C.I.S.C.-S.R.S.C. (Joint Venture) vs Central Coalfields Limited
2025 Latest Caselaw 5164 Jhar

Jharkhand High Court

C.I.S.C.-S.R.S.C. (Joint Venture) vs Central Coalfields Limited on 25 April, 2025

Author: Deepak Roshan

Bench: Deepak Roshan

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IN THE HIGH COURT OF JHARKHAND AT RANCHI
            C.M.P. No. 1064 of 2022
C.I.S.C.-S.R.S.C. (Joint Venture), having its Registered office at 7/1,
Lord Sinha Road, Lords Building, Suit No. 302, 3rd Floor, Kolkata, P.O.
& P.S. Kolkata, PIN - 700071 (State of West Bengal) ; through one of its
authorized signatory, namely, Om Prakash Pareek, aged about 61 years,
son of Radhe Shyam Pareek, resident of 48, Subhash Sangha Squyar,
Subhash Pally, Benachity, Durgapur (m. Corp.), P.O. Benachity, P.S.
Durgapur, District Barddhman, PIN - 713213 (State of West Bengal).
                                       ...   ...     Petitioner
                         Versus
Central Coalfields Limited, through its Managing Director, having its
office at Darbhanga House, P.O. Kotwali, P.S. G.P.O., District Ranchi,
(Jharkhand), PIN - 834001.                       ... Respondent
                         ---------
CORAM: HON'BLE THE CHIEF JUSTICE
              HON'BLE MR. JUSTICE DEEPAK ROSHAN
                         ---------
For the Petitioner               : Mr. Sumeet Gadodia, Advocate
                                   Mr. Prakash Narayan, Advocate.
For Respondent                   : Mr. Amit Kr. Das, Advocate.
                         ---------
C.A.V. On: 03.04.2025                  Pronounced On: 25.04.2025
M.S. Ramachandra Rao, C.J.(Oral)

This Civil Miscellaneous application is filed under Article 227 of the

Constitution of India challenging the order dt. 25.08.2022 of the Commercial

Court, Ranchi in Commercial Execution Case No. 40 of 2015.

2. The petitioner is a joint venture entity of the Calcutta Industrial

Supply Corporation Limited and Shri Rani Sati Carriers styled as

M/s.C.I.S.C.-S.R.S.C. (JV).

3. The respondent is the Central Coalfields Limited, which is a

Government of India undertaking.

The Background facts

4. The respondent had issued a tender dt. 27.05.2002 for

extraction/breaking of coal/coal measures data in slices/layers without

resorting to drilling and blasting and then loading/transfer of broken

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materials into tipping trucks/dumpers provided by the project management

with a specification that the broken materials should not be greater than 100

MM of size.

5. The petitioner became the successful tenderer and was issued a Letter

of Intent on 26.10.2002 to start the said work.

6. The work started on 29.11.2002 and the agreement/contract between

the parties was signed on 12.04.2003.

7. Disputes arose between the parties.

8. The petitioner herein filed an application under Section 11 (6) of the

Arbitration and Conciliation Act, 1996 ( for short 'the Act') being

Arbitration Application No.38 of 2004 in this Court.

9. During the pendency of the said application, the respondent stated that an

ex-CMD by name S.K. Verma was appointed as the sole arbitrator.

10. Later, he was replaced by another arbitrator by name M.A. Ubaid, who

was also an ex-CMD.

The Arbitral Award

11. The learned Arbitrator rendered an award on 22.12.2007 allowing

certain claims made by the petitioner and rejecting the counter claims made

by the respondent. He awarded Rs.2,62,02,434/- to the appellant.

12. With regard to interest on claim, the arbitrator stated in para 25 of the

the award that "interest at prevalent rates for claim due and ordered, is to

be paid for the period it is due to the date of payment".

13. In this Revision, we are concerned with only this aspect of the matter.

14. The said award of the arbitrator was challenged by the respondent

under section 34 read with section 16 (b), 17 of the Act before the court of

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the Sub-Judge, VIII, Ranchi in Arbitration Miscellaneous Case No. 24 of

2008. He dismissed the said challenge vide order dt. 30th January, 2015.

15. The respondent then filed Arbitration Appeal No. 4 of 2015 before

this High Court against the decision dt. 30.01.2015 of the Sub-Judge, VIII,

Ranchi in the Arbitration Miscellaneous Case No. 24 of 2008.

16. This Arbitration Appeal No. 4 of 2015 was also dismissed by this

Court on 06.07.2020.

17. In the meantime, the petitioner had filed before the Commercial

Court, Ranchi, Commercial Execution Case No. 40 of 2015, praying for

issuance of appropriate directions for directing the respondent to pay the

decretal amount along with interest.

