Judgment : The Petitioners, a Government of Maharashtra undertaking, have challenged the award dated 29 February 2008 passed by the Sole Arbitrator, as appointed on the basis of Arbitration clause in the agreement in question between the parties. 2. On or about December 2001, the Petitioners invited tender for Four Laning of Satara Kolhapur upto Maharashtra State Border Section of NH4 Package III from km. 639/000 to 668/000. The Petitioners awarded the work to the Respondents and issued a letter of acceptance. A formal contract was entered into between the parties. On 3 May 2002, a notice to proceed with the work was issued to the Respondents, which work was to be completed by 2 August 2004. On 1 June 2005, the work was completed by the Respondents. 3. Certain disputes arose between the parties in respect of the contract with regard to reimbursement of increase in royalty charges under the provisions of Clause 14 of the Special Conditions of Contract mentioned hereinabove and Price Escalation in respect of 32 mm MS Dowel Bars used in Pavement Quality Concrete (for short, PQC). 4. On 6 April 2006, the Respondents gave a notice under Clause 67.2 of the contract calling upon the Petitioners to refer the claims to the Steering Committee. The decision of the Petitioners on the recommendation of the Steering Committee was communicated to the Respondents. The Respondents referred the matter for Arbitration. 5. On 7 November 2006, Shri Sharad P. Upasani IAS (Retd.) Former Chief Secretary, Government of Maharashtra was appointed as a Sole Arbitrator. The learned Arbitrator issued notice of a preliminary meeting. A preliminary meeting was held. The Respondents filed their statement of claims. The Petitioners filed their statement of defence. the Respondents filed their rejoinder. On 29 February 2008, the Award was passed. 6. The Award is passed claim-wise, which reads as under:- “19 In view of the above, I have no hesitation to conclude that the Claimant has proved his case for entitlement of reimbursement of the enhanced Royalty which comes to Rs.1,16,71,879 as per the joint calculations dated 4th February 2008 given as per the direction of the Arbitral tribunal. The contract provides for interest at the rate of 15% p.a. To be paid on unpaid sums. In the joint statement the parties have also given interest calculations at 15% from 30-9-2005 till 30-11-2007. The amount of interest comes to Rs. 32,908.95. The contract provides for interest at the rate of 15% p.a. To be paid on unpaid sums. In the joint statement the parties have also given interest calculations at 15% from 30-9-2005 till 30-11-2007. The amount of interest comes to Rs. 32,908.95. I therefore award the payment of entire amount of Rs.1,49,62,774 plus further interest at 15% on the principle amount of Rs. 1,16,71,879 till the date of payment.” 7 The relevant clause for deciding the issue with regard to the reimbursement of increase in royalty charges is as under: “14.0 TAXES The rates quoted by the Contractor shall be deemed to be inclusive of Sales and other taxes on all materials that the contractor will have to purchase for performance of this Contract. Any further increase in Central or State Sales Tax or other taxes on complete items of work of this contract as may be levied and paid by the contractor shall be reimbursed by the Employer to the contractor on proof of payment. The octroi charges, if paid any, shall be reimbursed by the employer on proof of payment.” The said Clause 14 was amended as per corrigendum/addendum to Volume-1 of Bid document SECTION-VII, SPECIAL CONDITIONS OF CONTRACT, as follows, namely: “4 Page No. 111, Para 14.0 TAXES Line No.2 Add `including royalty charges' after `taxes'.” 8 The relevant portion of clause, after amendment, reads as under: “The rates quoted by the contract shall be deemed to be inclusive of sales and other taxes including Royalty charges on all materials that the construction will have to purchase for performance”. 9 It is relevant to note that the National Highways Authority of India (The NHAI) constituted by the Government of India, had taken up the work of Four Laning of (National Highway) NH-4 from Mumbai to Chennai known as “Golden Quadrangle Project”. The NHAI, in turn, assigned a section of said project from Satara to Kolhapur upto Maharashtra State Border Section, to the Petitioners (original Respondents) for Four Laning of the same for implementation from preliminary design to final completion. 10 Some part of the contract was awarded to the Respondents (Joint Venture). There arose dispute and, therefore, the present Arbitration. Admittedly, subject to supervision and full satisfaction of the Petitioners (employers) and its consultants, the project was completed on 1-6-2005. The consultants issued substantial completion certificates. 