Bombay High Court

Vitthalrao Shinde Sahakari ... vs Gangapur Sahakari Sakhar ... on 17 April, 2017

Bench: T.V. Nalawade

                                      1     Arb Appeals 7,8 & 9 of 2013

      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                 BENCH AT AURANGABAD

                      Arbitration Appeal No. 7 of 2013
                                     With
                      Civil Application No.4637 of 2013


     Vitthalrao Shinde Sahakari Sakhar
     Karkhana Ltd. Gangamai Nagar,
     Pimpalner, Taluka Madha,
     District Solapur & Another.       ..          Appellants.

             Versus

     Gangapur Sahakari Sakhar Karkhana
     Ltd. Raghunathnagar,
     Taluka Gangapur,
     District Aurangabad.           .. Respondent.

                                     ----

     Shri. R.N. Dhorde, Senior Advocate, instructed by Shri.
     V.R. Dhorde, Advocate, for appellants.

     Shri. S.V. Adwant with Miss. Neha Kamble, Advocates, for
     respondent.

                                     ----

                                     And

                       Arbitration Appeal No. 8 of 2013


     Vitthalrao Shinde Sahakari Sakhar
     Karkhana Ltd. Gangamai Nagar,
     Pimpalner, Taluka Madha,
     District Solapur & Another.       ..          Appellants.

             Versus




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                                      2      Arb Appeals 7,8 & 9 of 2013

     Gangapur Sahakari Sakhar Karkhana
     Ltd. Raghunathnagar,
     Taluka Gangapur,
     District Aurangabad.           .. Respondent.

                                     ----

     Shri. R.N. Dhorde, Senior Advocate, instructed by Shri.
     V.R. Dhorde, Advocate, for appellants.

     Shri. S.V. Adwant with Miss. Neha Kamble, Advocates, for
     respondent.

                                     ----

                                    And

                      Arbitration Appeal No. 9 of 2013
                                     With
                      Civil Application No.4640 of 2013


     Vitthalrao Shinde Sahakari Sakhar
     Karkhana Ltd. Gangamai Nagar,
     Pimpalner, Taluka Madha,
     District Solapur & Another.       ..          Appellants.

             Versus

     Gangapur Sahakari Sakhar Karkhana
     Ltd. Raghunathnagar,
     Taluka Gangapur,
     District Aurangabad.           .. Respondent.

                                     ----

     Shri. R.N. Dhorde, Senior Advocate, instructed by Shri.
     V.R. Dhorde, Advocate, for appellants.

     Shri. S.V. Adwant with Miss. Neha Kamble, Advocates, for
     respondent.
                                ----




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                                      3    Arb Appeals 7,8 & 9 of 2013

                                 Coram: T.V. NALAWADE, J.

                                 Date:   17 April 2017
     ORDER:

1) The appeals are filed by Vitthalrao Shinde

Sahakari Sakhar Karkhana (hereinafter referred to as

"VSSSK") to challenge the decision given by the learned

Principal District Judge Aurangabad in a proceeding filed

under section 34 of the Arbitration and Conciliation Act,

1996 (hereinafter referred to as "the Act"). The Arbitral

Tribunal has allowed the claims of Gangapur Sahakari

Sakhar Karkhana (hereinafter referred to as "GSSK"). It is

the case of the VSSSK that the counter claim made by it

is not decided by the Arbitrator. The proceeding was filed

under section 33(4) of the Act and this application is also

rejected by the Arbitrator. To challenge the decision of the

Arbitrator, the proceedings were filed under section 34 of

the Act by the VSSSK and one proceeding was filed by

GSSK as interest was not awarded on the claim amount by

the Arbitrator. The learned Principal District Judge has

dismissed the proceedings filed by VSSSK and the

proceeding filed by GSSK is allowed. Both the sides are

heard.

