union of india & ors. v/s. m/s. shri ganesh government contractors & rural works & anr....

7/18/2019 Union of India & Ors. v/s. M/s. Shri Ganesh Government Contractors & Rural Works & Anr. SBCW 2016/2014

http://slidepdf.com/reader/full/union-of-india-ors-vs-ms-shri-ganesh-government-contractors-rural 1/22

1

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN

AT JODHPUR

(1) S.B. Civil Writ Petition No.!1"#!1$

Union o% In&i' Or.

*#.

+#. S,ri G'ne, Govern-ent Contr'tor R/r'l Wor0 Anr.

() S.B. Civil Writ Petition No.$#!1$

Union o% In&i' Or.

*#.+#. S,ri G'ne, Govern-ent Contr'tor R/r'l Wor0 Anr.

Date of Order ::: 10.11.2014

PRESENT

HON2B3E +R. JUSTICE P.4. 3OHRA

Mr. Jagdish Vyas, for the petitioners.

Mr. Shyam Ladrecha, for the respondents.

Re5ort'6le

oth these !rit petitions are fo"nded on identica# facts and the

$"estion of #a! in%o#%ed therein is common, therefore, these petitions are

disposed of &y this common order.

'acts in &re%ity, as pro(ected in S.. )i%i# *rit +etition

o.201-2014, are narrated in chrono#ogica# order as "nder:/

t the thresho#d, a contract for !or of hand#ing of goodsparce#s

transshipment !as a!arded to the first respondent for a period of three

years commencing from 14th Octo&er, 134 and p"rs"ant thereto an

agreement !as signed &et!een the petitioners and the first respondent on

1th Octo&er, 134 containing ar&itration c#a"se. S"&se$"ent#y, another

contract of same nat"re !as a!arded to the first respondent for a period of



2

three years commencing from 1-th May, 10 and an agreement &et!een

the parties !as e5ec"ted for the same on 16th May, 10 ha%ing ar&itration

c#a"se. On comp#etion of &oth the contracts, a disp"te cropped "p &et!een

the ri%a# parties regarding payments, and therefore, first respondent for

redressa# of his grie%ances in%oed ar&itration c#a"se and initiated the

proceedings for appointment of ar&itrator for &oth the contracts. y

("dicia# inter%ention, s"&(ect/matter of disp"te in &oth the contracts !ere

referred to an ar&itrator and Shri La# Singh 7((a!a#, retired Di%isiona#

Manager, orth/*estern 8ai#!ay, Jodhp"r !as appointed as so#e ar&itrator.

9he ar&itrator passed separate a!ards for &oth the contracts of e%en date i.e.

1st March, 200.

eing aggrie%ed &y the ar&itra# a!ards, petitioners #aid separate

petitions "nder Section 4 of the r&itration and )onci#iation ct, 1-

;for short, hereinafter referred to as <the ct of 1-<= &efore the #earned

District J"dge, ianer raising certain o&(ections against the a!ards. #ong

!ith the petitions "nder Section 4 of the ct of 1-, petitioners a#so fi#ed

separate app#ications "nder Section 6 of the Limitation ct for condonation

of de#ay. 9he #earned District J"dge, ianer, !hi#e re#ying on a decision

of >on<&#e pe5 )o"rt, re(ected &oth the petitions "nder Section 4 of the

ct of 1- &y ho#ding that in these proceedings, pro%isions of Section 6 of

the Limitation ct are not app#ica&#e. 9h"s, &oth the petitions !ere thro!n

a!ay so#e#y on the gro"nd of #imitation.

'ee#ing dismayed !ith the order of the #earned District J"dge,

ianer, petitioners preferred t!o separate appea#s &efore this )o"rt "nder

Section of the ct of 1- and this )o"rt !as p#eased to decide &oth



these appea#s &y a common order dated 1-th 'e&r"ary, 2006. 9he )o"rt

he#d that petitions "nder Section 4 of the ct of 1- are not time &arred,

and therefore, !hi#e a##o!ing the appea#s, matter !as remanded &ac to the

#earned District J"dge for deciding o&(ections of the petitioners afresh on

merits. 9he operati%e portion of the order reads as "nder:/

9he net res"#t is that the imp"gned order cannot

&e s"stained. 9he appea# is therefor a##o!ed, the

imp"gned order is set aside, and the matter is sent &ac

to the #earned tria# )o"rt, !ith a direction to decide theo&(ections on merits, in accordance !ith the #a!, and

most e5peditio"s#y.

9he parties are directed to appear &efore the

#earned tria# )o"rt on 11th March 2004, as prayed.

fter remand, the petitions "nder Section 4 of the ct of 1- fi#ed

on &eha#f of the petitioners !ere considered de/no%o on merits &y the

#earned dditiona# District J"dge o.2, ianer ;for short, <#earned tria#

)o"rt<=. 9he #earned tria# )o"rt after e5amining the o&(ections on merits

fo"nd that there is no s"&stance in the o&(ections and conse$"ent#y &y order

dated 14th May, 200 dismissed the petitions of the petitioners "nder

Section 4 of the ct of 1-. ?t is apparent from the p#eadings that after

re(ection of the petitions s"&mitted &y the petitioners "nder Section 4 of

the ct of 1-, no endea%o"r !as made at their &ehest to cha##enge the

order of the #earned tria# )o"rt, and therefore, &y eff#"5 of time order

attained fina#ity.

ccording to %ersion of the petitioners, after e5piry of period of

#imitation from the date of order dated 14th May, 200, !ithin reasona&#e

period, the re$"isite amo"nt !as paid to the contractor !ith interest in



4

terms of ar&itra# a!ards. 9he re$"isite amo"nt !as paid in the month of

Decem&er, 200.