10 Some part of the contract was awarded to the Respondents (Joint Venture). There arose dispute and, therefore, the present Arbitration. Admittedly, subject to supervision and full satisfaction of the Petitioners (employers) and its consultants, the project was completed on 1-6-2005. The consultants issued substantial completion certificates. During the execution of the work as dispute arose, the same was referred to the team leader “SOWIL”, who was the Engineer in charge of the work. The claims were rejected. Therefore, the Respondents raised claims principally of reimbursement of increase in royalty charges declared by the Government of Maharashtra after award of work. The claim of price escalation was rejected. There is no challenge to the same. Therefore, we are concerned in this matter only with regard to Claim No. (I) as referred above. The minor minerals such as stone, sand and earth were the basic requirement of such work. 11 The rate was Rs.28/-per brass at that time. The royalty charges were subsequently increased by Government of Maharashtra to Rs.50/-per brass with effect from January 2003. The Petitioners paid increased of royalty of Rs.22/-per brass by reimbursing it as per the Respondents' RA Bill No.49. There was no dispute of whatsoever and both the parties acted accordingly. However, from RA Bill No.50, the entire amount of increased royalty charges of Rs.98,86,730/-paid previously was deducted in lumpsum. The deduction was without any notice, hearing by giving interpretation of the clause, for the first time, after 49 RA bills as referred above. The Dispute Resolution Committee also rejected the case of the Respondents. 12 The bone of contention in the matter, revolving around clause 14 which is referring to "rates quoted by the contractor shall be deemed to be inclusive of Sales and other Taxes including Royalty charges on all materials”. The next sentence is "any further increase in Central or State Sales Taxes or other taxes of complete items of work of this contract as may be levied and paid by the contractor shall be reimbursed by the employer to the contractor on proof of payment”. All the parties know the concept of royalty and/or royalty charges. There is no dispute that the first part, as reproduced above, covers the royalty charges. The royalty charges is a well-known concept, specifically when we are dealing with the construction contract, where, certain articles and materials including such metals are used to complete the work. All the parties know the concept of royalty and/or royalty charges. There is no dispute that the first part, as reproduced above, covers the royalty charges. The royalty charges is a well-known concept, specifically when we are dealing with the construction contract, where, certain articles and materials including such metals are used to complete the work. It is settled that the royalty charges are revisable. It is not the case that once the royalty or royalty charges are fixed, it is unrevisable. In a given case, the concern Department and/or Government, in view of the revision of the royalty charges, may ask and/or demand the same and some time with interest also. 13 We have to deal with the terms and conditions of the contract, having permitted to the contractor and that rates quoted by the contractor could be deemed to be inclusive of sales tax and other taxes including royalty charges on all material. Therefore, both the parties were fully aware that the royalty charges were also inclusive. The component like royalty charges has it own value for the pricing, if it is part and parcel of the basic clauses/valuations. It can be dissected. 14 The following sentence “any further increase in Central and/or State Sales Tax and/or other taxes on all complete items of the work”, in my view, covers the royalty charges on all material that the contractor has used. The words “any further increase" need to be read in the context of the first basic sentence, in my view, cannot be dissected to state that the words "royalty charges" are missing in the next sentence. There was never intended to take away the entitlement of such increase in the royalty charges. In the commercial contract like this, knowing fully the nature of business, including those items/materials in the construction contract and also considering that the royalty charges are always subject to the revision along with other taxes as recorded above, I see there is no reason to accept the say that though we have agreed to cover the royalty charges, while considering the rates quoted by the contractor, only at initial stage, but it would not be inclusive of any increase in the royalty charges, though other taxes would be taken care of. It is difficult to dissect these two sentences. The start of Second sentence makes it very clear referring to “any further increase”. It is difficult to dissect these two sentences. The start of Second sentence makes it very clear referring to “any further increase”. Therefore, if there is any further increase in either of the taxes, including royalty charges, on complete items, it is chargeable by the contractor subject to submission of the bills. If this contract itself provides and permits the contractor to submit the bills including of revised royalty charges, if any, and as per the clause itself, the contractor is entitled to