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Issues Involved:
The issues involved in this case are: 1. Whether the award of interest prior to the date of the reference was within the power and jurisdiction of the arbitrator? 2. Even if it was within the jurisdiction of the arbitrator, whether Clause 1.9 barred such consideration? 3. Whether such an objection could have been raised before the court in objections under Section 30 of the Act? 4. Whether the reduction of interest from 15.5 per cent to 6 per cent from the date of the decree till satisfaction of the decree as ordered by the High Court was justified? Issue 1: The Supreme Court noted a previous decision that ruled the arbitrator had the authority to award interest even for the pre-reference period. The Court found that the arbitrator had the power to grant such pre-reference period interest, especially since the cause of action for reference arose after the enactment of the Interest Act, 1978. Issues 2 and 3: The Court examined Clause 1.9 of the Contract, which prohibited claims for delayed payment due to disputes. The Court found that the claim for interest by way of damages was not barred by this clause, as it pertained to specific types of amounts related to disputes between the parties. The Court held that the arbitrator's interpretation of the clause was valid, and objections under Section 30 of the Arbitration Act could not be raised against it. Issue 4: Regarding the reduction of interest from 15.5 per cent to 6 per cent, the Court found that the arbitrator was limited by the law to award only 6 per cent interest. However, the Court clarified that the trial court had the discretion to award 15.5 per cent interest, which could not be set aside by the High Court. Therefore, the Court allowed the cross-appeal to modify the interest rate to 15.5 per cent per annum from the date of the decree till payment. In conclusion, the Supreme Court dismissed Civil Appeal No. 7643 of 1995 and allowed the Civil Appeal arising out of Special Leave Petition (Civil) No. 6307 of 1995 to the limited extent of modifying the interest rate. The judgment of the High Court was modified accordingly, and the order of the trial court was confirmed.
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