9he respondent/contractor fee#ing dis/satisfied !ith the action of the

petitioners in maing comp#iance of the ar&itra# a!ard initiated e5ec"tion

proceedings in the year 2010 for c#aiming interest on the tota# amo"nt

a!arded &y the ar&itrator @12A from the date of the a!ard. 9he prayer

made in the e5ec"tion petition on &eha#f of the respondent/contractor !as

resisted &y the petitioners and a rep#y !as s"&mitted, !herein it is a%erred

that the re$"isite amo"nt in terms of ar&itra# a!ard !ith interest has &een

paid to the petitioner and as s"ch it is not entit#ed for interest @12A on the

aforesaid amo"nt from the date of a!ard. 9he #earned District J"dge,

ianer ;for short, <#earned e5ec"ting )o"rt<= after hearing the ri%a# parties

passed the imp"gned order dated th o%em&er, 201, !here&y the

petitioners are directed to pay interest to the respondent/contractor @12A

from the date of a!ard on the entire c#aim for !hich respondent !as

dec#ared entit#ed &y the ar&itrator. 9he order of #earned e5ec"ting )o"rt is

"nder cha##enge in the !rit petition.

Learned co"nse# for the petitioners, Mr. Jagdish Vyas, has

%ehement#y arg"ed that order imp"gned is dehors the ar&itra# a!ard

inasm"ch as for certain c#aims, the ar&itrator has not a!arded any interest to

the respondent, yet the #earned e5ec"ting )o"rt has a##o!ed interest @12A,

!hich is an error apparent on the face of record, and therefore, imp"gned

order cannot &e s"stained. Mr. Vyas, #earned co"nse# for the petitioners,

!o"#d contend that an ar&itra# a!ard on attaining fina#ity is e5ec"ta&#e as a

decree of a ci%i# co"rt, and therefore, the po!ers of the e5ec"ting )o"rt, in



6

this regard, are ain to a ci%i# )o"rt to grant re#ief to the decree/ho#der in

terms of the decree and not &eyond the same. B#a&orating his s"&missions,

in this &eha#f, #earned co"nse# has s"&mitted that the #earned e5ec"ting

)o"rt has e5ceeded its ("risdiction &y a##o!ing interest @12A to the

respondent, !hich !as &eyond the scope of the a!ard itse#f and as s"ch the

a!ard imp"gned merits ann"#ment in e5ercise of certiorari ("risdiction of

this )o"rt. Learned co"nse# for the petitioners has s"&mitted that the

o&(ections #aid &y the petitioners "nder Section 4 of the ct of 1- !ere

re(ected on 14th May, 200 and thereafter !ithin a reasona&#e period

che$"es of the re$"isite amo"nt !ere deposited in the )o"rt on 26th

Septem&er, 200, and therefore, interest c#aimed &y the respondent/

contractor !as not at a## admissi&#e in terms of Section - of the ct of

1-, !hich is a %ery %ita# iss"e, !hich !as not considered &y the #earned

)o"rt &e#o!, !hi#e passing the imp"gned order. Last#y, #earned co"nse#

has "rged that in terms of Section 1;=;a= of the ct of 1- interest !hich

!as disa##o!ed on certain c#aims to the respondent/contractor &y the

ar&itra# 9ri&"na# !as not at a## admissi&#e and yet the #earned )o"rt &e#o!

has a##o!ed the same contrary to the mandate of #a!, !hich is serio"s

("risdictiona# error !arranting interference &y this )o"rt in e5ercise of

s"per%isory ("risdiction of this )o"rt enshrined "nder rtic#e 22 of the

)onstit"tion.

Learned co"nse# for the petitioners in s"pport of his contentions has

p#aced re#iance on a decision of >on<&#e S"preme )o"rt in case of St'te o%

H'r7'n' Or. *#. +#. S.3. Aror' Co-5'n7 8AIR !1! SC 1911:;

!hi#e #aying stress on paras 13.2 and 13.4 of the %erdict. 9he )o"rt in para

13 has he#d as "nder:/



-

13. s there is some conf"sion as to !hat section 1;=

a"thoriCes and !hat it does not a"thoriCe, !e !i##

attempt to set o"t the #ega# position regarding a!ard of

interest &y the ar&itra# tri&"na#s, as emerging fromsection 1;= of the ct.

13.1. 9he pro%ision for interest in the ct is contained

in section 1 dea#ing !ith the form and contents of

ar&itra# a!ard. ?t emp#oys t!o significant e5pressions

!here the ar&itra# a!ard is for payment of money

and the ar&itra# tri&"na# may inc#"de in the s"m for

!hich the a!ard is made, interest..... on the !ho#e or

any part of the money. 9he #egis#at"re has th"s made

it c#ear that a!ard of interest "nder s"&/section ;= of

section 1 ;and a!ard of costs "nder s"&/section ;3= of Section 1 of the ct= are anci##ary matters to &e

pro%ided for &y the a!ard, !hen the ar&itra# tri&"na#

decides the s"&stanti%e disp"tes &et!een the parties.

