Case Note & Summary
The dispute arose from an agreement concerning the construction of a residential complex at Shimla, leading to arbitration due to disagreements between the parties. An arbitrator was appointed, and an award was passed on August 12, 1998. The appellants filed objections under Section 34(3) of the Arbitration and Conciliation Act, 1996, which were accepted by the High Court, prompting the arbitrator to provide reasons for the award. After the arbitrator issued a revised award on February 14, 2001, the appellants deposited the entire amount due under the award on May 24, 2001, but their objections were rejected by the High Court on February 26, 2008. The respondent initiated execution proceedings on August 12, 2008, and the High Court ruled that the respondent was entitled to post-award interest at 18% per annum from the date of the award until actual payment. The Supreme Court examined whether the deposit constituted payment, determining that it did, thus ceasing the appellants' liability for interest from that date. The court modified the High Court's order, stating that interest was only payable until May 24, 2001, and directed the High Court to re-determine the amount due to the respondent, with any excess withdrawn to be refunded to the appellants. No costs were awarded.
Headnote
A) Arbitration - Post-Award Interest - Entitlement to Interest - Arbitration and Conciliation Act, 1996, Section 31(7) - The court held that the deposit of the entire award amount into the High Court constituted payment to the respondent, thus ceasing the liability for post-award interest from that date. The High Court's direction to pay interest beyond the deposit date was found to be incorrect (Paras 11-12).
Issue of Consideration
Whether the deposit of the entire award amount by the appellants into the High Court constituted payment to the respondent, thereby ceasing the liability to pay interest from that date.
Final Decision
The Supreme Court allowed the appeal in part, modifying the High Court's order to state that the appellants were liable to pay interest at 18% per annum only until May 24, 2001, after which no interest was payable. The court directed the High Court to re-determine the amount due to the respondent and refund any excess amount withdrawn.
Law Points
- Arbitration
- Post-Award Interest
- Definition of Payment
- Section 31(7) Arbitration and Conciliation Act
- 1996
