JUDGMENT M.L. Singhal, J. - Vide order dated 23.1.1992, Sh. D.S. Sethi, S.E. National High Ways Circle, Jalandhar was appointed arbitrator between Krishan Kumar Bansal (contractor) and Municipal Committee, Patiala for determining the amount due to him from the latter in re : construction of roads in Anand Nagar Near Blue Wing School, Patiala allotted to him vide agreement dated 29.3.1985. He submitted claim to the SE PWD (B&R) Patiala on 29.10.1987 for adjudication. SE PWD Circle, Patiala informed both the parties of his un-willingness to act as arbitrator vide his letter No. 2910-11 dated 28.6.1991. It was, thereafter that vide order dated 23.1.1992 Shri D.S. Seth, SE National Highways Circle, Jalandhar was appointed as arbitrator by the Court. Shri D.S. Seth gave award dated 20.5.1992. In respect of claims No. 2 to 6 (a), (b), (c), he awarded Rs. 24, 549/-, 1, 31, 905/-, 17, 132/-, 9600/-, nil, nil and 2000/- respectively. He awarded 18% compound interest yearly on Rs. 24, 549/- w.e.f. 1.10.1986 to 20.5.1992. He awarded 18% compound interest yearly on Rs. 1, 58, 637/- w.e.f. 13.6.1986 to 20.5.1992. He also awarded 18% compound interest yearly on the total amount of the award from the date of the award to the date of actual payment to Krishan Kumar Bansal-contractor. Sh. Krishan Kumar Bansal made application under Sections 14, 17 and 18 of the Indian Arbitration Act, 1940 for filing of the award by Sh. D.S. Sethi-petitioner and for making it rule of the Court. JD-Municipal Committee, Patiala put in objections to the award under Sections 30 and 33 of the Arbitration Act Sub Judge Ist Class, Patiala vide order dated 6.5.1993 dismissed the objections and made the award rule of the Court. He did not tinker with the interest awarded by the arbitrator either with regard to the periods for which interest was awarded or the rate on which interest was awarded. Municipal Committee, Patiala went in appeal, Additional District Judge, Patiala vide order dated 8.11.1993 dismissed the appeal. Still not satisfied, Municipal Committee, Patiala has come up in revision to this Court. This revision was admitted qua interest alone vide order dated 20.1.1994. Municipal Committee, Patiala went in appeal, Additional District Judge, Patiala vide order dated 8.11.1993 dismissed the appeal. Still not satisfied, Municipal Committee, Patiala has come up in revision to this Court. This revision was admitted qua interest alone vide order dated 20.1.1994. In this revision, therefore the focus will be - "whether the arbitrator could award interest for the period before the reference had been made to him and further whether he could award interest for the period from the date of reference till the date of award, further for the period subsequent to the date of award to the date of actual payment and further whether he could award interest to be compounded annually and that too at the rate of 18% per annum." It was submitted by the learned Counsel for the petitioner that as per the clause 24 of the arbitration agreement where the matter involves a claim for or the payment or recovery or deduction of money "only the amount if any awarded in such arbitration shall be recoverable in respect of the matter so referred. It was submitted that the arbitrator could award only the principal amount. On the principal amount, he could not award any interest. It was submitted that the arbitrator could not award interest for the pre-reference period and for the period during which arbitration proceedings remained pending. Learned counsel also submitted that arbitrator could not award interest for the period subsequent to the delivery of the award. It was submitted that arbitrator had no jurisdiction to award interest for these periods. In support of this submission, he drew my attention to State of Orissa v. B.N. Agarwalla, AIR 1997 SC 925 where it was held that arbitrator has the jurisdiction to award pre-reference interest in cases which arose after the Interest Act, 1978 has become applicable. With regard to those cases pertaining to period prior to the applicability of the Interest Act, 1978, in the absence of any substantive law, contract or usage, the arbitrator has no jurisdiction to award interest. For the period during which the arbitration proceedings were pending, the arbitrator has the power to award interest. The power of the arbitrator to award interest for the post-award period also exists. For the period during which the arbitration proceedings were pending, the arbitrator has the power to award interest. The power of the arbitrator to award interest for the post-award period also exists. In para 25 of the report, the Honble Supreme Court has observed as follows :- "From the facts enumerated herein above, it is clear that the reference in this case was made to the arbitrator by the Court on an application having been filed under Section 20 of the Arbitration Act. As interest was one of the claims made by the respondent, the said dispute was referred to arbitrator. The arbitrator, therefore, had the jurisdiction to decide this issue. Inasmuch as reference to the arbitration was made after the Interest Act, 1978 had came into force w.e.f. 19.8.1981, the High Court rightly came to the conclusion that at least with effect from that date, interest could be awarded for the pre-reference period under Section 3 of the Interest Act, 1978. This conclusion of the High Court is in conformity with the decision of this Court in the cases of Unique Erectors, AIR 1989 SC 973 and Sudhir Bros, 1995 AIR SCW 