Urban Devt. Auth.& ANR. Vs. Ranjit Singh Rana
[Civil Appeal No.
2751 of 2012 arising out of S.L.P. (C) No. 26581 of 2009]
J U D G M E N T
to the agreement between the parties being agreement No. 11 of 1989-90 concerning
construction of residential complex at Shimla, certain disputes arose. As per
the terms of the contract, the Arbitrator was appointed to adjudicate the claims
of the respondent and counter-claims of the appellants. On August 12, 1998, the
Arbitrator passed the award. Aggrieved thereby, the appellants filed objections
under Section 34(3) of the Arbitrator and Conciliation Act, 1996 (for short
"the Act"). The objections were accepted by the High Court to the extent
that the reasons were not given by the Arbitrator and, accordingly, the matter was
sent back to the Arbitrator for giving reasons in support of the award.
remand, the Arbitrator considered the matter and passed the award on February 14,
2001. The appellants filed objections against the award dated February 14, 2001.
They also deposited the entire amount due under the award before the High Court
on May 24, 2001. The objections filed by the appellants were ultimately rejected
by the single Judge of the High Court on February 26, 2008. Against this order,
intra-court appeal is said to be pending. The respondent, however, started
execution of the Award dated February 14, 2001 by filing Execution Petition on August
12, 2008. The appellants filed objections to the Execution Petition.
question before the High Court was whether the respondent was entitled to interest
@ 18% p.a. from the date of the award dated February 14, 2001 till the date of
actual payment to the respondent.
High Court considered the diverse provisions of the Act including Section 31(7)(a)
and (b) of the Act and few decisions of this Court and ultimately held that the
respondent was entitled to post-award interest @ 18% p.a. from the date of the
award till the date of 3the actual payment. It is this order which is in appeal
is no dispute that the entire amount due under the Award dated February 14, 2001
was deposited by the appellants before the High Court on May 24, 2001. The question
that arises for determination before us is, whether deposit of the entire award
amount by the appellants on May 24, 2001 into the High Court amounts to payment
to the respondent and the appellants liability to pay interest @ 18% p.a. from the
date of the award ceased from that date.
31(7)(a) and (b) of the Act reads as under: "31(7) (a) Unless otherwise
agreed by the parties, where and in so far as an arbitral award is for the payment
of money, the arbitral tribunal may include in the sum for which the award is made
interest, at such rate as it deems reasonable, on the whole or any part of the money,
for the whole or any part of the period between the date on which the cause of action
arose and the date on which the award is made. (b) A sum directed to be paid by
an arbitral award shall, unless the award otherwise directs, carry interest at the
rate of eighteen per centum per annum from the date of the award to the date of
above provision has been recently considered 4by this Court in State of Haryana
and others vs. S.L. Arora and Company (2010)3 SCC 690. This Court held as under:
"........In a nutshell, in regard to pre-award period, interest has to be awarded
as specified in the contract and in the absence of contract, as per discretion
of the Arbitral Tribunal. On the other hand, in retard to the post-award
period, interest is payable as per the discretion of the Arbitral Tribunal and in
the absence of exercise of such discretion, at a mandatory statutory rate of 18%
per annum."This Court further observed in para 24.6 as under: ".........but
if the award is silent in regard to the interest from the date of award, or
does not specify the rate of interest from the date of award, then the party in
whose favour an award for money has been made, will be entitled to interest at 18%
per annum from the date of award. He may claim the said amount in execution
even though there is no reference to any post-award interest in the award. Even
if the pre-award interest is at much lower rate, if the award is silent in regard
to post-award interest, the claimant will be entitled to post- award interest at
the higher rate of 18% per annum.
counsel for the parties are ad idem that the Arbitrator has not exercised any
discretion in the matter pertaining to the interest for the post-award period. Obviously,
in absence thereof, by virtue of Section 31(7)(b) of the Act, the award would carry
interest @ 18% p.a. from the date of the award till 5the date of payment. Whether
May 24, 2001 when the entire award amount was deposited by the appellants into
the High Court is the date of payment ?
is not defined in the Act. The Concise Oxford English Dictionary (Tenth Edition-revised)
defines 'payment' '1. the action of paying or the process of being paid. 2. an
amount paid or payable'. Webster Comprehensive Dictionary (International Edition)
Volume two defines 'payment' '1. the act of paying. 2 Pay; requital;
recompense.' The Law Laxicon, 2nd Edition reprint by P. Ramanatha Aiyar, inter alia,
states 'payment is defined to be the act of paying, or that which is paid;
discharge of a debt, obligation or duty; satisfaction of claim; recompense; the
fulfillment of a promise or the performance of an agreement; the discharge in
money of a sum due.'
word 'payment' may have different meaning in different context but in the context
of Section 37(1)(b); it means extinguishment of liability arising under the award.
It signifies satisfaction of the award. The deposit of the award amount into
the Court is nothing but a payment to the credit of the decree-holder. In this view,
once the award amount was deposited by the appellants before the High Court on 6May
24, 2001, the liability of post-award interest from May 24, 2001 ceased. The High
Court, thus, was not right in directing the appellants to pay the interest @ 18%
p.a. beyond May 24, 2001.
appeal is, accordingly, allowed in part. The impugned order of the High Court
is modified and it is directed that the appellants shall be liable to pay interest
@ 18% p.a. for the post-award period from the date of award until May 24, 2001.
After May 24, 2001, the appellants are not liable to pay any interest on the
award amount under Section 37(1)(b) of the Act.
are informed by Mr. Y. Prabhakara Rao, learned counsel for the appellants that
the amount as per the impugned order dated March 5, 2009 was deposited by the appellants
which has been withdrawn by the respondent. In light of this, we observe that the
High Court shall now re-determine the amount due and payable to the respondent
under the award and the post-award interest as indicated above. The excess amount,
if withdrawn by the respondent shall be refunded to the appellants within two months
of re-determination by the High Court.