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since 1985 practicing as advocate in both civil & criminal laws. This blog is only for information but not for legal opinions

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Sunday, March 20, 2016

“Suo motu cognizance of appointment of Lokayukta and failure to constitute Meghalaya State Human Rights Commission”.= “Judges ought to be more learned than witty, more reverend than plausible, and more advised than confident. Above all things, integrity is their portion and proper virtue. … Let the Judges also remember that Solomon’s throne was supported by lions on both sides: let them be lions, but yet lions under the throne.” - “History will find greatness in Felix Frankfurter as a justice, not because of the results he reached but because of his attitude toward the process of decision. His guilding lights were detachment, rigorous integrity in dealing with the facts of a case, refusal to resort to unworthy means, no matter how noble the end, and dedication to the Court as an institution. Because he was human, Justice Frankfurter did not always live up to his own ideal. But he taught us the lesson that there is importance in the process.”= In State of Haryana v. State of Punjab & another[13], the Court emphasizing on the facet of pleading, has opined that:- “….. It is well established that constitutional invalidity (presumably that is what Punjab means when it uses the word “unsustainable”) of a statutory provision can be made either on the basis of legislative incompetence or because the statute is otherwise violative of the provisions of the Constitution. Neither the reason for the particular enactment nor the fact that the reason for the legislation has become redundant, would justify the striking down of the legislation or for holding that a statute or statutory provision is ultra vires. Yet these are the grounds pleaded in subparagraphs (i), (iv), (v), (vi) and (vii) to declare Section 14 invalid. Furthermore, merely saying that a particular provision is legislatively incompetent [ground (ii)] or discriminatory [ground (iii)] will not do. At least prima facie acceptable grounds in support have to be pleaded to sustain the challenge. In the absence of any such pleading the challenge to the constitutional validity of a statute or statutory provision is liable to be rejected in limine.” This being the position in law, the High Court could not have proceeded as if it was testing the validity of the provision and granted stay. The approach is totally fallacious. Having opined aforesaid, we have no option but to set aside that part of the order which deals with the provisions of the Act. We do not intend to express any opinion with regard to validity of any provision contained in the Act. We also do not think it condign to direct that the establishment under the said Act should become operational within any fixed time. Suffice to say at present that when the State Legislature has introduced the legislation to take steps as regards the institution, it shall be the endeavour of the executive to see that the office of the Lokayukta is in place. We say no more for the present.

                                 REPORTABLE


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO.  2987 OF 2016
             (@ Special Leave Petition (Civil) No. 6825 of 2016)


Joint Secretary, Political Department,    …Appellant(s)
Government of Meghalaya,
Main Secretariat, Shillong

                                  Versus

High Court of Meghalaya                   …Respondent(s)
through its Registrar,
Shillong
                               J U D G M E N T



Dipak Misra, J.

       New York Times,  in  the  Editorial,  “The  Frankfurter  Legacy,”  on
September 2, 1962, while stating about the greatness of  Felix  Frankfurter,
chose the following expression:-

“History will find greatness in Felix Frankfurter as a justice, not  because
of the results he reached but because of his attitude toward the process  of
decision.  His  guilding  lights  were  detachment,  rigorous  integrity  in
dealing with the facts of a case, refusal to resort to  unworthy  means,  no
matter how noble the end, and dedication to the  Court  as  an  institution.
Because he was human, Justice Frankfurter did not always live up to his  own
ideal.  But he taught  us  the  lesson  that  there  is  importance  in  the
process.”


2.    Almost two decades and two years back, the Court in Tata  Cellular  v.
Union of India[1]  referred,  with  approval,  the  following  passage  from
Neely, C.J.[2] :-
“82. … ‘I have very few illusions about my own limitations as  a  Judge  and
from those limitations I generalise  to  the  inherent  limitations  of  all
appellate courts reviewing rate cases.  It  must  be  remembered  that  this
Court sees approximately 1262 cases a year with five Judges.  I  am  not  an
accountant,  electrical  engineer,  financier,  banker,  stock  broker,   or
systems management analyst. It is the  height  of  folly  to  expect  Judges
intelligently to review a 5000 page record  addressing  the  intricacies  of
public utility operation.’ ”

3.    Regard being had to the directions issued  by  the  High  Court,  this
Court in Census Commissioner and others  v.  R.  Krishnamurthy[3]  commenced
the judgment in the following manner:-
      “The present appeal depicts and, in a way, sculpts the  non-acceptance
of  conceptual  limitation  in  every  human  sphere   including   that   of
adjudication. No adjudicator or a Judge can conceive the idea that  the  sky
is the limit or for that matter there is no  barrier  or  fetters  in  one’s
individual perception, for judicial vision  should  not  be  allowed  to  be
imprisoned and have  the  potentiality  to  cover  celestial  zones.  Be  it
ingeminated, refrain and restrain are the essential virtues in the arena  of
adjudication  because  they  guard  as  sentinel  so  that  virtuousness  is
constantly sustained. Not for nothing, centuries back Francis  Bacon[4]  had
to say thus:

“Judges ought to be more learned than witty, more reverend  than  plausible,
and more advised than  confident.  Above  all  things,  integrity  is  their
portion and proper virtue. … Let the Judges  also  remember  that  Solomon’s
throne was supported by lions on both sides: let  them  be  lions,  but  yet
lions under the throne.”

4.    The necessity has arisen again  for  reiteration  of  the  fundamental
principle to be adhered to by a Judge.  It is  because  the  order  impugned
herein  presents  a  sad  sad  scenario,  definitely   and   absolutely   an
impermissible and unacceptable one.
5.    Presently, to the facts of the case.   A  writ  petition  forming  the
subject matter of Writ Petition (Civil)  No.  319  of  2015  was  registered
under the caption “Suo motu  cognizance  of  appointment  of  Lokayukta  and
failure to constitute Meghalaya  State  Human  Rights  Commission”.  By  the
impugned order dated 14.12.2015, the High Court referred to  clause  (a)  of
sub-section (2) of Section 3 of  the  Meghalaya  Lokayukta  Act,  2014  (for
brevity, “the Act”) and proceeded to deal with the same.  In  that  context,
it has passed the following order:-

“The  provision  providing  such  eligibility  criterion  requires  judicial
scrutiny; for: the same eligibility cannot be provided for  the  Chairperson
and for a Member other than the Judicial Member of the  Lokayukta.  Besides,
the Central Lokpal  and  Lokayukta  Act  of  2013  does  not  prescribe  any
eligibility criteria for  Lokayukta  and  Up-Lokayukta.  That  apart,  other
States including State of Karnataka and State of Madhya Pradesh, looking  to
adjudicatory nature of work, has provided the eligibility  criteria  like  a
former Judge of Supreme Court; a Chief Justice of High Court or a  Judge  of
High Court, whereas, the eligibility  criteria  provided  in  the  Meghalaya
Lokayukta Act, 2014, inter alia includes a  criterion  whereby  an  eligible
non-Judicial person can also be appointed as the Chairperson.  Hence,  issue
notice.

      During the pendency of this writ petition, the portion of  clause  (a)
of sub-section (2) of Section 3, which reads as  “…  or  an  eminent  person
who fulfills the eligibility specified in clause (b)  of  sub-section  (3)”;
and consequently, “Sub-clause (b) of Sub-section (3) of Section  3”  insofar
as it provides for the  offending  criterion  for  the  appointment  of  the
Chairperson is hereby stayed.”

6.    After passing the said order, the High Court  has  proceeded  to  deal
with the appointment of the Chairperson and Members of the  Meghalaya  State
Human Rights Commission.  Dealing with the said facet, it  had  directed  as
follows:-
      “Now, coming to the appointment of the Chairperson and Members of  the
Meghalaya State Human Rights Commission, Hon’ble the Apex  Court  has,  vide
order dated 24.7.2015 in Crl.M.P. No. 16086 of 1997 in Crl.M.P. No. 4201  of
1997 (Shri Dilip K. Basu v. State of  West  Bengal  and  Ors)  has  directed
various States including the State of Meghalaya to set up  the  State  Human
Rights  Commission  within  six  months  and  to  fill  up  the  vacancy  of
Chairperson and Members of State Human Rights Commission  within  3  (three)
months from the date of order.  As  towards   compliance  of  the  aforesaid
directions of Hon’ble the  Apex  Court,  the  State  of  Meghalaya  has  not
initiated the process of appointment of the Chairperson and Members  of  the
State Human Rights Commission, we  direct  the  Chief  Secretary,  State  of
Meghalaya, to file affidavit showing the status of processing  of  the  file
for the appointment of the Chairperson and other Members of the State  Human
Rights Commission on the next date of hearing.  Besides,  we  also  make  it
clear, that the State shall specify the name  of  Hon’ble  former  Judge  of
Supreme Court and Hon’ble former Chief Justice of High Court, who have  been
offered the appointment  as  Chairperson.   The  State  shall  also  clearly
indicate as to who are the Judges  of  High  Court  and  other  non-Judicial
persons who have been offered the appointment as the Chairperson/Members  of
the Commission.  This information is required to  maintain  transparency  in
the process of  appointment on the posts as aforesaid.”



7.    Be it noted, the Division Bench has appointed two  counsel  as  Amicus
Curiae and directed the Registrar General to settle their  professional  fee
to be paid by the Department of Law, Government of Meghalaya.

