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TMI Blog2024 (12) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... had attained finality and could not be interfered with. The Division Bench set aside that part of the order of the learned Single Judge dated 19.04.2017 passed in E.A. (OS) No. 34/2016 pertaining only to the calculations and permitted both the parties (appellant and respondent) to make submissions before the learned Single Judge restricted to the quantum of the amount payable to the respondent. The appeal and the miscellaneous application were disposed of with the observation that learned Single Judge would decide the amount payable by the appellant to the respondent after hearing both the sides. 4. At the outset, it would be appropriate to advert to the relevant facts having a material bearing on the lis. Facts 5. Respondent was awarded a contract work relating to construction of approaches to flyover at the level crossing on New Rohtak Road with clover-leaf slip road and service road etc. by the appellant. A contract agreement was entered into between the parties in this regard on 11.11.1983. The work however could not be completed even beyond the stipulated date of completion till March, 1990 and, therefore, the work had to be closed in an incomplete form. The main reason fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culated on the principal sum adjudged or would it be calculated on the principal sum plus interest on the principal sum which has accrued from the date of cause of action to date of passing of award, as under the new 1996 Act, award is enforced as a decree of the court. 8. Simultaneously, appellant also filed before the Single Bench a petition under Section 34 of the 1996 Act challenging the award dated 16.12.1997. By order dated 08.01.2002, the petition of the appellant under Section 34 of the 1996 Act was dismissed. 9. Appellant then preferred an appeal under Section 37 of the 1996 Act before the Division Bench assailing the order dated 08.01.2002 being FAO(OS) No. 89/2002. The said appeal was, however, dismissed by the Division Bench of the High Court by the judgment and order dated 14.03.2002. 10. Being aggrieved by the order dated 14.03.2002, appellant filed a special leave petition before this Court being SLP(C) No. 7474/2002. Though this Court had initially issued notice and granted limited stay qua execution of the award vis-à6 vis claim Nos. 22, 25 and 26, the said special leave petition was subsequently dismissed by this Court on 03.02.2010. 11. Reverting back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court being SLP(C) CC No. 5011/2007 and by order dated 09.07.2007, the said special leave petition was dismissed. 16. Against the clarification of the learned Arbitrator dated 15.03.2005, an application was filed by the appellant before the Single Bench being EA(OS) No. 270/2005 in the pending Ex.P. No. 99/1998 for setting aside the said clarification. By the order dated 19.02.2008, learned Single Judge, after referring to Section 32 of the 1996 Act and a decision of the Delhi High Court in Ircon International Ltd. Vs. Budhiraja Mining & Construction Ltd. 2007(4) Arb. LR 159 (Delhi), held that learned Arbitrator had become functus officio and, therefore, had no authority to entertain the application for clarification. After 30 days of the award, learned Arbitrator had no authority to make any change in the award. The earlier order of the learned Arbitrator awarding simple interest @ 18% per annum on the awarded amount from 01.04.1990 till the date of actual payment takes care of the interest part. Learned Single Judge, therefore, set aside the clarification issued by the learned Arbitrator, declaring that the award dated 16.12.1997 passed earlier and the interest granted thereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n held that the sum directed to be paid by the award would mean a sum inclusive of the principal amount adjudged and the interest thereon. Therefore, the post-award interest that may be awarded would be on the principal amount as well as on the interest on the principal amount which together would constitute the sum awarded. 21. Civil Appeal No. 2841 of 2015 i.e. the civil appeal of the respondent was allowed by directing that the interest component payable to the respondent shall be computed in accordance with the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra) and not in accordance with S.L. Arora (supra) since S.L. Arora (supra) has been overruled in M/s. Hyder Consulting (UK) Ltd. (supra). Resultantly, the decisions of the Single Bench as affirmed by the Division Bench were set aside; respondent was given liberty to seek execution of the award in terms of M/s. Hyder Consulting (UK) Ltd. (supra). 22. It is stated by the appellant that in the course of an audit, it transpired that it had made excess payment to the respondent due to an error in calculation of interest. Therefore, appellant filed an application being EA(OS) No. 364/2013 in the disposed of execution petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the respondent would have to be computed on the said basis. Accordingly, the appellant was directed to verify the calculations and to pay the amount to the respondent within four weeks. 