Madhu Mehra vs Pritpal Singh
2010 Latest Caselaw 2877 Del

                                                         REPORTABLE


*       IN THE HIGH COURT OF DELHI AT NEW DELHI


                              Ex. F.A. No.9/2009

                                       Date of Decision: June 01, 2010


        MADHU MEHRA                             ..... Appellant
                          through Mr. Sanjiv Sachdeva, Advocate with
                          Mr. D.K.Mehta, Mr. Sanjiv Sharma, Mr. Vibhu
                          Verma & Mr. Chitranshul Sinha, Advocates

                     versus


        PRITPAL SINGH                            ...... Respondent
                          through Mr. H.L.Tiku, Senior Advocate with
                          Mr. Thakur Sumit, Advocate

        CORAM:
        HON'BLE MISS JUSTICE REKHA SHARMA

1.      Whether the reporters of local papers may be allowed to see the
        judgment? Yes
2.      To be referred to the reporter or not? Yes
3.      Whether the judgment should be reported in the „Digest‟? Yes

REKHA SHARMA, J.

Should the court in a case where an arbitral award is silent with

regard to the payment of interest from the date of the award till

realization, direct payment of interest for the said period @ 18% per

annum having regard to the provisions of Section 31(7)(b) of the

Arbitration and Conciliation Act, 1996?

The above, in short, is the point in issue.

It is not in dispute that in the case in hand, the arbitrator has

simply awarded a sum of Rs.5,50,000/- towards rectification of defects

and other miscellaneous claims, with a direction for payment of the

same within 30 days of the receipt of the award, but with no further

direction for payment of interest from the date of the award till

realization. The award in question was challenged before Additional

District Judge who dismissed the same, against which an appeal was

preferred in this Court which also met with no success.

Consequent to the dismissal of the appeal, the appellant filed

execution in the Court of Additional District Judge. During the

execution proceedings, the respondent/judgment-debtor brought the

principal sum of Rs.5,50,000/- by way of a Pay Order which was

directed to be released to the appellant/decree-holder. However, the

matter did not end there, as according to the appellant/decree-holder,

in view of Section 31(7)(b) of the Act, he was also entitled to the

interest @ 18% per annum from the date of the award till payment.

The learned Additional District Judge vide order dated July 17, 2009

has declined the relief so claimed on the ground that the Court has

only to execute the award as it stands and that since the arbitrator

has not awarded any interest as claimed by the decree-holder, it is

deemed to have been refused.

Feeling aggrieved by the order so passed, the present appeal

has been preferred.

Before I proceed to deal with the issue, it will be appropriate to

reproduce Section 31(7)(b) of the Act. This is how it runs:-

"31(7)(b). A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment. "

It is clear from clause (b) of Section 31(7) of the Act that a sum

directed to be paid by an arbitral tribunal shall carry interest

@ 18% per annum from the date of the award to the date of payment,

unless the award otherwise directs. In other words, it means that if

the arbitral tribunal awards no interest from the date of the award till

the date of the payment, the mandate of clause (b) shall take effect

and the award in that event will carry interest @ 18% per annum from

the date of the award till realization. However, if in a given case, the

arbitral tribunal does award interest from the date of the award till

payment but not @ 18% per annum but at a different rate, then what

is awarded by the arbitrator shall hold good, unless the same is

modified by the Court on objections filed to the award by either of the

parties.

Apart from what has been held above, the issue is covered by a

judgment of the Apex Court in the case of State of Haryana and Ors.

Versus S.L.Arora and Company reported in 2010(2) SCALE 541. The

relevant part of the judgment which is binding on this Court runs as

under:-

"x x x x x x

18.6) Clause (b) of Section 31(7) is intended to ensure prompt payment by the award-debtor once the award is made. The said clause provides that the "sum directed to be paid by an arbitral award" shall carry interest at the rate of 18% per annum from the date of award to the date of payment if the award does not provide otherwise in regard to the interest from the date of the award. This makes it clear that if the award grants interest at a specified rate up to the date of payment, or specifies the rate of interest payable from the date of award till date of payment, or if the award specifically refused interest, Clause (b) of Section 31 will not come into play. But if the award is silent in regard to the

interest from the date of award, or does not specify the rate of interest from the date of award, then the party in whose favour an award for money has been made, will be entitled to interest at 18% per annum from the date of award. He may claim the said amount in execution even though there is no reference to any post award interest in the award. Even if the pre-award interest is at much lower rate, if the award is silent in regard to post-award interest, the claimant will be entitled to post-award interest at the higher rate of 18% per annum. The higher rate of interest is provided in Clause (b) with the deliberate intent of discouraging award-debtors from adopting dilatory tactics and to persuade them to comply with the award."

For what has been noticed above, the appeal is allowed and it is

hereby directed that the amount awarded by the arbitrator shall carry

interest @ 18% per annum from the date of the award till payment.

REKHA SHARMA, J.

JUNE 01, 2010 ka