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TMI Blog2019 (8) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... on Act, 1940 including the State amendment will have no application to the proceedings commenced after coming into force of the Act of 1996. Section 31(7)(b) of the Act of 1996, before its amendment by Act 3 of 2016, which has come into force with effect from 23.10.2015, is relevant for the purpose of this case, empowers the Arbitrator to award pre-award and post-award interest. In the instant case, though the agreement was earlier to the date of coming into force of the Act of 1996, the proceedings admittedly commenced on 27.10.1999 and were conducted in accordance with the Act of 1996. If that be so, para 7A of Section 24 of the U.P. Amendment Act has no application to the case at hand. Since the rate of interest granted by the Arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents and filed the claim petition on 11.09.1999. Shri B.M. Arora was appointed as the sole Arbitrator on 12.10.1999 and the proceedings commenced on 27.10.1999 under the Arbitration and Conciliation Act, 1996 (for short 'the Act of 1996'). 3. The sole Arbitrator passed an award on 24.12.2001, whereby the appellant was awarded a sum of ₹ 17, 86, 339/( seventeen lakhs eighty six thousand three hundred thirty nine). The Arbitrator further held that the interest on the sum awarded would be payable in accordance with Section 31(7)(b) of the Act of 1996, i.e. 18% p.a. from the date of the award till the date of actual payment. The operative portion of the award is: According to the above, the petitioner bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced on 27.10.1999 under the Act of 1996 and the provisions of Arbitration Act, 1940 will have no application to the proceedings between the parties. The U.P. Amendment Act was a State amendment which introduced para 7A to the First Schedule of the Arbitration Act, 1940. Since the Arbitration Act, 1940, has been repealed under Section 85 of the Act of 1996, the Schedule to Arbitration Act, 1940 also stands repealed and para 7A has become obsolete. Therefore, the Arbitrator has rightly awarded interest @ 18% p.a. under Section 31(7)(b) of the Act of 1996. The District Judge as also the High Court have wrongly relied upon the repealed provision and reduced a statutorily permissible interest rate. 7. On the other hand, learned Additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment . (Emphasis supplied) 11. Section 31(7)(b) of the Act of 1996 clearly mandates that, in the event the Arbitrator does not give any specific directions as regards the rate of interest on the amount awarded, such amount 'shall' carry interest @ 18% p.a. from the date of award till the date of payment. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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