8.    Mr. Ranjan Mukherjee learned counsel appearing for the  appellant  has
submitted that the State has  no  cavil  over  the  directions  relating  to
constitution  of  the  State  Human  Rights  Commission  by  appointment  of
Chairperson and Members. In course  of  hearing,  the  learned  counsel  has
submitted that the State shall appoint the Chairperson and  Members  of  the
State Human Rights Commission as per law by end of June, 2016.   That  being
the concession by Mr. Mukherjee on behalf of the State which, we  think,  is
absolutely fair, there is no need to advert to the said aspect. It  is  also
urged by Mr. Mukherjee that the State would not  have  challenged  the  said
part of the order as it understands its responsibility and further when  the
High Court has issued the direction, the State is  obliged  to  respect  the
same as it is  in  consonance  with  the  legal  position.  The  cavil,  Mr.
Mukherjee would put it, pertains to the observations made by the High  Court
and  the  stay  order  passed  in  respect  of  the  provision  relating  to
eligibility prescribed under the Act. It is urged  by  him  that  there  had
been no assail to the constitutional validity of  the  said  provision  and,
therefore, the High Court could  not  have  suo  motu  taken  up  the  same,
especially when the language employed is also  similar  to  the  Lokpal  and
Lokayuktas Act, 2013 passed by the Parliament.

9.    To appreciate the submission, it is necessary to note that Chapter  II
of the Act deals with Establishment  of  Lokayukta.   Sections  3  reads  as
follows:-

“Section  3.  Establishment  of  Lokayukta.—(1)  As  soon   as   after   the
commencement of this Act, there shall be  established,  by  notification  in
the Official Gazette, a body to be called the “Lokayukta”.

(2) The Lokayukta shall consist of-

(a) a Chairperson, who is or has been a Chief Justice of the High  Court  or
a Judge of the High Court or an eminent person who fulfils  the  eligibility
specified in clause (b) of sub-section (3); and

(b) such number of members, not exceeding four out  of  whom  fifty  percent
shall be Judicial Members.

(3) A person shall be eligible to be appointed,-

(a) as a Judicial Member if he is or has been a Judge of the High  Court  or
is eligible to be a Judge of the High Court;

(b) as a Member other  than  a  Judicial  Member,  if  he  is  a  person  of
impeccable integrity,  outstanding  ability  having  special  knowledge  and
expertise of not less than twenty-five years  in  the  matters  relating  to
anti-corruption policy, public administration, vigilance, finance  including
insurance and banking, law, and management.

(4) The Chairperson or a Member shall not be —

 (i) a member of Parliament or a member of the Legislature of any  State  or
Union territory;

(ii) a person convicted of any offence involving moral turpitude;

(iii) a person of less  than  forty-five  years  of  age,  on  the  date  of
assuming office as Chairperson or Member, as the case may be;

 (iv) a member of any Panchayat or Municipality or District Council;

(v) a person who has been removed or dismissed from service of the Union  or
a State, and shall not hold any office of trust or profit  (other  than  his
office as the Chairperson or a Member) or be connected  with  any  political
party or carry on any business or practice any profession  and  accordingly,
before he enters upon his office, a person appointed as the  Chairperson  or
a Member, as the case may be, shall, if –

(a) he holds any office of trust or profit, resign from such office; or

(b) he is carrying on any business, sever his connection  with  the  conduct
and management of such business; or

(c) he is practicing any profession, cease to practice such profession.”



10.   Section  4  deals  with  appointment  of  Chairperson  or  Members  on
recommendation of Selection Committee;  and  other  provisions  of  the  Act
dwell upon various other facets which we need not refer to.   Submission  of
Mr. Mukherjee is that the High Court could not have suo  motu  proceeded  to
deal with the appointment of Lokayukta and, in  any  case,  could  not  have
directed stay of the provision.

11.   There can be no doubt, the court can initiate suo motu proceedings  in
respect of certain issues which come within the domain of  public  interest.
In Budhadev Karmaskar (1) v. State of W.B.[5] the  Court,  while  dismissing
an appeal, observed thus:-

“14. Although we have dismissed this  appeal,  we  strongly  feel  that  the
Central and the State  Governments  through  Social  Welfare  Boards  should
prepare schemes for rehabilitation all over the country for  physically  and
sexually abused women commonly known as the ‘prostitutes’ as we are  of  the
view that the prostitutes also have a  right  to  live  with  dignity  under
Article 21 of the Constitution of India since they  are  also  human  beings
and their problems also need to be addressed.

15. As  already  observed  by  us,  a  woman  is  compelled  to  indulge  in
prostitution not for pleasure but because  of  abject  poverty.  If  such  a
woman  is  granted  opportunity  to  avail  some  technical  or   vocational
training, she would be able  to  earn  her  livelihood  by  such  vocational
training and skill instead of by selling her body.

16. Hence, we direct the  Central  and  the  State  Governments  to  prepare
schemes  for  giving  technical/vocational  training  to  sex  workers   and
sexually abused women in all cities in India. The schemes should mention  in
detail who will give the technical/vocational training and  in  what  manner
they can be rehabilitated and  settled  by  offering  them  employment.  For
instance, if a technical training is for some craft  like  sewing  garments,
etc. then some arrangements should also be made for providing a  market  for
such  garments,  otherwise  they  will  remain  unsold   and   unused,   and
consequently the woman will not be able to feed herself.”

      The purpose of the initiation in the aforesaid case is self-evident.

12.   Suo motu public interest litigation can  be  initiated  to  ameliorate
the conditions of a class  of  persons  whose  constitutional  or  otherwise
lawful rights are affected or not adequately looked  into.   The  Court  has
adopted the said tool so that persons in disadvantaged situation because  of
certain reasons – social, economic or socio-economic – are in a position  to
have access to the Court.  The Court appoints Amicus Curiae  to  assist  the
Court and also  expects  the  executive  to  respond  keeping  in  view  the
laudable exercise.

13.   In Ramlila Maidan Incident, In Re[6],  suo motu probe of incident  was
ordered by the Court against imposition of prohibitory order  at  night  and
hasty and forcible evacuation of public on the basis of  media  reports  and
CCTV camera footage.         In Nirmal Singh Kahlon v.  State  of  Punjab  &
others[7], the Court has held:-

“The High Court while entertaining the writ petition formed  a  prima  facie
opinion as regards the systematic commission of fraud. While dismissing  the
writ petition filed by the selected candidates,  it  initiated  a  suo  motu
public interest litigation.  It  was  entitled  to  do  so.  The  nature  of
jurisdiction exercised by the High Court, as is well  known,  in  a  private
interest litigation and  in  a  public  interest  litigation  is  different.
Whereas in the latter it is inquisitorial in nature, in  the  former  it  is
adversarial. In a public interest litigation, the court  need  not  strictly
follow the ordinary procedure. It may not only appoint committees  but  also
issue directions upon the State from time  to  time.  (See  Indian  Bank  v.
Godhara Nagrik Coop.  Credit  Society  Ltd.&  another[8]  and  Raju  Ramsing
Vasave v. Mahesh Deorao Bhivapurkar[9].)”



14.   In Raju Ramsing Vasave (supra), the Court has  observed  that  when  a
question is raised, this Court can take  cognizance  of  a  matter  of  such
grave importance suo motu. It may not treat the special leave petition as  a
public interest litigation, but, as a public law litigation.  It  is,  in  a
proceeding of that nature, permissible for the  Court  to  make  a  detailed
enquiry with regard to the broader aspects of the  matter  although  it  was
initiated at the instance of a person having a private  interest.  A  deeper
scrutiny can be made so as to enable the Court to find out as to  whether  a
party to a lis is guilty of commission of  fraud  on  the  Constitution.  If
such an enquiry subserves  the  greater  public  interest  and  has  a  far-
reaching  effect  on  the   society   the   Court   will   not   shirk   its
responsibilities from doing so.
15.   Be it noted, the constitutional courts can entertain letter  petitions
and deal with them as writ petitions.  But it will depend  upon  the  nature
of the issue sought  to  be  advanced.   There  cannot  be  uncontrolled  or
unguided exercise of epistolary jurisdiction.
16.   In the instant case, as is evident, the High Court  has  compared  the
provisions pertaining to appointment of Chairperson and  Members  under  the
Act with the provisions of other Acts  enacted  by  different  legislatures.
The legislature has passed the legislation in  its  wisdom.   There  was  no
challenge to the constitutional validity of the provisions of the Act.   The
suo motu petition was registered for giving effect to the  Act  by  bringing
the institutions into existence.  This  may  be  thought  of  in  very  rare
circumstances depending on the nature  of  legislation  and  the  collective
benefit but in that arena also the Court cannot raise the issue relating  to
any particular provision and seek explanation in  exercise  of  jurisdiction
under Article 226  of  the  Constitution.   In  the  case  at  hand,  as  is
manifest, the Division Bench of  the  High  Court  has,  with  an  erroneous
understanding of fundamental principle of law, scanned the  anatomy  of  the
provision and passed an order in relation to it as if  it  is  obnoxious  or
falls  foul  of  any  constitutional  provision.   The   same   is   clearly
impermissible.  A person aggrieved or with expanded concept of locus  standi
some one could have assailed the provisions.  But in that  event  there  are
certain requirements and need for certain compliances.
17.   In State of Uttar Pradesh v. Kartar Singh[10], while dealing with  the
constitutional validity of Rule 5 of the Food Adulteration Rules,  1955,  it
has been opined as follows:-
“….. if the  rule  has  to  be  struck  down  as  imposing  unreasonable  or
discriminatory standards, it could not  be  done  merely  on  any  a  priori
reasoning but only as a result of materials placed before the Court  by  way
of scientific analysis. It is obvious that this can be done  only  when  the
party invoking the protection of Art. 14 makes  averments  with  details  to
sustain such a plea and leads evidence to establish  his  allegations.  That
where a party seeks to impeach the validity of a rule made  by  a  competent
authority on the ground that the rules offend Art. 14 the burden is  on  him
to  plead  and  prove  the  infirmity  is  too  well  established  to   need
elaboration.”