25. The aforesaid judgment and order of the learned Single Judge dated 19.04.2017 was assailed by the appellant in appeal before the Division Bench being EFA(OS) No.17/2017. Division Bench vide the order dated 26.07.2017 noted that an amount of Rs. 5,14,44,393.00 was outstanding, due to be paid by the appellant to the respondent. Accordingly, without prejudice to the respective rights and contentions of the parties, a direction was issued to the appellant to deposit a sum of Rs. 5,14,44,393.00 before the High Court on or before 06.09.2017 to be released in favour of the respondent, subject to offering of solvent security. 26. In terms of the aforesaid direction, appellant deposited on 04.09.2017 a sum of Rs. 5,14,44,393.00 before the High Court by way of a demand draft dated 30.08.2017. 27. Thereafter, an application was filed before this Court by the appellant for seeking clarification of the order dated 12.03.2015 passed in C.A. No. 2541 of 2015. It was contended therein that the civil ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order of the Division Bench was questioned before this Court by the respondent in C.A. No. 2841 of 2015, the same was allowed vide the order dated 12.03.2015 relying on the decision of this Court in M/s. Hyder Consulting (UK) Ltd. (supra) which had overruled the earlier decision in S.L. Arora (supra). This Court also did not examine the primary question as to whether the learned Arbitrator had become functus officio while issuing the clarification. 30.2. When the appellant had earlier questioned the award under Section 34 of the 1996 Act and thereafter under Section 37 of the 1996 Act, the clarification dated 15.03.2005 was not in existence. Therefore, appellant could challenge the same only in the execution proceeding. Though the learned Single Judge had upheld the objection of the appellant and had set aside the clarification, Division Bench of the High Court while upholding the decision of the learned Single Judge and this Court while setting aside both the orders of the learned Single Judge and the Division Bench, did not examine this aspect of the matter. 30.3. It is also contended that learned Arbitrator had terminated the arbitral proceedings vide the award dated 16.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached this Court by filing special leave petition, a three- Judge Bench of this Court had already decided the issue in M/s. Hyder Consulting (UK) Ltd. (supra). In the said decision, this Court held that an arbitrator has the power to grant post-award interest under Section 31(7) of the 1996 Act on the sum comprising of the principal plus interest on the principal which has accrued from the date of cause of action to the date of passing of the award. Leave was granted whereafter the civil appeal of the respondent was allowed by this Court. Following the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra), the orders of Single Bench and Division Bench were set aside. Liberty was granted to the respondent to seek execution as per the law in M/s. Hyder Consulting (UK) Ltd. (supra). 31.2. In the above context, it is contended on behalf of the respondent that the clarification issued by the learned Arbitrator stood affirmed by this Court. Therefore, post the decision of this Court, it is not open to the appellant to again question the clarification on the ground that learned Arbitrator had no jurisdiction to issue such clarification. 31.3. Notwithstanding the same, appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the respondent to approach the learned Arbitrator for clarification. Though this decision of the Division Bench was challenged before this Court by the appellant by way of special leave petition, the same was dismissed. 32.2. Learned senior counsel submits that the clarification sought for by the respondent from the learned Arbitrator was that in the award it was not specifically mentioned that interest was granted under sub-Section(7) of Section 31 of the 1996 Act. Highlighting this aspect, learned senior counsel submits that learned Arbitrator was requested only to specifically mention whether the interest was awarded under Section 31(7) of the 1996 Act or not. 32.3. She further submits that in the clarificatory proceedings before the learned Arbitrator, it was specifically urged on behalf of the appellant that the learned Arbitrator had awarded past, pendente lite and future interest in terms of Section 31(7) of the 1996 Act. However, in the garb of issuing a clarification, learned Arbitrator fundamentally altered the award resulting in heavy financial burden on the appellant. 32.4. Therefore, learned Arbitrator had transgressed the scope of clarification sought for by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not be contained in the said 'sum'. According to her, it would be a complete absurdity if M/s. Hyder Consulting (UK) Ltd. (supra) is interpreted to mean that where interest on interest has not been granted or interest is not contained in the sum, it should be superimposed on an existing award. Seen in the above backdrop, the direction of this Court to compute the interest amount, in accordance with the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra), cannot be interpreted to mean that compound interest must be granted where it has not been granted in the first place. 