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TMI Blog1995 (12) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... made to this effect. Accordingly, Special Leave is granted in the present matter. Mr. K.K. Venugopal the learned senior counsel for the respondent pointed out that the aforesaid order was passed on the premise that the question regarding award of interest pendent lite by the Arbitrator was referred to a three Judge Bench. He pointed out that the question which was in fact referred to the three Judge Bench was in regard to the Award of interest in pendent lite but prior to the Arbitrator entering upon the reference. He, therefore, submitted that the aforesaid order and Special Leave had been granted because it was not correctly represented that the reference to the three Judge Bench was in relation to interest accruing prior to the refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract and he has no power to travel beyond the contract and if he does so he would be acting without jurisdiction. He invited our attention to the observation in paragraphs 26 and 29 of that decision which we have noticed. A Constitution Bench of this Court in Secretary, Irrigation Department, Government of Orissa Others Vs. G.C. Roy [1992(1) SCC 508] was called upon to consider whether the decision of this Court in Executive Engineer (Irrigation), Balimela Ors. Vs. Abhaduta Jena Ors. [1988(1) SCC 418] correctly laid down the Rule in regard to Arbitrator s power to grant interest pendent lite. Dealing with this question the Constitution Bench summed up the legal position in regard to grant of interest pendent lite in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, so long as they are not opposed to law. (The proviso to Section 41 and Section 3 of the Arbitration Act illustrate this point). All the same, the agreement must be in conformity with law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement. (iv) Over the years, the English and Indian courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest, the arbitrator must have the power to award interest pendent lite. The awards has not been followed in the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest pendent lite, the party entitled thereto would be required to go to a Court which would result in multiplicity of proceedings, a situation which the Court should endeavor to avoid. Reliance was, however, placed on the observation in sub-para (iii) wherein it is pointed out that an arbitrator is a creature of an agreement and if the agreement between the parties prohibits the payment of interest pendent lite the arbitrator must act in accordance therewith. In other words, according to their Lordships the arbitrator is expected to act and make his award in accordance with the general law of the land but subject to an agreement, provided, the agreement is valid and legal. Lastly, it was pointed out that interest pendent lite is not a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, ordinarily, a person who has a legitimate claim is entitled to payment within a reasonable time and if the payment has been delayed beyond reasonable time he can legitimately claim to be compensated for that delay whatever nomenclature one may give to his claim in that behalf. If that be so, we would be justified in placing a strict construction on the term of the contract on which reliance has been placed. Strictly construed the term of the contract merely prohibits the Commissioner from paying interest to the contractor for delayed payment but once the matter goes to arbitration the discretion of the Arbitrator is not, in any manner, stifled by this term of the contract and the Arbitrator would be entitled to consider the question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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