18.    In  State  of  Andhra  Pradesh  and  another  v.  K.  Jayaraman   and
others[11], it has been ruled thus:-
“It is clear that,  if  there  had  been  an  averment,  on  behalf  of  the
petitioners, that the rule was invalid for violating Articles 14 and  16  of
the Constitution, relevant facts showing how it was discriminatory ought  to
have been set out.”

19.   In Union of India v. E.I.D. Parry (India) Ltd.[12], a             two-
Judge Bench of this Court has expressed thus:-
“… There was no pleading that the Rule upon which the  reliance  was  placed
by the respondent was ultra vires the Railways Act, 1890. In the absence  of
the pleading to that effect, the trial Court did  not  frame  any  issue  on
that question. The High Court of its own proceeded to consider the  validity
of the Rule and ultimately held that it  was  not  in  consonance  with  the
relevant provisions of the Railways Act, 1890 and consequently held that  it
was ultra vires. This view is contrary to the settled law…”

20.   In State of Haryana v. State of  Punjab  &  another[13],    the  Court
emphasizing on the facet of pleading, has opined that:-
“….. It is well established that constitutional invalidity (presumably  that
is what Punjab means when it uses the word “unsustainable”) of  a  statutory
provision can be made either on the basis  of  legislative  incompetence  or
because the  statute  is  otherwise  violative  of  the  provisions  of  the
Constitution. Neither the reason for the particular enactment nor  the  fact
that the reason for the legislation has become redundant, would justify  the
striking down of the legislation or for holding that a statute or  statutory
provision  is  ultra  vires.  Yet  these  are   the   grounds   pleaded   in
subparagraphs (i), (iv), (v), (vi) and (vii) to declare Section 14  invalid.
Furthermore, merely saying that  a  particular  provision  is  legislatively
incompetent [ground (ii)] or discriminatory [ground (iii)] will not  do.  At
least prima facie acceptable grounds  in  support  have  to  be  pleaded  to
sustain the challenge. In the absence of any such pleading the challenge  to
the constitutional validity of a statute or statutory  provision  is  liable
to be rejected in limine.”

21.   This being the position  in  law,  the  High  Court  could  not   have
proceeded as if it was testing the validity of  the  provision  and  granted
stay. The approach is totally  fallacious.    Having  opined  aforesaid,  we
have no option but to set aside that part of the order which deals with  the
provisions of the Act.  We do not intend to express any opinion with  regard
to validity of any provision contained in the Act.  We also do not think  it
condign to direct that the establishment under the said  Act  should  become
operational within any fixed time.  Suffice to say at present that when  the
State Legislature has introduced the legislation to take  steps  as  regards
the institution, it shall be the endeavour of the executive to see that  the
office of the Lokayukta is in place.  We say no more for the present.
22.   In view of the aforesaid analysis, the appeal is  partly  allowed  and
the direction pertaining to the stay of  the  provisions  of  the  Meghalaya
Lokayukta Act, 2014 is set aside. It is directed  that  State  Human  Rights
Commission shall become functional  by  end  of  June,  2016.   As  we  have
completely dealt with the matter, the writ petition initiated  by  the  High
Court shall be deemed to have been disposed of. There shall be no  order  as
to costs.
                                         .................................J.
                                             [Dipak Misra]


                                         .................................J.
                                  [Shiva Kirti Singh]
New Delhi;
March 18, 2016
-----------------------
[1]

      [2] (1994) 6 SCC 651
[3]

      [4] Bernard Schwartz in Administrative Law, 2nd Edn., p. 584
[5]

      [6] (2015) 2 SCC 796
[7]

      [8] Bacon, ”Essays: Of Judicature in I The Works of Francis Bacon”
(Montague, Basil, Esq ed., Philadelphia: A Hart, late Carey & Hart, 1852),
pp. 58-59.
[9]

      [10] (2011) 11 SCC 538
[11]

      [12] (2012) 5 SCC 1
[13]

      [14] (2009) 1 SCC 441
[15]

      [16] (2008) 12 SCC 541
[17]

      [18] (2008) 9 SCC 54
[19]

      [20]  AIR 1964 SC 1135
[21]

      [22] (1974) 2 SCC 738 :  AIR 1975 SC 633
[23]

      [24] (2000) 2 SCC 223 :  AIR 2000 SC 831
[25]

      [26]  (2004) 12 SCC 673


Thursday, March 17, 2016

whether an Arbitrator has the power to award pendente lite interest in case contract bars the same in a case covered by Act and decisions of this Court in Engineers De-Space Age (supra) and Madnani Construction Corporation (P) Ltd. (supra) have been correctly decided..=The decision in Madnani Construction Corporation (supra) has followed decision in Engineers-De-Space-Age (supra). Same is also required to be diluted to the extent that express stipulation under contract may debar the Arbitrator from awarding interest pendente lite. Grant of pendente lite interest may depend upon several factors such as phraseology used in the agreement, clauses conferring power relating to arbitration, nature of claim and dispute referred to Arbitrator and on what items power to award interest has been taken away and for which period. Thus, our answer to the reference is that if contract expressly bars award of interest pendente lite, the same cannot be awarded by the Arbitrator. We also make it clear that the bar to award interest on delayed payment by itself will not be readily inferred as express bar to award interest pendente lite by the Arbitral Tribunal, as ouster of power of Arbitrator has to be considered on various relevant aspects referred to in the decisions of this Court, it would be for the Division Bench to consider the case on merits.

                                                                  Reportable
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                  SPECIAL LEAVE PETITION [C] No.11114/2009

Union of India                                               … Petitioner

Vs.

M/s. Ambica Construction                                     … Respondent

(With SLP [C] No.17219/2009]

                                  JUDGM ENT

ARUN MISHRA,  J.

1.        The issue involved in the reference is in regard to the  power  of
the Arbitrator to award pendente lite interest when  contract  contains  bar
for grant of interest in  a  case  covered  by  the  Arbitration  Act,  1940
(hereinafter referred to as “the Act”).  A Division   Bench  of  this  Court
had doubted the correctness of the decisions in Board of  Trustees  for  the
Port of Calcutta v. Engineers-De-Space-Age (1996) 1  SCC  516;  and  Madnani
Construction Corporation (P) Ltd. v. Union of India and Others (2010) 1  SCC
549. In  view  of  the  decision  of  the  Constitution  Bench  judgment  in
Secretary, Irrigation Department, Government of Orissa & Ors.  v.  G.C.  Roy
(1992)  1  SCC  508  and  Executive  Engineer,  Dhenkanal  Minor  Irrigation
Division, Orissa & Ors. v. N.C. Budharaj (D) by L.Rs. & Ors.  (2001)  2  SCC
721 which held that the Arbitrator had the  jurisdiction  and  authority  to
award interest for pre-reference period, pendente lite and future period  if
there was no express bar in the contract  regarding  award  of  interest.  A
doubt was expressed about the correctness of the decision  in  Engineers-De-
Space Age (supra) in Sayeed Ahmed & Co. v. State of U.P. &  Ors.  (2009)  12
SCC 26 and Sree Kamatchi Amman Constructions v.  Divisional Railway  Manager
(Works), Palghat & Ors.  (2010)  8  SCC  767.  Hence  the  matter  had  been
referred to a larger Bench for decision.



2.     The  case  has  a  chequered  history.  The  tender  of  M/s.  Ambica
Construction for fabrication of tie bars from M.S. Flats in  CST-9  sleepers
was accepted on 8.9.1989. Final agreement was executed  on  30.11.1989.  The
work  was  completed  on  21.11.1990.  With  respect  to  payments,  certain
differences and  disputes  arose  between  the  parties.  Thus  M/s.  Ambica
Construction prayed for appointment of an Arbitrator.  On  5.3.1991  as  the
petitioner M/s. Ambica Construction was in serious  financial  difficulties,
it accepted the amount in full and final settlement. Later on, the Union  of
India informed the  petitioner  on  11.3.1991  that  the  matter  was  under
consideration. However the Arbitrator  was  not  appointed.  An  application
under section 20 of the Act was filed before the High Court of Calcutta  for
referring the case to arbitration. On 2.6.1992 the High  Court  directed  to
file the arbitration agreement in the court and  appointed  two  Arbitrators
in terms of the arbitration clause. Said Arbitrators failed to  publish  the
award and as such an application was filed for revocation of  the  authority
of joint Arbitrators and another sole Arbitrator  was  appointed.  The  sole
Arbitrator ultimately published the award on 30.12.1997. On  an  application
filed by the Union of India,  the  High  Court  vide  order  dated  9.4.1998
remitted the award to the Arbitrator  to  give  an  item-wise  break-up.  On
12.5.1998 the sole Arbitrator  published  the  item-wise  award.  Again  the
Union of India questioned the same before the High Court. The award was  set
aside on the ground that the Arbitrator had not given an intelligible  award
in terms of clause 64(3)(a)(iii) of the agreement and  had  not  taken  into
effect the supplementary agreement dated 5.3.1991. The appeal  preferred  by
the petitioner was dismissed  by the Division Bench of  the  High  Court  on
15.10.2004 against which an SLP was filed  in which leave  was  granted  and
ultimately C.A. No.6621/2005 was allowed and case was  remitted  vide  order
dated 7.11.2005 passed  by  this  Court  to  the  Arbitrator  for  assigning
reasons and to pass fresh  award.  Thereafter,  Arbitrator  passed  a  fresh
award on 11.2.2006. Again an application was filed by  the  Union  of  India
under sections 30 and 33  of  the  Act.   The  Single  Judge  dismissed  the
application vide order dated 26.6.2007. Union of India filed an  application
for recall. The  order  dated  26.6.2007  was  recalled.  Vide  order  dated
22.8.2007 learned Single Judge set aside the award with regard  to  interest
for pre-reference period and directed that interest would be allowed on  the
principal sum of Rs.9,82,660/- at the rate of 10% per  annum  from  1.9.1992
the date from which the original Arbitrator entered upon the  reference.  An
appeal was preferred before the Division Bench and the same had been  partly
allowed with regard to claim Nos.6 and 7.  Aggrieved  thereby,  M/s.  Ambica
Construction had preferred S.L.P. [C] No.17219/2009 in this Court and  Union
of India has also assailed the judgment and  order  of  the  High  Court  in
S.L.P. [C] No.11114/2009.

