JUDGMENT : COMMON JUDGMENT: (per Hon’ble Sri Justice V.V.S.Rao) 1. These four matters which arise out of common order, dated 19.01.2001 in arbitration O.P.Nos.318 and 365 of 1991 passed by the Court of I Senior Civil Judge, City Civil Courts, Hyderabad. These two O.Ps., were filed in connection with the arbitration award, dated 06.07.1991 by Andhra Pradesh State Trading Corporation (Corporation, for brevity) and M/s.G.V.Malla Reddy and Company (Contractor, for brevity), a firm, in that, the former seeking to set aside the award and the latter praying to make the award rule of the Court. By impugned common Judgment, learned senior civil Judge set aside the award insofar as three claims are concerned and thus partly allowing the petitions filed by Corporation as well as the contractor. 2. The work of construction of Telugu Vanijya Bhavanam at A.C.Guards, Hyderabad, was taken up by Corporation. After due tender process, the work was entrusted to the contractor under agreement, dated 18.06.1987, which vide clause 65 of General Conditions of Contract (GCC) provides for settlement of disputes by arbitration. The contract period is eighteen (18) months, to be completed by 28.12.1988. The site was handed over to the contractor on 26.06.1987 and there was slow progress. The contractor blamed the Corporation and therefore, he insisted prevailing market rates for the work already done after completion of agreement period. He also requested for extension of period at revised rates. The Corporation then terminated contract on 19.01.1989. The disputes which arose were referred to sole arbitrator. Before the arbitrator, contractor made XXII claims. After adjudicating the same, the arbitrator allowed claim Nos.III, IV, VI, VII, VIII, XI and XII. These are payment of security deposit, refund of fixed security deposit, compensation for water brought from outside, compensation for dismantled distilled fabrication, compensation for cement brought from outside, loss of profit and refund of deductions made towards further security deposit. The arbitrator also partly allowed claim Nos.I, II, V and XXI. These are payment of third running bill, payment for work done after submission of third bill, cost of borewell and interest at 21% per annum. The other reliefs being claim Nos.IX, X, XIII to XX and XXII were rejected. The arbitrator also partly allowed claim Nos.I, II, V and XXI. These are payment of third running bill, payment for work done after submission of third bill, cost of borewell and interest at 21% per annum. The other reliefs being claim Nos.IX, X, XIII to XX and XXII were rejected. These are compensation for steel brought from outside, overhead charges, loss of advance paid to labour, loss of advance paid to metal supplier, loss of advance paid to brick supplier, loss due to slow progress, increase in labour charges and metal cost, increase in minimum wages, compensation for expenses incurred for removing materials from the site and the amounts due under final bill. The counter claims made by Corporation were totally rejected. 3. The contractor filed O.P.No.365 of 1991 under Section 17 of Arbitration Act, 1940 to make the award rule of the Court in terms thereof with interest at 18% per annum. The Corporation filed O.P.No.318 of 1991 praying the Court to set aside the award and to remit back the portion of the award relating to the counter claims for fresh consideration. As noticed supra, both these O.Ps., were partly allowed and the award was made rule of the Court except in respect of three claims and interest thereon. Aggrieved by the same, C.M.A.No.1666 of 2001 and C.R.P.No.2939 of 2001 are filed by contractor and C.M.A.No.1824 of 2001 and C.R.P.No.2893 of 2001 are filed by Corporation. Though Corporation filed the appeal and revision against the entire award, submissions are made before us in relation to claim Nos.I, V and XI. Even out of these, Sri N.Subba Reddy, learned counsel for Corporation pressed and made submissions on claim No.XI which deals with loss of profit and also touched upon other claims which are mainly the payments towards work done or pending bills or refund of security deposit, fixed deposit etc. The contractor mainly insisted upon the award of interest. Indeed, it is not denied before us that the contractor did not contest the rejected claims before the Court below. Therefore, having regard to the settled position in law that the questions of fact recorded by arbitral tribunal cannot be ordinarily interfered and having perused the material available on record, we are not inclined to interfere with the award or the Judgment of Court below insofar as claims I to V are concerned. Therefore, having regard to the settled position in law that the questions of fact recorded by arbitral tribunal cannot be ordinarily interfered and having perused the material available on record, we are not inclined to interfere with the award or the Judgment of Court below insofar as claims I to V are concerned. We nevertheless mainly advert to question of loss of profit and award of interest in view of the fact that some of the claims allowed by arbitrator were set aside by Court below, and there is no serious dispute about this. To appreciate the position that emerges in these appeals as of now in relation to the claims made, awarded as well as decreed, we may summarise these aspects in the following table. 