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Uttarakhand High Court · body

2019 DIGILAW 184 (UTT)

State of Uttar Pradesh v. Phool Chandra

2019-03-11

R.C.KHULBE, SUDHANSHU DHULIA

body2019
JUDGMENT : SUDHANSHU DHULIA, J. 1. One of the main purposes for arbitration is to have quick disposal of cases, by doing away with the strict procedural laws. It was intended to be a fast track system. Yet we have a case before us, which has a unique and chequered history, as it has been in the Courts for nearly 25 years! 2. An agreement dated 22.03.1985 was executed between the contractor i.e., M/s Phool Chandra and the Irrigation Department of the State of Uttar Pradesh, for civil and engineering work. Later a dispute arose between the parties and the matter was referred for arbitration, as per the terms of the Arbitration clause which was a part of the contract. The Arbitrator gave its award on 29.08.1994. Thereafter, an application to set aside the award was moved by the State of Uttar Pradesh under Sections 30/33 of the Arbitration Act, 1940, which was dismissed by the court vide judgment and order dated 10.05.1996 and the award was made Rule of Court. 3. The State of U.P. challenged the order dated 10.05.1996 in an appeal under Section 39 before the High Court of Judicature at Allahabad in the year 1997, where it remained pending, and later after creation of the State of Uttarakhand, (which was carved out from the erstwhile State of Uttar Pradesh under the U.P. Reorganization Act, 2000), the matter stood transferred to this Court on grounds of territorial jurisdiction. 4. A Division Bench of this Court allowed the appeal vide order dated 25.06.2007 and the order of the Civil Judge (Senior Division) dated 10.05.1996 was set aside and the matter was remanded to Court below with directions to decide the matter afresh. This was done because the Division Bench of this Court was of the opinion that the learned Civil Judge had decided the matter in a “cursory manner”, without considering the issues which were before him. This order dated 25.06.2007 was challenged by the contractor (M/s Phool Chandra) before the Hon’ble Apex Court. The Hon’ble Apex Court allowed the appeal setting aside the order of the High Court. While doing so, it was observed by the Hon’ble Apex Court, that the High Court was not right in setting aside the order, on ground that it was “cursory”. The Hon’ble Apex Court was of the view that the learned Civil Judge had considered all the relevant facts. While doing so, it was observed by the Hon’ble Apex Court, that the High Court was not right in setting aside the order, on ground that it was “cursory”. The Hon’ble Apex Court was of the view that the learned Civil Judge had considered all the relevant facts. It was observed as under:- “Our above view is based on the fact, that while considering the objections raised under Section 30 of the Act, the Civil Judge (Senior Division), Dehradun had factually adjudicated upon all the issues raised by the respondents before this Court. In fact, all the issues highlighted by the High Court in paragraph 8 (extracted hereinabove) were individually considered by the Civil Judge (Senior Division), Dehradun. It is another matter whether the aforesaid consideration was valid and legitimately decided. The issue of legitimacy of the determination rendered by the Civil Judge (Senior Division), Dehradun is not the subject matter of consideration before us. The only issue which falls for our consideration is, whether the remand of the matter by the High Court for re-adjudication by the Civil Judge (Senior Division), Dehradun was justified or not. Since, we are of the view, that the Civil Judge (Senior Division), Dehradun had taken into consideration all the objections pointed out by the respondents in paragraphs 8 of the impugned order, and specially Clauses 1.45,1.46 and 1.47, the High Court was not justified in remanding the matter to the Civil Judge (Senior Division), Dehradun, for re-adjudication.” 5. Thus, the matter was remanded back to the High Court, for fresh adjudication. When the matter came up again before this Court, the Division Bench of this Court this time dismissed the appeal vide its order dated 14.03.2014. The operative portions read as under: “4. The Hon’ble Supreme Court, however, remitted the matter before us. Accordingly, the Appeal is re-heard. We have heard the learned counsel for the appellant and considered the submissions made by the counsel appearing for the respondent. 5. It is the contention of the appellant that the Arbitrator was required to give reasons; he did not give any reason, and that, the Arbitrator did not consider the effect of Clauses 1.45, 1.46 and 1.47 of the contract extracted above. The fact remains that the said contention on the part of the appellant stands concluded by the findings recorded by the Hon’ble Supreme Court extracted above. 6. The fact remains that the said contention on the part of the appellant stands concluded by the findings recorded by the Hon’ble Supreme Court extracted above. 