Report No. 76
4.23. Supreme Court judgment of 1967.-
The Supreme Court judgement in Union of India v. Bungo Steel Furniture Pvt. Ltd., AIR 1967 SC 1032, recognised the power of the arbitrator to award interest for this stage. The Court rejected the argument of the appellant that the arbitrator had no authority to award interest from the date of the award, (dated September 2, 1959) to the date of the decree (granted by Mallick, J., i.e. August 2, 1960).1
In support of this argument, counsel had relied upon the following observations of Bose, J. in Thawardas Pherumal v. Union of India, (1955) 2 SC SCR 48 (65): AIR 1955 SC 468 (478):
"It was suggested that at least interest from the date of 'suit' could be awarded on the analogy of section 34 of the Civil Procedure Code, 1908. But section 34 does not apply because an arbitrator is not a 'court' within the meaning of the Code nor does the Code apply to arbitrators, and, but for section 34, even a court would not have the power to give interest after the suit. This was, therefore, also rightly struck out from the award."
Commenting on this passage, the Supreme Court observed:-
"This passage supports the argument of the appellant that interest cannot be awarded by the arbitrator after the date of the award, but in later cases it has been pointed out by this court that the observations of Bose, J. in 1955 2 SCR 48: AIR 1955 SC 468, supra, were not intended to lay down such a broad and unqualified proposition. See Nachiappa Chettiar v. Subramaniam Chetttar, (1960) 2 SCR 209 (238): AIR 1960 SC 207 (220). and Satinder Singh.2
The Supreme Court also distinguished the earlier case of 1955 as follows:-
"In Thawardas (1955) 2 SCR 48: AIR 1955 SC 468, supra, the material facts were that the Arbitrator had awarded interest on unliquidated damages for a period before the reference to arbitration and also for a period subsequent to the reference. The High Court set aside the award regarding interest on the ground that claim for interest was not referred to".
1. Union of India v. Bungo Steel Furniture Pvt. Ltd., AIR 1967 SC 1032.
2. Satinder Singh v. Umrao Singh, (1961) 3 SCR 676: AIR 1961 SC 908 (916).