3.    The only question for consideration is whether an Arbitrator  has  the
power to award pendente lite interest in case contract bars the  same  in  a
case covered by Act and decisions of this Court in  Engineers  De-Space  Age
(supra) and Madnani Construction Corporation  (P)  Ltd.  (supra)  have  been
correctly decided.
4.    It was submitted on behalf of the Union of India that  the  Arbitrator
is bound by the terms of the contract and cannot award interest in case  the
contract bars the same. On the other  hand,  learned  counsel  appearing  on
behalf of M/s. Ambica  Construction  has  contended  that  in  view  of  the
decision in Engineers-De-Space Age (supra) followed in Madnani  Construction
Corporation (P) Ltd. (supra)  notwithstanding  the  terms  in  the  contract
agreement barring the  award  of  interest  would  cover  the  pre-reference
period and not pendente lite interest.
5.     There  are  certain  provisions  which  are  statutorily  implied  in
arbitration agreement unless excluded in the agreement.  Section  3  of  the
Act of 1940 deals with the provisions which are implied in  the  arbitration
agreement. Section 3 is extracted below :
       “3.  Provisions  implied  in  arbitration  agreement.—An  arbitration
agreement, unless a different  intention  is  expressed  therein,  shall  be
deemed to include the provisions set out in the First Schedule in so far  as
they are applicable to the reference.”

      The provisions of section 3 make it  clear  that  unless  a  different
intention is expressed in the arbitration  agreement,  the  agreement  would
include the provisions contained in the First Schedule so far  as  they  are
applicable to the reference. Provisions in  the  First  Schedule  contain  8
paragraphs. It provides for reference to  a  sole  Arbitrator  and  in  case
there are even  numbers  of  Arbitrators,  appointment  of  umpire  is  also
provided. An Arbitrator is required to pass award within 4 months  from  the
date of entering on the reference. In  case  Arbitrator  fails  to  pass  an
award within the specified time the umpire shall make  the  award  within  2
months. Para 6 of First Schedule provides  that  the  Arbitrator  or  umpire
shall examine the matters in difference and the award  shall  be  final  and
binding. Arbitrator or umpire has the power for examining the witnesses  and
production of relevant documents. Para 8 of Schedule I  provides  for  costs
of reference and awards shall be in the discretion of the Arbitrator.
6.          “Court” has been defined in section 2(c) of the Act  to  mean  a
civil court having jurisdiction to decide the questions forming the subject-
matter of the reference.  Section 41 of the Act is extracted hereunder:
“41. Procedure and powers of Court. – Subject to the provisions of this  Act
and of rules made thereunder :
The provisions of the Code of Civil  Procedure,  1908  (5  of  1908),  shall
apply to all proceedings before the Court, and to all  appeals,  under  this
Act, and

The Court shall have, for the purpose of, and  in  relation  to  arbitration
proceedings, the same power of making  orders  in  respect  of  any  of  the
matters set out in the Second Schedule as it has for the purpose of, and  in
relation to any proceedings before the Court:

Provided that nothing in CI. (b) shall  be  taken  to  prejudice  any  power
which may be vested in an  Arbitrator  or  umpire  for  making  orders  with
respect to any of such matters.”
      The court can exercise the power specified in Second Schedule  of  the
Act.  However, Arbitrator is not a  court.  Arbitrator  is  the  outcome  of
agreement. He decides  the  disputes  as  per  the  agreement  entered  into
between the parties. Arbitration is an alternative forum for  resolution  of
disputes but an Arbitrator ipso facto does not  enjoy  or  possess  all  the
powers conferred on the courts of  law.
7.    Section 29 of the Act confers on the court  power  to  award  interest
from the date of decree. Section 34 of  the  C.P.C.  confers  on  the  court
power to award interest prior to the institution  of  the  suit  and  during
pendency of the suit and post decree.
8.    A Constitution Bench of this Court in G.C. Roy (supra) has  considered
the question of power of the Arbitrator to award pendente lite interest  and
it has been laid down that if the  arbitration  agreement  or  the  contract
itself provides for interest, Arbitrator  would  have  the  jurisdiction  to
award the interest. Similarly, where the agreement expressly  provides  that
no  interest  pendente  lite  shall  be  payable  on  the  amount  due,  the
Arbitrator has no power to  award  pendente  lite  interest.   In  G.C.  Roy
(supra) this Court has held thus :
      “xxx If the arbitration agreement or the contract itself provides  for
award of interest on the amount found due from one party to  the  other,  no
question regarding the absence of Arbitrator’s  jurisdiction  to  award  the
interest could arise as in that case  the  Arbitrator  has  power  to  award
interest pendent lite as well.  Similarly,  where  the  agreement  expressly
provides that no interest pendente lite shall be payable on the amount  due,
the Arbitrator has no power to award pendente lite interest. But  where  the
agreement does not provide either for grant or denial  of  interest  on  the
amount found  due,  the  question  arises  whether  in  such  an  event  the
Arbitrator has power and authority to grant pendente lite interest.”
      The question involved in G.C. Roy (supra)  was  with  respect  to  the
award of interest for the period commencing  from  the  date  of  Arbitrator
entering upon the reference till the date of making the award.  In G.C.  Roy
(supra),  this  Court  has  considered  decisions  in   Raipur   Development
Authority & Ors. v. M/s. Chokhamal Contractors & Ors.,  (1989)  2  SCC  721;
Executive Engineer (Irrigation) Balimela & Ors. v.  Abhaduta  Jena  &  Ors.,
(1988) 1 SCC 418;  Nachiappa Chettiar & Ors, v.  Subramaniam  Chettiar,  AIR
1960 SC 307; Satinder Singh v. Amrao Singh & Anr., AIR  1961  SC  908;  Firm
Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd.,  Indore,  AIR  1967  SC
1030; Union of India v. Bungo Steel Furniture Pvt. Ltd., AIR 1967  SC  1032;
Ashok Construction Company v. Union of India, (1971)  3  SCC  66;  State  of
M.P. v. M/s. Saith and Skelton Pvt. Ltd., (1972) 1 SCC 702, various  foreign
courts decisions and decisions of the  High  Court.   This  Court  has  also
referred to Halsbury’s Laws of England in Paras 36 & 37 thus:-
“36. “534. Express and implied clauses.—  In  general,  the  parties  to  an
arbitration agreement may include in it such clauses as they think  fit.  By
statute, however, certain terms are  implied  in  an  arbitration  agreement
unless a contrary intention is expressed or implied  therein.  Moreover,  it
is normally an implied term of an arbitration agreement that the  Arbitrator
must decide the dispute in accordance with the ordinary law.  This  includes
the  basic  rules  as  to  procedure,  although  parties  can  expressly  or
impliedly consent to depart from  those  rules.  The  normal  principles  on
which terms are implied in  an  agreement  have  to  be  considered  in  the
context that the agreement relates to an arbitration.”

37. At page 303, para 580 (4th edn., Vol.  2)  dealing  with  the  award  of
interest, it reads:
“580. Interest.— A Arbitrator or umpire has power to award interest  on  the
amount of any debt or damages for the  whole  or  any  part  of  the  period
between the date when the cause of action arose and the date of the award.”

        Ultimately, in  G.C.  Roy  (supra),  this  Court  has  answered  the
question whether Arbitrator has the power to award  interest  pendent  lite.
Their Lordships have reiterated that they  have  dealt  with  the  situation
where the agreement does not provide for grant of such interest nor does  it
prohibit such grant when the agreement is silent as to  award  of  interest.
This Court has laid down various principles in para 43 of the report thus:
“43. The question still remains whether Arbitrator has the  power  to  award
interest pendente lite, and if so on what principle. We must reiterate  that
we are dealing with the situation where the agreement does not  provide  for
grant of such interest nor does it prohibit such grant. In other  words,  we
are dealing with a case where  the  agreement  is  silent  as  to  award  of
interest.  On  a  conspectus  of  aforementioned  decisions,  the  following
principles emerge:

(i) A person deprived of the use  of  money  to  which  he  is  legitimately
entitled has a right to be compensated for the deprivation, call it  by  any
name. It may  be  called  interest,  compensation  or  damages.  This  basic
consideration is as valid for the period the dispute is pending  before  the
Arbitrator as it is for the period prior to  the  Arbitrator  entering  upon
the reference. This is the principle of Section  34,  Civil  Procedure  Code
and there is no reason or  principle  to  hold  otherwise  in  the  case  of
Arbitrator.