                                            4    Arb Appeals 7,8 & 9 of 2013

     2)                The parties are cooperative sugar factories

registered under the Maharashtra Cooperative Societies

Act, 1960. GSSK was indebted and it was running in

losses. GSSK approached VSSSK and requested to run the

factory on partnership basis. As per the provision of

Section 20 of the Maharashtra Cooperative Societies Act,

approval of the Commissioner of Sugar, Maharashtra

State, whose post is equivalent to the post of the Registrar

under the said Act, is involved in the process of granting

approval and the State Government has also ultimate

power to consider this point. After such approval

partnership agreement was made and it was registered.

Factory premises including machinery was handed over

to VSSSK by GSSK prior to sugarcane crushing season of

2006-2007 and from the crushing season 2006-2007

VSSSK was to run the factory under the agreement for

five years.

3) The main terms and conditions of the contract

which need to be considered and used in the present

matter were as follows:-

5 Arb Appeals 7,8 & 9 of 2013

(i) Every year (for each crushing season) VSSSK

was to pay the rent of Rs.200 lakh. This amount

was to be paid in three installments like Rs.100

lakh at the time of starting of the crushing season,

Rs.50 lakh within the three months from the

starting of the crushing season and the remaining

Rs.50 lakh at the conclusion of the crushing season;

(ii) Amount @ Rs.71 per metric tonne was to be

paid by VSSSK to GSSK as variable amount on the

basis of sugarcane crushed by VSSSK for every

season;

(iii) VSSSK was to pay the taxes during the

aforesaid period and if any taxes were due prior to

the date of the agreement, that amount was also to

be paid by VSSSK. Such liabilities which were

already in existence were to be discharged by

VSSSK and the payments made for such liabilities

were to be adjusted against the aforesaid amount

which was payable to GSSK every year. There was

also loan taken by GSSK from the State

6 Arb Appeals 7,8 & 9 of 2013

Cooperative Bank and so amount against it was to

be deposited by VSSSK in the account of GSSK in

the State Cooperative Bank.

(iv) VSSSK was to comply the provisions of

various Acts like Provident Fund Act, Essential

Commodities Act etc. VSSSK was to pay

contribution for provident fund in respect of the

employees who were already working. If already

some amount was due under that head that amount

was also to be paid by VSSSK and this amount

could have been adjusted as against the amount

which was payable to GSSK.

(v) If there was capital investment made by

VSSSK for running the factory then the

depreciation in respect of agreement period was

to be deducted from that amount and the VSSSK

was entitled to recover the remaining amount from

GSSK after the contract period;


         (vi)     VSSSK was to pay 75% of the salary to the

         employees             already   employed         by     GSSK.         Even





                                             7     Arb Appeals 7,8 & 9 of 2013

retirement benefits like payment of gratuity in

respect of employees who were to retire during the

contract period were to be given by VSSSK.

4) There were other conditions like VSSSK was to

pay Statutory Minimum Price to the farmers as fixed by

the Government but this point of the entitlement of the

farmers from this factory is not the point in issue in the

present matter.

5) VSSSK worked for two consecutive crushing

seasons like 2006-2007 and 2007-2008 and then it

abandoned the work. As per the agreement, the Sugar

Commissioner was to act as the sole Arbitrator for giving

decision on the disputes and so GSSK referred the dispute

to the Sugar Commissioner after notice to the VSSSK.

GSSK made following two claims before the sole

Arbitrator:-

(a) The amount of Rs.611.19 lakh as the amount

of rent and the variable amount at the rate of

Rs.71 per metric ton of the sugarcane crushed

8 Arb Appeals 7,8 & 9 of 2013

during the aforesaid two seasons and 14% interest

on this amount from the date when the amount

had become due;

(b) The amount of Rs.255.61 lakh as the amount

which was due to the employees under the head of

salary etc. with interest at the rate of 14% per

annum from the date when the amount had

become due.

Thus the total claim of Rs.866.80 lakh with interest was

made before the sole Arbitrator by GSSK.