9he !ords Es"m for !hich the a!ard is made< and Ea

s"m directed to &e paid &y an ar&itra# a!ard<

conte5t"a##y refer to a!ard on the s"&stanti%e c#aims

and not anci##ary or conse$"entia# directions re#ating to

interest and costs.

13.2. 9he a"thority of the ar&itra# tri&"na#s to a!ard

interest "nder section 1;=;a= is s"&(ect to the contract

&et!een the parties and the contract !i## pre%ai# o%er

the pro%isions of section 1;=;a= of the ct. *here the

contract &et!een the parties contains a pro%ision

re#ating to, or reg"#ating or prohi&iting interest, the

entit#ement of a party to the contract to interest for the

period &et!een the date on !hich the ca"se of action

arose and the date on !hich the a!ard is made, !i## &e

go%erned &y the pro%isions of the contract, and thear&itra# tri&"na# !i## ha%e to grant or ref"se interest,

strict#y in accordance !ith the contract. 9he ar&itra#

tri&"na#s cannot ignore the contract &et!een the

parties, !hi#e dea#ing !ith or a!arding pre/a!ard

interest. *here the contract does not prohi&it a!ard of

interest, and !here the ar&itra# a!ard is for payment of

money, the ar&itra# tri&"na# can a!ard interest in

accordance !ith Section 1;= ;a= of the ct, s"&(ect to

any term regarding interest in the contract.

13.. ?f the contract pro%ides for compo"nding of

interest, or pro%ides for payment of interest "pon

interest, or pro%ides for interest paya&#e on the

principa# "pto any specified stages &eing treated as

part of principa# for the p"rpose of charging of interest

d"ring any s"&se$"ent period, the ar&itra# tri&"na# !i##

ha%e to gi%e effect to it. "t !hen the a!ard is

cha##enged "nder Section 4 of the ct, if the co"rt



finds that the interest a!arded is in conf#ict !ith, or

%io#ating the p"&#ic po#icy of ?ndia, it may set aside

that part of the a!ard.

13.4. *here an ar&itra# tri&"na# a!ards interest "nder

section 1;=;a= of the ct, it is gi%en discretion in

three areas to do ("stice &et!een the parties. 'irst is in

regard to rate of interest. 9he 9ri&"na# can a!ard

interest at s"ch rate as it deems reasona&#e. 9he second

is !ith reference to the amo"nt on !hich the interest is

to &e a!arded. ?nterest may &e a!arded on the !ho#e

or any part of the amo"nt a!arded. 9he third is !ith

reference to the period for !hich the interest is to &ea!arded. ?nterest may &e a!arded for the !ho#e or any

part of the period &et!een the date on !hich ca"se of

action arose and the date on !hich the a!ard is made.

13.6. 9he ct does a!ay !ith the distinction and

differentiation among the fo"r interest &earing periods,

that is, pre/reference period, pendente #ite period, post/

a!ard period and post/decree period. 9ho"gh a

di%iding #ine has &een maintained &et!een pre/a!ardand post/a!ard periods, the interest &earing period can

no! &e a sing#e contin"o"s period the o"ter #imits

&eing the date on !hich the ca"se of action arose and

the date of payment, s"&(ect ho!e%er to the discretion

of the ar&itra# tri&"na# to restrict the interest to s"ch

period as it deems fit.

13.-. )#a"se ;&= of Section 1;= is intended to ens"re

prompt payment &y the a!ard/de&tor once the a!ard ismade. 9he said c#a"se pro%ides that the s"m directed

to &e paid &y an ar&itra# a!ard sha## carry interest at

the rate of 13A per ann"m from the date of a!ard to

the date of payment if the a!ard does not pro%ide

other!ise in regard to the interest from the date of the

a!ard. 9his maes it c#ear that if the a!ard grants

interest at a specified rate "p to the date of payment, or

specifies the rate of interest paya&#e from the date of

a!ard ti## date of payment, or if the a!ard specifica##y

ref"sed interest, c#a"se ;&= of Section 1 !i## not comeinto p#ay. "t if the a!ard is si#ent in regard to the

interest from the date of a!ard, or does not specify the

rate of interest from the date of a!ard, then the party in

!hose fa%o"r an a!ard for money has &een made, !i##

&e entit#ed to interest at 13A per ann"m from the date

of a!ard. >e may c#aim the said amo"nt in e5ec"tion

e%en tho"gh there is no reference to any post a!ard

interest in the a!ard. B%en if the pre/a!ard interest is

at m"ch #o!er rate, if the a!ard is si#ent in regard to



3

post/ a!ard interest, the c#aimant !i## &e entit#ed to

post/a!ard interest at the higher rate of 13A per

ann"m. 9he higher rate of interest is pro%ided in c#a"se

;&= !ith the de#i&erate intent of disco"raging a!ard/de&tors from adopting di#atory tactics and to pers"ade

them to comp#y !ith the a!ard.

On the other hand, #earned co"nse# for the respondent/contractor has

"rged that the imp"gned order passed &y the #earned e5ec"ting )o"rt is in

consonance and conformity !ith the pro%isions of Section 1;=;&= of the

ct of 1-, and therefore, no interference !ith the same is ca##ed for in

e5ercise of certiorari ("risdiction of this )o"rt. Learned co"nse#, Mr.

