Orissa Vs. Shr. B.K.Routray  INSC 3
(12 January 1999)
V. Manohar, R.C. Lahoti.
D E R
The only question which has been raised in this appeal pertains to the award of
interest by the Arbitrator for the pre-reference period. The pre-refcrence
period, in the present case, is from 31.3.1977 to 20.3.1980. This entire period
is prior to coining into force of the interest Act, 1978. The interest Act,
1978 came into force during the pendency of the reference and the award is made
on 12.10.1982 when the Interest Act, 1978 was in force.
short question is whether the Arbitrator in 1982, could have awarded interest
for the pre-reference period in view of the provisions of the Interest Act,
1978, although the entire pre-reference period is prior to the coming into
force of the Interest Act, 1978.
this connection, our attention has been drawn to the decision of this Court in
State of Orissa vs.
reported in (1997) 2 SCO 469. In paragraph 18, this Court has held that
interest cannot be given for the period prior to the coming into force of the
Interest Act, 1973. This Court has also held that the decision in the case of
Executive Engineer (Irrigation) vs. Abhaduta Jena reported in (1938) 1 SCO 418
has not been over-ruled in so far as it deals with interest for the
pre-reference period. This Court has upheld the view taken in Abhaduta Jena's
case to the effect that in respect of pre-reference period, interest cannot be
awarded in respect of the period not covered by the Interest Act, 1978. Our
attention was also drawn to a decision in the case of State of Orissa vs.
Swain reported in (1989) 4 SCC 269 where also this Court said that where
reference to arbitration was made prior to the commencement of the Interest
Act, 1978, Arbitrator is not empowered to grant interest for the period upto
the date of submission of claim to arbitration.
this connection, we would also like to refer to Section 6(2) of the Interest
Act, 1978 which provides as follows:
6(2? : The provisions of this Act shall not apply to any suit or other legal
proceeding pending at the commencement of this Act and the provisions of the
corresponding law applicable immediately before such commencement shall
notwithstanding the repeal of such law by sub-section (1), continue to apply to
such suit or other legal proceeding.
section also clearly provides that the provisions of the Interest Act, 1978
shall not apply to any legal proceeding pending at the commencement of the said
Act. Since the definition of "Court" under Section 2(a) includes a
Tribunal or Arbitrator, the proceedings before the Arbitrator would also be
covered by the expression legal proceedings in Section 6(2). Therefore interest
Act, 1978 does not apply to pending arbitration proceedings.