Respondent insured his Load carrier (Layland Truck) with Registration mark and No. JKC-4708 with the petitioner- Insurance Company for an amount of Rs. 225000/-. The all inclusive insurance cover and certificate was taken by the registered vehicle owner w.e.from 7-12-1983 to 6-12-1984. During the currency of the insurance policy in November, 1984 on the eve of assasination of Smt.Indira Gandhi, the then Prime Minister of India, that the truck was set ablaze by a frenzy mob at Samba. The truck was reduced to ashes and was a total loss. The driver escaped to lodge FIR 157 of 1984 at Police Station Samba. Respondents took steps and informed the Insurance Company of the incident and claimed the insurance dues. 2. As the parties failed to settle the claim, dispute/differences arose with regard to quantum of insurance claim payable to insured. Same was referred to Arbitrator pursuant to condition 8 of the insurance Policy incorporating the Arbitration Agreement thereto. Before 2nd Additional District Judge, Srinagar, the parties not only agreed to the arbitration, but also agreed on the name of arbitrator, Shri G.H. Nehvi, Ex.District and Sessions Judge.The arbitrator after entering the reference on associating the parties with the proceedings and upon hearing them, passed an award on 23-2-1997 at Srinagar. In terms of this award, he awarded Rs. 2.25 lacs with 18% per annum compound interest ( from 1-1-1985 to 22-2-1997 ) to insured/respondent. Besides, the costs of the proceedings were assessed as Rs. 10, 000/- payable by the appellant Insurance-Co. The United Insurance Company Ltd. appellant has in this appeal challenged the award on the ground that the arbitral action of awarding pre-reference period interest and compound interest is beyond the authority of law. Besides the quantum assessed as compensation/insurance claim is alleged excessive. 3. The counsel for the respondents submit that interest awarded in this case is reasonable and based on the principals as enshrined in Section 34 of C.P.C. 4. Admittedly, Interest Act 1978 is not applicable to State of Jammu and Kashmir and therefore, allowing interest on the awarded arbitral amount is not governed by the said Act. In respect of pre-reference period interest, same cannot be awarded for the period not covered by the provisions of the arbitration Act 1940. Admittedly, Interest Act 1978 is not applicable to State of Jammu and Kashmir and therefore, allowing interest on the awarded arbitral amount is not governed by the said Act. In respect of pre-reference period interest, same cannot be awarded for the period not covered by the provisions of the arbitration Act 1940. Arbitrator has no jurisdiction to grant any interest for such any reference period, notwithstanding, that the arbitrator has powers to grant interest pendentelite so long terms of agreement do not exclude the jurisdiction or the Arbitrator on that count. 5. In Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, 1992 (1) SCC 508 a constitution Bench of the Apex Court while considering the powers of an Arbitrator to award interest pendentelite, held that in case Arbitration agreement did not exclude the jurisdiction of the Arbitrator to entertain the claim for interest, the Arbitrator was competent to award interest pendentelite, but not for pre-reference period. This should be clear from the following passage extracted from the judgement dated 21-10-97 In Ram Nath International Constructional Pvt.Ltd. Etc v. State of U.P., 1997 (9) SC 233): "... As is held by the Constitution Bench in the case of G.C. Roy (supra), the power of the arbitrator to grant interest pendentelite is based on principals analogous to section 34 of the Civil Procedure Code, such interest is granted by the Arbitrator in order to do complete justice between the parties. This is not a matter of substantive law as in the case regarding the arbitrators power to grant interest for the pre-reference period. Whether interest should be awarded pendente lite or not is a matter of discretion for the courtor the arbitrator, they expect that the disputes will be decided in accordance with law as they would have been decided had the decision been of a court of law. Hence the arbitrator can exercise a power analogous to the power given to the courts under Section 34 of the Civil Procedure Code. The appellant is, therefore, entitled to interest on the principal amount awarded by the arbitrator from the date of the reference till the date of the award. Hence the arbitrator can exercise a power analogous to the power given to the courts under Section 34 of the Civil Procedure Code. The appellant is, therefore, entitled to interest on the principal amount awarded by the arbitrator from the date of the reference till the date of the award. The appellant is, however not entitled to any interest for the pre-reference period." In State of Orissa v. Shri B.K. Routary, 1999 (1) Supreme 159) a three member Bench of the Supreme court also laid the law as declared by the constitutional bench in the G.C. Roys case (Supra). 