(ii) An Arbitrator is an alternative form  (sic  forum)  for  resolution  of
disputes arising between the parties. If so,  he  must  have  the  power  to
decide all the disputes or differences arising between the parties.  If  the
Arbitrator has no power to award interest pendente lite, the party  claiming
it would have to approach the court for that purpose,  even  though  he  may
have obtained satisfaction in respect of other claims from  the  Arbitrator.
This would lead to multiplicity of proceedings.

(iii) An Arbitrator is 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  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 pendente lite. Seth Thawardas Pherumal  v.  Union  of  India,
AIR 1955 SC 468 has not been followed in the later decisions of this  Court.
It has been explained and distinguished on  the  basis  that  in  that  case
there was no claim for interest but only a claim for  unliquidated  damages.
It has been said repeatedly that observations in the said judgment were  not
intended to lay down any such absolute or universal rule as they appear  to,
on first impression.  Until Executive Engineer (Irrigation) Balimela &  Ors.
v.  Abhaduta Jena & Ors., (1988) 1 SCC 418 almost  all  the  courts  in  the
country had upheld the power of the Arbitrator to  award  interest  pendente
lite. Continuity and certainty is a highly desirable feature of law.

(v) Interest pendente  lite  is  not  a  matter  of  substantive  law,  like
interest for the period anterior to reference  (pre-reference  period).  For
doing complete justice between the  parties,  such  power  has  always  been
inferred.”

“44. Having regard to the above consideration, we think that  the  following
is the correct principle which should be followed in this behalf:
Where the agreement between the parties does not prohibit grant of  interest
and where a party claims interest and that dispute  (along  with  the  claim
for principal amount or independently) is referred  to  the  Arbitrator,  he
shall have the power to award  interest  pendente  lite.  This  is  for  the
reason that in such a case it must be presumed that interest was an  implied
term of the agreement between the parties and  therefore  when  the  parties
refer all their disputes — or refer the dispute as to interest as such —  to
the Arbitrator, he shall have the power to award  interest.  This  does  not
mean that in every case the Arbitrator  should  necessarily  award  interest
pendente lite. It is a matter within his discretion to be exercised  in  the
light of all the facts and circumstances of the case, keeping  the  ends  of
justice in view.”

      The Constitution Bench of this Court has  laid  down  that  where  the
agreement between the parties does not prohibit grant of interest and  where
the party claims interest and that dispute is referred  to  the  Arbitrator,
he shall have the power to award interest pendent lite.   The  law  declared
has been held applicable prospectively.
9.    Another Constitution Bench of this Court  in  N.C.  Budharaj  (supra),
considered the question of award of interest by the Arbitrator for the  pre-
reference period.  In that connection, discussion has been made and  it  has
been observed as long as there is nothing in the  arbitration  agreement  to
exclude the jurisdiction of the Arbitrator entertaining claim  for  interest
on the amount due under the contract or any provision to claim  interest  on
the amount due, the jurisdiction of the Arbitrator  to  award  interest  for
pre-reference period under section 29 of the Arbitration Act,  1940  has  to
be upheld.  In majority opinion, this Court has held thus:
“25. If that be the position, courts which of late  encourage  litigants  to
opt for and avail of the  alternative  method  of  resolution  of  disputes,
would be penalising or placing those who avail of  the  same  in  a  serious
disadvantage. Both logic and reason should counsel courts to  lean  more  in
favour of the Arbitrator holding to possess all the powers as are  necessary
to do complete and full justice between the parties in the  same  manner  in
which the civil court seized  of  the  same  dispute  could  have  done.  By
agreeing to settle all the disputes and claims arising out  of  or  relating
to the contract between the parties through arbitration  instead  of  having
recourse to civil court  to  vindicate  their  rights  the  party  concerned
cannot be considered to have frittered away and given  up  any  claim  which
otherwise it could have successfully asserted  before  courts  and  obtained
relief. By agreeing to have settlement of disputes through arbitration,  the
party concerned must be understood to have only opted for a different  forum
of adjudication with less cumbersome procedure, delay and  expense  and  not
to abandon all or any of its substantive rights under the  various  laws  in
force, according to which only even the Arbitrator is obliged to  adjudicate
the claims referred to him. As long as there is nothing in  the  arbitration
agreement to exclude the jurisdiction  of  the  Arbitrator  to  entertain  a
claim  for  interest  on  the  amounts  due  under  the  contract,  or   any
prohibition to claim interest on the amounts due and  become  payable  under
the contract, the jurisdiction of  the  Arbitrator  to  consider  and  award
interest in respect of all  periods  subject  only  to  Section  29  of  the
Arbitration Act, 1940 and that too the powers of the court  thereunder,  has
to be upheld. The submission that the Arbitrator  cannot  have  jurisdiction
to award interest for the period prior to the date  of  his  appointment  or
entering into reference which alone confers upon him  power,  is  too  stale
and technical to be countenanced in our hands, for the  simple  reason  that
in every case the appointment of an Arbitrator or even resort  to  court  to
vindicate rights could be only after disputes have cropped up   between  the
parties and continue to subsist unresolved, and that if the  Arbitrator  has
the power to deal with and decide disputes which cropped up at  a  point  of
time and for the period prior to the appointment of  an  Arbitrator,  it  is
beyond  comprehension  as  to  why  and  for  what  reason  and  with   what
justification the Arbitrator should  be  denied  only  the  power  to  award
interest for the pre-reference period when  such  interest  becomes  payable
and has to be awarded as an accessory or incidental to the  sum  awarded  as
due and payable, taking into account the deprivation of the use of such  sum
to the person lawfully entitled to the same.

26. For all the reasons stated above, we answer  the  reference  by  holding
that the Arbitrator appointed  with  or  without  the  intervention  of  the
court, has jurisdiction to  award  interest,  on  the  sums  found  due  and
payable, for the pre-reference  period,  in  the  absence  of  any  specific
stipulation or prohibition in the  contract  to  claim  or  grant  any  such
interest. The decision in Jena case taking a contraview does  not  lay  down
the correct position and stands overruled, prospectively, which  means  that
this decision shall not entitle any party nor shall it empower any court  to
reopen proceedings which have already become final, and apply  only  to  any
pending proceedings. No costs.”

     It has also been observed that G.C. Roy’s case (supra) cannot  be  said
to have overruled Executive Engineer (Irrigation)  Balimela’s  case  (supra)
insofar as it dealt with the power of Arbitrator to award interest  for  the
pre-reference period.
10.   A 3 Judges Bench of this Court in Hindustan Construction  Co. Ltd.  v.
State of Jammu & Kashmir (1992) 4 SCC 217 has laid down that the  Arbitrator
has the power to award pendente lite interest on the basis of  principle  of
Section 34 of the Code of Civil Procedure though  same  is  not  applicable.
However, the observation has to be considered in case there  is  no  express
bar in the agreement for awarding pendente lite interest as  it  has  simply
followed what has been laid down in G.C. Roy (supra).  This Court  has  laid
down thus:
“5. The question of interest can be easily disposed of as it is  covered  by
recent decisions of this Court. It is sufficient  to  refer  to  the  latest
decision of a five Judge  bench  of  this  Court  in  Secretary,  Irrigation
Department, Govt. of Orissa  & Ors. v. G.C. Roy. Though  the  said  decision
deals with the power of the Arbitrator to award interest pendente lite,  the
principle of the decision makes it clear that the  Arbitrator  is  competent
to award interest for the period commencing with the date of  award  to  the
date of decree or date of realisation, whichever is earlier.  This  is  also
quite logical for, while award of  interest  for  the  period  prior  to  an
Arbitrator entering upon the reference is a matter of substantive  law,  the
grant of interest for the  post-award  period  is  a  matter  of  procedure.
Section 34 of  Code  of  Civil  Procedure  provides  both  for  awarding  of
interest pendente lite as  well  as  for  the  post-decree  period  and  the
principle of Section 34 has been held applicable to proceedings  before  the
Arbitrator, though the section as such may not apply.  In  this  connection,
the decision in Union of India v. Bungo Steel Furniture (P)  Ltd.  AIR  1967
SC 1032 may be seen as also the decision in Gujarat Water Supply &  Sewerage
Board v. Unique Erectors (Gujarat) P. Ltd. 1989 1 532  SCC    which  upholds
the said power though on a somewhat   different  reasoning.  We,  therefore,
think that the award on Item No. 8 should have been upheld.”

11.   In Sayeed Ahmed (supra) various decisions  of  this  Court  have  been
referred. In State of Orissa v. B.N.  Agarwalla,  (1997)  2  SCC  469,  this
Court has laid down thus:
“18. In view of the aforesaid decisions there  can  now  be  no  doubt  with
regard to  the  jurisdiction  of  the  Arbitrator  to  grant  interest.  The
principles which can now be said to be well-settled are that the  Arbitrator
has the jurisdiction to award pre-reference interest in  cases  which  arose
after the Interest Act, 1978 had become applicable.  With  regard  to  those
cases pertaining to the period prior to the applicability  of  the  Interest
Act, 1978, in the absence of any substantive law,  contract  or  usage,  the
Arbitrator has no jurisdiction to award  interest.  For  the  period  during
which the arbitration proceedings were pending in view of  the  decision  in
G.C. Roy case and Hindustan Construction Ltd. case, the Arbitrator  has  the
power to award interest. The power of the Arbitrator to award  interest  for
the post-award period also exists and this aspect  has  been  considered  in
the discussion relating to Civil Appeal No. 9234 of 1994 in the  later  part
of this judgment.”

