising between date of award and date of the decree; and
fourthly, interest arising from date of decree till
realisation of award.
The claim for interest not having been made before the
court in which proceedings for making the award the rule of
the court were pending would certainly dis- entitle the
appellant for making such a claim during first three stages
of pre-arbitration and post-arbitration that is between
award and filing of application inasmuch as several
considerations will have to be examined before award of
interest and at what rate. Therefore, when the award had
not been challenged for not granting interest, the award
could not be upset to that extent. The view taken by the
High Court appears to be correct to that extent. However,
that is not the end of the matter. The High Court ought to
have further examined whether the appellant was entitled to
any interest after the decree was made in terms of the
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award. The courts have taken the view that award of
interest under Section 34 CPC is a matter of procedure and
ought to be granted in all cases when there is a decree for
money unless there are strong reasons to decline the same.
In the present case the appellant had made a claim for
interest before the arbitrator but the same had been denied
and no reasons are forthcoming thereto. Whatever that may
be, at any rate after the Sub-Judge made an award the rule
of the court the decree ought to contain a provision for
making payment of interest. If such payment had not been
made, appropriate correction of the decree could be ordered
to be made when an application had been made before the High
Court.
We are conscious of the fact that the appellant had
not preferred any appeal against the order made by the court
of Sub-Judge which made the award the decree of the court
but did not grant any interest. Even so, the grant of
interest being a matter of procedure and the appellant
having made an application before the High Court in that
regard, we do not think there is any impediment to grant the
same by bringing decree of subordinate court in conformity
with law, namely, by awarding appropriate interest.
The learned counsel for the appellant relied upon
several decisions of this Court to state the proposition
that such interest could be granted. It is unnecessary to
make any detailed reference to them. We think it
appropriate to modify the decree of the court of Sub-Judge
by including a direction for payment of interest @ 12% per
annum from the date when the award was made the decree of
the court of Sub-Judge till realisation. The appeal is
allowed to the extent indicated above. However, in the
circumstances of the case, there shall be no orders as to
costs.