32.9. She, therefore, submits that the impugned order of the Division Bench of the High Court is required to be set aside and the entire controversy is required to be given a quietus. 33. Mr. C. Aryama Sundaram, learned senior counsel representing the respondent at the outset submits that the primary issue raised by the appellant in the present proceeding i.e. whether the Arbitrator had become functus officio and thus had no jurisdiction to issue the clarification dated 15.03.2005, was expressly raised by the appellant and decided in favour of the respondent by this Court on three earlier occasions. Firstl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case for the fourth time). 33.1. Learned senior counsel submits that the principle of constructive res judicata is applicable to execution proceeding as well and in this connection, relies upon a decision of this Court in Mohanlal Goenka Vs. Benoy Kishna Mukherjee ( 1952 ) 2 SCC 648. 33.2. He also submits that when the respondent had filed application before the learned Arbitrator for clarification on the question of interest upon permission being granted by the Division Bench of the High Court, appellant did not raise any objection before the learned Arbitrator as to its jurisdiction to issue such clarification or that the learned Arbitrator had become functus officio. Referring to the decision of this court in Gas Authority of India Limited Vs. Keti Construction (I) Limited ( 2007 ) 5 SCC 38, he submits that if objection as to jurisdiction is not raised before the Arbitral Tribunal, the same cannot be allowed to be raised later in subsequent proceedings. 33.3. Proceeding further, Mr. Sundaram, learned senior counsel submits that after the learned Arbitrator had issued the clarification dated 15.03.2005, no petition was filed by the appellant under Section 34 of the 1996 Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in reading of Section 33(2) of the 1996 Act would show that the learned Arbitrator had the jurisdiction to issue the clarification. He submits that even learned Single Judge while setting aside the clarification acknowledged the fact that the learned Arbitrator had the jurisdiction to issue the clarification but the same had to be issued within 30 days. Once the Division Bench had given liberty to the respondent to seek clarification after 30 days even that issue i.e. seeking of clarification beyond 30 days would be of no consequence. 33.6. Learned senior counsel submits that undue hardship and serious prejudice would be caused to the respondent if the concurrent findings of two courts which are based on order(s) of this Court are set aside. Contending that there is no merit in the civil appeal, respondent seeks dismissal of the same. 34. After the arguments were closed and judgment was reserved, we had permitted the parties to file brief summary of submissions actually canvassed before the Court. Pursuant to such permission, both the sides have filed brief summary of submissions. 35. Submissions made by learned counsel for the parties have received the due consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e included in the 'sum' which is awarded by the arbitral tribunal. 36.4. This brings us to the second part i.e. clause (b) which deals with post award interest. The 'sum' directed to be paid by the arbitral tribunal shall, unless the award otherwise directs, carry interest at the rate of 18 percent per annum from the date of the award to the date of payment. Thus, what clause (b) provides for is that the arbitral tribunal may award interest on the 'sum' adjudged under clause (a). But if no such interest is awarded, then there shall be interest at the rate of 18 percent on the 'sum' awarded by the arbitral tribunal from the date of the award to the date of payment. The two crucial words in this part are sum and shall. As seen from clause (a), the 'sum' awarded by the arbitral tribunal would include interest if it is granted by the arbitral tribunal. Therefore, the 'sum' as awarded by the arbitral tribunal may or may not include interest. Whether the 'sum' so awarded includes or does not include interest, it would carry further interest at the rate of 18 percent from the date of the award to the date of payment unless another rate of interest is granted by the arbitral tribunal. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitral tribunals to award interest on interest from the date of the award till payment. After referring to the old Arbitration Act, 1940 as well as to the provisions of the Interest Act, 1978, the Bench observed that unlike the old Act the 1996 Act contains specific provision dealing with power of the arbitral tribunal to award interest. Analysing the aforesaid provision, the Bench further observed that Section 31 (7) makes no reference to payment of compound interest or payment of interest upon interest; nor does it require the interest which accrues till the date of the award to be treated as part of the principal from the date of the award for calculating the postaward interest. Examining the difference between clauses (a) and (b) of Section 31 (7) of the 1996 Act, the Bench observed that clause (a) relates to pre-award period interest whereas clause (b) relates to post-award period interest. The contract binds and prevails in regard to interest during the pre-award period. The contract has no application in regard to interest during the postaward period. Clause (a) gives discretion to the arbitral tribunal in regard to the rate, the period, the quantum (principal) when awarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest at such rates as it deems fit from the date on which the cause of action arose till the date of payment. It also provides that if the award is silent about interest from the date of award till the date of payment, the person in whose favour the award is made will be entitled to interest at 18% per annum on the principal amount awarded, from the date of award till the date of payment. The calculation that was made in the execution petition as originally filed was correct and the modification by the respondent increasing the amount due under the award was contrary to the award. 41. The correctness of the view taken in S.L. Arora (supra) was gone into by a three-Judge Bench of this Court in M/s. Hyder Consulting (UK) Ltd (supra). The majority opined that it was not possible to agree with the conclusion in S.L. Arora (supra) that Section 31(7) of the 1996 Act does not require that interest which accrues till the date of the award be included in the sum from the date of the award for calculating the post-award interest. Justice Bobde in his majority opinion was of the view that the conclusion reached in S.L. Arora (supra) does not seem to be in consonance with the clear language ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to encourage early payment of the awarded sum and to discourage delay. Therefore, the 'sum' directed to be paid by the arbitral award under clause (b) of sub-Section (7) of Section 31 of the 1996 Act is inclusive of interest pendente lite. In M/s. Hyder Consulting (UK) Ltd (supra), the majority referred to Section 34 of the Civil Procedure Code, 1908 and after making a comparison of the said provision with Section 31(7) of the 1996 Act observed that while enacting Section 34 of the Civil Procedure Code, Parliament conferred power on a court to award interest on the principal sum adjudged and not merely on the 'sum' as provided in the 1996 Act. Observing that the departure from the language of Section 34 of the Civil Procedure Code in Section 31(7) of the 1996 Act is significant and shows the intention of the Parliament, it has been held as follows: 12. It is settled law that where different language is used by Parliament, it is intended to have a different effect. In the Arbitration Act, the word "sum" has deliberately not been qualified by using the word "principal" before it. If it had been so used, there would have been no scope for the contention that the word "sum" may i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est amount awarded. 43. The question as to whether the sum awarded under clause (a) of sub-Section (7) of Section 31 of the 1996 Act will include interest pendente lite or not again came up for consideration before a two-Judge Bench of this Court in Delhi Airport Metro Express Private Limited Vs. Delhi Metro Rail Corporation ( 2022 ) 9 SCC 286. The Bench referred to the decision of this Court in M/s. Hyder Consulting (UK) Ltd (supra) and held as follows : 15. It could thus be seen that the majority view of this Court in Hyder Consulting (UK) is that the sum awarded may include the principal amount and such interest as the Arbitral Tribunal deems fit. It is further held that, if no interest is awarded, the "sum" comprises only the principal amount. The majority judgment held that clause (a) of sub-section (7) of Section 31 of the 1996 Act refers to the total amount or sum for the payment for which the award is made. As such, the amount awarded under clause (a) of sub-section (7) of Section 31 of the 1996 Act would include the principal amount plus the interest amount pendente lite. It was held that the interest to be calculated as per clause (b) of sub-section (7) of Section 31 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pre-award interest arrived at under Section 31(7)(a) of the Act. 28.2. Bobde, J.'s opinion in Hyder Consulting held that the arbitrator may grant post-award interest on the aggregate of the principal and the pre-award interest. The opinion did not discuss the issue of whether the arbitrator could use their discretion to award postaward interest on a part of the "sum" awarded under Section 31(7)(a). 28.3. The phrase "unless the award otherwise directs" in Section 31(7)(b) only qualifies the rate of interest. 28.4. According to Section 31(7)(b), if the arbitrator does not grant post-award interest, the award holder is entitled to post-award interest at eighteen per cent. 28.5. Section 31(7)(b) does not fetter or restrict the discretion that the arbitrator holds in granting postaward interest. The arbitrator has the discretion to award post-award interest on a part of the sum. 28.6. The arbitrator must exercise the discretionary power to grant post-award interest reasonably and in good faith, taking into account all relevant circumstances. 