4. Learned counsel, as mentioned above, concentrated on the question of loss of profit and award of interest. They made elaborate submissions and also relied on number of precedents. A reference to the arguments and precedents may be made as and when we take up these two aspects. Award towards loss of profit 5. Learned counsel for Corporation submits that the award of arbitrator is vitiated by misconduct in the sense that the arbitrator ignored clause 12 of GCC and awarded loss of profit. He would urge that clause 12 of GCC only permits extension of time and prohibits any claim for compensation, and breach of contract by Corporation does not have any bearing on the question. Clause 12, according to him, would disentitle any claim for compensation for execution of works. In his counter arguments, contractor’s counsel submits that clause 12 of GCC and clause 40.1 of agreement only deal with a situation where the work is completed after obtaining extensions and bars the contractor from claiming compensation by way of escalation, overhead charges etc during the extension period. These two clauses have no application when there is breach of contract by contractor and as a result thereof, the contractor is put to loss of profits. In view of these submissions, it is necessary to read clause 12 of GCC and clause 40.1 of agreement itself. 12. These two clauses have no application when there is breach of contract by contractor and as a result thereof, the contractor is put to loss of profits. In view of these submissions, it is necessary to read clause 12 of GCC and clause 40.1 of agreement itself. 12. The contractor shall be entitled to any compensation or loss suffered by him on account of delays in commencing or executing the work whatever the cause of delays may be or in procuring Government controlled or other building materials or in obtaining water and power connections for construction purpose. The employer shall not be liable for any claim in respect thereof. Suitable extension to time will be given to the contractor if the delay occurs on the part of the employers. The contractor is responsible for procuring the safe storage of all materials. All materials shall be approved by the Architects before putting in place. 40.1 Should the amount of extra or additional work of any kind or other special circumstances of any kind whatsoever which may occur, be such, as fairly to entitle the Contractor to an extension of time for the completion of the work, the Architect shall recommend the period of such extension, if any the owner on such recommendations of the Architect may grant the necessary extension, provided that the Architect is not bound to take into account any extra or additional work or other special circumstances, unless the contractor has, within 28 days after such work has been commenced or such circumstances have arisen or as soon thereafter as is practicable, deliver to the Architect’s Representative full and detailed particulars of any claim to extension of time, to which he may consider himself entitled in order that such claim may be investigated at the time. However, no compensation by the owner shall be payable to the contractor for such extension of time beyond the relevant clause of the contract. 6. In clause 12, there is a glaring typing error, in that the word ‘not’ is missing in the first sentence of the clause, but there is no denial that it is a typing mistake and it does not make any difference in understanding the same. 6. In clause 12, there is a glaring typing error, in that the word ‘not’ is missing in the first sentence of the clause, but there is no denial that it is a typing mistake and it does not make any difference in understanding the same. Be that as it is, clause 12 of GCC and clause 40 of agreement are to the effect that in case the work is not completed or extra/additional work of any kind comes up, contractor would be entitled for extension of time and Corporation is not liable to pay any compensation to the contractor for extension of time beyond the stipulated time for completion of the contract. If delay occurs either in commencing or executing the work due to procurement of Government controlled building materials, or obtaining water and power connections for the construction purpose, the contractor would be entitled only for suitable extension of time and he cannot claim any compensation. Counsel for rival parties do not deny the purport of these clauses that the contractor would not be entitled for compensation. When does clause 12 of GCC or clause 40.1 of agreement not attracted? 