Ladrecha, has s"&mitted that e%en if for certain c#aims, the ar&itra# 9ri&"na#

has not a!arded interest, the respondent is entit#ed for interest post ar&itra#

a!ard &y %irt"e of c#a"se ;&= of Section Section 1;= of the ct of 1-

and the #earned e5ec"ting )o"rt has passed the imp"gned order &y re#ying

on the said c#a"se, !hich is a ("st decision !arranting no interference in

e5ercise of s"per%isory ("risdiction of this )o"rt. B#a&orating his

s"&missions, in this &eha#f, Mr. Ladrecha !o"#d contend that interest

en%isaged "nder Section 1;=;a= of the ct of 1- refers to interest on the

amo"nt a!arded anterior to the ar&itra# a!ard, !hereas c#a"se ;&= of

Section 1;= dea#s !ith interest on the amo"nt a!arded &y the ar&itra#

9ri&"na# posterior to the a!ard and for !hich grant of interest on the entire

a!ard @13A per ann"m is mandated and &y the imp"gned order the

#earned e5ec"ting )o"rt has a!arded interest @12A on#y, !hich cannot &e

fa"#ted so as to mae s"&(ect matter of ("dicia# scr"tiny.

?n s"pport of his contentions, Mr. Ladrecha has a#so p#aced re#iance



on paras 1-, 1 as !e## as 13.4 and 13.- of the %erdict of >on<&#e S"preme

)o"rt in State of >aryana F Ors. ;s"pra=. +aras 1- and 1 read as "nder:/

1-. Some r&itra# 9ri&"na#s ha%e misconstr"ed c#a"se

;&= of section 1;= of the ct and ass"med that the

said pro%ision re$"ires the rate of post/a!ard interest

in a## ar&itra# a!ards sho"#d &e 13A per ann"m, and

that they do not ha%e any discretion in regard to post/

a!ard interest. Some ha%e misconstr"ed it f"rther to

infer the rate of interest mentioned therein is an

indication that in%aria&#y the rate of interest in

ar&itrations, either pre/a!ard or post/a!ard, sho"#d &e

13A per ann"m. oth these ass"mptions are &ase#essand erroneo"s. ?f that !as the #egis#ati%e intention,

there !o"#d ha%e &een no need for %esting discretion in

r&itra# 9ri&"na#s, in the matter of interest, "nder

section 1;=;a=. 9he princip#es re#ating to a!ard of

interest, in genera#, are not different for co"rts and

ar&itra# tri&"na#s, e5cept to the e5tent indicated in

section 1;= of the ct and )+). comparati%e#y

high rate of post/a!ard interest is pro%ided in section

1;=;&= of the ct, not &eca"se 13A is the norma# rate

of interest to &e a!arded in ar&itrations, &"t p"re#y as adeterrent to a!ard/de&tors from a%oiding payment or

"sing de#aying tactics. ?n fact a pro%ision simi#ar to

section 1;=;&= of the ct, if pro%ided in section 4 of

)ode of )i%i# +roced"re, !i## considera&#y red"ce the

tra%ai#s of p#aintiffs in e5ec"ting their decrees in ci%i#

cases. e that as it may.

1. 9he difference &et!een c#a"ses ;a= and ;&= of

section 1;= of the ct may con%enient#y &e noted at

this stage. 9hey are:

;i= )#a"se ;a= re#ates to pre/a!ard period and c#a"se ;&=

re#ates to post/ a!ard period. 9he contract &inds and

pre%ai#s in regard to interest d"ring the pre/a!ard

period. 9he contract has no app#ication in regard to

interest d"ring the post/a!ard period.

;ii= )#a"se ;a= gi%es discretion to the r&itra# 9ri&"na#

in regard to the rate, the period, the $"ant"m ;principa#

!hich is to &e s"&(ected to interest= !hen a!ardinginterest. "t s"ch discretion is a#!ays s"&(ect to the

contract &et!een the parties. )#a"se ;&= a#so gi%es

discretion to the r&itra# 9ri&"na# to a!ard interest for

the post/a!ard period &"t that discretion is not s"&(ect

to any contractG and if that discretion is not e5ercised

&y the ar&itra# 9ri&"na#, then the stat"te steps in and

mandates payment of interest, at the specified rate of

13A per ann"m for the post/ a!ard period.



10

;iii= *hi#e c#a"se ;a= gi%es the parties an option to

contract o"t of interest, no s"ch option is a%ai#a&#e in

regard to the post/a!ard period.

?n a n"tshe##, in regard to pre/a!ard period,

interest has to &e a!arded as specified in the contract

and in the a&sence of contract as per discretion of the

r&itra# 9ri&"na#. On the other hand, in regard to the

post/a!ard period, interest is paya&#e as per the

discretion of the r&itra# 9ri&"na# and in the a&sence

of e5ercise of s"ch discretion, at a mandatory stat"tory

rate of 13A per ann"m.

Mr. Ladrecha has a#so p#aced re#iance on a yet another decision of

>on<&#e pe5 )o"rt in case of In&i'n H/-e Pi5e Co. 3t&. *#. St'te o%

R'<'t,'n; reported in !1! CDR =" (SC). ?n this %erdict, the pe5 )o"rt

has reiterated the princip#es #aid do!n in case of State of >aryana ;s"pra=.

