JUDGMENT D.P. Mohapatra, J. - The sole question that arises for determination in this appeal filed under Section 39(1)(vi) of the Arbitration Act, 1940 (for short, "the Act") is whether the appellant is entitled to get interest on the sum awarded by the Arbitration Tribunal ("Tribunal", for short). The appellant's claim for interest was negatived by the Tribunal in its award and the said award was confirmed by the learned Subordinate Judge, Bhubaneswar in his judgment dated 19.3.1990. 2. Since the dispute lies within a narrow compass, it is not necessary to set out the case of the parties in great detail. The facts relevant for the present purpose may be stated thus : The appellant was entrusted with the word "Supply of Kiln Burnt Bricks" under agreement No. IL 74 F-2 of 1963-64 of the Construction Division No. 1, A.E.F. Project. Certain dispute having arisen between the parties relating to the work, the appellant sought for a reference to the Arbitrator and in view of the provisions of Section 41A of the Arbitration (Orissa Amendment) Act, 1982, the dispute stood referred to the Tribunal for adjudication. The appellant claimed a sum of Rs. 1,38,082/- from the respondent while the letter accepted the claim only to the tune of Rs. 24,518/-. The Tribunal on consideration of the matter held that the appellant was entitled to get a total sum of Rs. 58,979/- from the respondent in full and final settlement of all the disputes/claims between the parties and further held that out of the said sum Rs. 29,379/- is to be recovered by the claimant in cash and the balance of Rs. 29,600/- which is in shape of W.D.C. and loan bond should be released by the respondent in favour of the appellant. The Tribunal under claim item No. 3 in the award negatived the claim of the appellant for interest with the observation "in the facts and circumstances of the case, the claimant was not entitled to any amount by way of interest. So this claim is rejected. 3. The learned Subordinate Judge by his judgment dated 19.3.1990 confirmed the award in toto and directed that the claimant was entitled to interest on the awarded amount at the rate of six per cent per annum from the date of the award till payment.
So this claim is rejected. 3. The learned Subordinate Judge by his judgment dated 19.3.1990 confirmed the award in toto and directed that the claimant was entitled to interest on the awarded amount at the rate of six per cent per annum from the date of the award till payment. The appellant has assailed the Tribunal's decision rejecting his claim for interest which was confirmed by the learned Subordinate Judge. 4. Shri B.K. Nayak appearing for the appellant submitted that the Tribunal ought to have awarded interest from the due date till the initiation of the arbitration proceeding. He conceded that the Tribunal has no jurisdiction to award pendente lite or future interest to the appellant. The learned Standing Counsel appearing for the respondent supported the decision of the Tribunal. 5. The power of Arbitrator to award interest must be taken to be well settled in view of several decisions of the Apex Court. (See Food Corporation of India v. M/s. Surendra, Devendra and Mahendra Transport Co. ( AIR 1988 SC 734 ); Executive Engineer, Irrigation, Galimalu and others v. Abnoduta Jena ( AIR 1988 SC 1520 ); State of Orissa and others v. Construction India ( AIR 1988 SC 1530 ) : State of Orissa v. Dandasi Sohu ( AIR 1988 SC 1791 ); Gujarat Water Supply and Severage Board v. Unique Erectors (Gujarat) (P) Ltd. and another ( AIR 1989 SC 973 ). The position that emerges from the analysis and discussions in the aforementioned decisions are : (i) In the case to which the 1978 Interest Act applies, the award of interest prior to the proceeding is not open to question. In regard to pendente lite interest, that is, interest from the due of reference to the date of award, the claimants would not be entitled to the same for the simple reason that the arbitrator is not a court within the meaning of Section 34 of the C.P.C. nor were the references to arbitration made in the course of suits. In the cases which arose before the commencement of the Interest Act, 1978, the claimants are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration proceedings.
In the cases which arose before the commencement of the Interest Act, 1978, the claimants are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration proceedings. They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that Interest Act, 1932 does not apply to their cases and there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants were entitled to recover interest. They are not entitled to claim pendente lite interest as the Arbitrator is not a court. (See AIR 1988 SC 1520 ). (ii) Interest for the period prior to commencement of arbitration proceedings can be granted by Arbitrator in reference made after commencement of Interest Act, 1978 (See AIR 1989 SC 973 ). 6. Examining the present case in the light of the principles enunciated by the decisions of the Apex Court referred to above, the first question to be considered is : When was the reference made to the Arbitrator ? It is neither clear from the records available before me nor the counsel for the parties are in a position to give the specific date. It is relevant to note that it appears from the award that the proceeding was received on the file of the Tribunal on 4.10.1983 on transfer in pursuance of the provisions in Section 41A of the Arbitration (Orissa Amendment) Act, 1982. In the absence of any specific material indicating to the country I shall proceed on the footing that the reference was made after the Interest Act, 1978 which was enforced with effect from 19.8.1981. It therefore follows that in this case the Tribunal has jurisdiction to award interest for the period prior to the reference. 7. The next question that arises for consideration is whether under the provisions of the Interest Act, 1978 the appellant is entitled to any interest. Shri Nayak, learned counsel for the appellant accepted the position that in order to succeed on the claim of interest the appellant has to bring his case within the provision in Section 3 of the Interest Act, 1978.
Shri Nayak, learned counsel for the appellant accepted the position that in order to succeed on the claim of interest the appellant has to bring his case within the provision in Section 3 of the Interest Act, 1978. On perusal of the said section it appears that the only provision which may be applicable to the appellant's case is Section 3(1)(b) which lays down that if the proceeding does not relate to any such debt, i.e., a debt payable by virtue of a written instrument at a certain time as per clause (a), then the court, if it thinks firm, may allow interest from the date mentioned in this regard in the written notice given by the person entitled or the person making the claim to the person liable that interest to the date of institution of the proceeding. It is therefore clear that this provision is applicable only when notice is given by the person entitled to or the person making the claim to the person liable that interest will be charged until the date of institution of the proceeding. Shri Nayak fairly conceded that no such notice was issued by the appellant to the respondent and therefore this pre-condition has not been satisfied. It is also not in dispute that in this case there is neither any provision in the agreement for payment of interest nor is any interest payable by virtue of any enactment or other rule of law or usage having the force of law. The ultimate position that emerges is that though the Tribunal has jurisdiction to award interest to the appellant for the period prior to the reference the appellant was not entitled to interest under the provisions of the Interest Act, 1978. 8. Examining the matter from another angle, the contention raised on behalf of the appellant is also unsustainable. Assuming that the conditions in Section 3 of the Interest Act, 1978 are satisfied in the case suit the court has discretion to either allow or disallow interest as noted earlier, the Tribunal in its award observed that in facts and circumstances of the case the appellant was not entitled to any sum towards interest. This decision of the Tribunal, as appears from the judgment of the learned Subordinate Judge, was not specifically assailed before the court.
This decision of the Tribunal, as appears from the judgment of the learned Subordinate Judge, was not specifically assailed before the court. The learned Subordinate Judge simply confirmed the award with the further direction that the appellant will be entitled to receive interest at the rate of 6 per cent from the date of award till the date of payment. The exercise of discretionary jurisdiction by the Tribunal having not been challenged before the learned Subordinate Judge, no fault can be found with his judgment on that score. Therefore view from any angle, the appeal is devoid of merit. 9. In the result, the appeal fails and is dismissed. Both parties will bear their respective costs of this appeal. Appeal dismissed. *-*-*-*-*