6) VSSSK filed written statement to the aforesaid

claims and denied the claim of GSSK. In the written

statement VSSSK made counter claim and following main

contentions were made in the written statement:-

(i) For crushing season 2006-2007 VSSSK had

paid Rs. 100 lakh to GSSK by depositing the

amount in the account of GSSK in Maharashtra

State Cooperative Bank and it had paid Rs.14.03

9 Arb Appeals 7,8 & 9 of 2013

lakh as subsidy granted under the head of loss

sustained over recovery and the amount of

Rs.85.36 lakh as the amount paid towards income

tax etc. which had already become due, prior to

the date of agreement. Thus VSSSK contended that

it had already paid amount of Rs.199.39 lakh to

GSSK.

(ii) That VSSSK had invested the amount of

Rs.299.52 lakh as capital investment for keeping

the factory functioning.

(iii) The amount which was available as the price

with GSSK on store, molasses and sugar of

Rs.217.48 lakh.

7) In the written statement VSSSK contended that

as per the agreement which was made subsequently,

GSSK had given up the rent and also variable amount of

Rs.71 per metric ton for the year 2007-2008 and so that

amount was not payable to GSSK by VSSSK. In the written

statement VSSSK contended that after the adjustment of

10 Arb Appeals 7,8 & 9 of 2013

the aforesaid amount, amount of Rs.336.64 lakh was

payable by GSSK to VSSSK. VSSSK contended that it was

entitled to get interest at the rate of 16% per annum on

the amount when from the date when the amount had

become due and this amount was claimed as counter

claim. This case of VSSSK was denied by GSSK by filing

rejoinder.

8) The sole Arbitrator who was also the

Commissioner of Sugar collected report from the Regional

Joint Director of Sugar Pune on factual aspects of

aforesaid contentions. On the case of capital investment

made by VSSSK opinion of expert like Vasantdada Sugar

Institute Manjari (Pune) was taken. It can be said that

such step was possible in view of provision of section 26 of

the Act. On the basis of these reports and in the inquiry,

the sole Arbitrator held that VSSSK had made investment

of Rs.295.96 lakh and after deducting 10% depreciation

on that amount, VSSSK was entitled to get back the

amount of Rs.228.53 lakh. The learned sole Arbitrator

considered the aforesaid claims raised by VSSSK in

respect of price of the store, molasses and sugar available.

11 Arb Appeals 7,8 & 9 of 2013

However, most of this material was lifted with the

permission of High Court by VSSSK and so the molasses,

sugar and value the remaining stock was considered as

around Rs. 59.63 and this amount is considered by the

learned sole Arbitrator as the amount which can be

deducted from the claim made by GSSK.

9) The learned sole Arbitrator has considered the

claim of GSSK in respect of the amount which was

demanded by the employees under the head of salary etc.

and on that point it is observed that the amount was

deposited in High Court and this point was already

decided. The claim of VSSSK that it had deposited amount

of Rs.100 lakh in Maharashtra State Cooperative Bank, it

had paid the amount of Rs.14.03 lakh (for crushing season

2006-2007) which was subsidy amount towards the loss in

respect of recovery and it had paid amount of Rs.97.36

lakh towards amount of taxes which was already due and

also the amount of Rs.91.20 lakh as subsidy amount

received towards loss in respect of recovery for crushing

season 2007-2008 are considered by the learned sole

Arbitrator. It is already observed that the amount of

12 Arb Appeals 7,8 & 9 of 2013

Rs.228.53 lakh, the amount towards capital investment

made by VSSSK can be considered by the learned sole

Arbitrator and all these amounts are held to be due from

GSSK. As to interest amount which was claimed by GSSK

there was no agreement that interest is not payable and

there is the record in respect of sugarcane crushing and

so there was no problem in calculating the exact amount

due to GSSK. After deducting the aforesaid amounts

mentioned by the VSSSK learned sole Arbitrator has held

that the amount Rs.181.65 lakh was due from VSSSK to

GSSK and award in respect of that amount was given.

