Union Of India Gm Northern Railway vs Ak Tiwari
2012 Latest Caselaw 5428 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI


+      FAO 395/2012

%                                         Date of Decision: 11.09.2012


UNION OF INDIA GM NORTHERN RAILWAY           ..... Appellant
                  Through : Mr. Joydeep Mazumdar, Mr. Soumya
                            Dutta and Mr. Rohit Dutta, Advs.



                    versus


AK TIWARI                                                  ..... Respondent
                             Through :   None


CORAM:
HON'BLE MS. JUSTICE VEENA BIRBAL


VEENA BIRBAL, J.(ORAL)
*

1. By way of present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as „the Act‟), appellant has challenged the impugned order dated 19.02.2011 passed by the learned ADJ, Delhi by which appellant has been granted interest @ 6% p.a. on the awarded amount of Rs.1,25,100/- from 29.10.1992 till the date of payment.

2. The facts relevant for the disposal of present appeal are as under:-

The respondent herein is a Contractor with the appellant. Certain

disputes arose between the parties regarding installation of 1800 ceiling fans and 1800 points at different stations of Allahabad Division and the same were referred for arbitration. The respondent had made 9 claims before the arbitrator. The claim no. 1 was of Rs. 20,000/- towards earnest money and the claim no. 2 was for Rs. 1,05,100/- towards security deposit. The claim no. 9 was towards interest @ 24% p.a. on the aforesaid amount w.e.f. 29.10.1992. There were other claims which were rejected by the arbitrator and the respondent did not make any grievance against the rejection of said claims. The only grievance of the respondent/claimant before the learned ADJ under Section 34 of the Act was that when the arbitrator had allowed the claim no. 1 and 2 towards refund of earnest money and the security deposit, in that event, the respondent was also entitled to interest on the aforesaid amount @ 24% p.a. The learned ADJ vide impugned order has granted interest @ 6% p.a. on the awarded amount of Rs. 1,25,100/- from 29.10.1992 in respect of claim no. 1 and 2.

3. Aggrieved with the same, present appeal is filed.

4. Learned counsel for appellant has contended that arbitrator in the award dated 4.2.2008 had held that the payment of interest was not justified on the basis of material on record. It is contended that in these circumstances, the learned ADJ was not justified in awarding interest in favour of the appellant.

5. I have considered the submissions made and perused the material on record.

6. Ld. ADJ has observed in the impugned order that though the arbitrator has stated that on the basis of evidence and documents, the grant of interest was not justified. However, the arbitrator is silent as to what was material on the basis of which the claim of interest was rejected. There is no mention of the same in the award. The learned ADJ has held that when respondent is entitled for payment of earnest money and security deposit and it has also been observed that the same was wrongly held by the appellant, in that event, the interest ought to have been granted in favour of the respondent. The relevant finding of the learned ADJ is as under:-

"The object of awarding interest to a party is to compensate him for the loss suffered by him due to delay in release of the payment for which he was entitled on a particular date. In the present case, while allowing the claim no. 1 and 2, the arbitrators acknowledged the fact that the plaintiff was entitled for the payment on account of earnest money and security deposit and the same was wrongly withheld by the defendant no. 1. Once the same was held so, the plaintiff should have been compensated for the loss suffered by him on account of non release of the payment by the defendant no. 1 in time. Despite that, the arbitrators rejected the claim no. 9 with respect to the interest without assigning any reason whatsoever. Hence, I am of the opinion that the findings of the arbitrators with regard to claim no. 9 is against the public policy."

7. During arguments, before this court also, learned counsel for the appellant has failed to point out any material on record as per which

respondent/claimant was not entitled for interest. No illegality is seen in the impugned order which calls for interference of this court.

The appeal stand dismissed.

VEENA BIRBAL, J SEPTEMBER 11, 2012 kks