Mr. Ladrecha has contended that after passing of the ar&itra# a!ard, the

protracted ("dicia# proceedings at the &ehest of the petitioners has de#ayed

the payment of re$"isite amo"nt for more than si5 years, therefore,

entit#ement of the respondent for interest in terms of Section 1;= of the

ct of 1- is "n$"estiona&#e and as s"ch the interest a!arded &y the

#earned e5ec"ting )o"rt cannot &e categoriCed as infirm or !itho"t

("risdiction. )o"ntering the arg"ment of the #earned co"nse# for the

petitioners that the #earned e5ec"ting )o"rt has tra%e##ed &eyond the terms

of the a!ard, Mr. Ladrecha !o"#d contend that post ar&itra# a!ard interest

is a right of the respondent contractor, !hich emanates from the mandatory

pro%ision of #a! and same cannot &e constr"ed as &eyond the scope of the

ar&itra# a!ard.

? ha%e heard #earned co"nse# for the parties and per"sed the

imp"gned orders.



12

SCC "$:; !hi#e reiterating the same princip#e, the pe5 )o"rt in para

has he#d as "nder:/

. ?t is o&%io"s that the e5ec"ting co"rt had no

("risdiction to direct the reco%ery of any amo"nt !hich

!as not granted &y the decree "nder e5ec"tion since the

decree !as for a mere dec#aration. 9he order of the

e5ec"ting co"rt &eing !itho"t ("risdiction, it !as the

d"ty of the >igh )o"rt to ha%e corrected that error of

("risdiction. >o!e%er, the >igh )o"rt has fai#ed to do

so.

?n case of R'<'t,'n Fin'ni'l Cor5or'tion *#. +'n In&/tri'l

Cor5or'tion 3t&. 8(!!=) SCC 9:; !hi#e reiterating the princip#e that

e5ec"ting )o"rt cannot go &eyond the decree, the pe5 )o"rt he#d in para

13 as "nder:/

13. *e ha%e considered the ri%a# s"&missions.

9here can &e no disp"te to the proposition that the

e5ec"ting )o"rt cannot go &eyond the decree. 9here

can &e no disp"te that the e5ec"ting )o"rt m"st tae

the decree according to its tenor. #so as has &een set

o"t in Hreater )ochin De%e#opment "thority case

!hen a decree is in terms of an a!arddoc"ment then

the terms of that doc"ment ha%e to &e #ooed at. ?n this

case the decree is in terms of the compromise deed.

9he decree does not pro%ide that the compromise deedor any of its terms ha%e &een %aried. 9o &e

remem&ered, that the decree is passed "nder Order 2

8"#e )i%i# +roced"re )ode. 7nder this pro%ision

norma##y the )o"rt passes the decree in terms of the

compromise. Of co"rse, the )o"rt can mae a change.

>o!e%er, if the )o"rt !as maing a change it !o"#d

ha%e had to record !hy it !as maing the change and

!hat change it !as maing. ?t co"#d not then pro%ide

that the decree !as in terms of the compromise. ?f the

)o"rt !as not passing the decree in terms of thecompromise then this opening portion of the decree

co"#d not ha%e &een there. 9he s"&se$"ent portion is

mere c#assificatory in nat"re as to !hich of the options

!as to &e e5ercised. 9his does not go%ern or detract

from the main terms of the decree !hich is a decree in

terms of the compromise. )#a"ses 2 and of the

compromise deed mae it %ery c#ear that the appe##ants

!ere entit#ed to charge interest on ha#f year#y &asis. *e

see no s"&stance in the s"&mission that the ha#f year#y



1

rests !ere to app#y on#y if the rate of interest !as to

&e decided &y the appe##ants. 9hese !ords c#ear#y

app#ied to &oth the options. ?n the c#assificatory portion

the !ords on ha#f year#y &asis ha%e not &eenmentioned &eca"se the portion is on#y c#arifying ho!

interest !as to &e ca#c"#ated. 9his portion th"s does not

detract from the fact that the decree is in terms of the

compromise deed. Mere#y &eca"se some other minor

changes, !hich appear to &e inad%ertent changes, ha%e

crept in do not a#so detract from the fact that the decree

is in terms of the compromise deed. *e a#so do not

find any "ncertainty in the decree.

?n case of J 4 B'n0 3t&. Or. *#. J'>&i, C. G/5t' 8(!!$)

1! SCC 9":; three J"dges ench of >on<&#e S"preme )o"rt, !hi#e di#ating

on the po!ers of the e5ec"ting )o"rt "nder Section 4 )+), reiterated the

same princip#e that e5ec"ting )o"rt cannot go &eyond the decree and he#d

in para 2 as "nder:/

2. 9he short $"estion in%o#%ed in the case is

!hether the e5ec"ting co"rt co"#d go &eyond the

decree &y directing that the respondent &e promoted to

the post of )hief Manager. ?t is no more res integra

that the e5ec"ting co"rt has no ("risdiction to go

&ehind the decree. ?t is not disp"ted that the decree did

not contain any direction to promote the respondent to

the post of chief Manager. 7nder s"ch circ"mstances,!e are of the %ie! that the e5ec"ting co"rt as !e## as

the >igh )o"rt fe## in error in iss"ing directions in

e5ec"tion case that the respondent &e promoted to the

post of )hief Manager. 9he order "nder cha##enge,

therefore, deser%es to &e set aside. *e order

according#y. 9he appea# is a##o!ed. 9here sha## &e no

order as to costs.