12.   The decision  in  B.N.  Agarwalla  (supra)  has  been  considered  and
distinguished by this Court in Sayeed Ahmed (supra) thus :
“20. The appellant next relied upon the judgment of this Court in  State  of
Orissa v. B.N. Agarwalla (1997) 2 SCC 469. In that  case,  this  Court  held
that the Arbitrator  has  jurisdiction  to  award:  (i)  interest  for  pre-
reference  period,  (ii)  interest  for  pendente  lite,  and  (iii)  future
interest. This Court also held that the following part of Clause (4) of  the
contract dealing with “Rates, materials and workmanship” did not  bar  award
of interest by the Arbitrator on the claims of the contractor: (SCC p.  478,
para 22)
No interest is payable on amount withheld under the item of the agreement.
Interpreting the said clause (which provided that interest was  not  payable
on the amount which was withheld), this Court held that it referred only  to
the amount withheld by the employer State towards retention  money  for  the
defect liability period. This Court in fact clarified the position  that  if
the terms of  contract  expressly  stipulated  that  no  interest  would  be
payable, then the  Arbitrator  would  not  get  the  jurisdiction  to  award
interest. As Clause G1.09 in the present case contains an  express  bar  and
is different from the clause considered in B.N. Agarwalla (supra)  the  said
decision is also of no assistance.”

      In B.N. Agarwalla (supra) this Court has observed  that  Clause  4  of
the contract dealing with “Rates, materials and  workmanship”  did  not  bar
award of interest by the Arbitrator on the claims  of  the  contractor.  The
stipulation was no  interest  was  payable  on  amount  withheld  under  the
agreement.
13.   In Sayeed Ahmed (supra), this  Court  has  referred  the  decision  in
State of U.P. v. Harish Chandra & Co. (1999) 1 SCC 63, in which  this  Court
has interpreted the stipulation contained in clause  1.9  of  the  agreement
which came up for consideration before a  3  Judges  Bench  of  this  Court.
Clause 1.9 is extracted hereunder:
 “1.9 No claim  for  delayed  payment  due  to  dispute  etc.—No  claim  for
interest or damages will be entertained by the Government  with  respect  to
any moneys or balances which may be lying with the Government owing  to  any
dispute, difference; or misunderstanding between the  Engineer-in-Charge  in
marking periodical or final payments or in any other respect whatsoever.”

      This Court has interpreted the clause 1.9 and held that  there  is  no
provision which could be culled out against the  respondent-contractor  that
he could  not  raise  claim  of  interest  by  way  of  damages  before  the
Arbitrator on the relevant items placed for adjudication.
This Court in Sayeed Ahmed (supra) has also distinguished  the  decision  in
Harish Chandra (supra) in which clause 1.09 came up for  consideration  thus
:
“17.   x x x x x This Court held that the said clause did not bar  award  of
interest on any claim for damages or for claim for payment  for  work  done.
We extract below the reasoning for such decision: (SCC p. 67, para 10)
“10. A mere look at the clause shows that the claim for interest by  way  of
damages was not to be entertained against the  Government  with  respect  to
only a specified type of amount, namely, any moneys or  balances  which  may
be lying with the Government owing to any dispute,  difference  between  the
Engineer-in-Charge and  the  contractor;  or  misunderstanding  between  the
Engineer-in-Charge  and  the  contractor  in  making  periodical  or   final
payments or in any other respect whatsoever. The  words  ‘or  in  any  other
respect whatsoever’ also referred to the dispute pertaining  to  the  moneys
or balances  which  may  be  lying  with  the  Government  pursuant  to  the
agreement meaning thereby security deposit or retention money or  any  other
amount which might have been with the Government and refund of  which  might
have been withheld by the Government. The claim for  damages  or  claim  for
payment for the work done and which was not paid  for  would  not  obviously
cover any money  which  may  be  said  to  be  lying  with  the  Government.
Consequently,  on  the  express  language  of  this  clause,  there  is   no
prohibition which could be culled  out  against  the  respondent  contractor
that he could not raise the claim for interest by way of damages before  the
Arbitrator   on   the   relevant    items    placed    for    adjudication.”
        (emphasis supplied)

18. In Harish Chandra (1999) 1 SCC 63 a different  version  of  Clause  1.09
was considered. Having regard to the restrictive  wording  of  that  clause,
this Court held that it did not  bar  award  of  interest  on  a  claim  for
damages or a claim for payments for work done and which was not  paid.  This
Court held that the said clause barred award of  interest  only  on  amounts
which may be lying with the Government by way of security  deposit/retention
money or any other amount, refund of which was withheld by the Government.

19. But in the present case, Clause G1.09  is  significantly  different.  It
specifically provides that no interest shall be payable in  respect  of  any
money  that  may  become  due  owing   to   any   dispute,   difference   or
misunderstanding between  the  Engineer-in-Charge  and  contractor  or  with
respect to any delay  on  the  part  of  the  Engineer-in-Charge  in  making
periodical or final payment or in respect of any other  respect  whatsoever.
The bar under Clause G1.09 in this case  being  absolute,  the  decision  in
Harish Chandra (supra) will not assist the appellant in any manner.”

In Harish Chandra (supra), this Court has laid down  that  clause  1.09  did
not bar award of interest for claim of damages for  payment  for  work  done
and which was not paid for would not obviously cover any money which may  be
said to be lying with the Government.
14.   In our opinion, it would depend upon the nature of the  ouster  clause
in each case.  In case there is express stipulation  which  debars  pendente
lite interest, obviously, it cannot be granted by Arbitrator.  The award  of
pendente lite interest inter alia must depend upon the overall intention  of
the agreement and what is expressly excluded.
15.   In Sayeed Ahmed (supra), this  Court  has  referred  the  decision  in
Superintending Engineer v. B. Subba Reddy (1999)  4  SCC  423  and  observed
thus :
“11. Two more decisions dealing with cases  arising  under  the  Arbitration
Act, 1940 require to be noticed. In  Superintending  Engineer  v.  B.  Subba
Reddy (1999) 4 SCC 423 this  Court  held  that  interest  for  pre-reference
period can be awarded only if there was an agreement to that  effect  or  if
it was  allowable  under  the  Interest  Act,  1978.  Therefore,  claim  for
interest for pre-reference period, which is barred as per the  agreement  or
under the Interest Act, 1978 could not be allowed. This Court  however  held
that the Arbitrator can award interest pendente lite and future interest.”

      In Sayeed Ahmed (supra) this Court has also referred the  decision  in
State of Rajasthan & Anr. v. Ferro Concrete Construction (P) Ltd. (2009)  12
SCC 1 thus :
“12. The principles relating to interest were summarised by  this  Court  in
State of Rajasthan v. Ferro Concrete Construction (P) Ltd. (2009) 12  SCC  1
thus:

   (a) Where a provision for interest is made on any  debt  or  damages,  in
any agreement, interest shall be paid in accordance with such agreement.
   (b) Where payment of interest  on  any  debt  or  damages  is  barred  by
express provision in the contract, no interest shall be awarded.

   (c) Where there is no express bar in the  contract  and  where  there  is
also no provision for payment of interest then the principles of  Section  3
of the Interest Act will apply and consequently interest will be payable:

   (i) where the proceedings relate to a debt (ascertained sum)  payable  by
virtue of a written instrument at a certain time, then from  the  date  when
the debt is payable to the date of institution of the proceedings;
   (ii) where the proceedings is for recovery of damages or for recovery  of
a debt which is not payable at a certain time, then from the date  mentioned
in a written notice given by the person making a claim to the person  liable
for the claim that interest will be claimed.

(d) Payment of interest pendente lite  and  future  interest  shall  not  be
governed by the provisions of the Interest Act, 1978, but by the  provisions
of Section 34 of the Code of Civil Procedure, 1908 or the provisions of  law
governing arbitration as the case may be.”

      In Sayeed Ahmed (supra), the provisions of Arbitration &  Conciliation
Act, 1996 were applicable.
16.   A 3-Judge Bench of this Court  in  Union  of  India  v.  Bright  Power
Projects (India) Pvt. Ltd. (2015) 9 SCC 695 has  considered  the  provisions
contained in section 31(7)(a) of the Arbitration and Conciliation Act,  1996
and considered the words “unless otherwise agreed by parties”  in  the  said
section and held that the Arbitrator is bound by the terms of  the  contract
so far as award of interest from the date of execution to the date of  award
is concerned. This Court considered clause 13(3) of the  contract  and  came
to the conclusion that once agreed  that  contractor  would  not  claim  any
interest on the amount to be paid under the  contract,  he  could  not  have
claimed the interest. The  Arbitrator  while  awarding  interest  failed  to
consider the provisions of section 31(7)(a) and  binding  nature  of  clause
13(3) of the terms of agreement.  With respect to section  31(7)(a)  of  the
Arbitration & Conciliation Act, 1996 this Court in Union of India v.  Bright
Power Projects  (supra) has observed thus :
“18. Section 31(7)(a) of the Act ought to have been read and interpreted  by
the Arbitral Tribunal before taking any decision  with  regard  to  awarding
interest. The said section, which has  been  reproduced  hereinabove,  gives
more respect to the agreement entered  into  between  the  parties.  If  the
parties to the agreement agree not  to  pay  interest  to  each  other,  the
Arbitral Tribunal has no right to award interest pendente lite.”