7. At this stage, we may refer to the relevant factual basis which supports the view that the total value of the work is about Rs.2.05 crores. The parties entered into agreement on 18.06.1987 and the work has to be completed by 28.12.1988 within a period of eighteen (18) months. Part of the site was handed over on 26.06.1987. As found by the arbitrator, the failure to hand over complete site, delay in giving water connection, delay in supply of electricity, delay in supply of cement as per agreement, delay in payment of bills and delay in ordering extra items of work, attributable to Corporation. By the due date only the work worth about Rs.24 lakhs should be completed. As extra work was entrusted, for which extra rates were not fixed and as delays were occasioned by the breach of terms of the contract by Corporation, the work could not be completed. On 05.12.1988, the contractor addressed Superintending Engineer of the Corporation seeking extension of time from 05.12.1988 to 04.04.1990, at revised and escalated rates. The Superintending Engineer sent a letter on 19.01.1989 terminating the contract and there was a breach of contract. By that date, balance of work valued at Rs.1.81 crores remains to be completed. On 05.12.1988, the contractor addressed Superintending Engineer of the Corporation seeking extension of time from 05.12.1988 to 04.04.1990, at revised and escalated rates. The Superintending Engineer sent a letter on 19.01.1989 terminating the contract and there was a breach of contract. By that date, balance of work valued at Rs.1.81 crores remains to be completed. In view of this, the contractor claimed normal profit of 15% on the balance value. The arbitrator, on considering the facts, came to the conclusion that the breach of contract was committed by the Corporation by causing various delays and defaults and terminated the contract, and accordingly awarded loss of profit at 15%, having regard to the decisions of Supreme Court in M/s.A.T.Brij Paul Singh v State of Gujarat (1984) 4 SCC 59 = AIR 1984 SC 1703 and P.M.Paul v Union of India AIR 1989 SC 1034 and Government of Andhra Pradesh v E.C.Techno Industries 1989 (2) ALT 320 (DB). 8. Learned counsel for Corporation relied on Steel Authority of India Ltd. v J.C. Budharaja, Govt. and Mining Contractor (1999) 8 SCC 122 = AIR 1999 SC 3275 , General Manager, Northern Railway v Sarvesh Chopra (2002) 4 SCC 45 = AIR 2002 SC 1272 and Ramnath International Construction (P) Ltd. v Union of India (2007) 2 SCC 453 = AIR 2007 SC 509 . 9. In Steel Authority of India Limited (supra), respondent obtained a contract for construction of tailing-cum-storage reservoir at iron ore project of the appellant. The contract has to be completed within a period of two years. Clause 5 (vi) of General Conditions of Contract (GCC) provided as follows: “Failure or delay by the Corporation to hand over to the Contractor possession of the lands necessary for the execution of the work, or to give the necessary drawings, instructions or any other delay by the Corporation which due to any other cause whatsoever shall in no way affect or vitiate the contract or alter the character thereof or entitle the Contractor to damages or compensation therefor provided that the Corporation may extend the time for completion of the work by such period as it may consider necessary and proper.” Clause 32 was to the following effect: “Site for execution of work will be available as soon as the work is awarded. In case it is not possible for the Corporation to make the entire site available on the award of work the Contractor will have to arrange his working programme accordingly. No claim whatsoever for not giving the entire site on award of work and for giving the site gradually will be tenable.” The contractor after contract period, raised a claim of about Rs.18,00,000/- as damages for delay in handing over work sites. On reference, the arbitrators gave award with modification with regard to interest. SAIL was unsuccessful before High Court. Before the Supreme Court, it was contended that the award is without jurisdiction. Accepting the plea of SAIL, the apex Court relied on clause 32 of the contract and clause 5 (vi) of GCC and observed as under. Clause 32 of the agreement specifically stipulates that no claim whatsoever for not giving the entire site on award of work and for giving the site gradually will be tenable and the Contractor is required to arrange his working programme accordingly. Clause 39 further stipulates that no failure or omission to carry out the provisions of the contract shall give rise to any claim by the Corporation and the Contractor, one against the other, if such failure or omission arises from compliance with any statute or regulation of the Government or other reasons beyond the control of either the Corporation or the Contractor. Obtaining permission from the Forest