6. The matter was remitted back to us only for the purpose of permitting the appellant to highlight that, in considering the issues, as were considered, the Arbitrator misconducted himself. No such argument has been advanced. We, accordingly, conclude the Appeal by dismissing the same.” 6. This time the State of Uttar Pradesh took the matter to the Apex Court. The Hon’ble Apex Court again allowed the appeal vide its order dated 22.09.2015 and the matter was again remanded to this Court with the following observations:- “The earlier impugned order passed by the High Court on 25.06.2007, was set aside with the observation extracted hereinabove, on the premise that the Civil Judge (Senior Division), Dehradun, had already adjudicated upon the issues which had been raised before the High Court, and as such, it was not appropriate for the High Court to remand the matter to the Civil Judge (Senior Division), Dehradun, for re-adjudication. Despite the clear observations recorded by this Court in its order dated 12.02.2014, the High Court has not gone into the issues canvassed before it, by the rival parties. It is in that view of the matter, that yet again the case is being remanded back to the High Court, requiring it to consider the issues canvassed by the rival parties on merits, and render a decision thereon in accordance with law. While doing so, we hereby set aside the impugned order dated 14.03.2014. The parties are directed to appear before the High Court on 03.11.2015, either in person or through their counsel. The appeal is disposed of in the above terms” 7. Under these circumstances, the matter has come up before this Court for adjudication. 8. We have heard the parties at length. 9. It is an appeal under Section 39 of the Arbitration Act, 1940, against an order by which the Court has refused to set aside the arbitration award, and has made the award Rule of Court. 10. The grounds for setting aside an award are given in Section 30 of the old Arbitration Act, 1940, which reads as under:- “30. Grounds for setting aside award. 10. The grounds for setting aside an award are given in Section 30 of the old Arbitration Act, 1940, which reads as under:- “30. Grounds for setting aside award. An award shall not be set aside except on one or more of the following grounds, namely:- (a) That an arbitrator or umpire has misconducted himself or the proceedings (b) That an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35; (c) That an award has been improperly procured or is other- wise invalid.” 11. We have gone through the award dated 29.08.1994. As per the terms of the contract, the respondent had to construct a Hydro Power Project known as “Khara Power Project”, near Dehradun. A contract was executed between the Irrigation Department of Uttar Pradesh and the Contractor on 22.03.1985. It was primarily a construction of a channel for carrying water to the turbines, for generation of electricity. After completion of the project, a demand of money was raised by the contractor on various counts, such as : loss incurred by the contractor due to damage of equipment; delay on the part of the Department; increase in the prices of the raw material, etc. 12. In this regard, there are three important clauses of the Contract, to which we shall now refer. These are clauses 1.45, 1.46 and 1.47, as under:- “1.45: If the contractor considers any record or ruling of the Engineer-in-charge or of his representatives in respect of any of the Provisions of this contract to be unfair or considers any work demanded of him by the Engineer in-charge to be out side the requirements of the contract, he shall immediately upon such work being demanded, ask in writing for written instructions or decisions, on receipt where of he shall proceed without delay to confirm to the record of ruling or to perform the work demanded, and within 15 days after date of receipt of the written instructions or decisions he may file a written protest to the Engineer-in-charge stating clearly and in detail the basis of his objection. Except for such protests or objection as are made on record in the manner herein specified and within the time limit stated, ruling, instructions or decisions of the Engineer-in-charge shall be conclusive and binding on the contractor. Except for such protests or objection as are made on record in the manner herein specified and within the time limit stated, ruling, instructions or decisions of the Engineer-in-charge shall be conclusive and binding on the contractor. Instructions and/or decisions of the Engineer-in-charge contained in letters transmitting drawings to the contractor shall be considered as written instructions or decision, subject to protest or objections as herein provided. 1.46: If the contractor is dissatisfied with final decision of the Engineer-in-charge on the protest or objection made by the contractor in accordance with the procedure prescribed in clause 1.45, the contractor may within twenty eight (28) days after receiving notice of such decision give notice in written to the Engineer-in-charge requiring that the matter be submitted to arbitration and furnishing detailed particulars of the dispute or difference 2 specifying clearly the profit at issue. If the contractor fails to give such notice within the period of 28 days as stipulated above the decision of the Engineer-in-charge shall be conclusive and binding on contractor. 