A.P.State Trading Corp.Ltd vs M/S G.V.Malla Reddy & Co

A.P. STATE TRADING CORPORATION LTD. .......APPELLANT

Versus

G.V. MALLA REDDY & CO. .....RESPONDENT

O R D E R

Mr. M. Vijaya Bhaskar, learned counsel

appears on caveat for the respondent. Leave granted.

Heard.

2. The arbitrator made an award dated 6.7.1991

allowing claims 1 to 8, 11 and 12 (Note: claims 1,2 and 5

were allowed only in part) and disallowing claims 9, 13 to

20 of the respondent. The arbitrator also granted interest

from 10.3.1989 to 6.1.1990 and from the date of award to

date of decree at 18% per annum. On the award being

challenged, the Civil Court, by judgment dated 19.2.2001

set aside the award on claims 5, 6 and 8. The Civil Court

limited the interest awarded (for the periods 10.3.1989 to

6.1.1990 and from date of awarded to date of decree) only

in regard to amounts awarded under claims 1 to 4 and 7 and

made the award a rule of the Court with further interest at

18% per annum from the date of decree to date of payment on

the amounts allowed under claims 1 to 4 and 7. Both respondent

.....2.

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and the appellant challenged the decision of the Civil

Court. The High Court, by impugned order dated 30.12.2009,

dismissed the appeal and revision filed by the appellant.

It allowed the appeal and revision filed by the respondent

in part and held that the respondent is entitled to

interest from the date of reference to date of award. In

other words, in view of the judgment of the High Court, the

interest is payable pendente lite and in future at 18% per

annum. The said judgment is challenged in these appeals by

special leave.

3. The award of the Arbitrator is governed by

the Arbitration Act, 1940. This court has been

consistently taking a view that in the absence of any

specific contract in regard to rate of interest, pendente

lite and future interest should not normally exceed 9% per

annum. [See State of Rajasthan & Anr. Vs. Ferro Concrete

Construction Pvt. Ltd., (2009) 12 SCC 1]

4. In view of the above, the appeals are allowed

in part and the interest awarded is reduced from 18% to 9%

per annum. In all other respects, the judgment of the

Civil Court as modified by the High Court is upheld.

......................J. ( R.V. RAVEENDRAN )

New Delhi; .....................J. September 27, 2010. ( H.L. GOKHALE )