18. In the said application, he gave computation of interest as per the

Arbitral Award read with section 31 (7) (b) of the Act (unamended),

claiming interest at the rate of 18% per annum from the date of the Arbitral

Award.

19. The respondent filed its objection thereto disputing the calculation of

interest submitted by the petitioner. The contention of the respondent was

that section 31 (7) (b) of the Act, as amended would apply; and since the

Arbitral Tribunal had not prescribed the rate of interest payable on the

arbitral award, interest is to be calculated in terms of the amended section 31

(7) (b) of the Act. It contended that the "current" rate of interest as defined

under clause (b) of section 2 of the Interest Act, 1978 would be payable on

the amount awarded by the arbitral award from the due date till the date of

payment.

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20. Reply was filed thereto by the petitioner contending that if the arbitral

Tribunal had not prescribed the rate of interest, the same would be payable

in terms of unamended provision of section 31 (7) (b) of the Act, which

provides interest to be paid at the rate of 18% per annum from the date of the

award to the date of payment.

Alternatively, it was contended that the term "interest @ prevalent

rate" cannot be equated with the expression "current rate of interest"; and

the prevailing interest rate provided by the arbitral Tribunal would mean the

highest rate of interest, payable by the judgment debtor under any loan

obtained from the schedule bank.

The impugned judgment of the Commercial Court

21. The Commercial Court, Ranchi through the impugned judgment

dt. 25.08.2022 directed that the interest awarded by the arbitral Tribunal is

required to be computed in terms of section 2 (b) of the Interest Act, 1978

and the provisions of the Interest Act, 1978 will be taken for calculating the

amounts for different periods, since rate of interest was fluctuating.

22. The Commercial Court, Ranchi in the impugned judgment noted that

section 31 (7) of the Act was amended with effect from 23.10.2015 by the

Arbitration and Conciliation Amendment Act, 2015 and clause (b) of section

31 (7) came to be substituted as under:

"[(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.

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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 Act, 1978 (14 of 1978).]"

23. It then referred to the definition of the expression 'current rate of

interest' in clause (b) of section 2 of the Interest Act, 1978; and that the

arbitrator noted that the previous provision i.e. clause (b) of section 31 (7)

was substituted as above by Act 3 of 2016 and that prior to its substitution it

read as under:-

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

24. The Commercial Court then referred to Section 87 of the Act which

stated that unless parties otherwise agreed, the amendments made to the Act

by the Arbitration and Conciliation Amendment Act, 2015 (3 of 2016) shall

not apply to arbitral proceedings commenced before the commencement of

the Arbitration and Conciliation Amendment Act, 2015 (3 of 2016) i.e.

23.10.2015.

25. It then held that admittedly parties had not agreed, and so the

amendment will not apply, and only Section 31(7) as it stood prior to the

date of amendment would apply.

26. It then held that under the unamended section 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 18% per annum from the date of award to

the date of payment, but since in Para 25 of the Award, the arbitrator had

mentioned about the rate of interest to be paid, and the period for which it is

to be paid, therefore interest at the rate of 18% per annum claimed by the

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petitioner from the date of the award to the date of the payment, cannot be

awarded.

27. It then interpreted Para 25 of the award where the arbitrator had dealt

with the interest and interpreted the word 'prevalent rate' to mean 'current

rate of interest'.

28. It then quoted section 2 (b) of the Interest Act, 1978 which deals with

the term "current rate of interest" and noted that it defines the same as

meaning "the highest of the maximum rates at which interest may be paid on

different classes of deposits (other than those maintained in savings account

or those maintained by charitable or religious institutions) by different

classes of scheduled banks in accordance with the directions given or issued

to banking companies generally by the Reserve Bank of India under the

Banking Regulation Act, 1949."

29. The Commercial Court then noted that the Reserve Bank of India

issued directions/bulletins regarding rate of interest meant for different

purposes namely interest on savings, rate of interest on lending, rate of

interest on different amount of deposits for different periods and concluded

as under:-

"(1). The interest applicable will in terms of Section -2 (b) of the Interest Act, 1978 corresponding to Para - 25 of the Award.

(2). The rate of interest as envisaged in Section 2 (b) of the Interest Act 1978 will be taken for calculating the amount for different periods since the rate of interest keep fluctuating.

(3). Since there is no agreement as regards compound interest the interest will be calculated as simple interest.

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(4). The Decree-Holder shall get this amount calculated through a Chartered Accountant and will file the same in the court with a copy to the other side.

