Case Note & Summary
The Union of India, owning South Western Railway, filed a civil revision petition under Section 115 of the Code of Civil Procedure, 1908, challenging the judgment and decree dated 11.04.2014 passed in Execution No.1045/2013 by the XIX Additional City Civil and Sessions Judge, Bangalore. The executing court had ordered that the memo of calculation filed by the decree-holder, M/s Best Cast Construction Pvt. Ltd., was in accordance with the interim award dated 27.02.2001 passed by the Arbitral Tribunal, and that the interest calculated by the decree-holder was correct. The dispute arose from an agreement dated 04.08.1999. The Arbitral Tribunal passed an interim award on 27.02.2001 directing refund of 'vitiation amount' with interest at 18% p.a. payable after 30 days from the date of publication of the interim award under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. Subsequently, a final award was passed on 21.01.2005 awarding a total sum of Rs.8,83,085/-. The legal issue was whether the interim award merges with the final award and the effect of such merger on interest calculation. The petitioners argued that the interim award merged with the final award, and therefore interest should be calculated from the date of the final award, not the interim award. The respondent contended that the interim award remained independent. The court analyzed the provisions of the Arbitration and Conciliation Act, 1996, and held that an interim award is a final award on the matters covered therein but merges with the final award when the final award is passed. Consequently, the decree-holder is entitled to interest only as per the final award. The court set aside the impugned order and directed the executing court to recalculate the interest in accordance with the final award.
Headnote
A) Arbitration Law - Merger of Interim Award with Final Award - Section 31(7)(b) Arbitration and Conciliation Act, 1996 - The court considered whether an interim award merges with the final award. Held that the interim award merges with the final award and the decree-holder is entitled to interest only as per the final award, not the interim award. The memo of calculation based on the interim award was set aside. (Paras 2-6) B) Execution Proceedings - Interest Calculation - Section 31(7)(b) Arbitration and Conciliation Act, 1996 - The court held that the executing court erred in accepting the decree-holder's memo of calculation based on the interim award. The interest must be calculated from the date of the final award, not the interim award, as the interim award merges. (Paras 4-6)
Issue of Consideration
Whether an interim award passed by an Arbitral Tribunal merges with the final award and the effect of such merger on interest calculation.
Final Decision
The court allowed the civil revision petition, set aside the impugned order dated 11.04.2014 passed in Ex.No.1045/2013, and directed the executing court to recalculate the interest in accordance with the final award dated 21.01.2005.
Law Points
- Interim award merges with final award
- interest calculation on final award
- Section 31(7)(b) Arbitration and Conciliation Act
- 1996