1.47: Every dispute difference or question which may at any time arising between the parties hereto or and person claiming under then, touching or arising out or in respect of this deed or the subject matter thereof shall be referred to the arbitration of Chief Engineer or any person nominated by him. There will be no objection to any such appointment that the arbitrator so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servant he had expressed views on all or any of the matter in dispute or difference. In the event of the arbitrator to whom the matter is originally referred, being transferred or vacating his office or being unable to act for any reason Chief Engineer shall either enter upon the reference himself or appoint another person to act as arbitrator. Such person shall be entitled to proceed with the reference from the state it was left by the predecessor. It will also be a term of this contract that no person other than a person appointed as aforesaid should act as an arbitrator and if for any reason that is not possible the matter is not to be referred to arbitration at all. It will also be a term of this contract that no person other than a person appointed as aforesaid should act as an arbitrator and if for any reason that is not possible the matter is not to be referred to arbitration at all. In all cases where the amount of the claim in dispute is Rs.50,000 (Rupees fifty thousand) and above the arbitrator shall give reasons for the award.” 13. Admittedly the Chief Engineer of Irrigation Department vide his order dated 19.02.1992 appointed Sri Suresh Chandra Gupta as an Arbitrator, pursuant to the request of the contractor. The claims and the objections of the claim were submitted before the learned Arbitrator. These claims were under 17 heads from ‘A’ to ‘Q’. After hearing the claims of the contractor and the objections of the Department, each claim was adjudicated separately by the Arbitrator and an amount of Rs.5,08,232/- (Rupees Five Lakhs Eight Thousand Two Hundred Thirty Two only) was awarded as against the total claim of Rs.25,72,944/- (Rupees Twenty Five Lakhs Seventy Two Thousand Nine Hundred Forty Four Only). 14. Towards the interest, the Arbitrator has awarded simple interest upto the date of award at the rate of 18% as follows:- “On all claims (except “N”) amounting to Rs.3,51,131.00 from 30.04.91 upto 29.08.1994 (Date of Award) On Claim “N” (Refund of security and earnest money) amounting to Rs.2,50,000.00 from 30.10.1991 upto 29.08.1994. Further an interest of 6% (Six percent) per annum on Rs.5,08,232.00 from the date of Award till payment or decree which ever is earlier.” 15. There are two basic objections which have been raised by the appellant before the court below as well as before us. First is that claims of the contractor (respondent before us) were time barred, and therefore were not liable to be adjudicated by the Arbitrator, and by doing so he has mis-conducted himself. Secondly, no reasons have been assigned by the arbitrator, while giving his award. 16. A bare reading of Clause 1.45 and 1.46, which have been referred above, shows that in case a demand has to be raised by the contractor he shall ask from the Engineer in writing for instructions or a decision and thereafter within 15 days of his receiving such instructions he shall file a protest before the Engineer In-charge “stating clearly and in detail the basis of his objections”. The decision of the In-charge shall be final and conclusive, but if the contractor is dissatisfied with the decision of the Engineer In-charge, he can within 28 days from the receiving of the notice of such decision give notice in writing to the Engineer In-charge that the matter be submitted for arbitration. This is in nutshell what the two clauses of the contract i.e. clauses 1.45 and 1.46 state. According to the learned counsel for the appellant, this process has not been followed. 17. The fact remains that we do not have before us any written order of the Engineer In-Charge in this regard nor do we have any protest of the contractor. What we do have, however, is the order of the Chief Engineer of the Irrigation Department dated 19.02.1992, whereby he appointed Sri Suresh Chandra Gupta as an Arbitrator. In view of the above order the formalities of lodging a protest and thereby giving a decision on it, will have no meaning as of now, as it is an admitted fact that it was the Chief Engineer himself who had appointed the Arbitrator in the matter. Therefore, a presumption would be drawn that the Chief Engineer had come to a conclusion, that it is an arbitral dispute, as only then he would have referred the matter for arbitration. 18. Moreover, the plea that the claims are time barred is misconceived, because 28 days’ period will start from the date when the claim of the contractor was rejected by the Engineer In-charge. Admittedly, there is no such formal order by which the claim of the contractor was rejected. Therefore, it cannot be said that the objections were not made by the contractor within 28 days. Further, there is an order of the Chief Engineer In-charge himself admitting that the objections were made on 20.11.1991 and 21.12.1991 on certain heads, and therefore, the Arbitrator was now appointed. The Arbitrator was not appointed by any order of the court, the Arbitrator was appointed by the Engineer In-charge himself on an application moved by the contractor dated 20.11.1991 for appointment of an Arbitrator. Therefore, it will be presumed that the claims of the contractor and appointment of the Arbitrator was well within limitation and not time barred, otherwise the appellant in the first place, would not have appointed the Arbitrator. 