At the cost of repetition, it is noted that the Judgment Debtor has taken all steps for stalling the payment to the Decree Holder who (the Decree Holder) has not received a single penny from the Judgment Debtor. All the petitions filed in this respect stands disposed off today.

The decree holder is directed to take steps for getting the amount realized. Put up on 12.09.2022 for filing of charge of amount due to be recovered from Judgment Debtor."

The instant Revision under Art.227 of the Constitution of India

30. Challenging the same, this application under Article 227 of the

Constitution of India has been filed by the petitioner.

31. Counsel for the petitioner contends that the judgment passed by the

Commercial Court, Ranchi in Commercial Execution Case No. 40 of 2015 in

so far as it directed payment of interest in accordance with section 2 (b) of

the Interest Act, 1978 is perverse and contrary to the specific statutory

provision contained under unamended Section 31 (7) (b) of the Act.

It is contended that while directing that interest would be

computed in terms of section 2 (b) of the Interest Act, 1978, the Commercial

Court had completely failed to appreciate that the Interest Act, 1978 is a

general enactment and cannot override the specific statutory provision

contained under the Act.

It is reiterated that in the absence of any specific rate of interest

having been provided in the Arbitral Award, interest was payable at the rate

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of 18% per cent per annum in terms of unamended section 31 (7) (b) of the

1996 Act.

It is contended that though the Commercial Court in substance

had held that the unamended provision of section 31 (7) (b) of the Act would

be applicable, it was influenced by the provisions of the amended Section 31

(7) (b) of the Act while passing the impugned judgment, and it had

incorrectly equated the expression 'interest at prevalent rate' with the

expression 'current rate of interest', which has been provided in the

'explanation' to the amended provisions of section 31 (7) (b) of the Act.

According to the petitioner, the Executing Court by directing that

interest would be computed in terms of section 2 (b) of the Interest Act,

1978, had travelled beyond the Arbitral Award, and in substance had

modified the same, which was not tenable in law. The petitioner therefore

prayed for setting aside of the impugned judgment.

32. The counsel for the respondent refuted the said contentions and

supported the order passed by the Commercial Court in the Commercial

Execution Case No. 40 of 2015.

Consideration by the Court

33. We have noted the contentions of both sides.

34. The only issue, which is to be adjudicated in the instant case is:

" Whether in exercise of the jurisdiction conferred on this Court under Article 227 of the Constitution of India, the judgment passed by the Commercial Court, Ranchi in Commercial Execution Case No. 40 of 2015 on 25.08.2022 with regard to award of interest is liable to be set aside or not?"

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35. Admittedly, the arbitrator in the Arbitral Award dt. 22.12.2007 had

granted relief to the petitioner against the respondent for Rs.2,62,02,434/-. In

clause 25 of the Arbitral Award, the learned Arbitrator had even awarded

interest in the following manner:-

"25. Interest on claim-"Interest at prevalent rates for claim due and ordered to be paid for the period it is due to date of payment be paid"

36. In our opinion, the Commercial Court was correct in applying

unamended Section 31(7) (b) , in the absence of agreement between the

parties to apply the amended Section 31(7) (b) ( introduced by the

Arbitration and Conciliation Amendment Act, 2015 (3 of 2016)), as required

by Section 87 which states that 'unless parties otherwise agreed, the

amendments made to the Act by the Arbitration and Conciliation

Amendment Act, 2015 (3 of 2016) shall not apply to arbitral proceedings

commenced before the commencement of the Arbitration and Conciliation

Amendment Act, 2015 (3 of 2016) i.e. 23.10.2015'.

37. Clause (b) of Section 31 (7) of the Act prior to the amendment by Act

3 of 2016 read as under:-

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

(emphasis supplied)

38. We are also of the view that since the Award in para 25 did mention

about the interest awarded to the petitioner, petitioner cannot claim 18%

interest awarded, because the Award directs otherwise, and can only get

what the Award decrees.

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39. The court below thus rightly rejected the plea of the petitioner that

interest at the rate of 18% per annum has to be awarded to it.

40. In the Arbitral Award passed by the learned Arbitrator on 22.12.2007,

the Arbitrator had not fixed the rate of interest mathematically by indicating

the percentage specifically. He only said that interest at prevalent rates

should be paid for claim. He did not say that the prevalent rate of interest

payable on the claim for which he has granted relief should be the lending

rate fixed by banks from time to time for granting loans to borrowers.

41. Only if there was no direction in the arbitral award regarding the rate

of interest would the petitioner be entitled to the rate at the rate of 18% per

cent per annum.