6. The Ld. Advocate for respondents submits that pre-reference and pendente lite interest awarded in this case is backed by the authorities, reported in AIR 1999 J&K (8) and Arbitration Matter No. 280/91 decided 0n 6-10-1999 by Single Bench of this court in M/s N.D.Radha krishen and Co. v. State of J&K 8) in terms held that in absence of applicability of interest Act or any other statutorily provision, in the event of insurance agreement providing for award of pre-reference interest by the Arbitrator, there is no bar for the arbitrator to award the same. It was in this context that in the facts and circumstances of that case, the court declined to interfere with award of pre-reference interest and interest awarded to both the pareties. 7. In Arbitration application, 280/91, the learned single bench of this court, observed that the pre-reference interest may be given and is within discretion of court, for the reason that in commercial transaction on loans, advanced, interest is so charged. Still the awarded pre-reference period interest, has been disallowed, even in this case by the court after relying the decision of Apex Court in AIR 1998 S.C.366. 8. Section 29 of the Arbitration Act, provides that where the award is for payment of money, the court can order reasonable rate of interest from the date or decree to be paid on the principal sum as adjuged by the award and confirmed by the court. A plain reading of section would imply that while awarding the reasonable interest in respect of award of money by the Arbitrator, the interest has to be only on the adjudged principal sum awarded by the judgement and decree in terms of the award. The Section nowhere provides for compound interest. A plain reading of section would imply that while awarding the reasonable interest in respect of award of money by the Arbitrator, the interest has to be only on the adjudged principal sum awarded by the judgement and decree in terms of the award. The Section nowhere provides for compound interest. by use of words that the rate of interest is "to be paid on the principal sum as ad-judged by the award and confirmed by the decree" would show that the rate of interest has to be simple. The Arbitrators power to award pendente lite interest from date of reference till date of award is not at higher pedestral than award of interest by the court under section 29 of the Arbitration Act. Grant of payment of interest on interest is unsustainable. 9. The rate of interest granted is 18% PA on the principal awarded amount, compoundable at quarterly rests as per the Bank practice. The compound interest held as above is unsustainable. Quantum of interest of 18% is on higher side. The prevelent rate of interest is 9% for last 2 to 3 years, though earlier to that period, the over all reasonable rates of interest granted on average by Banks is not more than 12%. In Smt. Khushnuma Begum and Others v. The New India Assurance Co. Ltd. and Ors., JT 2001 (1) SC 375 where compensation was granted by MACT in a Motor vehicle Accident case, it is observed:- " 24. Now, we have to fix up the rate of interest. Section 171 of the MV Act empowers the Tribunal to direct that in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as may be specified in this behalf. Earlier, 12% was found to be the reasonable rate of simple interest. With a change in economy and the policy of the Reserve Bank of India the interest rate has been lowered.The nationalised banks are now granting interest at the rate of 9% on fixed deposits for one year. We, therefore, direct that the compensation amount fixed herein before shall bear interest at the rate of 9% per annum from the date of the claim made by the appellants.." 10. Viewed thus, the interest awarded @ 18 % is on much higher side and unconscionable. We, therefore, direct that the compensation amount fixed herein before shall bear interest at the rate of 9% per annum from the date of the claim made by the appellants.." 10. Viewed thus, the interest awarded @ 18 % is on much higher side and unconscionable. The reasonable rate of interest would be 12% PA on the adjudged and awarded principal amount after ignoring the compound component part of the interest and treating it as simple interest. 11. The contention that the award of Insurance claim of Rs. 2.25 lacs by the Arbitrator, as upheld by the court of reference vide judgement in terms of award followed by decree, challenged by the Insurance company is to be noticed only to be rejected. The Principal amount awarded is in fact the total amounty for which the vehicle was insured with the appellant Insurance Company, though the damage suffered by the insured on account of total loss of the vehicle, is on much higher side. The Insurance Companys surveyors and loss assesser has assessed the claim and termed it as having under valued the claim. The contention that the depreciation is not accounted for by the Arbitrator is not sustainable.The vehicle was brand new when the incident occurred. It was total loss and nothing was salvaged. Besides the award is not speaking one and reasons cannot be read into it when the reasons are not given. The contention of excess award of loss is un-sustainable and without merit. 12. In the above view of the matter, the appeal is partly alowed in so far as:- (1) Pre-reference period interest is deleted from the award, and (2) the award of simple interest @ 12% PA from the date of reference till date of award and thereafter till decree/actual payment of the decretal amount is ordered at the above rate, on the principal adjudged awarded amount. The award is maintained in other respect. Judgement and decree of the court below, the court of reference, is modified accordingly. Inform court below of this order. Disposed of.