19. Therefore, it will be presumed that the claims of the contractor and appointment of the Arbitrator was well within limitation and not time barred, otherwise the appellant in the first place, would not have appointed the Arbitrator. 19. The order dated 19.02.1992 refers to the contract and then the letter of the contractor dated 20.11.1991, where he has raised certain objections from ‘A’ to ‘Q’ i.e., 17 objections which he has reiterated in his letter dated 21.12.1991 that an Arbitrator is being appointed who is Mr. Suresh Chandra Gupta. The number of objections which has been raised by the State of U.P. has also been stated in order dated 10.05.1996 which has different heads from ‘A’ to ‘Q’, on which certain amount of money was demanded by the contractor. 20. The second ground raised by the appellant is regarding Clause 1.47 which says that:- “In all cases where the amount of the claim in dispute is Rs.50,000 (Rupees fifty thousand) and above the arbitrator shall give reasons for the award.” 21. The learned counsel for the appellant would argue that since the claim was more than 50,000/- (Rupees Fifty Thousand Only), the reasons ought to have been assigned by the Arbitrator in the award. The law, as it stood under the old Arbitration Act, was that it was not necessary for the Arbitrator to assign reasons while giving his award. We do, however, feel that once there was a stipulated condition in the contract, which said that the claim for more than Rs.50,000/- (Rupees Fifty Thousand Only), reasons shall be assigned, then reasons ought to have been given. 22. Now let us see the reasons which have been assigned by the Arbitrator while giving his award. We have perused the award dated 29.08.1994. The learned Arbitrator has applied its mind to each of the claim raised by the contractor and the objections therein. The award of the Arbitrator 29.08.1994 has discussed the merits and demerits of each claim (17 in total) of the contractor (M/s Phool Chandra respondent before this Court) and only then has he come to the conclusion as to how much award is liable to be given, if at all. These are not elaborate reasons and that is again not the requirement. All what has to be seen here is whether there was an application of mind by the Arbitrator on the claims raised. These are not elaborate reasons and that is again not the requirement. All what has to be seen here is whether there was an application of mind by the Arbitrator on the claims raised. We find that this criteria has been met. In order to get a feel as to how the award was made under each of the heads, we may refer here to Claim ‘A’ which was for “Payment due as claim on account of loss suffered by us due to breach of reference-cum-water drain at many places due to transportation of bulldozer and consequent loss thereof.” The adjudication of the Arbitrator on this was as follows:- “The claimants had constructed reference-cum-water drain as per requirements for execution of works. The claimants initially informed the defendants about its damage by departmental bulldozor and requested for inspection vide his letter dated 21.10.86. The defendants have argued that no damage to the reference-cum-water drain has occurred by the departmental machines and the claimants were satisfied with the verbal decision of the Engineer-in-Charge in this regard. After considering the facts of the case, the damage to reference-cum-water drain has occurred due to movement of the departmental equipment. However, the loss claimed is excessive. As per defendants estimate compensation @ Rs.58.00 per m is considered reasonable. This works out to Rs.3,480.00 only which is awarded in favour of claimants.” 23. Similarly, Claim ‘B’ which was for “payment of due as claim on account of non-allotment of quarry by Forest Department and consequent non-availability of construction material like Bairi & sand. The adjudication of the arbitrator was as follows:- “This claim is in respect of non-availability of quarry by the Forest Deptt. due to which the claimants could not obtain construction materials and therefore his labour and machinery remained idle for 20 months and one week at the start of the work. Due to excessive delay in completion of work, the claimant has also preferred claim (Claim L). Since this claim (Claim-B) is also on account of initial delays, it is being clubbed with Claim-L and considered along with it.” [ 24. The reasons which have to be assigned by an Arbitrator, need not be elaborate. All that has to be seen by the Court is whether the arbitration was alive to the dispute and has applied his mind before arriving at his decision. The reasons which have to be assigned by an Arbitrator, need not be elaborate. All that has to be seen by the Court is whether the arbitration was alive to the dispute and has applied his mind before arriving at his decision. After perusal of the order of the Arbitrator, we have absolutely no doubt in our mind that reasons have been assigned by the Arbitrator, under each head. 25. It is also beyond the jurisdiction of this Court under Section 39 of the old Arbitration Act, 1940 to examine whether the Arbitrator could have taken a different view. What has to be seen by this Court is that whether the Arbitrator has applied its mind to the dispute before him while adjudicating the dispute. We therefore are not inclined to accept the argument of the learned counsel for the appellant in this regard. It has not been shown to us that the reasons assigned by