However, interest on this amount was not awarded.

10) The aforesaid award was delivered by the

learned sole Arbitrator on 5-8-2010. Application under

section 33 of the Act was filed by VSSSK on 24-8-2010,

within 30 days from the date of the award. In the

application filed under section 33, VSSSK contended that

the amount of Rs.336.34 lakh which is the amount

towards fixed rent (Rs.200 lakh) and the variable amount

at the rate of Rs.71/- per metric ton in respect of crushing

season 2007-2008 could not have been awarded in favour

13 Arb Appeals 7,8 & 9 of 2013

of GSSK as this claim was already waived by GSSK and

this circumstance is not considered by the learned sole

Arbitrator. In the proceedings under section 33 it was

further contended by VSSSK that the aforesaid contention

ought to have been considered as counter claim of VSSSK

and that claim is not decided separately. GSSK contested

this contention by filing reply. By order dated 15-12-2010

the learned sole Arbitrator rejected this application. The

learned sole Arbitrator has held that so called request of

VSSSK, that the aforesaid amount was waived by the

GSSK cannot be considered as that agreement is not part

of the registered agreement of partnership. The learned

Arbitrator has referred to the terms and conditions of the

contract which require that in case any change is made in

the terms and conditions of the partnership agreement,

such change needs to be in writing and signed by both

the sides.

11) The learned Principal District Judge has held

that the proceeding Nos.103/2011 and 104/2011 filed by

GSSK under section 34 of the Act were not filed within

prescribed period of limitation (as per the provision of

14 Arb Appeals 7,8 & 9 of 2013

section 34 of the Act). On this main ground these two

proceedings of VSSSK are dismissed. The proceedings

under section 34 were filed by VSSSK on 9-3-2011 when

the sole Arbitrator had delivered the award on 5-8-2010.

The application under section 33 was rejected on 15-12-

2010. The learned Principal District Judge has held that

the relevant date for filing proceeding under section 34 of

the Act is 5-8-2010 and not 15-12-2010. On merits the

learned Principal District Judge has observed that no

change in the previous written contract and it was

registered agreement and so the claim of waiver of rent

etc. made by VSSSK could not have been considered by

the learned sole Arbitrator.

12) From the aforesaid contentions and the facts &

circumstances it can be said that following three points

need to be decided in the present matter :-

(1) whether only due to the circumstance that

proceeding was filed by VSSSK under section 33

of the Act, in law it can be presumed that it was

necessary for the learned Arbitrator to hold that

15 Arb Appeals 7,8 & 9 of 2013

it was filed under section 33(4) of the Act and

the decision can be treated as the additional /

supplementary award ?

(2) whether the limitation period as mentioned in

section 34 of the Act will start to run from the date

of the original award or from the date of the

decision of the application purportedly filed under

section 33 of the Act ?

(3) whether the learned Principal District Judge

has power to award interest in proceeding filed

under section 34 of the Act when the sole

Arbitrator had not awarded the interest.

13) Point Nos.1 and 2 : At the outset due to the

facts and circumstances of the present matter it needs to

be observed that the contention of the appellant that there

was resolution of GSSK to waive rent and so VSSSK was

not bound to pay the fixed rent of Rs.200 lakh and

variable amount at the rate of Rs.71 PMT in respect of

sugarcane crushed cannot be taken as the counter claim

or even as the set-off claim. As the things did not

16 Arb Appeals 7,8 & 9 of 2013

materialize it was a defence taken by VSSSK to the claims

made by GSSK. The claims of GSSK were on the basis of

terms and conditions of the written contract and it can be

said that there was defence of VSSSK that this amount

was waived by GSSK.