reimburse the same, subject to the proof of payment, this itself further confirm the position that the parties all the time need to consider the nature of business, the use of material in such contract and even in the completed items of work. The basic requirement, therefore, is that the contractor must submit the bills with regard to the revised royalty charges, otherwise, there was no occasion to give this permission to the contractor to submit the bills for reimbursement. Another angle is, when we talk about "on all materials" and in second sentence "on complete items of work", it means whatever may be the material used to complete the work, including the items of the work, in my view, covers the royalty charges paid initially and/or at revised stage/part. The intention was very clear, in view of the first sentence and considering the contract in question that the contractor is entitled to quote/claim their rates inclusive of sales tax and other taxes, including royalty charges on all materials. Once the work is completed and during this and for whatever may be the reason, there is a revision in the royalty charges, the words “on complete items of work of this contract” itself means and covers the raised royalty charges on all materials. In my view, it is difficult to dissected only because the words "royalty charges" are missing in the next sentence. It makes no difference. Any further increase in Central and/or State Sales tax on completion of the work of this contract, cannot be read and/or to interpret and/or to restrict only to the sales tax and any other taxes. The words "other taxes" just cannot be interpreted and/or left alone to say that the royalty charges which was well-known concept in such type of contracts, having value addition to the rates quoted by the contractor were excluded. The words "other taxes" just cannot be interpreted and/or left alone to say that the royalty charges which was well-known concept in such type of contracts, having value addition to the rates quoted by the contractor were excluded. This component, if admittedly part and parcel of the first sentence, to say later on by overlooking, including the words “any further increase" is definitely unjust and unacceptable. The whole clause of contract and the terms so referred above, if read together, I am inclined to observe that any further increase in royalty charges, is recoverable by the contractor subject to furnishing the requisite bills, if any. 15 We cannot overlook the additional factor that the Government and/or such Authority, who has revised and/or increased the royalty charges, at whatever stage, is bound to demand the same. The contractors and/or such persons have no option but to pay the enhanced increased royalty charges. Such contractor, if makes payment of those enhanced/increased royalty charges and submit the bills accordingly, now cannot be denied the claim in view of the alleged vagueness in second sentence, merely because the words "royalty charges" are missing. It is wrong reading of the whole clause itself. All the materials, as referred in the first sentence, in my view includes "all items of work". Therefore, any increase or revision should follow for all the purposes. It is difficult to dissect the same. 16 It is not the case that the contractor never paid and/or want to receive and/or charging this royalty charges, without any documents or bills. As recorded by the learned Arbitrator, having once granted and permitted and proceeded by all the parties, now deny the same charges to the contractor, is contrary to the terms and agreement in question. 17 The learned Arbitrator has observed the royalty charges in the following words. “17. It is necessary to note certain important dates of events in this case. The letter of Acceptance was given on 17-1-2002 and the formal contract between the parties was signed on 15-3-2002. The notice to proceed with the Work was given on 3-5-2002 and Work was completed on 1-6-2005. The Employer has taken over the Works on 1-6-2005. The Contractor came to know the Employer's decision regarding reversing the earlier practice of reimbursement of Royalty only when he enquired why the RA Bill 50 for period upto 3182005 was kept pending. The notice to proceed with the Work was given on 3-5-2002 and Work was completed on 1-6-2005. The Employer has taken over the Works on 1-6-2005. The Contractor came to know the Employer's decision regarding reversing the earlier practice of reimbursement of Royalty only when he enquired why the RA Bill 50 for period upto 3182005 was kept pending. During the entire execution of the Works and after reimbursing practically 83% of the claim in respect of enhanced Royalty, at no stage the Employer informed or gave inclination to the Claimant that he is modifying the interpretation given to clause 14 by the parties during execution of the work and on which the parties have acted during execution of work for a period of nearly 3 years. It is not now permissible for the Respondent to disown the interpretation given by both the parties to the contract