the Arbitrator are erroneous or the view taken by the Arbitrator is not sustainable in law. Therefore it will not be proper for us to interfere with the award (Food Corporation of India v. Joginderpal Mohinderpal and another, AIR 1989 SC 1263 ). The Hon’ble Apex Court in the case of Food Corporation of India (supra) had this to say:- “8. In the instant case, the arbitrator has chosen to make a speaking award, that is to say, he has given reasons for his conclu- sion. Whether he is obliged to give such reasons or not is another matter but since the arbitrator had chosen to give the reasons, unless it is demonstrated to this Court that such reasons are erroneous as such as propositions of law or a view which the arbitrator has taken is a view which it could not possibly be sustained on any view of the matter, then the challenge to the award of the arbitrator cannot be sustained. As has been emphasised in Sudarsan Trading v. Government of Kerala, (1989) 1 JT 339 : ( AIR 1989 SC 890 ) that an award could be set aside if the arbitrator has misconducted himself or the proceedings or has proceeded beyond jurisdiction. It could also be set aside where there are errors apparent on the face of the award. But these are separate and distinct grounds. It could also be set aside where there are errors apparent on the face of the award. But these are separate and distinct grounds. In case of errors apparent on the face of the award, it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award, namely, in the award itself or any document incorporated in the award. See the observations of the Judicial Committee in Champsey Bhara & Co. V. Jivraj Balloo Spinning & Weaving Co. Ltd., (1923) 50 Ind App 324: ( AIR 1923 PC 66 )” 26. In the same case i.e. Food Corporation of India (supra), it was stated as under:- “However, the proceedings of arbitration must adhere to the principles of natural justice and must be in consonance with such practice and procedure which will lead to a proper resolution of the dispute and create confidence of the people for whose benefit these processes are resorted to. It is, therefore, the function of courts of law to oversee that the arbitrators act within the norms of justice. Once they do so and the award is clear, just and fair, the courts should, as far as possible, give effect to the award of the parties and make the parties compel to adhere to and obey the decision of their chosen adjudicator. It is in this perspective that one should view the scope and limit of correction by the court of an award made by the arbitrator. We should make the law of arbitration simple, less technical and more responsible to the actual realities of the situations but must be responsive to the canons of justice and fair play and make the arbitrator adhere to such process and norms which will create confidence, not only by doing justice between the parties, but by creating sense that justice appears to have been done.” 27. There is third aspect, however, which needs to be adjudicated. It is regarding the interest awarded by the learned arbitrator. The learned Arbitrator has awarded pendente lite interest of 18% on all claims (except “N”) amounting to Rs.3,51,131.00/- from 30.04.1991 upto 29.08.1994 (i.e. the date of the award) and interest of 6% per annum on Rs.5,08,232.00/- from the date of award till payment or decree, whichever is earlier. 28. It is regarding the interest awarded by the learned arbitrator. The learned Arbitrator has awarded pendente lite interest of 18% on all claims (except “N”) amounting to Rs.3,51,131.00/- from 30.04.1991 upto 29.08.1994 (i.e. the date of the award) and interest of 6% per annum on Rs.5,08,232.00/- from the date of award till payment or decree, whichever is earlier. 28. We are of the opinion that the learned Arbitrator should not have awarded, interest pendente lite. Section 29 of the Arbitration Act, 1940 reads as under:- “29. Interest on awards.-where and in so far as an award is for the payment of money the Court may in the decree order interest, from the date of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree.” 29. There are three stages in an arbitration proceeding. The first stage is the period between the date of dispute and the date when the matter was finally referred for arbitration. The second stage is the period taken by the Arbitrator in giving its award and the third stage is the stage during which the award becomes Rule of Court. From the above provision, it is clear that it is only the court which can award the interest and secondly that interest has to be awarded only from the date of the decree, i.e. at the conclusion of the third stage “at such rate as the court deems reasonable”. 