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2006 DIGILAW 3194 (PNJ)

State of Haryana v. Goel Projects Pvt. Ltd.

2006-08-07

VINOD K.SHARMA

body2006
JUDGMENT Vinod K. Sharma, J. - This revision petition has been filed by the State of Haryana against the order passed by the District Judge, Hissar directing the payment with interest at the rate of 18% on the awarded amount from the date of award till payment. 2. The arbitrator had passed an award for a sum of Rs. 6,28,807/- (Rs. Six lacs, twenty eight thousand, eight hundred and seven only) in favour of M/s. Goel Projects Pvt. Ltd. on 27.6.2002. The execution application was filed in January, 2003 as the State of Haryana failed to make the payment. The decree- holder claimed interest at the rate of 18% p.a. from the date of award till realisation, in terms of Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). 3. The judgment-debtor in reply to the execution application submitted that the amount as awarded stood paid on 24.4.2003 and thus no interest was payable. The decree-holder relying upon the provisions of Section 31(7)(b) of the Act claimed that the decree-holder was entitled to interest at the rate of 18% p.a. from the date of award till payment. Section 31(7)(b) of the Act reads as under :- "A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment." 4. In view of the above provisions and by relying upon the judgment of Himachal Pradesh High Court, reported in M/s. Kataria Builders v. State of H.P., 2004(2) SLJ 1077, learned Court directed the payment of interest at the rate of 18% p.a. This order has been challenged by the State of Haryana on the plea that once the arbitrator did not award interest from the date of award, it was not open to the executing Court to grant interest at the rate of 18%. The reading of provision of Section 31(7)(b) of the Act shows that in absence of any directions in the award to the contrary, the awarded amount is to carry interest at the rate of 18% p.a. from the date of award till the date of payment. The reading of provision of Section 31(7)(b) of the Act shows that in absence of any directions in the award to the contrary, the awarded amount is to carry interest at the rate of 18% p.a. from the date of award till the date of payment. The provision of Section 31(7)(b) of the Act has been interpreted by the Himachal Pradesh High Court in the case of M/s. Kataria Builders v. State of H.P. to the following effect :- "4. Sub-section (7) of Section 31 of the Act provides for the interest on the payment of Arbitral award for the payment of money. Sub-section (7) of Section 31 is reproduced for convenience. : "31(7) (a) Unless otherwise agreed by the parties, where and in so far as an Arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the case of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment." (emphasis given) 5. A perusal of sub-section (7) shows that an arbitral award, if it is for the payment of money may carry interest as such rate as is deemed reasonable by the Arbitrator on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. 6. Clause (b) of sub-section (7) of Section 31 provides for the future interest, i.e., interest from the date of the award till the payment of the amount of award. This clause stipulates that in addition to the sum payable under the award, which indeed include the interest under clause (a) of sub- section (7) of Section 31, the decree-holder shall also be entitled to an interest at the rate of 18% per annum from the date of the award to the date of the payment unless the award otherwise directs." 5. In the present case, the State has not chosen to place on record the award passed by the arbitrator to show if any direction to the contrary was given. In absence thereof, no fault can be found with the order passed by the learned District Judge as the executing Court was under statutory obligation to allow 18% interest on the amount awarded from the date of award till realization. The learned counsel for the State contended that 18% interest was on the higher side in view of the judgment of the Honble Supreme Court holding that interest to be awarded should not be over 9% p.a. However, this contention cannot be accepted as in absence of award of interest by the Arbitral Tribunal from the date of realization, the interest payable is 18% under the statute. That being the position, it can safely be said that it is the policy of law in so far as Arbitral proceedings are concerned to award 18% interest. The acceptance of contention that reasonable interest be granted would therefore be contrary to the public police and therefore, no sustainable. 6. In the present case, the date of award was 27.6.2002 whereas the payment was made on 24.4.2003, thus, the respondents have rightly been held entitled to payment of interest on the said amount for this period, therefore, no fault can be found with the judgment impugned. Thus, finding the revision petition to be without any merit, the same is hereby dismissed. Petition dismissed.