     Section 31(7)(a) of the 1996 Act confers power on Arbitrator  to  award
interest pendente lite, “unless otherwise agreed by parties”.  Thus,  it  is
clear from the provisions contained in section 31(7)(a)  that  the  contract
between the parties  has  been  given  importance  and  is  binding  on  the
Arbitrator. Arbitration clause is also required  to  be  looked  into  while
deciding the power of the Arbitrator and in case there is any bar  contained
in the contract on award of interest, it operates on which items and in  the
arbitration clause what are the powers conferred on Arbitrator  and  whether
bar on award of interest has been confined to certain period or  it  relates
to pendency of proceedings before Arbitrator.
17.   In Sree Kamatchi Amman Constructions (supra),  it  was  observed  that
the words “unless otherwise agreed by the parties” in section 31 of new  Act
of 1996 clarify that Arbitrator is bound by the terms of contract for  award
of interest pendente lite. It was also held thus :
“19. Section 31(7) of the new Act  by  using  the  words  “unless  otherwise
agreed by the parties” categorically clarifies that the Arbitrator is  bound
by the terms of the contract insofar as the award of interest from the  date
of cause of action to the date of award. Therefore, where  the  parties  had
agreed that no interest shall  be  payable,  the  Arbitral  Tribunal  cannot
award interest between the date when the cause of action arose to  the  date
of award.

20. We are of the view that the decisions in Engineers-De-Space-Age  (supra)
and Madnani  (supra) are inapplicable for yet another reason. In  Engineers-
De-Space-Age  (supra)  and  Madnani   (supra)  the  Arbitrator  had  awarded
interest for the pendente lite period. This Court upheld the award  of  such
interest under the old Act  on  the  ground  that  the  Arbitrator  had  the
discretion to decide whether interest should be awarded or  not  during  the
pendente lite period and he was not bound by the contractual  terms  insofar
as the interest for the pendente lite period. But in the  instant  case  the
Arbitral Tribunal has refused  to  award  interest  for  the  pendente  lite
period. Where  the  Arbitral  Tribunal  has  exercised  its  discretion  and
refused award of  interest  for  the  period  pendente  lite,  even  if  the
principles in those two cases were applicable, the award of  the  Arbitrator
could not  be  interfered  with.  On  this  ground  also  the  decisions  in
Engineers-De-Space-Age (supra) and  Madnani  (supra)  are  inapplicable.  Be
that as it may.”

18.   This Court in Union of India v. Krafters Engineering  &  Leasing  Pvt.
Ltd. (2011) 7 SCC 279 has held that by a provision  in  the  agreement,  the
jurisdiction of the Arbitrator to  award  interest  can  be  excluded.  This
Court considered the nature of the claim vis-à-vis the  provision  contained
in the relevant clause.
19.   It is apparent from various decisions referred to above that  in  G.C.
Roy (supra) Constitution Bench of this Court has laid down  where  agreement
expressly provides that no  interest  pendente  lite  shall  be  payable  on
amount due. The  arbitrator  has  no  power  to  award  interest.   In  N.C.
Budharaj (supra) a Constitution Bench has observed that  in  case  there  is
nothing in the arbitration agreement to exclude jurisdiction  of  arbitrator
to entertaining claim  for  interest,  the  jurisdiction  of  arbitrator  to
consider and award interest in respect to all periods is subject to  section
29 of the Act.  In Hindustan Construction Co. Ltd. (supra)  this  Court  has
followed decision in G.C. Roy (supra) and laid down that  on  the  basis  of
principles of section 34 arbitrator would have the power to  award  pendente
lite interest  also.  In  B.N.  Agarwalla  (supra),  this  Court  has  again
followed G.C. Roy (supra) and Hindustan Construction Co. Ltd.  (supra)  with
respect to power of arbitrator to award pendente lite interest  and  it  was
held that arbitrator  has  power  to  award  interest.   In  Harish  Chandra
(supra) this Court interpreted the clause 1.9 which provided that  no  claim
for interest or damages will be entertained by the Government in respect  to
any moneys or balances which may be lying with the Government. It  was  held
that  there  was  no  provision  which  could  be  culled  out  against  the
contractor not to claim interest by way of damages before the arbitrator  on
the relevant items placed for adjudication. In Ferro  Concrete  Construction
(P) Ltd. (supra) this Court considered clause  4  containing  a  stipulation
that no interest was payable on amount withheld under the agreement. It  was
held that clause 4 dealt with rates, material and workmanship  did  not  bar
award of interest by the arbitrator on claims of the contractor made in  the
said case. In Sayeed Ahmed (supra) this Court has emphasized that  award  of
interest would depend upon nature of the clause in the agreement. In  Bright
Power Projects (India) Pvt. Ltd.  (supra)  this  Court  has  considered  the
expression  “unless  otherwise  agreed  by  parties”  employed  in   section
31(7)(a) of the Act of 1996 and laid down that in case contract  bars  claim
of interest contractor could not have claimed  interest.  The  provision  of
section 31(7)(a) of the Act of 1996 is binding upon the arbitrator. In  Sree
Kamatchi Amman Constructions (supra) similar view has been taken.
20.   Now we come to the question of correctness of decision of  this  Court
rendered by a Bench of two Judges in  Engineers-De-Space-Age  (supra)  which
has  been  referred  for  our  consideration  in  which  this  Court   after
consideration of G.C. Roy’s case has observed thus :
“3….. It will appear from what the  Constitution  Bench  stated  to  be  the
legal position, that ordinarily a person who is deprived  of  his  money  to
which he is legitimately entitled as of right is entitled to be  compensated
in deprivation thereof, call it by whatever name. This would be in terms  of
the principle laid down in Section 34 of the Code of Civil Procedure.  Their
Lordships pointed out  that  there  was  no  reason  or  principle  to  hold
otherwise in the case of an Arbitrator. Pointing out that Arbitrator  is  an
alternative forum for resolution of disputes arising  between  the  parties,
it said that he must have the power to decide all disputes  and  differences
arising between the parties and if he were to be denied the power  to  award
interest pendente 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 endeavour 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 pendente 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
pendente lite is not a matter of substantive  law,  like  interest  for  the
period anterior to reference.  Their  Lordships  concluded  that  where  the
agreement between the parties does not prohibit grant of interest and  where
a party claims interest and that dispute is referred to the  Arbitrator,  he
shall have the power to award interest pendente lite for the  simple  reason
that in such a case it is presumed that interest was an implied term of  the
agreement  between  the  parties;  it  is  then  a  matter  of  exercise  of
discretion by the Arbitrator. The  position  in  law  has,  therefore,  been
clearly stated in the aforesaid decision of the Constitution Bench”.

4. We are not dealing with a case in regard to award  of  interest  for  the
period prior to the reference. We are dealing  with  a  case  in  regard  to
award of interest by the Arbitrator  post  reference.  The  short  question,
therefore, is whether in  view  of  sub-clause  (g)  of  clause  13  of  the
contract extracted earlier  the  Arbitrator  was  prohibited  from  granting
interest  under  the  contract.  Now  the  term  in  sub-clause  (g)  merely
prohibits the Commissioner from entertaining  any  claim  for  interest  and
does not prohibit the Arbitrator from awarding interest. The  opening  words
“no claim for interest will be  entertained  by  the  Commissioner”  clearly
establishes that  the  intention  was  to  prohibit  the  Commissioner  from
granting interest on account of delayed payment to  the  contractor.  Clause
has to be strictly construed for the simple reason that as  pointed  out  by
the Constitution 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.”