30. In a three-Judge Bench decision of the Hon’ble Apex Court in the case of Executive Engineer, Irrigation, Galimala and other Vs. Abnaduta Jena, reported in AIR 1988 SC 1520 , the Hon’ble Apex Court after considering the aforesaid provision in the Arbitration Act and the Interest Act as well as Section 34 of the Code of Civil Procedure came to the conclusion that interest cannot be paid for the period prior to the commencement of the arbitration proceeding nor pendente lite the award proceeding. Interest can only be awarded by the court. It said as under: “In the cases to which the 1978 Interest Act applies the award of interest prior to the proceedings is not open to question. Interest can only be awarded by the court. It said as under: “In the cases to which the 1978 Interest Act applies the award of interest prior to the proceedings is not open to question. In regard to pendente lite interest, that is, interest from the date of reference to the date of the award, the claimants would not be entitled to the same for the simple reason that the arbitrator is not a Court within the meaning of S. 34 of the C.P.C., nor were the references to arbitration made in the course of suits. In the cases which arose before the commencement of the Interest Act, 1978, the claimants are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration. They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that the Interest Act, 1939 does not apply to their cases and there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants were entitled to recover interest. They are not entitled to claim pendente lite interest as the arbitrator is not a Court nor were the references to arbitration made in suits.” 31. This judgment was later followed by the Hon’ble Apex Court in the case of Raipur Development Authority Vs. Chokhamal Contractors reported in AIR 1990 SC 1426 . All the same, this matter came up before the five-Judges Constitution Bench of Hon’ble Apex Court in the case of Irrigation Department., State of Orissa Vs. G.C. Roy, reported in (1992) 1 SCC 508 , where it was held that on certain contingencies interest can also be awarded by the Arbitrator pendente lite the proceedings. It was stated as under: “43. The question still remains whether Arbitrator has the power to award interest pendente lite, and if so, on what principle. We must reiterate that we are dealing with the situation where the agreement does not provide for grant of such interest nor does it prohibit such grant. In other words, we are dealing with a case where the agreement is silent as to award of interest. We must reiterate that we are dealing with the situation where the agreement does not provide for grant of such interest nor does it prohibit such grant. In other words, we are dealing with a case where the agreement is silent as to award of interest. On a conspectus of aforementioned decisions, the following principles emerge: (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 of the 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. Thawardas Pherumal V. Union of India has not been followed in the later decisions of this Court. (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. Thawardas Pherumal V. Union of India 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 Deptt. Of Irrigation V. Abhaduta Jena 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.” 44. Having regard to the above consideration, we think that following is the correct principle which should be followed in this behalf:- 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.” 32. This was followed later by the Hon’ble Apex Court in the case of Union of India Vs. Ambica Construction, reported in (2016) 6 SCC 36 . 33. 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.” 32. This was followed later by the Hon’ble Apex Court in the case of Union of India Vs. Ambica Construction, reported in (2016) 6 SCC 36 . 33. In other words, an arbitrator can award interest even pendente lite, even where the agreement does not provide for the interest, or does not prohibit the grant of interest. 34. In the present case, however, there is a specific provision in Clause 1.9 of the Special Conditions of Contract. Clause 1.9 of the Special Conditions of Contract reads as under:- “1.9: No claim for delayed payment due to dispute etc. No claim for interest or damages will be entertained by Government with respect to any money or balances which may be lying with Government owing to any dispute, difference or his understanding between the Engineer-in-charge in making periodical or final payment or in any other respect whatsoever:” 35. In other words, there is a specific condition which bars any claim for interest. 36. In view of the above, we are of the opinion that as far as award of interest is concerned, the same needs to be modified. The learned arbitrator has awarded an interest at the rate of 18 % till the date of the award, which we believe was not in his jurisdiction or powers, particularly in view of the specific clauses in the agreement, which have already been referred above. Therefore, no interest is liable to be paid to the respondent, till that period. The learned arbitrator has further given an interest at the rate of 6% from the date of award till the payment is made. We also modify that part, since interest can only be given from the date of the decree. The award and the order stands modified to the extent as now the respondent shall only be given an interest at the rate of 6% from the date of the decree i.e. from 10.05.1996 till its payment. 37. The appeal is partly allowed, in terms of our above findings and reasoning. The award and the order stands modified to the extent as now the respondent shall only be given an interest at the rate of 6% from the date of the decree i.e. from 10.05.1996 till its payment. 37. The appeal is partly allowed, in terms of our above findings and reasoning. The respondent would be entitled to an interest at the rate of 6% on the amount awarded by the arbitrator i.e. 5,08,232/- (Rupees Five Lakh Eight Thousand Two Hundred Thirty Two Only), from the date of decree i.e., from.