Department to carry out the work in the wildlife sanctuary depends on statutory regulations. Clause (vi) of the general conditions of the contract also provides that failure or delay by the Corporation to hand over to the Contractor possession of the lands necessary for the execution of the work or any other delay by the Corporation due to any other cause whatsoever would not entitle the Contractor to damage or compensation thereof; in such cases, the only duty of the Corporation was to extend the time for completion of the work by such period as it may think necessary and proper. These conditions specifically prohibit granting claim for damages for the breaches mentioned therein. It was not open to the arbitrator to ignore the said conditions which are binding on the contracting parties. By ignoring the same, he has acted beyond the jurisdiction conferred upon him. These conditions specifically prohibit granting claim for damages for the breaches mentioned therein. It was not open to the arbitrator to ignore the said conditions which are binding on the contracting parties. By ignoring the same, he has acted beyond the jurisdiction conferred upon him. It is settled law that the arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action. (emphasis supplied) 10. In Sarvesh Chopra (supra), work of construction and widening of a railway bridge was entrusted to respondent. The disputes, which arose in relation thereto with reference to six claims of contractor, were sought to be referred to arbitrator. A single Judge of Delhi High Court referred two claims to arbitration holding that four claims being “excepted matters” within the meaning of clause 63 of GCC, were not liable to be referred to arbitration. The Division Bench however disagreed and referred the matters to arbitrator. The Supreme Court speaking about the scope of clause disentitling the contractor for any compensation, held as follows. Each of these clauses provides for such claims being not capable of being raised or adjudged by employing such phraseology as “shall not be payable”, “no claim whatsoever will be entertained by the Railways”, or “no claim will/shall be entertained”. These are “no claim”, “no damage”, or “no liability” clauses. The other category of claims is where the dispute or difference has to be determined by an authority of the Railways as provided in the relevant clause. In such other category fall such claims as were read out by the learned counsel for the respondent by way of illustration from several clauses of the contract such as General Conditions Clause 18 and Special Conditions Clauses 2.4.2(b) and 12.1.2. The first category is an “excepted matter” because the claim as per the terms and conditions of the contract is simply not entertainable; the second category of claims falls within “excepted matters” because the claim is liable to be adjudicated upon by an authority of the Railways whose decision the parties have, under the contract, agreed to treat as final and binding and hence not arbitrable. The expression “and decision thereon shall be final and binding on the contractor” as occurring in clause 63 refers to the second category of “excepted matters”. (emphasis supplied) 11. In Ramnath International Construction (P) Ltd (supra), the Government of India awarded the contract of construction of aircraft hangar, airtech hangar and connected works as well as road works to the appellant. Disputes in the execution of contract were referred to arbitrator, who passed awards. On appropriate applications, learned single Judge rejected the cases to set aside and made awards rule of the Court. Division Bench partly allowed appeals of Government, aggrieved by which, the contractor filed appeals before Supreme Court. Clause 11(c) of the contract provided that no claim in respect of compensation or otherwise, howsoever arisen, as a result of extensions granted shall be admitted. One of the questions before Supreme Court was whether arbitrator committed legal misconduct in ignoring clause 11(c). Answering the question in the affirmative, apex Court dismissed appeals placing reliance on Ch. Ramalinga Reddy v Superintending Engineer (1999) 9 SCC 610 and Associated Engineering Co. v Government of Andhra Pradesh (1991) 4 SCC 93 = AIR 1992 SC 232 observing as under. Clause (C) provides that where extensions have been granted by reason of the delays enumerated in Clause (A) which were beyond the control of the contractor, or on account of the delays on the part of the employer specified in Clause (B), the contractor is not entitled to make any claim either for compensation or otherwise, arising in whatsoever manner, as a result of such extensions. After enumerating certain delays, sub-clause (viii) of Clause (A) specifically mentions delay on account of any other cause beyond the control of the contractor. The causes for delays specified in clause A, thus, encompass all delays over which the contractor has no control. This will necessarily include any delays attributable to the employer or any delay for which both the employer and the contractor are responsible. The contract thus provides that if there is any delay, attributable either to the contractor or the employer or to both, and the contractor seeks and obtains extension of time for execution on that account, he will not be entitled to claim compensation of any nature, on the ground of such delay, in addition to the extension of time obtained by him. Therefore, the claims for compensation as a consequence of delays, that is claim 24 of Hangar Contract and claims 13 to 16 of Road Contract are barred by clause 11(C). 