during the execution of the Work and unilaterally change it after completion of Work and taking over of the Work. The defence of the Employer on the ground that the reimbursement of enhanced Royalty was given by oversight for three years is difficult to accept. Further the argument advanced that the Employer is entitled under Clause 60.4 of the GCC to rectify the RA Bill payments which are only ad hoc payments has no application to the facts of the case as the omission the payment is not made on the ground that the work is not carried out to the satisfaction of the Engineer as required under the said clause. I have also noted that the suggestion of the Respondent that the increased royalty gets reflected in the indices which are taken into account while paying price variations is not supported by the facts placed on record.” 18 It is relevant to note the observation of the Apex Court in The Godhra Electricity Co. Ltd. & Anr. Vs. The State of Gujarat & Anr ( AIR 1975 SC 32 ). “19. Ltd. & Anr. Vs. The State of Gujarat & Anr ( AIR 1975 SC 32 ). “19. In these circumstances, we do not think we will be justified in not following the decision of this Court in Abdulla Ahmed V. Animendra Kissen Mitter, 1950 SCR 30 at P. 46 = ( AIR 1950 SC 15 at p. 21), where this Court said that extrinsic evidence to determine the effect of an instrument is permissible, where there remains a doubt as to its true meaning and that evidence of the acts done under it is a guide to the intention of the parties, particularly, when acts are done shortly after the date of the instrument.” 19 In RashtriyaIspat Nigam Limited Vs. M/s. Dewan Chand Ram Saran,2012(3) All MR 972 (S.C.)the possible view of the Arbitrator has been upheld by the Apex Court. 20 Therefore, taking over all view of the matter and the reasonings given by the learned Arbitrator, I am not inclined to accept the submission made by the learned counsel appearing for the Petitioners that the award so passed, is perverse and/or contrary to law and/or by misleading of the clauses. The submission that the Arbitrator just cannot overlook those words, which are admittedly missing, is also unacceptable in view of the above reasonings itself. Taking over all view of the matter, I see there is no reason to interfere with the impugned award. 21 Now, the question is of grant of 15% interest on the principal amount till the date of payment. Admittedly, no particular rate of interest was agreed by the parties. The learned Arbitrator, considering the nature of business however, granted 15% interest. I am inclined to reduce the same. The contract, being construction contract, therefore, taking overall view of the matter and in view of the judgment of Apex Court in Krishna Bhagya Jala Nigam Ltd. Vs. G. Harischandra Reddy & Anr. (2007 AIR SCW 527), in my view, the rate of interest needs to be reduced to 9% from 15%. The pendency of the Arbitration Petition, is no way be treated as additional reason to continue the rate of 15% interest till realization. The award unless attains finality, there is no question of realization of deposit of the awarded amount, specially in the circumstance like this. Only one party cannot be asked to suffer interest only because of pendency of the matter. The award unless attains finality, there is no question of realization of deposit of the awarded amount, specially in the circumstance like this. Only one party cannot be asked to suffer interest only because of pendency of the matter. 22 The submission that the rate of interest so awarded is nothing but discretion exercised by the Arbitrator, is not the solution in all and every matters. The discretion, so exercised by the Arbitrator, is always subject to the law laid down by the Supreme Court, as well as, the power of the Court under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act) and/or to grant and/or to increase the said rate of interest. Therefore, it is not the case that the Court under Section 34, nowhere interfere to grant the interest so awarded. Considering the Supreme Court Judgment and admittedly, this is a construction contract, I am also of the view that the rate of interest needs to be reduced to 9% from 15 % as observed above. 23 No other points have been pressed and submitted and therefore, taking over all view of the matter, I am inclined to modify the award only to the extent of grant of interest as referred above i.e. 9% instead of 15% as above. The rest of the award is maintained. 24 The learned Arbitrator considering the material so placed on record, has recorded that the Petitioners failed to make out the case and thereby rejected the counter claim. Considering the over all view of the matter, and as no case is made out, and I see there is no reason to interfere with the rejection of the counterclaim also. No such counter-claim was raised earlier by the Petitioners. 25 Resultantly, the following order. ORDER a) The impugned award is modified only to the extent of grant of interest i.e. 9% instead of 15%. b) Rest of the award is maintained. c) There shall be no order as to costs.