2015 (1) TMI 65 - SC - Companies Law

Award of interest Held that - Respondent tried to persuade to enhance the post-Award interest granted by the Arbitral Tribunal @ 10.5% to 18% p.a. in the light of provisions in Section 31(7)(b) of the Act the contention cannot be accepted because the Arbitral Tribunal has already granted post-Award interest @ 10.5% - Only if the Award had not made such a direction, the statutory rate of interest @ 18% p.a. would have been payable from the date of the Award to the date of payment as per statutory provision - the order under appeal ought not to have approved grant of any pre-Award interest. Crane hire charges Held that - Clause 12 and other sub-clauses show that a high capacity crane (250 T) is included in the Tools and Plants which will be provided by BHEL to the respondent free of charge as per provisions of contract on availability but only upto drum lifting of Unit II as specified in clause 12.2.2 - There is no provision either in the Work Order or in the Agreement/Tender Document to entitle the respondent to claim that it was not obliged to pay the higher charges as fixed, subject to the conditions laid down by BHEL from time to time in respect of user of crane for Unit No. III - To the contrary, the extracts from the Tender Document contain a clear stipulation for recovery of such charges from the contractor s bill/security deposit in one instalment - the learned Division Bench has not kept in mind the provisions in the Work Order and the Tender Document. BHEL was neither required to issue any notice for exercising its right to recover crane hire charges for Unit III, nor was it required to deduct such charges from the running bills of the respondent - the crane hire charges claimed by the appellant were wrongly disallowed by the order under appeal passed by the Division Bench thus, the appellant is entitled for crane hire charges and, therefore, that amount needs to be deducted from the amount payable to the respondent under the Award on other heads the appellant is not liable to pay any pre-Award interest and the interest @ 10.5% p.a. shall be payable by the appellant only from the date of Award till the date of payment on the Award amount now found payable, if any Decided partly in favour of appellant.

Summary

Issues involved:
1. Interpretation of contract clauses regarding crane hire charges and interest in an arbitration dispute.

Analysis:
In this judgment, the appellant issued a notice inviting tender for engaging a sub-contractor to erect, test, and commission two 120 MW boilers. Disputes arose, leading to the constitution of an Arbitral Tribunal, which awarded amounts for various heads, including crane hire charges and interest. The appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The Single Judge and the Division Bench of the High Court of Calcutta decided on the objections raised by the appellant regarding over-run charges, crane hire charges, and interest.

The appellant appealed against the Division Bench's decision, focusing on the crane hire charges and interest issues. The appellant argued that the Division Bench erred in reversing the Single Judge's decision on crane hire charges based on specific clauses in the Work Order and Agreement/Tender Document. The respondent defended the Division Bench's decision, stating that the Tribunal's award on crane hire charges was based on a holistic view of the evidence.

Regarding interest, the respondent tried to persuade the court to enhance the post-Award interest rate, but the court held that the Tribunal's decision on interest was final. The court also discussed the legal position on pre-Award interest based on previous judgments. The court held that no pre-Award interest should have been granted.

The court analyzed the relevant clauses of the Work Order and Tender Document to determine the entitlement to crane hire charges. It found that the appellant was entitled to the crane hire charges for Unit III as per the contract clauses, contrary to the Division Bench's decision. Therefore, the court allowed the appeal, holding the appellant entitled to crane hire charges and no pre-Award interest, with post-Award interest payable at 10.5% p.a. from the date of the Award.

In conclusion, the court set aside the Division Bench's decision on crane hire charges and interest, ordering the deduction of crane hire charges from the respondent's payable amount under the Award and specifying the interest payable by the appellant.