21.      In Sayeed Ahmed  (supra)  the  decision  in  Engineers-De-Space-Age
(supra) has been considered and it was observed that it cannot  be  used  to
support an outlandish argument that bar  on  the  Government  or  department
paying interest is not a bar  on  the  Arbitrator  awarding  interest.  This
Court expressed doubt as to the correctness of certain observations made  in
Engineers-De-Space-Age (supra) to  the  extent  that  the  Arbitrator  could
award interest pendente lite ignoring the express bar in the  contract.  But
this Court did not consider the question  further  as  the  case  in  Sayeed
Ahmed (supra) arose under the Arbitration and Conciliation Act of 1996,  and
there was a specific provision under new Act regarding award of interest  by
the Arbitrator. From the discussion made  in  Sayeed  Ahmed  (supra)  it  is
apparent that this Court has  emphasized  that  it  would  depend  upon  the
nature of clause  and  claim  etc.  and  it  is  required  to  be  found  on
consideration of stipulation whether interest is barred,  if  yes,  on  what
amounts interest is barred under the contract.
22.    A  three-Judge  Bench  of  this  Court  in  Tehri  Hydro  Development
Corporation Limited and Another v. Jai Prakash  Associates  Limited,  (2012)
12 SCC 10, has considered the  question  which  has  been  referred  in  the
instant case and it has been laid down in the context of clauses 1.2.14  and
1.2.15 imposed  a clear bar on either entertainment or payment  of  interest
in any situation of non-payment or delayed payment  of  either  the  amounts
due for work done or lying in security deposit.  Thus,  the  arbitrator  had
no power to grant pendente lite interest.   This Court has also doubted  the
correctness  of  the  decisions  in  Engineers-De-Space  Age  (supra)    and
Madnani  Construction  Corporation  (P)  Ltd.  (supra).   This   court   has
considered the aforesaid  clauses  and  various  decisions  in  Tehri  Hydro
Development  Corporation  (supra) in which one of us Ranjan Gogoi, J.  spoke
for  the Court.  This Court has laid down thus :–
 “14. This will lead the court to a consideration of what is  the  principal
bone of contention between the parties in  the  present  case,  namely,  the
issue with regard to payment of  interest.  Clauses  1.2.14  and  1.2.15  on
which much arguments have been advanced by Learned Counsel  for  both  sides
may now be extracted below:
                                  PART - II
                           CONDITIONS OF CONTRACT
1.2.14.     No claim  for  delayed  payment  due  to  dispute,  etc.  -  The
contractor agrees that no claim for interest of damages will be  entertained
or payable by the Government in respect of any money or balances  which  may
be  lying  with  the  Government  owing  to  any  disputes,  differences  or
misunderstandings between  the  parties  or  in  respect  of  any  delay  or
omission on the part of the engineer-in-charge in making immediate or  final
payments or in any other respect whatsoever.
1.2.15.     Interest on money due to the contractor. - No  omission  on  the
part of the engineer-in-charge to pay the amount  due  upon  measurement  or
otherwise shall vitiate or make void the contract, nor shall the  contractor
be entitled to interest upon any guarantee or payments in arrears  nor  upon
any balance which may on the final settlement of  his  accounts  be  due  to
him.
A reading of the aforesaid two clauses of  the  contract  agreement  between
the  parties  clearly  reveal  that  despite   some   overlapping   of   the
circumstances contemplated by the two clauses, no  interest  is  payable  to
the contractor for delay in payment,  either,  interim  or  final,  for  the
works done or on any amount lying  in  deposit  by  way  of  guarantee.  The
aforesaid contemplated consequence would be applicable both to  a  situation
where withholding of payment is on account of  some  dispute  or  difference
between the parties or even otherwise.
15.   Of the several decisions of this Court  referred  to  by  the  learned
counsel for the appellant the judgments of the Constitution  Bench  of  this
Court in Irrigation Deptt., Govt. of Orissa v. G.C. Roy, (1992)  1  SCC  508
and Dhenkanal Minor Irrigation Division v. N.C. Budharaj,  (2001) 2 SCC  721
will require specific notice. The true ratio laid down in the aforesaid  two
judgments have been elaborately considered in a  more  recent  pronouncement
of this Court in the case of Union of India v. Krafters  Engg.  and  Leasing
(P) Ltd., (2011) 7 SCC 279. In Krafters Engineers's case (supra)  the  ratio
of the decision in G.C. Roy's case (supra) was identified to  mean  that  if
the agreement between the parties does not prohibit grant  of  interest  and
the claim of a  party  to  interest  is  referred  to  the  arbitrator,  the
arbitrator would have the power to award the interest. This is on the  basis
that in such a case of silence (where the agreement is silent)  it  must  be
presumed that interest was an implied term of the agreement and,  therefore,
whether such a claim is tenable can be examined by  the  arbitrator  in  the
reference made to him. The aforesaid view, specifically, is with  regard  to
pendente lite interest. In  the  subsequent  decision  of  the  Constitution
Bench in N.C. Budharaj's case (supra) a similar view  has  been  taken  with
regard to interest for the pre-reference period.
16. In Krafters  Engineers'  case  (supra),  the  somewhat  discordant  note
struck by the decisions of this Court  in Port of Calcutta v.  Engineers-De-
Space-Age  (supra) and Madnani Construction Corporation Private  Limited  v.
Union of India and Ors.  (supra), were also taken note  of.  Thereafter,  it
was also noticed that the decision in Engineers-De-Space-Age's case  (supra)
was considered in Sayeed Ahmed & Co.  v.  State  of  U.P.  (supra)  and  the
decision in  Madnani  Construction  case  (supra)  was  considered  in  Sree
Kamatchi Amman Constructions  v.  Railways  (2010)  8  SCC  767.  In  Sayeed
Ahmed's case (supra) (SCC para 24) it was held that  in  the  light  of  the
decision of the Constitution Bench in G.C. Roy's case (1992) 1 SCC  508  and
N.C. Budharaj case (2001) 2 SCC 721 it is doubtful whether the  observations
in Engineers-de-Space-Age's case (supra) to the effect that  the  Arbitrator
could award  interest  pendente  lite,  ignoring  the  express  bar  in  the
contract, is good law. In Sree Kamatchi Amman  Construction's  case  (Supra)
while considering Madnani's case (supra) this Court noted that the  decision
in Madnani case  (supra) follows the  decision  in  Engineers-de-Space-Age's
case (supra).
17. From the  above  discussions,  it  is  crystal  clear  that  insofar  as
pendente lite interest is concerned, the observations contained in  Para  43
and 44 of the judgment in G.C. Roy case (supra) will hold the field.  Though
the gist of the said principle has been noticed earlier it  would  still  be
appropriate to set out para 44 of the judgment in G.C.  Roy's  case  (supra)
which is in the following terms:
44. Having regard to the above consideration, we think  that  the  following
is the correct principle which should be followed in this behalf.
Where the agreement between the parties does not prohibit grant of  interest
and where a party claims interest and that dispute  (along  with  the  claim
for principal amount or independently) is referred  to  the  arbitrator,  he
shall have the power to award  interest  pendente  lite.  This  is  for  the
reason that in such a case it must be presumed that interest was an  implied
term of the agreement between the parties and  therefore  when  the  parties
refer all their disputes - or refer the dispute as to interest as such -  to
the arbitrator, he shall have the power to award  interest.  This  does  not
mean that in every case the arbitrator  should  necessarily  award  interest
pendente lite. It is a matter within his discretion to be exercised  in  the
light of all the facts and circumstances of the case, keeping  the  ends  of
justice in view.
18. The provisions of the  U.P.  Civil  Laws  (Reforms  and  Amendment)  Act
amending the First Schedule to the Arbitration Act,  1940  does  not  assist
the respondent contractor in any manner to sustain the  claim  of  award  of
interest pendente lite, inasmuch, as Para 7-A  of  the  First  Schedule,  as
amended, is only an enabling provision which will have no application  to  a
situation where there is an express bar to the entertainment or  payment  of
interest on the delayed payment either of an amount due for  the  work  done
or of an  amount  lying  in  deposit  as  security.  The  decision  in  B.N.
Agarwalla case (supra) on which reliance has  been  placed  by  the  learned
counsel for the respondent, once again, does not assist  the  claim  of  the
respondent to interest pendente lite inasmuch  as  in  B.N.  Agarwalla  case
(supra) the views of the Constitution Bench in G.C. Roy  case  (supra)  with
regard to interest pendente lite could not have been and, in fact, were  not
even remotely doubted. The observation of the Bench in B.N.  Agarwalla  case
that in G.C. Roy case (supra)  the  decision  in  Deptt.  of  Irrigation  v.
Abhaduta Jena (1988) 1 SCC 418 was not overruled was only in the context  of
the issue of award of interest for the pre- reference period.  The  decision
in Asian Techs Limited case (supra) also relied on by the  respondent  takes
note of the decision in Engineers-De-Space-Age case (supra) to come  to  the
conclusion the prohibition on payment of interest contained in Clause 11  of
the agreement between the parties was qua the department  and  did  not  bar
the arbitrator from entertaining the claim.  It  has  already  been  noticed
that the correctness of the propositions laid  down  in  Engineers-De-Space-
Age case (supra) have been doubted  in  the  subsequent  decisions  of  this
Court, reference to which has already been made.
19. Clauses 1.2.14 and 1.2.15, already extracted  and  analysed,  imposed  a
clear bar on either entertainment or payment of interest  in  any  situation
of non-payment or delayed payment of either the amounts due  for  work  done
or lying in security deposit. On the basis  of  the  discussions  that  have
preceded we, therefore, take the  view  that  the  grant  of  pendente  lite
interest on the claim of Rs. 10,17,461/- is  not  justified.  The  award  as
well as the orders of the courts  below  are  accordingly  modified  to  the
aforesaid extent.”

      In para 4 in Engineers-De-Space-Age (supra) this  Court  has  observed
that bar under the contract will not be applicable to Arbitrator  cannot  be
said to be observation of general application.  In  our  opinion,  it  would
depend upon the stipulation in the contract in each case  whether  power  of
Arbitrator to grant pendente lite interest  is  expressly  taken  away.   If
answer is ‘yes’ then Arbitrator would have no power to award  pendente  lite
interest.
23.   The decision in Madnani Construction Corporation (supra) has  followed
decision in Engineers-De-Space-Age (supra).  Same is  also  required  to  be
diluted to the extent that express stipulation under contract may debar  the
Arbitrator from awarding interest pendente lite.   Grant  of  pendente  lite
interest may depend upon several factors such as  phraseology  used  in  the
agreement, clauses conferring  power  relating  to  arbitration,  nature  of
claim and dispute referred to Arbitrator and on what items  power  to  award
interest has been taken away and for which period.
24.         Thus, our answer to the reference is that if contract  expressly
bars award of interest pendente lite, the same  cannot  be  awarded  by  the
Arbitrator.  We also make it  clear  that  the  bar  to  award  interest  on
delayed payment by itself will not be readily inferred  as  express  bar  to
award interest pendente lite by the Arbitral Tribunal, as  ouster  of  power
of Arbitrator has to be considered on various relevant aspects  referred  to
in the decisions of this Court, it  would  be  for  the  Division  Bench  to
consider the case on merits.

     ………………………J.
                                       (Ranjan Gogoi)

                                       ………………………J.
                                       (Arun Mishra)

New Delhi;                             ……………………….J.
March 16, 2016.                        (Prafulla C. Pant)