14) It needs to be ascertained as to whether such

defence could have been considered by the learned sole

Arbitrator. It is true that this contention was not touched

by the learned sole Arbitrator in the initial award though

it was touched while rejecting the application filed under

section 33 of the Act. In this regard it is not disputed that

there was written agreement of partnership between the

parties and this agreement was possible only due to the

approval of the competent authority. In the present matter

there was resolution of the managing committee of GSSK

to waive such amount but this proposal which was made

before the authority, State Government, was not accepted

and so the original agreement was not changed. In law

such decision could not have been taken by GSSK and

GSSK could not have waived it as interests of farmers,

creditors, share-holders were involved and only the

17 Arb Appeals 7,8 & 9 of 2013

authority could have taken decision on this point. Further,

as per clause 46 of the agreement to make such change

written agreement between the parties was necessary.

Such agreement could not come into existence due to

aforesaid circumstances.

15) The learned sole Arbitrator was to decide the

disputes arising out of contract in which there was term of

arbitration. As there was no change in the initial contract,

there was no scope to learned sole Arbitrator to consider

the defence of waiver taken by VSSSK. In view of these

circumstances, this Court has no hesitation to hold that

the learned sole Arbitrator had not committed error in

not touching this defence of VSSSK while deciding the

dispute. The provisions of sections 10, 23 and 25 of the

Contract Act read with the provision of section 20 of the

Maharashtra Cooperative Societies Act 1960 are relevant

on this point.

16) When the contention of waiver could not have

been considered by the learned sole Arbitrator, there was

no possibility of raising this dispute under section 33(4)

18 Arb Appeals 7,8 & 9 of 2013

of the Act. Thus, this contention of VSSSK was not within

the purview of provision of section 33(4) of the Act. It can

be said that the learned sole Arbitrator had refused to

touch this point as it was beyond his jurisdiction and by

filing proceeding under section 33(4) of the Act, virtually

review of the said Award was sought by VSSSK. Such

review is not possible under the provision of section 33 of

the Act. Relevant portions of section 33 are Section 33(4)

and 33(5) and they are as under :

"33. Correction and interpretation of award; additional award :

(1) . . . .

(2) . . . .

(3) . . . .

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request."

17) From the aforesaid provision it can be said that

the provision becomes applicable when the decision on a

19 Arb Appeals 7,8 & 9 of 2013

particular claim is possible through arbitration. In the

present matter, the decision on the case of waiver was not

possible through arbitration. Thus the application filed by

VSSSK was not within the scope of provision of section

33(4) of the Act and as such application was not tenable,

the order made on the application cannot be used by

VSSSK for contending that the period of limitation started

when this application was rejected by the learned sole

Arbitrator. This Court has no hesitation to hold that the

time started to run for filing proceeding under section 34

of the Act when the learned sole Arbitrator delivered the

award i.e. from 5-8-2010 and not from 15-12-2010 when

the so called application under section 33 came to be

rejected by the learned sole Arbitrator. This discussion is

sufficient to hold that the proceedings filed by VSSSK

under section 34 of the Act were not filed within the

prescribed period of limitation. So the Point Nos.1 and 2

are answered against VSSSK.

18) Learned counsel for GSSK placed reliance on a

case decided by Division Bench of this Court at the

Principal Seat viz Appeal No.35/2013 in Arbitration

20 Arb Appeals 7,8 & 9 of 2013

Petition No.47/2009 ( Kritika Nagpal v. Geojit Financial

Services Ltd.) decided on 25-6-2013. The provisions of

the old Act of 1940 and the new Act of 1996 are compared

by the Division Bench of this Court and it is observed that

there is no provision to remit the award in view of the

wording of the provision of section 34(4) of the Act. By

using this provision learned counsel for GSSK submitted

that this Court cannot allow the appeals and direct the

learned sole Arbitrator to reconsider and the learned

Principal District Judge cannot remand the matter back to

the Arbitrator. On this point learned Senior Counsel for

VSSSK placed reliance on the case reported as (2009) 10

SCC 259 (Som Datt Builders Ltd. v. State of Kerala) . In

this case the Apex Court has laid down that when the

Award is not sustainable (due to absence of reasons

under the Act 1996), in view of provision of Section 34(4)

of the Act, opportunity can be given to the Arbitral

Tribunal to give reasons. The facts show that the decision

of the High Court was set aside and direction was given to

the Arbitral Tribunal to give reasons to justify the award

and after that the District Court was to hear the matter

which was pending in District Court under section 34 of

21 Arb Appeals 7,8 & 9 of 2013

the Act. These observations of the Apex Court were not

considered by the Division Bench of this Court and it can

be said that at least for the aforesaid purpose the matter

could have been remanded to the learned sole Arbitrator

if there was such requirement in the present matter.

