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2012 DIGILAW 1302 (PNJ)

State of Punjab v. Kuljit Singh and Company

2012-09-25

L.N.MITTAL

body2012
JUDGMENT Mr. L.N. Mittal, J. (Oral) - In this revision petition filed under Article 227 of the Constitution of India, State of Punjab has assailed judgments and decrees of both the courts below thereby making award dated 20.8.2000, Annexure P/1 of the Arbitrator as rule of the court and passing decree accordingly. 2. I have heard learned counsel for the parties and perused the case file. 3. Counsel for the petitioner assailed the impugned judgments and decrees and award regarding rate of interest. The Arbitrator has awarded interest @ 15% per annum which has been upheld by the courts below. Counsel for the petitioner contended that interest @ 15% per annum is excessive. It was also argued that under section 34 of the Code of Civil Procedure (in short, CPC), future interest from the date of decree of the trial court till recovery cannot exceed 6% per annum. 4. On the other hand, counsel for the respondent contended that in view of section 29 of the Arbitration Act, 1940 (in short, the Act), future interest from the date of decree till recovery can be granted by the court at such rate as the court deems reasonable and therefore, bar of section 34 CPC is not attracted. Counsel for the respondent also referred to various judgments namely B.P. Radha Krishna versus Sponge Iron India Ltd., 1997(2) RCR (Civil) 316; Bhagawati Oxygen Ltd. versus Hindustan Copper Ltd., [2005(2) Law Herald (P&H) 501 (SC)] : 2005(2) RCR (Civil) 559 and unreported judgment of this Court passed in FAO No. 488 of 2009, titled Haryana Warehousing Corporation and others versus M/s Gupta Electric Company and another, decided on 5.9.2012 and contended that interest has been awarded at reasonable rate by the Arbitrator and the courts below. Reference was also made to clause 8 of the general conditions of Contract which provides for recovery of interest @ 15% per annum by the petitioner from the respondent/contractor on the amount of advance. 5. I have carefully considered the rival contentions. 6. Section 34 of the CPC is not applicable regarding rate of interest in view of section 29 of the Act which authorizes the court to award future interest at such rate as the court deems reasonable. Consequently, maximum limit of future interest at 6% per annum stipulated by section 34 CPC is not applicable to the instant case. 7. 6. Section 34 of the CPC is not applicable regarding rate of interest in view of section 29 of the Act which authorizes the court to award future interest at such rate as the court deems reasonable. Consequently, maximum limit of future interest at 6% per annum stipulated by section 34 CPC is not applicable to the instant case. 7. Rate of interest at 15% per annum contained in clause 8 of general conditions of the Contract is not strictly applicable because the said rate of interest has been provided on advance given by the petitioner to the respondent and not regarding amount recoverable by the respondent from the petitioner. In fact, in the contract, no rate of interest has been provided regarding amount recoverable by the respondent from the petitioner. Consequently, interest has to be awarded at reasonable rate only. Rates of interest were high in the year 1990 till the year 1999 or 2000 when the rate of interest started falling down. Keeping in view all the circumstances, I am of the considered view that reasonable rate of interest would be 12% per annum instead of 15% per annum. 8. Accordingly, the instant revision petition is allowed partly. Impugned judgments and decrees of the courts below as well as award of the Arbitrator are modified only to the extent that the rate of interest for the entire period in question would be 12% per annum instead of 15% per annum.