Coal Linker vs Coal India Ltd

Coal Linker ...Appellant(s)

- Versus -

Coal India Limited ..Respondent(s)

J U D G M E N T

GANGULY, J.

1. The appellant herein, a proprietary

concern, was given a work order on or about

5.7.1982 by Coal India Limited (hereinafter

referred to as "the respondent") for

transportation of coal/coke by road to the

respondent's stockyard at Kanpur and also

for operation of the said stockyard. 1

2. Pursuant to such work order a formal

agreement was entered into between the

appellant and the respondent and the said

agreement contained an arbitration clause.

As disputes and differences arose between

the parties, a reference was made to the

sole arbitrator for resolving the dispute

and an award dated 30.4.1993 was passed

awarding an amount of Rs.51,77,600/- in

favour of the appellant. Appellant was

granted interest of Rs.11,39,560/-

calculated at the rate of 15% from October,

1990 to April, 1993. Interest was also

granted for the pre-reference period to the

extent of Rs.10,97,250/- but in the award

no interest was granted from the date of

the award till the date of the decree.

3. Challenging the said award, the respondent

filed an application, but the same was

dismissed by the learned Single Judge of

2 the Calcutta High Court by a judgment and

order dated 3.11.1995. Thereafter, an

appeal was preferred before the Division

Bench of the Calcutta High Court and the

Division Bench also dismissed the appeal of

the respondent on 25.04.1996. Thereafter,

a decree was passed by the learned Single

Judge of the Calcutta High Court confirming

the said award. The said decree directed

payment of interest @ 18% per annum from

the date of the said award till the date of

the decree.

4. The respondent filed a special leave

petition before this Court challenging the

order of the Division Bench of the Calcutta

High Court dated 25.04.1996. On that

special leave petition, this Court by an

order dated 10.5.1996 directed the

respondent to deposit an amount of Rs.40

lakhs within 6 weeks with the Registrar,

3 Original Side of the Calcutta High Court

and permitted the appellant to withdraw the

same on furnishing a bank guarantee.

Ultimately, by order dated 22.7.1996 this

Court dismissed the special leave petition

filed by the respondent.

5. Thereafter, execution proceeding was

initiated by the appellant for execution of

the unsatisfied portion of the decree dated

2.5.1996. Against the said execution

proceeding, an application was filed by the

respondent under Section 47 of the Code of

Civil Procedure contending inter alia that

the decree dated 2.5.1996 insofar as the

same directs payment of interest from the

date of the award till the date of the

decree is a nullity and the same is not

executable against the respondent.

6. Learned Single Judge of the Calcutta High

Court by judgment and order dated

4 13.12.1996 held that insofar as the decree

was passed providing for grant of interest

from the date of the award till the passing

of the decree, is a nullity and is

inexecutable and the appellant was directed

to refund the amount representing the same

pendente lite interest. Against the same

judgment and order the present appellant

filed an appeal before the Calcutta High

Court and the Division Bench of the

Calcutta High Court by judgment and order

dated 8.3.2001 was pleased to dismiss the

appeal.

7. Challenging the said appeal this special

leave petition has been filed.

8. The question in this appeal is whether the

Division Bench was correct in setting aside

the order of the Executing Court directing

payment of interest at the rate of 18% from

5 the date of the award till the date of the

decree.

9. Few facts of the case are relevant to

understand issues involved herein.

Admittedly, in the award, interest from the

date of the award till the date of the

decree has not been granted. What has been

granted is pre-reference interest and the

interest from October 1990 to April 1993

i.e the interest during the pendency of the

arbitration proceedings. The award is

dated 30.04.1993. No post award interest

has been granted.

10. The appellant herein-the awardee did not

raise any objection under Section 30 of the

Arbitration Act (hereinafter referred to as

"the Act") to the award about denial of

such interest. On the other hand, the

appellant filed an application under

6 Section 17 of the Act for passing of a

decree in terms of the award. Therefore,

the Executing Court while passing a decree

in terms of the award should not go beyond

what has been given in the award.

11. In this connection certain decisions have

been cited which are not strictly attracted

in the facts situation of the instant case.

Reference was made to the decision of this

Court in the case of Executive Engineer

(Irrigation), Balimela and others Vs.