19) The learned counsel for GSSK placed reliance

on some observations made by the Allahahad High Court

in the case reported as 2016(5)ADJ14 = Manu /UP/

0560/2016 (Indian Oil Corporation Ltd. v. Vidyawati

Construction Company). On the basis of the observations

made in this case, learned counsel submitted that notice

ought to have been given before filing proceeding under

section 33(4) of the Act by VSSSK to GSSK and unless

there was agreement between the parties to get additional

award, it was not possible to entertain and decide the

application filed under section 33(4) of the Act. There are

such observations of Allahabad High Court but with due

respect to these observations, this Court holds that in

view of the many decisions of the Apex Court, one of

which can be referred to as (2012) 12 SCC 581 (State of

Goa v. Pravin Enterprises) , there is no necessity of giving

22 Arb Appeals 7,8 & 9 of 2013

notice of again referring the matter to the Arbitrator

under section 33 and for taking consent of the other party.

20) In the case of Pravin Enterprises (cited supra)

the Apex Court has referred and interpreted the

provisions of Sections 2(a), 8, 11, 16, 21 and 23 of the Act

and following observations are made :-

"41. The position emerging from the above discussion may be summed up as follows :

(a) Section 11 of the Act requires the Chief Justice or his designate to either appoint the arbitrator(s) or take necessary measures in accordance with the appointment procedure contained in the arbitration agreement. The Chief Justice or the designate is not required to draw up the list of disputes and refer them to arbitration. The appointment of the Arbitral Tribunal is an implied reference in terms of the arbitration agreement.

(b) Where the arbitration agreement provide for referring all disputes between the parties (whether without any exceptions or subject to exceptions), the arbitrator will have jurisdiction to entertain any counterclaim, even though it was not raised at a stage earlier to the stage of pleadings before the arbitrator.

(c) Where however the arbitration agreement requires specific disputes to be referred to arbitration and provides that the arbitrator will have the jurisdiction to decide only the disputes so referred, the arbitrator's jurisdiction is controlled by the specific reference and he cannot travel beyond the reference, nor entertain any additional claims or counterclaims which are not part of the disputes specifically referred to arbitration."

                                                 23      Arb Appeals 7,8 & 9 of 2013

     21)              The aforesaid observations are not squarely in

respect of the provision section 33(4) of the Act but this

Court holds that those observations can be made

applicable by considering the object behind the provisions

of section 11 and section 33(4) of the Act. It is settled law

that when counter claim is filed before the Arbitrator, as

dispute, it is the duty of the Arbitrator to decide that claim

also. The provision of section 33(4) of the Act only says

that if the Arbitrator has omitted to decide such claim,

the party who had filed such claim can bring this omission

to the notice of the learned Arbitrator. The Arbitral

Tribunal is already constituted and so the notice

mentioned in section 33(4) is not the notice which can be

called as mandatory and of the nature mentioned in

section 11 of the Act. This Court has no hesitation to

observe that the purpose behind this notice is only to give

an opportunity to other side to have its say and contest

the matter raised before the Arbitral Tribunal. Thus, it

cannot be said that the consent of other side who will be

benefited due to such omission is necessary for

application under section 33(4) of the Act. If such

interpretation of provision of section 33(4) is done, then

24 Arb Appeals 7,8 & 9 of 2013

this provision will be become otiose. It can be said that

when the omission is brought to the notice of the

Arbitrator under section 33(4) of the Act, it will be the

duty of the so called party applying under section 33(4) of

the Act and the Arbitrator to see that the other side gets

opportunity to contest this contention also. Thus, there is

no force in the contention made by the learned counsel for

the respondent on this point.

