2012 (3) TMI 641 - SC - Indian Laws

Award of interest on interest from the date of award - The High Court considered the diverse provisions of the Act including Section 31(7)(a) and (b) of the Act and few decisions of this Court and ultimately held that the Respondent was entitled to post- award interest @ 18% p.a. from the date of the award till the date of the actual payment. It is this order which is in appeal before us. HELD THAT - The appeal is, accordingly, allowed in part. The impugned order of the High Court is modified and it is directed that the Appellants shall be liable to pay interest @ 18% p.a. for the post-award period from the date of award until May 24, 2001. After May 24, 2001, the Appellants are not liable to pay any interest on the award amount under Section 37(1)(b) of the Act. the amount as per the impugned order dated March 5, 2009 was deposited by the Appellants which has been withdrawn by the Respondent. In light of this, court observe that the High Court shall now re-determine the amount due and payable to the Respondent under the award and the post- award interest as indicated above. The excess amount, if withdrawn by the Respondent shall be refunded to the Appellants within two months of re-determination by the High Court.

Summary

Issues involved:
1. Interpretation of Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996 regarding post-award interest.
2. Determination of the date of payment under the Act in relation to the deposit of the entire award amount into the High Court.
3. Liability of the Appellants to pay interest @ 18% p.a. from the date of the award till the date of actual payment to the Respondent.

Analysis:
1. The judgment dealt with the interpretation of Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996 concerning post-award interest. The High Court considered various provisions of the Act and previous court decisions to determine the entitlement of the Respondent to post-award interest at 18% p.a. from the date of the award until the actual payment. The appeal was filed challenging this decision.

2. The Court focused on determining the date of payment under the Act in relation to the deposit of the entire award amount into the High Court. The Appellants had deposited the award amount before the High Court on a specific date, raising the question of whether this constituted payment to the Respondent and whether the liability to pay interest ceased from that date. The Court analyzed the definition of "payment" in legal dictionaries to establish the significance of extinguishing the liability under the award.

3. The liability of the Appellants to pay interest @ 18% p.a. from the date of the award till the date of actual payment to the Respondent was a crucial issue. The Court observed that the Arbitrator had not exercised discretion regarding post-award interest, leading to the application of Section 31(7)(b) of the Act, which mandates interest at 18% p.a. in the absence of such discretion. The judgment clarified that once the award amount was deposited into the High Court, the liability for post-award interest ceased from that date, modifying the High Court's order accordingly.

4. The Court directed the Appellants to pay interest at 18% p.a. for the post-award period from the date of the award until the deposit date. Any excess amount withdrawn by the Respondent was to be refunded to the Appellants after re-determination by the High Court. The judgment highlighted the importance of defining "payment" in the context of the Act and clarified the timeline for the liability of post-award interest, providing a comprehensive analysis of the legal provisions and previous court decisions to reach a conclusive decision.