4622. The only question, therefore, is whether the aforesaid clause 4 of the Agreement negates any claim for interest being made. There can be no doubt that if the terms of the contract expressly stipulate that no interest would be payable then, notwithstanding the provisions of the Interest Act, 1978, an arbitrator would not get the jurisdiction or right to award interest." In this case, the reference to the arbitrator arose out of an agreement entered between the Municipal Committee, Patiala and Krishan Kumar Bansal on 27.3.1985 with regard to the work entrusted to him for execution vide order dated 442 dated 21.3.1982 issued by the Municipal Engineer, Patiala. In this case thus the contract for execution of work was given to the contractor much after the Interest Act, 1978 had come into force and therefore the arbitrator had the jurisdiction to award pre-reference interest in cases which arose after the Interest Act, 1978 had become applicable. In AIR 1997 SC 925 (supra), Honble Supreme Court has held that the arbitrator can award future interest also. He can award interest from the date of passing of the award till the date of decree or date of payment whichever is earlier. In AIR 1997 SC 925 (supra), Honble Supreme Court has held that the arbitrator can award future interest also. He can award interest from the date of passing of the award till the date of decree or date of payment whichever is earlier. Where the award is filed in Court and the decree is passed in terms thereof, then it is for the Court to determine under Section 29 of the Arbitration Act, as to whether interest should be ordered to be paid and if so at what rate. If the award is voluntarily accepted which may not result in a decree being passed, then payment of interest would be made from the date of award till the date of payment. The use of the words "only the amount, if any awarded in such arbitration shall be recoverable in respect of the matter so referred in my opinion is not meant to convey that the arbitrator can award only the principal amount and no interest thereon. If clause 24 of the Arbitration Agreement is construed as conveying that the arbitrator can award nothing beyond the principal amount, there will be chaos. Courts cannot place such a narrow construction on clause 24. If such a narrow construction is placed, the contractor will get only that much amount which was spent by him, say six years back on the execution of the work. In common parlance, money gets doubled in six years if put in the purchase of National Saving Certificates or put in some other scheme of the Government. In this case contract was given in 1985. It was executed by him soon thereafter. A reference was made to the arbitrator by Sub Judge Ist Class, vide order received by him on 30.1.1992. Arbitrator gave award on 20.5.1992. If in the year 2001 or 2002, the contractor is called upon to receive what was awarded to him by the arbitrator in the year, 1992, that would be negation of every principle of law and equity. The contractor has been in doldrums for the last about 15/16 years i.e. since when he executed the work of Municipal Committee, Patiala. It would be unjust if he is called upon to receive now that much which he was entitled to in the year 1986. The contractor has been in doldrums for the last about 15/16 years i.e. since when he executed the work of Municipal Committee, Patiala. It would be unjust if he is called upon to receive now that much which he was entitled to in the year 1986. It was submitted by the learned Counsel for the petitioner that the award of interest at the rate of 18% per annum by the arbitrator is bad. It was submitted that the award of interest to be compounded annually is still bad. If at all arbitrator could award simple interest and that, too at reasonable rate and not at such an exorbitant rate. In support of this submission, he drew my attention to Executive Engineer, Rural Engg. Division v. Biswanath, AIR 1982 Orissa 263 where it was held that interest can be awarded only on principal sum and not on total amount which includes interest. In AIR 1982 Orissa 263 (supra), the award of the arbitrator in so far as it directed payment of interest at the rate of 12% on the "award amount" was modified to interest at the rate of 12% per annum on the principal sum of Rs. 64, 380.00 from the date of filing of the award till the date of the decree. The order of the learned Subordinate Judge was also modified to the extent that the respondent shall be entitled to interest at the rate of 12% per annum from the date of the decree till payment on the principal sum of Rs. 64, 380.00. In The Bihar State Electricity Board-Appellant v. Modern Indian Construction Company Limited, AIR 1983 Patna 229 it was held by a Division Bench of Patna High Court that if the arbitrators award of interest is reasonable, the Court should not normally interfere with that but in a case where the exercise of a discretion by the arbitrator does not seem to be reasonable, the Courts may step in and interfere with such unreasonable exercise of discretion. The interest must be co-related with the rate of interest which is reasonably awarded at the time when the claim arose. The interest must be co-related with the rate of interest which is reasonably awarded at the time when the claim arose. Where the arbitrator refused to grant any interest pendente lite but granted interest on the principal amount after the date of award at 9 per cent and the claim related to the period in the early sixties then the