2009 (11) TMI 977 - SC - Indian Laws

Interest payable by the Employer on Earnest Money, Security Deposit or on any money due to the Contractor by the Employer - Application of ejusdem generis rule - Whether Interest can be awarded from the date of the award or before the date of award? - HELD THAT - When the Legislature before enumerating specific examples uses the words 'without prejudice to the generality of the foregoing provision' the preceding general provision cannot be restricted by applying the rule of ejusdem generis. A word of caution is here necessary. The fact that the ejusdem generis rule is not applicable does not necessarily mean that the prima facie wide meaning of the word 'other' or similar general words cannot be restricted if the language or the context and the policy of the Act demand a restricted construction. In the expression 'defect of jurisdiction or other cause of a like nature' as they occur in Section 14(1) of the Limitation Act the generality of the words 'other cause' is cut down expressly by the words 'of a like nature', though the rule of ejusdem generis is strictly not applicable as mention of a single species 'defect of jurisdiction' does not constitute a genus. The words 'other person' in this section cannot be construed by the rule of ejusdem generis for mention of single species namely 'police officer' does not constitute a genus but having regard to the importance of the power to detain and seize vehicles it is proper to infer that the words 'other person' were restricted to the category of Government Officers. In the same category falls the case interpreting the words 'before filing a written statement or taking any other steps in the proceedings' as they occur in Section 34 of the Arbitration Act, 1940. In the context in which the expression 'any other steps' finds place it has been rightly construed to mean a step clearly and unambiguously manifesting an intention to waive the benefit of arbitration agreement, although the rule of ejusdem generis has no application for mention of a single species viz. written statement does not constitute a genus In the present case we noticed that the clause barring interest is very widely worded. It uses the words 'any amount due to the contractor by the employer'. In our opinion, these words cannot be read as ejusdem generis alongwith the earlier words earnest money or security deposit . We agree with the submission of Mr. Gaurab Banerji that interest is only payable from the date of the award. However, we do not agree with him that the interest should be reduced because of Section 31(7)(b) of the Arbitration Conciliation Act, 1996 which clearly states that rate of interest will be 18% per annum. Shri Gaurab Banerji submitted that in some decisions, a lesser interest has been awarded. We cannot see how a lesser interest can be awarded when the statute specifically provides that the rate of interest will be 18% per annum and the arbitrator has accepted and awarded this rate of interest. Judges cannot legislate or amend the law by judicial decisions. They have to maintain judicial discipline and give their decisions in accordance with law. Hence the lesser rate of interest cannot be awarded because that would be amending the law which is not within the powers of the judiciary. We modify the impugned judgment in the light of the observations made above. Mr. Gaurab Banerji submitted that the appellant had deposited the entire amount in the High Court under the order of this Court. The respondent can withdraw the amount at the rate of 18% per annum for the period after the date of award. The remaining amount will be returned to the appellant.

Summary

Issues Involved:
1. Interpretation of Clause 3.3(ix) of the General Conditions of Contract (GCC) regarding interest.
2. Application of the principle of ejusdem generis.
3. Determination of the rate of interest as per Section 31(7)(b) of the Arbitration & Conciliation Act, 1996.
4. Judicial power to amend statutory provisions.

Issue-wise Detailed Analysis:

1. Interpretation of Clause 3.3(ix) of the General Conditions of Contract (GCC) regarding interest:
The primary dispute in this case revolves around whether interest can be awarded from a date prior to the date of the award. The appellant argued that, according to Clause 3.3(ix) of the GCC, "No interest shall be payable by the Employer on Earnest Money, Security Deposit or on any money due to the Contractor by the Employer." This clause was interpreted to mean that interest could only be awarded from the date of the award and not before. The court agreed with this interpretation, stating that the clause barring interest is very broadly worded and includes "any amount due to the contractor by the employer." Therefore, these words cannot be read as ejusdem generis with the earlier words "earnest money" or "security deposit."

2. Application of the principle of ejusdem generis:
The respondent contended that Clause 3.3(ix) should be read ejusdem generis, meaning that the general words "or on any money due to the contractor by the employer" should be interpreted in the context of the specific words "earnest money" and "security deposit." The court rejected this argument, explaining that the principle of ejusdem generis does not apply in every situation. The court cited various precedents and authoritative texts to illustrate that for the ejusdem generis rule to apply, the enumerated items before the general words must constitute a category or genus. In this case, the specific words did not form a distinct genus, and thus the general words should not be limited by the specific words.

3. Determination of the rate of interest as per Section 31(7)(b) of the Arbitration & Conciliation Act, 1996:
The court addressed the issue of the rate of interest to be awarded. Section 31(7)(b) of the Arbitration & Conciliation Act, 1996, specifies that the rate of interest will be 18% per annum. The court noted that although the appellant argued for a lesser rate of interest based on some judicial precedents, the statute explicitly provides for an 18% interest rate. The court emphasized that judges cannot legislate or amend the law through judicial decisions, and thus, the statutory rate of interest must be adhered to.

4. Judicial power to amend statutory provisions:
The court underscored the importance of judicial discipline and the limits of judicial power. It stated that awarding a lesser rate of interest than what is prescribed by statute would amount to amending the law, which is beyond the judiciary's powers. The court reiterated that judges must give their decisions in accordance with the law and cannot alter statutory provisions through their judgments.

Conclusion:
The court modified the impugned judgment to reflect that interest is payable only from the date of the award at the statutory rate of 18% per annum. The appellant had deposited the entire amount in the High Court, and the respondent was allowed to withdraw the amount at the rate of 18% per annum for the period after the date of the award. The remaining amount would be returned to the appellant. The appeal was allowed to the extent indicated, with no costs awarded.