Case Note & Summary
The appeal arose from a judgment dated 15.5.2007 by the Rajasthan High Court, which dismissed the appellant's appeal under Section 39 of the Arbitration Act, 1940. The dispute originated from a contract for laying PSC pipeline, where the appellant's tender was accepted in 1982, leading to an arbitration clause being invoked due to disputes. The arbitrators awarded the appellant interest on outstanding payments, but the District Judge allowed objections from the respondent, limiting the interest awarded. The appellant's review application resulted in a ruling that only simple interest was granted. The Single Judge upheld the District Judge's decision, leading to the current appeal. The Supreme Court analyzed the powers of arbitrators to award interest, referencing established precedents that affirmed this authority. The court found that the lower courts had erred in their reasoning, particularly in denying the appellant interest while granting it to the respondent. The court emphasized that arbitrators are mandated to award interest when justified, and the appeal was allowed, restoring the original award with interest. The respondent was ordered to bear litigation costs.
Headnote
A) Arbitration Law - Jurisdiction of Arbitrators - Power to Award Interest - Arbitration Act, 1940, Section 29 - Arbitrators possess the authority to award interest for pre-reference, pendente lite, and post-award periods, provided there is no prohibition in the arbitration agreement. The court held that the lower courts erred in denying interest to the appellant while granting it to the respondent, leading to discrimination (Paras 20-22).
Issue of Consideration
Whether the arbitrators had the jurisdiction to award interest at various stages and whether the orders of the lower courts denying such interest were sustainable.
Final Decision
The Supreme Court allowed the appeal, set aside the orders of the lower courts, and restored the arbitrators' award with interest as originally granted.
Law Points
- Arbitration
- Interest
- Jurisdiction of Arbitrators
- Code of Civil Procedure
- 1908
- Section 34
- Arbitration Act
- 1940
- Section 29