interest of 9 per cent was quite un-reasonable and interest of 6 per cent would be reasonable. Learned counsel for the respondent on the other hand submitted that it is inherent in the power of the arbitrator to award interest on the principal amount awarded. Clause 24 of the Arbitration agreement should not be narrowly construed as meaning that only the principal amount without any interest, if any awarded shall be recoverable. It was held by this Court in Union of India v. M/s. Paramjit Singh and Company, 1999(4) RCR(Civil) 633 that arbitrator could award interest for the pre-reference period. He could award interest for the period during which reference remained pending up to the date of award. Arbitrator could award future interest i.e. from the date of award till the date of actual payment. In Secretary, Irrigation Department, Government of Orissa and others v. G.C. Roy, JT 1991(6) SC 349 the Honble Supreme Court observed that the arbitrator could award pre-reference, pendente lite and future interest. He could award interest for all these periods. Since the award of interest by the arbitrator is not prohibited by the contract agreement, arbitrator was well within his power to award interest for all these three periods. In this case, the work was executed by the contractor in the year 1986. Claims of the contractor were referred to the arbitrator for adjudication in the year 1992. In equity, it would be unjust to deprive the contractor of the accretion which would have been made to the principal amount even if it had been put in some government scheme and not invested elsewhere in some lucrative venture. It goes without saying that ever since 1986 there has been considerable hike in the price of the construction material. A work which could be executed say for an amount of Rs. two lac in the year, 1986 may not be executed for Rs. eight lac in the year, 2002. It goes without saying that ever since 1986 there has been considerable hike in the price of the construction material. A work which could be executed say for an amount of Rs. two lac in the year, 1986 may not be executed for Rs. eight lac in the year, 2002. Interest is awarded on the principle that the person who keeps the amount and deprives the other of the profit which he would have earned on that amount should be compensated. At a higher rate, interest is awarded to compensate one for inflation also. It was submitted by the learned Counsel for the respondent relying upon Manjit Johl v. Dewan Modern Breweries Limited, AIR 1994 J&K 56 and B.V. Radha Krishna v. Sponge Iron India Limited, AIR 1997 SC 1324 that compound interest awarded at the rate of 18% by the arbitrator was legal. In Manjit Johl v. Dewan Modern Breweries Limited (supra) rate of interest awarded at 24% per annum was up-held. In B.V. Radha Krishna v. Sponge Iron India Limited (supra) interest awarded at the rate of 18% per annum by the arbitrator and other at the rate of 20% from the date of decree till payment awarded by the Court was up-held by the Honble Supreme Court. It was held in Muthukaruppan Chettyar v. Annamalai Chettyar and others, AIR 1936 Rangoon 141 that when people are kept out of their money for a long period of years the damage which they suffer from the failure to get the money is constantly increasing one and increases at an increasing rate, so justice demands that compound interest should be allowed. In State of Punjab v. Sham Sunder Dutt and others, FAO 211 of 1993, it was held that during the pendency of litigation, arbitrator can award interest. In Secretary, Irrigation Department, Government of Orissa and others v. G.C. Roy, AIR 1992 SC 732 it was held that where the agreement between the parties does not prohibit the grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and, therefore, when the parties refer all their disputes or refer the dispute as to interest as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case keeping the ends of justice in view." Arbitrator could thus award interest on the reference made to him. It was submitted that since no argument was raised as to the rate of interest etc. before the courts below, this question cannot be raised now in revision before this Court. It was submitted that the award of interest even if it be at a higher rate by the arbitrator, cannot be attacked as it is not "mis- conduct" falling within the ambit of Section 30 of the Arbitration Act, 1940 on the part of the arbitrator. Suffice it to say as to whether arbitrator could award interest if so at what rate and whether he could award compound interest and further whether he could award interest for the pre-reference period etc. are all questions of law even if not submitted before the Court below can be submitted before this Court. In view of what I have said above, award of interest at the rate of 18% per annum by the arbitrator cannot be said to be un-reasonable when we look to the fact that during the recent years, there has been heavy spurt in the price index of construction material, real estate etc. Award of interest at this rate to be compounded annually might compensate the contractor for the return he could legitimately expect on the amount spent by him in the year, 1986, which he has been awarded by the arbitrator in 1992. Award of pre-reference period interest is quite legal as this contract arose after the coming into force of the Interest Act, 1978. Pendente lite and future interest awarded could always be awarded. So, this revision fails and is dismissed. No costs. Revision dismissed.