12. We have briefly referred to the fact situation obtaining in the three apex decisions referred to hereinabove. Those were the cases wherein the contract was completed or the contractor sought reference to arbitration in respect of certain items of work beyond the scope of arbitration. These cases do not involve termination of contract by one party. Therefore, we cannot countenance the submission of the counsel for Corporation with regard to the claim for loss of profit made by contractor. On that ground, the award cannot be said to have vitiated or the contractor can be said to be committed misconduct. As held by Supreme Court in Rajasthan State Mines & Minerals Ltd. v Eastern Engg. Enterprises (1999) 9 SCC 283 = AIR 1999 SC 3627 and Sikkim Subba Associates v State of Sikkim (2001) 5 SCC 629 , if the arbitrator has passed a reasoned award on appreciation of facts and law, it is not open to the Court to interfere with the award probing into the mental process of arbitrator to speculate the reasons for and against the award. It is also reiterated in these decisions that if the arbitrator ignored the law or misapplied it, it amounts to arbitrary adjudication and therefore, the Court can interfere in such matters. To say the least, no such ground exists in the award impugned before us calling for interference. Considering the exchange of correspondence between the contractor and the Corporation during the subsistence of contract and at or about the termination, came to the conclusion that delays occurred for the number of breaches committed by Corporation, when the contractor sought for extension of time, the agreement was cancelled. Therefore, any interference is not called for. 13. The next aspect of the matter is award of loss of profit at 15% per annum. The law appears to be well settled that loss of profit can be validly claimed by contractor as and when there is breach of contract by employer. Therefore, any interference is not called for. 13. The next aspect of the matter is award of loss of profit at 15% per annum. The law appears to be well settled that loss of profit can be validly claimed by contractor as and when there is breach of contract by employer. In Hudson’s treatise on ‘Building and Engineering Contracts’ (tenth edn., by I.N.Duncan Wallace, 1970), it is pointed out that in completing contracts, a percent of profit varies from contractor to contractor and in Great Britain, as per the evidence given in litigation it ranges between 3% to 7% of the total prime cost of the project. In Mohd.Salamatullah v Government of Andhra Pradesh AIR 1977 SC 1481 , Supreme Court indicated that award amount of 15% towards loss of profit or towards quantum of damages would be justified. In Brij Paul Singh (supra), Supreme Court while upholding the principle that the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract, observed as under. It was not disputed before us that where in a works contract, the party entrusting the work commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. What must be the measure of profit and what proof should be tendered to sustain the claim are different matters. But the claim under this head is certainly admissible. … What would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. In this case we have the additional reason for rejecting the contention that for the same type of work, the work site being in the vicinity of each other and for identical type of work between the same parties, a Division Bench of the same High Court has accepted 15% of the value of the balance of the works contract would not be an unreasonable measure of damages for loss of profit. We are therefore, of the opinion that the High Court was in error in wholly rejecting the claim under this head. 14. In Dwaraka Das v State of Madhya Pradesh (1999) 3 SCC 500 , the work for the construction of hostel for hundred boys at Polytechnic Ujjain was entrusted to the appellant therein. The work was to be completed within twenty-nine months. Allegedly due to the reason that Superintending Engineer obstructed the progress of the work, the work could not be completed and the contract between the parties was rescinded. The appellant contended that termination of the contract was in breach thereof and claimed