Full Judgment Text
NEUTRAL CITATION NO: 2022/DHC/004475
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Decision delivered on: 18.10.2022
+ FAO(OS) (COMM) 52/2020
M/S LABH CONSTRUCTION & INDUSTRIES LTD .... Appellant
Through: Mr Aniruddha Deshmukh and Mr
Nikhil Goel, Advs.
versus
CENTRAL GOVT EMPLOYEES WELFAR HOUSING
ORGANISATION ..... Respondent
Through: Mr Debasish Moitra and Mr Rahul
Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
HON'BLE MS. JUSTICE TARA VITASTA GANJU
[Physical Hearing/Hybrid Hearing (as per request)]
RAJIV SHAKDHER, J. (ORAL):
1. This appeal is directed against the judgment dated 23.04.2019 passed
by the learned Single Judge.
2. Mr Aniruddha Deshmukh, who appears on behalf of the appellant,
says that the appeal is confined to the directions issued by the learned Single
Judge in paragraph 46 of the impugned judgment. For the sake of
convenience, the said paragraph is extracted hereafter:
“46. Under Section 31 of the Act, the Ld. Arbitrator has a
discretion to award interest i.e. pre-reference, pendente
lite, and post award. CGEWHO has been awarded various
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Digitally Signed By:VIPIN
KUMAR RAI
Signing Date:28.10.2022
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NEUTRAL CITATION NO: 2022/DHC/004475
sums in its favour including an amount of Rs.1,01,53,823/-
in respect of principal amounts spent by CGEWHO. The
award of interest relates to amounts paid by CGEWHO to
the labour and suppliers at the behest of the Contractor. It
cannot, therefore, be said that the CGEWHO is not entitled
to pre-reference and pendente Lite interest. Considering
that initially claims were raised by the Contractor and not
by CGEWHO, it is held that the CGEWHO is entitled to
pendente lite interest on the sums awarded in its favour, as
also future interest from the date of award at 8% simple
interest per annum. The challenge by the Contractor to this
award insofar as the awarded counter claims are
concerned, has already failed and attained finality. The
amount so calculated in terms of the present judgement be
paid to CGEWHO within three months by the Contractor.
If the payment is not made within three months, interest at
the rate of 10% would be liable to be paid on the awarded
amount.”
3. It is Mr Deshmukh’s contention that the learned Single Judge has
erred in substituting the view taken by the Arbitral Tribunal, which was to
confine payment of interest to the pre-reference period. In support of this
submission, Mr Deshmukh has drawn our attention to paragraph 7.13.4 of
the award.
4. On the other hand, Mr Debasish Moitra, who appears on behalf of the
respondent, says that the learned Single Judge has, after appreciating the
nuances of the matter, granted interest only for the period when the matter
was pending before the learned Arbitrator, i.e., pendente lite interest and
future interest from the date of award.
5. Paragraph 46 of the impugned judgment, which has been extracted
hereinabove, shows that the learned Single Judge has awarded interest at the
rate of 8% (simple) per annum for the period when the matter was pending
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Digitally Signed By:VIPIN
KUMAR RAI
Signing Date:28.10.2022
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NEUTRAL CITATION NO: 2022/DHC/004475
before the learned Arbitrator, i.e., pendente lite interest and interest from the
date of the award, i.e., future interest.
5.1. As noted above, the interest has been pegged by the learned Single
Judge at the rate of 8% (simple) per annum.
6. In our opinion, Mr Deshmukh is right, that if the learned Single Judge
was of the view that the learned Arbitrator has committed an error which fell
within the scope of Section 34 of the Arbitration and Conciliation Act, 1996
[in short, the “Act”], all that could have been done was to set aside and sever
that portion of the award.
7. Mr Deshmukh, in our view, is also right in contending that the learned
Single Judge could not have substituted the Arbitrator’s award concerning
pendente lite and future interest by awarding and then proceeding to fix the
rate of interest for the said periods.
8. The directions contained in the impugned judgment are, in our
opinion, contrary to the ratio of the judgment rendered by the Supreme
Court in The Project Director, National Highways no. 45 and 220 National
Highways Authority of India v M. Hakeem and Anr. ; (2021) 9 SCC 1.
9. Accordingly, the appeal is allowed. The directions contained in
paragraph 46 of the impugned judgment are set aside concerning pendente
lite and post- award interest are set aside.
10. The respondent will, however, be at liberty to trigger a fresh
proceeding, albeit , as per law.
10.1. In case a fresh proceeding is triggered, the appellant would have an
opportunity to demonstrate that the observations made in paragraph 46 of
the impugned judgement are not sustainable in law.
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Digitally Signed By:VIPIN
KUMAR RAI
Signing Date:28.10.2022
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10.2. In other words, the concerned adjudicatory forum would have to, in
our opinion, examine counter claim no.20 de novo i.e., the claim concerning
pendente lite and post-award interest.
11. The appeal is disposed of in the aforesaid terms.
(RAJIV SHAKDHER)
JUDGE
(TARA VITASTA GANJU)
JUDGE
OCTOBER 18, 2022/ aj
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Digitally Signed By:VIPIN
KUMAR RAI
Signing Date:28.10.2022
14:46:45