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Report No. 76

4.19. Second period.-

As to the second period (period of pendency of the arbitration proceeding), there are several decisions of the High Courts, recognising such a power.1

Some doubt was created as to the power to award interest for this period by certain observations of Bose J. in a decision of the Supreme Court.2 In that decision, after holding that the conditions for the award of interest under the Interest Act, 1839 were not satisfied in that case, the Supreme Court also repelled the argument under section 34, Code of Civil Procedure, 1908, on the ground that the arbitrator is not a 'court' within the meaning of that Code. In a later case,3 however, the Supreme Court itself expressed a doubt whether these observations were intended to lay down a broad proposition that, in no case, the arbitrator can award interest. Power to award interest on a sum certain is in fact, a part of the power to decide differences4 between the parties.

1. See Union of India v. Bungo Steel Furniture Pvt. Ltd., AIR 1963 Cal 70 (74), para. 14 (reviews case law).

2. Thawardas v. Union of India, (1955) 2 SCR 48: AIR 1955 SC 468.

3. Nachiappa v. Subramanian, AIR 1960 SC 307 (320).

4. Union of India v. Salween Timber & Construction Co. (India), AIR 1964 Cal 240 (241), para. 6.

Arbitration Act, 1940 Back

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