Abhaduta Jena and others - (1988) 1 SCC

418. In that case the question was about

the competence of arbitrator to award

interest on a reference made without

intervention of the Court and the three-

Judge Bench of this Court held that in

cases coming after the commencement of the

Interest Act of 1978 an arbitrator has the

same power as the Court to award interest

7 up to the date of institution of the

proceedings. In cases which arose prior to

the commencement of the Interest Act 1978,

the arbitrator has no such power under

provisions of the previous Interest Act of

1839. In the instant case, as pointed out

above, there is no dispute about the

competence of the arbitrator to grant

interest. The arbitrator, as noted above,

granted interest but did not grant any

interest after the date of the award till

the date of the decree. Therefore, the

decision in Abhaduta Jena (supra) has no

relevance. Reference was also made to the

decision of this Court in the case of

Gujarat Water Supply and Sewerage Board Vs.

Unique Erectors (Gujarat) (P) Ltd. and

another - (1989) 1 SCC 532, wherein a

two-Judge Bench of this Court relied on the

previous decision of this Court in Abhaduta

Jena (supra) and dealt with the aspect of

8 grant of interest by the arbitrator in

paragraphs 14, 15 and 16 of the said

judgment. In Gujarat Water Supply (supra),

this Court held that an arbitrator can

award the interest which can cover three

periods namely; (a) the period prior to the

commencement of the arbitration proceeding,

(b) period during which the arbitration

proceeding was pending and (c) the period

between the date of the award to the date

of the decree i.e the post award period.

The learned Judge has held that in the

light of the decision in Abhaduta Jena

(supra) the arbitrator could not have

awarded interest "for the period between

August 22, 1984 and till the date of the

publication of the award i.e. July 1985".

That was the period during which the

arbitration proceeding was pending.

Ultimately, the Court deleted the interest

awarded by the arbitrator for the period

9 from August 22, 1984 till the date of the

award. (See para 16 of the report). It may

be again pointed out here that in this case

the award in which interest has been given

by the arbitrator has been finally upheld.

Therefore, the principles decided in

Gujarat Water Supply (supra) have no

application to the facts of the case.

12. However, in the case of Secretary,

Irrigation Department, Government of Orissa

and others Vs. G.C. Roy - (1992) 1 SCC 508,

the Constitution Bench of this Court

overruled the decision of the Abhaduta Jena

(supra) and held on construction of

Section 14 and 29 of the said Act that the

arbitrator can grant pendente lite

interest. In paragraph 8 in the judgment

of G.C. Roy (supra) the Constitution Bench

of this Court clearly mentioned three

periods for which the question of award of

10 interest by the arbitrator may arise. The

said periods have been clearly pointed out

in paragraph 8 of G.C. Roy (supra) and the

same is set out as below:

"...(i) for the period commencing from the date of dispute till the date the arbitrator enters upon the reference;

(ii) for the period commencing from the date of the arbitrator's entering upon reference till the date of making the award; and (iii) for the period commencing from the date of making of the award till the date the award is made the rule of the court or till the date of realisation, whichever is earlier..."

13. Admittedly, in the instant case interest

has been granted by the arbitrator in the

award for the first two periods. But

interest has not been granted by the

arbitrator in the award for the last

period.

14. As noted above, the awardee-appellant

herein, filed an application under Section

17 of the Act for pronouncing a judgment in

11 terms of the award. So there is no scope

for the Executing Court to go beyond the

award and grant interest for the post award

period which was not granted in the award.

15. Here the Executing Court has gone beyond

the award and thus had gone beyond its

jurisdiction and passed a decree which thus

becomes a nullity.

16. Similar principles have been laid down by

this Court in the case of Visakapatnam

Municipal Corporation Vs. K. Satyanarayana

& Co. - (1995) 2 SCC 385. In paragraph 3 of

the report, the Court held:

"On the admitted facts, viz., that the respondent had not preferred any objection to the award in question under Section 30 of the Act and, in fact, had applied for a decree in terms of the award, the trial court could not have granted pendente lite interest which was not a part of the award. To that extent, the trial court had exceeded its jurisdiction".

12 17. The same facts are present here. Here also

the appellant herein has not filed any

objection under Section 30 of the Act to

the award. Rather the appellant had

applied for a decree in terms of the award

under Section 17 of the Act.

18. In view of such clear factual position, we

find no merit in this appeal and which is

accordingly dismissed. There is no order as

to costs.

.......................J. (MARKANDEY KATJU)

.......................J. New Delhi (ASOK KUMAR GANGULY) September 07, 2009

13