damages for breach of contract besides other amounts. The suit was decreed with 6% interest per annum. The High Court partly allowed the appeal. Aggrieved by which, the contractor filed appeal. Before Supreme Court, one of the questions was whether the claim on account damages as expected profit out of contract was illegal? Referring to Mohd.Salamatullah (supra) and Brij Paul Singh (supra), Supreme Court allowed the appeal observing as under. This Court in A.T.Brij Pal Singh v State of Gujarat ( (1984) 4 SCC 59 ) while interpreting the provisions of Section 73 of the Contract Act, has held that damages can be claimed by a contractor where the government is proved to have committed breach by improperly rescinding the contract and for estimating the amount of damages court should make a broad evaluation instead of going into minute details. It was specifically held that where in the works contract, the party entrusting the work committed breach of contract, the contractor is entitled to claim the damages for loss of profit which he expected to earn by undertaking the works contract. Claim of expected profits is legally admissible on proof of the breach of contract by the erring party. ….. To the same effect is the judgment in Mohd. Salamatullah v Government of Andhra Pradesh ( (1977) 3 SCC 590 : AIR 1977 SC 1481 ). After approving the grant of damages in case of breach of contract, the court further held that the appellate court was not justified to interfere with finding of fact given by the trial court regarding quantification of the damages even if it was based upon guess work. In both the cases referred to hereinabove. 15% of the contract price was granted as damages to the contractor. 15. In both the cases referred to hereinabove. 15% of the contract price was granted as damages to the contractor. 15. A Division Bench of this Court in Superintending Engineer v P.Radhakrishna Murthy 1996 (3) ALT 1137 (DB), while following Brij Paul Singh (supra) held that compensation in the form of loss of profit could be legitimately awarded if as a result of breach of contractual obligations, the other party is disabled from carrying out the work fully and the damages on account of loss of profit cannot be considered to be too remote. 16. Thus, the principle is well settled that when there is breach of works contract by employer, the contractor can claim loss of profit. The percentage of profit would certainly differ from contract to contract and in the absence of any contra evidence, award of 15% by the arbitrator and the Court below are reasonable and does not call for any interference. 17. Learned counsel for contractor submits that if only his client was allowed to complete the work, he would have earned profit at 15%, that the claim for 15% on such count was not specific dispute before the arbitrator and that the claim being substantial, the award of interest during pendente lite and post award is necessary. He would urge that the denial of the same by Court below is erroneous. Per contra, learned counsel for Corporation submits that when the loss of profit is itself in the nature of interest at 15% per annum, the question of awarding further interest pendente lite and post award period would not arise. These submissions need to be considered in the light of the relevant case law. 18. A Constitution Bench of Supreme Court in Secretary, Irrigation Department, Government of Orissa v G.C.Roy (1992) 1 SCC 508 = AIR 1992 SC 732 , considered jurisdiction of arbitral tribunal to award pendente lite interest, when (i) agreement is silent as to award of interest; (ii) agreement does not specifically provide for grant of such interest; and (iii) agreement does not prohibit grant of interest. On consideration of various precedents, the conspectus and the principles were summarized which are as below. Award of Interest (i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. On consideration of various precedents, the conspectus and the principles were summarized which are as below. Award of Interest (i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of Section 34, Civil Procedure Code and there is no reason or principle to hold otherwise in the case of arbitrator. (ii) An arbitrator is an alternative form (sic forum) for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator. This would lead to multiplicity of proceedings. (iii) An arbitrator is the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, so long as they are not opposed to law. (The proviso to Section 41 and Section 3 of Arbitration Act illustrate this point). All the same, the agreement must be in conformity with law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement. (iv) Over the years, the English and Indian courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest, the arbitrator must have the power to award interest pendente lite. Seth Thawardas Pherumal v Union of India ( AIR 1955 SC 468 ) has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. Seth Thawardas Pherumal v Union of India ( AIR 1955 SC 468 ) has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. It has been said repeatedly that observations in the said judgment were not intended to lay down any such absolute or universal rule as they appear to, on first impression. Until Executive Engineer (Irrigation), Balimela v Abhaduta Jena ( (1988) 1 SCC 418 ) almost all the courts in the country had upheld the power of the arbitrator to award interest pendente lite. Continuity and certainty is a highly desirable feature of law. (v) Interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred. (emphasis supplied) Supreme Court further held Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (along with 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. (emphasis supplied) 19. In Bhagawati Oxygen Limited v Hindustan Copper Limited (2005) 6 SCC 462 = AIR 2005 SC 2071 , Supreme Court considered the question as to whether arbitral tribunal has had power to award interest at 18% per annum for pre-reference period, pendente lite and post-award period i.e., future interest from the date of award till the date of payment. Insofar as interest pendente lite is concerned, the apex Court followed G.C.Roy (supra) and reiterated the principles (extracted hereinabove). Insofar as interest pendente lite is concerned, the apex Court followed G.C.Roy (supra) and reiterated the principles (extracted hereinabove). Making reference to G.C.Roy (supra) and other cases, the law laid down by their Lordships with regard to interest for pre-reference period and post award period is as follows (paras 38 and 40). So far as interest for pre-reference period is concerned, in view of the conflicting decisions of this Court, the matter was referred to a larger Bench in Executive Engineer, Dhenkanal Minor Irrigation Division v N.C. Budharaj ( (2001) 2 SCC 721 ). The Court, by majority, held that an arbitrator has power to grant interest for pre-reference period provided there is no prohibition in the arbitration agreement excluding his jurisdiction to grant interest. The forum of arbitration is created by the consent of parties and is a substitute for conventional civil court. It is, therefore, of unavoidable necessity that the parties be deemed to have agreed by implication that the arbitrator would have power to award interest in the same way and same manner as a court. ….. As to post-award interest, the point is covered by the decision of this Court in Hindustan Construction Company Limited v State of J&K ( (1992) 4 SCC 217 ). It was held there that an arbitrator is competent to award interest for the period from the date of the award to the date of decree or date of realisation, whichever is earlier. (emphasis supplied) 20. In G.C. Roy (supra) and Bhagawati Oxygen Limited (supra), the Supreme Court considered the right of a building contractor to claim interest on the amounts due for pre-reference, pendente lite and post arbitration periods. The two cases applied the principle that even if there is no agreed term between the parties regarding payment of interest, in the absence of specific prohibition, the arbitrator has got power to award interest. If the agreement specifically prohibits and bars claim for interest, the arbitrator has no power to award interest. This aspect of the matter has again been considered by Supreme Court in a recent judgment dealt with hereunder. 21. In State of Rajsthan v Ferro Concrete Construction Private Limited 2009 (3) Arb.LR 140 (SC), the question was related to awarding pre-reference interest, interest pendente lite and post arbitration interest. This aspect of the matter has again been considered by Supreme Court in a recent judgment dealt with hereunder. 21. In State of Rajsthan v Ferro Concrete Construction Private Limited 2009 (3) Arb.LR 140 (SC), the question was related to awarding pre-reference interest, interest pendente lite and post arbitration interest. Observing that in the absence of express bar in the contract in regard to interest, the arbitral tribunal can award interest, the Supreme Court laid down as follows. The appellants contended that there was no provision in the contract for payment of interest on any of the amounts payable to the contractor and, therefore, no interest ought to be awarded. But this court has held that in the absence of an express bar, the arbitrator has the jurisdiction and authority to award interest for all the three periods – pre-reference, pendente lite and future [vide decisions of Constitution Bench in Secretary, Irrigation Department, Government of Orissa v G.C.Roy, (1992) 1 SCC 508 : 1992(1) Arb.LR 145 (SC); Executive Engineer, Dhenkanal Minor Irrigation Division v N.C.Budharaj, (2001) 2 SCC 721 : 2001(1) Arb. LR 346 (SC) and the subsequent decision in Bhagawati Oxygen Ltd v Hindustan Copper Limited, (2005) 6 SCC 462 : 2005(1) Arb. LR 608 (SC). In this case as there was no express bar in the contract in regard to interest, the arbitrator could award interest. 