Rai & Brothers Vs. Union of India  INSC 84 (19 March 1999)
S.N.Phukan RAJENDRA BABU, J. :
claim has been made for grant of interest in respect of an amount awarded
pursuant to arbitration in an application under Section 29 of the Arbitration
Act, 1940 read with Section 34 CPC. However, such a claim does not seem to have
been made before the Court of the Sub-Judge when the proceedings were pending
for making the award the rule of the court. The Subordinate Judge passed a decree
in terms of the award and against which an appeal was filed in the High Court.
When that appeal was pending in the High Court an application was made as
stated earlier but was rejected firstly on the ground that the appellant is not
entitled to award of interest when such a claim had not been made before the
court of the Sub-Judge by challenging the award and secondly on the ground that
when interim relief was granted against the order making the award a rule of
the court to make payment to an extent of 50% which could be withdrawn after
furnishing security to the satisfaction of the court and having withdrawn the
money the appellant would not be entitled to claim interest.
are four stages of grant of interest. Firstly, from the stage of accrual of
cause of action till filing of the arbitration proceedings; secondly, during pendency
of the proceedings before arbitrator; thirdly, future interest arising between
date of award and date of the decree; and fourthly, interest arising from date
of decree till realisation of award.
claim for interest not having been made before the court in which proceedings
for making the award the rule of the court were pending would certainly dis-
entitle the appellant for making such a claim during first three stages of
pre-arbitration and post-arbitration that is between award and filing of
application inasmuch as several considerations will have to be examined before
award of interest and at what rate. Therefore, when the award had not been
challenged for not granting interest, the award could not be upset to that
extent. The view taken by the High Court appears to be correct to that extent.
However, that is not the end of the matter. The High Court ought to have
further examined whether the appellant was entitled to any interest after the
decree was made in terms of the award. The courts have taken the view that
award of interest under Section 34 CPC is a matter of procedure and ought to be
granted in all cases when there is a decree for money unless there are strong
reasons to decline the same.
present case the appellant had made a claim for interest before the arbitrator
but the same had been denied and no reasons are forthcoming thereto. Whatever
that may be, at any rate after the Sub-Judge made an award the rule of the
court the decree ought to contain a provision for making payment of interest.
If such payment had not been made, appropriate correction of the decree could
be ordered to be made when an application had been made before the High Court.
conscious of the fact that the appellant had not preferred any appeal against
the order made by the court of Sub-Judge which made the award the decree of the
court but did not grant any interest. Even so, the grant of interest being a
matter of procedure and the appellant having made an application before the
High Court in that regard, we do not think there is any impediment to grant the
same by bringing decree of subordinate court in conformity with law, namely, by
awarding appropriate interest.
learned counsel for the appellant relied upon several decisions of this Court
to state the proposition that such interest could be granted. It is unnecessary
to make any detailed reference to them. We think it appropriate to modify the
decree of the court of Sub-Judge by including a direction for payment of
interest @ 12% per annum from the date when the award was made the decree of
the court of Sub-Judge till realisation. The appeal is allowed to the extent
indicated above. However, in the circumstances of the case, there shall be no
orders as to costs.