M/S. Dlf Industries Ltd. vs Indian Oil Corporation Ltd.
2009 Latest Caselaw 3310 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 OMP No.480/2009

%                      Date of decision: 21st August, 2009

      M/s. DLF Industries Ltd.                        ....Petitioner
                       Through: Mr. Anil Seth, Advocate

                               Versus

      Indian Oil Corporation Ltd.                   ... Respondent

                       Through: None.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                 No

2.    To be referred to the reporter or not?          No

3.    Whether the judgment should be reported         No
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1 This petition under Section 34 of the Arbitration Act, 1996 has

been preferred with respect to the arbitral award dated 8th May,

2009 partly in favour of the petitioner and rejecting the other claims

of the petitioner. Even on the claims allowed in favour of the

petitioner no pre-reference or pendente lite interest has been

awarded by the arbitrator, though the arbitration proceedings

remained pending for considerable time. The arbitrator has held

that both the parties had delayed the arbitral proceedings and thus

the petitioner is not entitled to any pendente lite interest. The

arbitrator has awarded future interest to the petitioner at 9% per

annum.

2 The challenge in this petition is two fold. Firstly, qua non-

grant of interest and secondly, qua the rejection of other claims of

the petitioner.

3 As far as interest is concerned, the counsel for the petitioner

has contended that from the perusal of the award and the arbitration

record, though not before this court as yet, it is apparent that the

delay in arbitration proceedings was not on the part of the petitioner

but on the part of the respondent or on the part of the arbitrator. It

is next contended that it was a term of the contract that the

respondent would be charging interests at the rate of 19.75 % per

annum on the mobilization advance given to the petitioner. It is

argued that on the same parity, the petitioner was entitled to

interest at the same rate on the amounts found due by the arbitrator

to the petitioner. Reliance is placed on Bhagawati Oxygen Ltd. Vs.

Hindustan Copper Ltd. 2005 (6) SCC 462 and State of Rajasthan

Vs. Ferro Concrete Construction Pvt. Ltd. 2009 (3) Arb. LR

140(SC). While in the first the High Court had interfered with the

award of interest by the arbitrator and the Supreme Court reversed

the same inter alia on the ground that the award of interest by the

arbitrator at the same rate at which the other party was entitled

under the contract was justified, in the other judgment the only

principle is of the arbitrator being competent to award interest. In

neither of the said cases the principle of the court interfering in the

discretion exercised by the arbitrator in the matter of award of

interest has been dealt with.

4 There is no principle that the arbitrator is bound to award

interest on the claims allowed. The award of interest remains a

discretionary matter. Even though the principle has been laid down

by a five Judge bench in Executive Engineer Dhenkanal Minor

Irrigation Division Vs. N.C. Budharaj (2001) 2 SCC 721 that interest

can also be in the form of compensation for delay in payment, the

fact remains that it is not mandatory.

5 It is not as if in the present case the arbitrator has not given

any reason. The arbitrator has given reasons for declining pendente

lite interest to the petitioner. Interference with such factual findings

of the arbitrator finding the petitioner not entitled to pendente lite

interest or with the discretion, in my view is not permissible under

Section 34 of the Act.

6 As far as the rejection of the other claims of the petitioner is

concerned, the counsel for the petitioner has contended that all of

them have been rejected for the same reasoning as at internal page

24 of the award. The arbitrator has held that the petitioner had

while seeking extension of time for completing the works specifically

stated that it will not raise any claims in respect of prolongation of

contract; that the explanation rendered by the petitioner that it was

forced to write such letters has been found by the arbitrator to have

remained unsubstantiated.

7 The counsel for the petitioner has contended that there was an

affidavit of the petitioner before the arbitrator in this respect and the

petitioner had also placed before the arbitrator letters written by it

in this regard.

8 However the same falls within the domain of appreciation of

evidence which is not actionable under Section 34. The finding of

the arbitrator, that the petitioner could not substantiate having been

made to write the letter disclaiming rights/claims under coercion, is

a factual finding and this court in exercise of powers under Section

34 of the Act cannot interfere with the same.

9     No other point has been urged.



10    No case is made out for issuance of notice of the petition. The

same is dismissed.




                                         RAJIV SAHAI ENDLAW
                                              (JUDGE)
August 21st, 2009
J