22. Thus, it is settled law that even though there is no specific covenant in the agreement unless it is specifically barred, the claim for interest during pre-reference period, pendente lite and post award period is sustainable. It is even competent to the arbitrator to award future interest from the date of the award till the date of decree or date of realization whichever is earlier. When the claim for 15% of the contract value towards loss of profit is awarded, whether the same would carry further interest? While denying interest pendente lite, the arbitrator awarded interest at 18% per annum from 10.03.1989 to 06.01.1990 and again from the date of the award till the date of payment whichever is earlier. 23. Learned senior civil Judge, however, disallowed interest at 18% amount awarded under claim No.XI observing that such award of interest is impermissible in law. Before us, learned counsel for contractor pressed for post award interest till the date of decree. 23. Learned senior civil Judge, however, disallowed interest at 18% amount awarded under claim No.XI observing that such award of interest is impermissible in law. Before us, learned counsel for contractor pressed for post award interest till the date of decree. He relied on Oil and Natural Gas Commission v M.C.Clelland Engineers S.A (1999) 4 SCC 327 . Dispute in that case was whether the award of the arbitrators for certain amounts payable with subsequent interest was sustainable. ONGC contended that the amount claimed under two claims was itself interest for different periods and therefore, arbitrator could not have further awarded interest on the claims awarded at 12% per annum from the date of award till realization. Reliance was placed on Section 3 of the Interest Act, 1978. This contention was negatived by the apex Court observing as under. There cannot be any doubt that the Arbitrators have powers to grant interest akin to Section 34 of the CPC which is the power of the court in view of Section 29 of the Arbitration Act, 1940. It is clear that interest is not granted upon interest awarded but upon the claim made. The claim made in the proceedings is under two heads -one is the balance of amount claimed under invoices and letter dated February 10, 1981 and the amount certified and paid by the appellant and the second is the interest on delayed payment. That is how the claim for interest on delayed payment stood crystallized by the time the claim was filed before the Arbitrators. Therefore, the power of the Arbitrators to grant interest on the amount of interest which may, in other words, be termed as interest on damages or compensation for delayed payment which would also become part of the principal. If that is the correct position in law, we do not think that Section 3 of the Interest Act has any relevance in the context of the matter which we are dealing with in the present case. 24. From the above, it may be taken as fairly well settled that if the amount under any claim before arbitration, is crystallized, interest for post arbitration cannot be denied even if the claim itself is towards interest. Therefore, we are convinced that the denial of interest at 18% per annum by the Court below is not justified. 24. From the above, it may be taken as fairly well settled that if the amount under any claim before arbitration, is crystallized, interest for post arbitration cannot be denied even if the claim itself is towards interest. Therefore, we are convinced that the denial of interest at 18% per annum by the Court below is not justified. To that extent, the contractor must succeed in the C.R.P.No.2939 of 2001. 25. In the appeal and civil revision petition filed by contractor, grievance is made out not only with regard to denial of interest on claim No.XI but also with regard to claim Nos.V, VI and VIII which have been set aside by the Court below. We have perused the award passed by arbitrator and we have no hesitation to say that condition No.47, clause 12, Other claims 14.5 and 15.2 were ignored by the arbitrator while allowing these claims. We may mention that these clauses provide that the contractor shall obtain written permission before there is any deviation/alteration or addition. The contractor did not obtain any written permission from the Corporation to dig the borewell, to bring water from outside or to bring cement from outside. These aspects are not seriously disputed before us. Therefore, we do not find any reason to disagree with the Court below. 26. Accordingly, C.M.A.No.1824 of 2001 and C.R.P.No.2893 of 2001 filed by Andhra Pradesh State Trading Corporation are dismissed without any order as to costs. C.M.A.No.1666 of 2001 and C.R.P.No.2939 of 2001 filed by M/s.G.V.Malla Reddy and Company, a registered partnership firm, are partly allowed as indicated hereinabove. There shall be no order as to costs.