JUDGMENT Mr. A.N. Jindal, J.:- The judgment dated 05.03.2012 dismissing the application filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act’) for setting aside an exparte Award dated 27.04.2005, is under challenge. 2. As per terms of the agreement dated 03.10.2001, executed between the parties, the appellants were allotted 4606 metric tones of paddy for milling up to 30.06.2002. After milling, the said rice was to be supplied to the respondent-corporation within the stipulated period and the agreement was to remain in force w.e.f. 03.10.2001 till 30.09.2002 or till the clearance of dues, whichever is later. However, the said agreement could be extended at the behest of the Director/Managing Director for further period on the same terms and conditions. On account of short supply of rice, a dispute arose, as such, the matter was referred to the Arbitrator Sh. G.S. Bhatia, who vide order dated 27.04.2005 passed an Award to the tune of Rs.3,64,48,779.71 along with interest at the rate of 21% for the first year and at the rate of 30% for the subsequent period till realization of the amount. It was further ordered that since the appellants have been proceeded against exparte in the case and have not deposited their share of arbitration fee, therefore, the respondentcorporation would pay the share of the appellants to the arbitrator in terms of Section 38(2) Proviso 1 of the Act. 3. The claim set up by the respondent-corporation before the Arbitrator was as under:- ---------------------------------------------------------------------------------------------------------------------------------------- “Total Paddy : 2553.434 MT Rice Due : 1710.80 MT Cost of Rice Due & Rs.10663.31 : Rs.1,82,42,432 paise per qtl. Interest Compound quarterly @ 21% : Rs.3,54,10,537.71 from 01.08.2002 to 31.07.2003 (included interest of and 30% from 01.08.2003 to 28.02.2005 Rs.1,71,68,105.71) Cost of bags i.e. 34046 bags of 75 Kg. : Rs.10,38,242 Each @ Rs.29.21 per bag + Sales Tax ---------------------------------------------------------------------------------------------------------------------------------------- Total : Rs.3,64,48,779.71 ---------------------------------------------------------------------------------------------------------------------------------------- 4. The Additional District Judge, Ludhiana, vide judgment dated 05.03.2012, dismissed the objection petition filed by the appellants. 5. It would be pertinent to mention here that though the Award was passed exparte, yet the same was not set aside and the objection petition filed against the same, was dismissed. 6. The first contention raised by learned counsel for the appellants is that the Arbitrator has no jurisdiction to pass a compound quarterly interest over the claim amount. 5. It would be pertinent to mention here that though the Award was passed exparte, yet the same was not set aside and the objection petition filed against the same, was dismissed. 6. The first contention raised by learned counsel for the appellants is that the Arbitrator has no jurisdiction to pass a compound quarterly interest over the claim amount. The interest so ordered by the Arbitrator i.e. at the rate of 21% per annum for the first year and at the rate of 30% for the subsequent years, was quite exorbitant and against the principles of natural justice. 7. While answering to the aforesaid argument, learned counsel for the respondent-corporation has stated that he accedes to the argument raised to this extent and the Award, in so far as it relates to the granting of compound interest, may be set aside. Similarly, he has also accepted the contention that the agreement was executed on 03.10.2001, whereby paddy for the crop year 2001-02 was supplied, which was to be shelled up to 30.06.2002. Therefore, certainly the respondent-corporation was entitled to the interest from 01.08.2002 when the accounts were settled, till realization of the Award amount of Rs.1,82,42,432/-. 8. As regard the clause governing the interest, the case of the appellants is not covered by clause 8 of the agreements. Actually, the case of the appellants falls within Clause 6 of the agreement, which reads as under:- “6. The miller shall be responsible for the safe custody of paddy lifted till the delivery of rice as per out-turn ratio fixed by Government of India. Miller shall also make good the losses that may be incurred in paddy and rice during transit/storage at the rate of custom milled rice fixed by Government of India, plus interest at the rate of 21% from the date of it becomes payable till the date of actual realization of the converted variety of paddy or rice towards the short fall.” 9. Thus, in the light of the aforesaid clause, the interest recoverable from the appellants was 21% on the short supply of rice. But the interest claimed appears to be a little bit on the higher side. As such, this Court deems it appropriate to award statutory interest at the rate of 18% per annum qua all four stages i.e. (i) pre reference, (ii) pendente lite, (iii) post award and (iv) post decretal amount. 10. But the interest claimed appears to be a little bit on the higher side. As such, this Court deems it appropriate to award statutory interest at the rate of 18% per annum qua all four stages i.e. (i) pre reference, (ii) pendente lite, (iii) post award and (iv) post decretal amount. 10. As regards the other contention raised by learned counsel for the appellants that there was no legal agreement between the parties, therefore, the Award passed by the Arbitrator was beyond his jurisdiction, in this regard, it may be stated that the agreement came into existence between the Governor of Punjab through District Food & Supplies Controller on one side and M/s Kuber Rice & General Mills, G.T. Road, Khanna on the other side. The Award was signed by the District Manager on behalf of Punjab Agro Industries Corporation Ltd-respondent. It is not in dispute that the respondent-corporation is the State Government agency, engaged for purchase and storage of paddy for supplying the same for custom milling to the shellers with its direction to supply rice to the Food Corporation of India, after its milling. It is also not in dispute that the agreement was acted upon between the parties. The appellants received paddy and did not supply rice, as agreed to between the parties. Thus, apparently, no defect could be found in the agreement, as entered into between the parties and the appellants have not been prejudiced in any manner by the execution of the said agreement. Consequently, the Award cannot be said to be, in any manner, without jurisdiction. 11. As regards the argument with regard to passing of the exparte Award, the same appears to be rightly passed, as the appellants failed to appear before the Arbitrator despite repeated notices issued to them. The record reveals that on receiving of the reference, notices were issued to the parties on 10.08.2004 to attend the proceedings before the Arbitrator for 25.08.2004. On that date, the respondent-corporation made its attendance through Shri Rajiv Sharma, but none appeared on behalf of the appellants and the case was adjourned for 08.09.2004. On that date also, none had appeared on behalf of the appellants. On that date, the respondent-corporation made its attendance through Shri Rajiv Sharma, but none appeared on behalf of the appellants and the case was adjourned for 08.09.2004. On that date also, none had appeared on behalf of the appellants. Then, notice was again issued through registered letters for 06.10.2004, but the same were received back ‘undelivered’, therefore, the Arbitrator being satisfied that the appellants could not be served in the ordinary manner, got published the notice for their appearance for 27.12.2001. But, despite the registered notices and publication, the appellants failed to appear before the Arbitrator, therefore, they were rightly proceeded against exparte. The District Manager, while appearing as RW-1, had stated that the appellants were in due knowledge of the pendency of the arbitral proceedings. Appellant No.2 had been visiting the office of the respondent-corporation i.e. venue of arbitration proceedings, but intentionally avoided to put in appearance for participation in those proceedings. Even the appellants were served with notices of five complaints, filed by the respondent-corporation under Section 138 of the Negotiable Instrument Act, which were still pending in the Court at Ludhiana and the appellants were served in the case on the same address. Thus, all this goes to show that the appellants were in the knowledge of the arbitration proceedings and they intentionally did not appear before the Arbitrator. As such, there are no reasons to set aside the exparte proceedings taken against them. 12. No other argument has been raised. 13. Resultantly, this appeal is dismissed with modification in the impugned Award to the effect that the respondent-corporation would be entitled to recover the awarded amount along with interest at the rate of 18% per annum from 01.08.2002 till its realization.