Delegating arithmetical interest calculation to a third party after adjudicating liability is legally permissible.

Between 2010 and 2012, the appellant issued four work orders to the respondent, for which certain bills remained unpaid

The respondent referred the dispute to the Micro, Small and Medium Enterprises (MSME) Facilitation Council, which passed an award on September 18, 2017, followed by an additional award on October 24, 2017

The appellant challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, primarily arguing that the respondent was registered post-transaction and that the contract was a work contract outside the MSME Development Act’s purview

The learned Trial Judge dismissed the Section 34 application on August 14, 2024

The appellant subsequently filed this appeal under Section 37, which was restored after a prior dismissal for default

1. Whether the MSME Council exceeded its jurisdiction or improperly delegated its authority by directing an empanelled chartered valuer to calculate interest and idle labour charges

2. Whether the award was perverse or dehors the MSME Development Act, 2006, regarding the calculation of interest

The Court applied Section 37 of the Arbitration and Conciliation Act, 1996, to evaluate the Trial Judge's exercise of power under Section 34

Micro, Small and Medium Enterprises Development Act, 2006, specifically regarding the Council's authority under Section 20 and the mandatory interest provisions under Section 16 (referred to as Section 36 in the judgment), which stipulates interest at three times the bank rate notified by the RBI, compounded monthly

The Court distinguished the precedent Juggobundhu Saha v. Chand Mohan Saha (AIR 1996 CAL 806), which limits an arbitrator's power to delegate matters within the scope of the submission

The Court addressed the appellant's primary contention that the Council improperly delegated its duties. It found that the Council had substantively adjudicated the dispute by quantifying the principal amount, identifying the interest rate (3x RBI rate), and defining the interest period

The delegation to an empanelled chartered valuer was held to be limited to "arithmetical calculation" of the adjudicated interest, which does not constitute an illegal delegation of judicial or adjudicatory power

The Court noted that the appellant failed to demonstrate that the actual quantification was inconsistent with the Council’s directions

Furthermore, as the respondent waived its claims for idle labour charges and equipment costs, the concerns regarding those specific delegations became moot

The Court concluded that the Council’s directions remained within the statutory mandate of the MSME Act

The Court held that ministerial tasks, such as arithmetical interest calculations based on a predefined formula, can be delegated once the substantive liability is adjudicated

The respondent was granted liberty to withdraw the deposited amounts from the Registrar, Original Side, with accrued interest

The application for restoration (IA No. GA/6/2026) was allowed, and the previous dismissal order was recalled