9h"s, the #ega# position remains no more res/integra that e5ec"ting

)o"rt cannot go &eyond the terms of the decree. So far as the present case

is concerned, a!arding interest post ar&itra# a!ard for !hich the ar&itrator

has not a!arded interest on a partic"#ar c#aim, ? am afraid, it is diffic"#t to



14

pres"me that the ar&itrator has disa##o!ed f"t"re interest. 9he recita#s

contained in the ar&itra# a!ards, no!here indicate that ar&itrator has

dec#ined f"t"re interest on the c#aim a##o!ed to the respondent/contractor.

?t is on#y interest pendente #ite !hich is disa##o!ed to the respondent/

contractor in respect of some of the c#aims. 9herefore, the intention of the

ar&itrator !as to disa##o! interest on the c#aim amo"nt from the date of

accr"a# of ca"se of action "p/ti## passing of the a!ard and not for the f"t"re

interest. ?n s"ch a sit"ation the irresisti&#e conc#"sion of this )o"rt is that

p#ea can%assed &y the #earned co"nse# for the petitioners rhetorica##y that

e5ec"ting )o"rt has a!arded f"t"re interest to the respondent/contractor

&eyond the terms of the decree &y transgressing its ("risdiction cannot &e

s"stained.

9here remains no $"arre# that Section - of the ct of 1- c#ear#y

en%isages that after attaining fina#ity an ar&itra# a!ard sha## &e enforced

"nder )+), in the same manner as if it !ere a decree of the )o"rt. ?n the

instant case, &oth the ar&itra# a!ards attained fina#ity on re(ection of the

petitions "nder Section 4 of the ct of 1- #aid &y the petitioners on 14th

May, 200. 9he so#e ar&itrator in &oth the a!ards &if"rcated c#aims of the

respondent/contractor in ten and si5 parts respecti%e#y. *hi#e passing the

a!ard in &oth the cases, the ar&itrator has a!arded interest @3A per ann"m

for certain c#aims and pertaining to some of the c#aims, no interest !as

a##o!ed to the respondent/contractor. ?tem/!ise s"mmary of &oth the

a!ards indicating amo"nt c#aimed, amo"nt a!ardedamo"nt not a!arded

and the interest a!arded in &oth the petitions are reprod"ced as "nder:/



16

S.. )i%i# *rit +etition o.201-2014

?tem

o.

?tem/!ise a!ard )#aim mo"nt

;8s.=

!ard mo"nt

;8s.=

?nterest

1 )#aim on acco"nt of

imposting additiona#fines for discriminati%e

specia# condition.

,06, 01.00 2,00,000.00 o

interesta##o!ed.

2 )#aim on acco"nt of

!rong#y ded"cted and

!rong#y !ithhe#d d"e

payments from the &i##s

against ?tem I)M ;3

*hee#ed coa# co%ered

!agons .H.

,0,34.00 ,36,000.00 3A

interest

a##o!ed.

. )#aim on acco"nt of

!rong interpretation

and !rong app#ication

on .H., IOK 3

!hee#er open coa#

!agons.

1,42,0.00 ?L o

interest

a##o!ed.

4. )#aim on acco"nt of

ser%ices done a&o"t

c#earance of yard and

goodshed at DBB ;9=and DL9

6,00,000.00 ?L o

interest

a##o!ed.

6. )#aim for ref"nd of

cost of La&o"r

4-,40-.00 1600.00 3A

interest

a##o!ed.

-. )#aim for "npaid

reg"#ar i##s.

1,2,416.00 1,1,000.00 3A

interest

a##o!ed.

. 8ef"nd for !rongf"#and "n("stified

dem"rrage charges

reco%ered.

,60,6-.00 2,20,000.00 ointerest

a##o!ed.

3. )#aim for sett#ement of

rates for item o.3 of

the SO+

-,000.00 2-000.00 3A

interest

a##o!ed.



1-

?tem

o.

?tem/!ise a!ard )#aim mo"nt

;8s.=

!ard mo"nt

;8s.=

?nterest

. )#aim for !rongforfeit"re of sec"rity

deposit amo"nt.

26,000.00 ?L ointerest

a##o!ed.

10. )#aim for

compensatory damages

for &reach of contract

"nder different head.

2-,26,000.00 66,000.00 o

interest

a##o!ed.

9O9L 60,6,632.00 10,20,600.00

S.. )i%i# *rit +etition o.22342014

)#aim

o.

+artic"#ars mo"nt

)#aimed

mo"nt

!arded

?nterest

1 9he )#aim on

acco"nt of !rongf"#

reco%ery F

"n("stified!ithho#ding of d"es.

1,6,64/ 1,21,000/ 3A interest

a##o!ed.

2. 9he c#aim on acco"nt

of non/sett#ement of

rates and

rem"neration for

hand#ing of f"## #oad

!agons of ?ron

commodities for the

period 14.10.34 to

1.0.33.

,-0,000/ 63,400/ 3A interest

a##o!ed.

. 9he c#aim on acco"nt

of non/sett#ement of

rates and

rem"neration<s for

the ser%ices for

s!eeping of 8#y.

ard, goods shed

area and disposa# of

ref"se. 'or the period 16.04.13- to

1.0.133.

,62,600/ 1,2,000/ 3A interest

a##o!ed.

4. 9he c#aim on acco"nt

of "n("stified

reco%ery of

dem"rrage charges

for the period Jan.,

13- to March, 133.

1,6-,000/ -0,000/ o interest

a##o!ed.



1

)#aim

o.

+artic"#ars mo"nt

)#aimed

mo"nt

!arded

?nterest

6. 9he c#aim on acco"ntof compensatory

damages for non/

payment of

#egitimate d"es for

more than 12 years

and &reach of

contract.