28.7 * * * * * 45. Let us now turn to Section 33 of the 1996 Act which provides for correction and interpretation of awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific point or part of the award. The period of 30 days contemplated under sub- Section (1) may stand extended to another period of time if agreed upon by the parties. Therefore, ordinarily the time limit for correction of errors or for interpretation of a specific point or part of the award is 30 days from the date of receipt of the arbitral award. However, the limitation of 30 days can be waived for another period of time, if agreed upon by the parties. Question for consideration is what would be the contours of the expression unless another period of time has been agreed upon by the parties, as appearing in sub-Section (1) of Section 33. 45.2. Sub-Section (7) of Section 33 clarifies that correction or interpretation of arbitral award or passing of additional arbitral award would attract Section 31 of the 1996 Act as discussed supra. Therefore, the language of sub-Section (1) of Section 33 makes it abundantly clear that the period of 30 days as provided in Section 33(1) is not an inflexible period. If the parties agree, the said period can be extended. 45.3. There is no dispute to the proposition of law laid down in Harshad Chiman Lal Modi (supra), relied upon by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission that he may be permitted to approach the Arbitral Tribunal for a clarification on this issue. In view of such submission, Division Bench granted permission to the respondent to approach the Arbitral Tribunal for clarification. While granting such permission, Division Bench did not answer the above question clarifying that it had not expressed any opinion about payment of interest either under Section 31(7)(a) or under Section 31(7)(b) of the 1996 Act. 49. In terms of the permission granted, respondent filed an application before the learned Arbitrator seeking clarification of the interest awarded by the learned Arbitrator qua Section 31(7) of the 1996 Act. In its response to the application of the respondent filed before the learned Arbitrator, appellant contended that the learned Arbitrator had awarded simple interest @ 18% per annum on the awarded amount from 01.04.1990 to the date of actual payment except on claim No. 23(b). Referring to the interest portion of the award, it stated that interest was required to be paid on Rs. 1,70,70,720.80 minus Rs. 5,61,208.00 [for claim No. 23(b)] equal to Rs. 1,65,09,512.80, which is the principal amount. Therefore, it was conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarification. 53. When the respondent approached the Division Bench assailing the above decision of the learned Single Judge, the Division Bench held vide the order dated 23.02.2012 that in view of the judgment in S.L. Arora (supra), compound interest under the 1996 Act cannot be granted. Accordingly, challenge to the decision of the learned Single Judge was rejected. 54. When the matter came up before this Court in Civil Appeal No. 2841 of 2015 at the instance of the revenue, this Court observed that the decision in S.L. Arora (supra) has been overruled in M/s. Hyder Consulting (UK) Ltd. (supra) declaring that the interest component payable to the respondent shall be computed in accordance with the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra). Both the orders of the learned Single Judge and the Division Bench were set aside, further clarifying that it would be open to the respondent to seek execution as per the law pronounced by this Court in M/s. Hyder Consulting (UK) Ltd. (supra). 55. Thereafter, the executing court i.e. learned Single Judge passed the order dated 19.04.2017. Learned Single Judge, firstly, held that it was no longer open to examine the question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is a consent order. Division Bench of the High Court after taking the consent of the parties had remitted the matter back to the High Court only as to the calculations permitting both the parties to make submissions before the learned Single Judge on the quantum payable to the respondent. If that be the position, it is not open to the appellant to assail the aforesaid order. 58. The issue raised by the appellant in the present proceeding i.e. learned Arbitrator had become functus officio and therefore had no jurisdiction to issue the clarification, was also raised in the miscellaneous application filed by the appellant before this Court seeking clarification of the order dated 12.03.2015. While dismissing the miscellaneous application, no leave was granted by this Court to agitate the aforesaid issue in any other proceeding. Therefore, viewed from this perspective also, it is not open to the appellant to raise the aforesaid issue again in the present proceeding. Conclusion 59. In view of what we have discussed above, the interpretation given by us to Section 33(1) of the 1996 Act and on a cumulative assessment of the attendant facts and circumstances of the case, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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