42. So we hold that the Commercial Court also rightly did not accept the

plea of the petitioner that the rate of interest charged by the bank for lending

purposes on the basis of which the petitioner had submitted a calculation

before it.

43. If the petitioner had any doubt about the quantum of interest awarded

by the Arbitrator it was open to the petitioner to seek a correction of the

arbitral award or seek interpretation of the Arbitral Award on this aspect

from the Arbitrator by moving an application under Section 33 (b) within 30

days from the receipt of the Arbitral Award. The petitioner has failed to do

so.

44. The petitioner had also never challenged the Arbitral Award on this

ground under Section 34 of the Act. It was the respondent which had

challenged the Arbitral Award under section 34 of the Act in Arbitration

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Miscellaneous Case No. 24 of 2008 which got dismissed on 30th January,

2015.

45. It was the respondent, who also challenged the said order in this Court

in Arbitration Appeal No. 4 of 2015 and lost vide judgment

dt. 06.07.2020.

46. It is also stated across the Bar that there was an SLP filed in the

Supreme Court by the respondent against the order passed by the High Court

under section 37 of the Act, which was also dismissed.

47. Thus, for a period from 2007 till 2015 when the Execution case was

filed, the petitioner did not doubt the portion of the arbitral award dealing

with award of interest to it. It erred in proceeding to assume in the Execution

petition that it is entitled to interest at the rate of 18% per annum as per the

unamended section 31 (7) (b), forgetting that the award otherwise directs,

i.e., there was a specific direction in the Award about payment of interest.

48. When the arbitrator had mentioned in clause 25 of the Award that the

interest would be at prevalent rate, the question arises:

'whether there was any perversity in the arbitrator construing the word prevalent rate of interest as the current rate of interest?'

49. In the Oxford Advanced Learners Dictionary (8th edition 2010), the

word 'prevalent' is given the following meaning:-

"That exists or is very common at a particular time or any particular place"

and the word 'prevailing' is given the synonym 'current'.

50. In the Shorter Oxford English Dictionary (Sixth Edition), the word

'prevail' is given a meaning 'Be in general use or practice; be prevalent or

current; exist' and the word 'prevailing' has been given the meaning

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'generally current or accepted'. The word 'prevalent' has been given the

meaning 'generally occurring or existing; in general use; usual'.

51. Therefore, we agree with the Commercial Court when it interpreted

the words 'prevalent rate of interest' as 'current rate of interest', since it is a

probable view. It cannot therefore be said that the said view is a perverse

view.

52. In Estralla Rubber-Vs.-Dass Estate (P) Limited1, the Supreme Court

held that the High Court while acting under Article 227 of the Constitution

of India cannot exercise its power as an appellate court or substitute its own

judgment in place of that of the subordinate court to correct an error which is

not apparent on the face of record. It held that the High Court is not vested

with any unlimited prerogative to correct all kinds of hardship or wrong

decisions made within the limits of jurisdiction of the subordinate courts or

tribunals. Exercise of this power and interfering with the orders of the courts

or tribunals is restricted to cases of serious dereliction of duty and flagrant

violation of fundamental principles of law of justice, where if a High Court

does not interfere, a grave injustice remains uncorrected. The High Court

can set aside or ignore findings of fact of an inferior court or tribunal if there

is no evidence at all to justify or the finding is so perverse that no reasonable

person can possibly come to such a conclusion which the court or tribunal

has come to.

53. In Surya Dev Rai-Vs.-Ram Chander Rai and others2, it was

reiterated that exercise of supervisory jurisdiction under Article 227 is not

(2001) 8 SCC 97

(2003) 6 SCC 675

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available to correct mere errors of fact or of law unless the error is manifest

and apparent on the face of the proceedings such as when it is based on clear

ignorance or utter disregard of the provisions of law and a grave injustice or

gross failure of justice as occasioned whereby.

54. In the facts and circumstances of the instant case, we are satisfied that

the view taken by the Commercial Court is a possible view which cannot be

said to be perverse or falling within the scope of interference by this Court

under Article 227 of the Constitution of India. This Court cannot sit in

appeal over the Arbitral Award and act as if it has wide power to interfere

with the same when the petitioner itself did not chose to challenge the award

under Section 34 of the Act or to seek an interpretation from the arbitrator

on this aspect under section 33 (1) (b) of the Act.

55. We also disagree with the contention of the counsel for the petitioner

that the Commercial Court in the instant case had travelled beyond the scope

of the decree or order and had committed an error making its order as one

without jurisdiction.

56. We therefore do not find any merit in the petition. It is accordingly

dismissed with costs.

(M. S. Ramachandra Rao, C.J.)

(Deepak Roshan, J.) APK

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