16,00,000/ 1,00,000/ o interesta##o!ed.

-. 9he c#aim for the

cost of #itigation in

the )o"rts.

26,000/ 10,000/ o interest

a##o!ed.

9ota# 26,4,04/

;9!entyfi%e

#ahs, fo"rty/

se%en

tho"sand,

thirtyfo"r

on#y=

6,41,400/

;'i%e #ahs,

'o"rtyone

tho"sand,

fo"r

h"ndred

on#y=

3A interest on

8s.,1,400/

;9hree Lahs,

se%entyone

tho"sand, fo"r

h"ndred on#y=

8s.1,0,000/

;One #ah

se%enty

tho"sand on#y=

to &e paid

!itho"t

interest.

?n S.. )i%i# *rit +etition o.201-2014, the ar&itrator has not

a##o!ed interest on the amo"nt a!arded to the respondent/contractor for

c#aim os.1, and 10 and o&%io"s#y there !as no $"estion of a!arding

interest on c#aim os., 4 and , !hich !ere re(ected &y the so#e ar&itrator.

Vis/a/%is ar&itra# a!ard in S.. )i%i# *rit +etition o.22342014 ar&itrator

a##o!ed interest @3A on the amo"nt a!arded in re#ation to c#aim os.1 F

2 on#y and for the rest of the c#aims i.e. for c#aim os. to - tho"gh

amo"nt has &een a!arded, &"t no interest has &een a##o!ed to the

respondent/contractor. 'or the c#aims !herein tho"gh certain amo"nt is

a##o!ed &y the ar&itrator and interest is not a##o!ed, it is o&%io"s that the

respondent/contractor is not entit#ed for interest on the amo"nt a!arded

anterior to the ar&itra# a!ard and s"ch a c#aim of the contractor is per se



13

&eyond the scope of the ar&itra# a!ard.

d("dication of c#aim fa%o"ra&#e to the respondent is c#ear

affirmation a&o"t its #egitimacy, and therefore, retention of this amo"nt &y

the petitioners !as "n("st may &e d"e to protracted ("dicia# proceedings,

and therefore, &y a##o!ing interest to the respondent on the entire amo"nt in

&oth the e5ec"tion petitions from the date of a!ard "p/ti## payment is made,

the e5ec"ting )o"rt has not committed any ("risdictiona# error. ?n common

par#ance, in a contract party responsi&#e for &reach of contract is o&#iged to

pay damages "nder Section of the ?ndian )ontract ct, 132 to the

s"fferer contracting party. +ayment of interest in the form of damages in

case of &reach of contract is a#so recogniCed &y #a! )o"rts "nder Section

of the )ontract ct.

9he disp"te no! remains on#y !ith respect to the f"t"re interest or

interest post ar&itra# a!ard, !hich is precise#y a##o!ed to the respondent/

contractor &y the e5ec"ting )o"rt in the imp"gned order to e5amine the

same !ithin the fo"r corners of the ct of 1-.

9he #ega# position is no more res integra that in case of ar&itra#

a!ard, pro%isions of Section 4 )+) as s"ch are not app#ica&#e #ogica##y

for the reason that there is a separate and distinct pro%ision for a!arding of

interest in re#ation to ar&itra# a!ard "nder Section 1;= of the ct of 1-.

Moreo%er, Section 4 )+) refers to a )o"rt !hich does not inc#"de ar&itra#

9ri&"na#. My this %ie! if f"##y fortified from a decision of >on<&#e pe5

)o"rt in case of B,'>'ti O7>en 3t&. *#. Hin&/t'n Co55er 3t&.

8(!!9) " SCC $":. ?n this %erdict, !hi#e di#ating on tr"e p"rport of !ord



1

<)o"rt< as en%isaged "nder Section 4 )+), the )o"rt in para he#d as

"nder:/

. o! Section 4 of the )ode of )i%i# +roced"re

has no app#ication to ar&itration proceedings since the

ar&itrator cannot &e said to &e a Ico"rt !ithin the

meaning of the )ode. "t an ar&itrator has po!er and

("risdiction to grant interest for a## the three stages

pro%ided the rate of interest is reasona&#e.

*e## it is tr"e that ar&itra# 9ri&"na# is not a )o"rt !ithin the meaning

of Section 4 )+), &"t the decision in hag!ati O5ygen Ltd. ;s"pra=

d"#y recogniCes the po!ers of the ar&itrator to a!ard interest, !hich

inc#"des post ar&itra# a!ard interest.

s per scheme of the ct of 1-, an ar&itrator is competent to

a!ard interest for the fo"r stages. 9he >on<&#e pe5 )o"rt in case of T.P.