22) The learned Senior Counsel for the appellant

placed reliance on many reported cases in support of his

submission that the time started to run from the date of

disposal of the application filed under section 33(4) of the

Act. One such case is 2010(1) Arbitration Law Report 344

of Delhi High Court (Division Bench). The facts of this

reported case were totally different. The said High Court

held that the plea raised was itself not within the ambit of

section 33(1)(a)(b). Further, the application under section

33 was filed after expiry of 30 days period mentioned in

this section. Thus, the other point and particular the point

raised in the present mater, the submission made by the

learned Senior Counsel has no support of the Delhi High

25 Arb Appeals 7,8 & 9 of 2013

Court also. On this point many other reported cases were

cited by the learned Senior Counsel for the appellant.

Reliance was placed on the following cases by the learned

Senior Counsel for the appellant:-

(1) (2012) 12 SCC 581 (State of Goa v. Praveen Enterprises)

(2) AIR 2006 SC 1796 (State of Haryana v. Ranbir alias Rama).

Learned counsel for the respondent has placed reliance on

following cases :

(1) AIR 2013 Calcullta 186 (State of W.B. v. M/s B.B.J. Construction Cl. Lt.)

(2) AIR 2010 SC 3543 (M/s Rashtriya Chemicals and Fertilizer Ltd. v. M/s Chowgule Brother and Or)

(3) (2010) 11 SCC 593 (Supreme Paper Mills Limited v.

Assistant Commissioner)

(4) (2007) 2 SCC 230 (Raghunath Rai Bareja v. Punjab National Bank)

(5) 2016 (5) ADJ74 (Indian Oil Corporation Lt. v.

Vidyawati Construction Company)

(6) 2012 (2) CG.L.R.W.417 (M/s Shadani Builders v. M/s Begraj Agrawal)

(7) 2016(5) LJSOFT 2 (Blue Prime Aluminum Lt. v. L & T Finance Ltd)

26 Arb Appeals 7,8 & 9 of 2013

(8) MANU/TN/2902/2014 (R.R. Donnelley Publishing India Pvt. Ltd. v. Canara Traders and Printers Private Limited)

23) The cases which are relevant for the present

purpose are already referred and considered by this

Court. The other cases are not squarely applicable to the

present matter and so those cases are not considered in

detail.

24) Point No.3 : On the point of the entitlement

of the party to get interest on the claim which is allowed

by the Arbitral Tribunal, the provisions of the Act first

needs to be seen. The provision is section 31(3)(a), (b) and

31(1)(a) & (b) of the Act. That portion of the section runs

as under :

"31. Form and contents of arbitral award.--

(1) . . . .

(2) . . . .

(3) The arbitral award shall state the reasons upon which it is based, unless,--

(a) the parties have agreed that no reasons are to be given, or

(b) the award is an arbitral award on agreed terms under section 30.

                                        27      Arb Appeals 7,8 & 9 of 2013


             (4) . . . .

             (5) . . . .

             (6) . . . .

(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the while or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.

Explanation.-- The expression "current rate of interest" shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest at, 1978 (14 of of 1978)"

25) Aforesaid provision shows that if there is no

agreement contrary to the provisions made in this section

then the Arbitral Tribunal can award interest and the

interest can be 18% per annum. In the present matter

there was no agreement between the parties that a party

will not be entitled to get interest on the amount like fixed

rent and variable amount at the rate of Rs.71/- PMT of the

sugarcane crushed by present appellant. Thus, there was

no provision to prevent the claim of the interest and grant

28 Arb Appeals 7,8 & 9 of 2013

of the interest. In spite of this circumstance, this point

was not touched by the learned Arbitrator. The learned