Geor>e *#. St'te o% 4er'l' Anr. 8(!!1) SCC 9, !hi#e re#ying on

its ear#ier decision d"#y recogniCed fo"r stages of grant of interest !hi#e

emphasiCing that a!ard of interest o"ght to &e granted in a## cases !hen

there is a decree of money "n#ess there are strong reasons to dec#ine the

same. 9he )o"rt in para 10 has he#d as "nder:/

10. 9he ne5t $"estion is !hether the >igh )o"rt

!as right in setting aside the a!ard of the interest from

the date of the a!ard. 9his )o"rt has he#d in the case

of Jagdish 8ai and ros. %. 7nion of ?ndia that the

a!ard of interest o"ght to &e granted in a## cases !henthere is a decree of money "n#ess there are strong

reasons to dec#ine the same. ?n the case of Jagdish 8ai

F ros. %. 7nion of ?ndia this )o"rt has he#d that there

are fo"r stages of grant of interest, %iC., ;1= from the

stage of accr"a# of ca"se of action ti## fi#ing of the

ar&itration proceedings, ;2= d"ring pendency of the

proceedings &efore the ar&itrator, ;= f"rt"re interest

arising &et!een date of a!ard and date of the decree,

and ;4= interest arising from date of decree ti##



20

rea#isation of the a!ard. 9he po!er of )o"rt to grant

interest from date of decree is not in do"&t. ?n the case

of >ind"stan )onstr"ction )o. Ltd. %. State of J F N

this )o"rt has he#d that the ar&itrator is competent toa!ard interest from the date of the a!ard. 9his )o"rt

has he#d in the case of Secy., ?rrigation Deptt., Ho%t. of

Orissa %. H.). 8oy that the ar&itrator has po!er to

grant interest pendente #ite. 8ecent#y in the case of

B5ec"ti%e Bngineer, Dheana# Minor ?rrigation

Di%ision %. .). "dhara( this )o"rt has he#d that an

ar&itrator can a!ard interest for the pre/reference

period. 9h"s as per #a! #aid do!n &y this )o"rt

interest can &e a!arded at a## fo"r stages. 9he

reasoning gi%en &y the >igh )o"rt that interest cannot &e a!arded &y the ar&itrator is th"s fa##acio"s and

cannot &e s"stained. ?n o"r %ie! the direction to pay

interest from the date of a!ard, cannot &e fa"#ted. 9he

imp"gned ("dgment to the e5tent that it disa##o!s the

interest from the date of the a!ard, is set aside.

?t is trite that ar&itra# 9ri&"na# is not ain to a )o"rt !ithin the

meaning of section 4 )+), &"t then that itse#f cannot circ"mscri&e the

po!ers of ar&itrator to a##o! post a!ard interest. ?f the ar&itra# a!ard is

si#ent for post a!ard interest, the pro%isions contained "nder Section 1;=

;&=can &e in%oed to a!ard f"t"re interest &y app#ying ana#ogy "nder

Section 4 )+). s a matter of fact, Section 1;=;&= of the ct of 1-

mandates grant of f"t"re interest @13A per ann"m "n#ess the a!ard

other!ise directs. 9his %ie! finds s"pport from the decisions of >on&#e

pe5 )o"rt in State of >aryana F Ors. as !e## as ?ndian >"me +ipe )o.

Ltd. ;s"pra=. Section 1;= of the ct of 1- !ith emphasis on c#a"se ;&=

reads as "nder:/

1;=;a=. 7n#ess other!ise agreed &y the parties,

!here and in so far as an ar&itra# a!ard is for the

payment of money, the ar&itra# 9ri&"na# may inc#"de in

the s"m for !hich the a!ard is made interest, as s"ch

rate it deems reasona&#e, on the !ho#e or any part of

the money, for the !ho#e or any part of the period

&et!een the date on !hich the ca"se of action arose

and the date on !hich the a!ard is made.



21

=1()(6). A /- &irete& to 6e 5'i& 67 'n

'r6itr'l ''r& ,'ll; /nle t,e ''r& ot,erie

&iret; 'rr7 interet 't t,e r'te o% ei>,teen per

centum 5er 'nn/- %ro- t,e &'te o% t,e ''r& to

t,e &'te o% 5'7-ent.

9herefore, &y a##o!ing post a!ard interest to the respondent/

contractor for entire determined c#aim in &oth the a!ards, the #earned

e5ec"ting )o"rt has not committed any manifest error of #a! !arranting

interference in e5ercise of s"per%isory ("risdiction of this )o"rt "nder

rtic#e 22 of the )onstit"tion. ?n fact, the #earned e5ec"ting )o"rt has

passed imp"gned orders in &oth the petitions !hi#e constr"ing mandate of

#a! &y granting interest at a moderate rate i.e. 12A per ann"m.

S"per%isory ("risdiction of this )o"rt enshrined "nder rtic#e 22 of

the )onstit"tion is not ain to appe##ate ("risdiction and as s"ch it is to &e

e5ercised !ith "tmost care and circ"mspection. ?t is not permissi&#e to

"pset a decision of inferior )o"rt9ri&"na#, !hi#e e5ercising its ("risdiction

!hen t!o %ie!s are possi&#e or e%en if decision is erroneo"s, &eca"se

concern of the )o"rt is to e5amine decision maing process and not the

decision itse#f.

9h"s, %ie!ed from any ang#e, ? ha%e not &een a&#e to find any error

m"ch #ess an error apparent on the face of record in imp"gned orders, nor it

is a case !here&y #earned e5ec"ting )o"rt has transgressed its ("risdiction

!hi#e passing the imp"gned orders. 9he imp"gned orders, in my

considered opinion, ha%e not occasioned fai#"re of ("stice or perpetrated

miscarriage of ("stice in any manner re$"iring interference.



22

8es"#tant#y, &oth the !rit petitions are &ereft of any merit and

according#y same are dismissed.

)osts are made easy.

(P.4. 3OHRA); J.

a.asopa/

union of india & ors. v/s. m/s. shri ganesh government contractors & rural works & anr....

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