Madras High Court
Union Of India Represented By vs M/S.Mars Construction on 5 February, 2020
Author: P.T. Asha
Bench: P.T. Asha
O.P.No.850 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.02.2020
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
O.P.No.850 of 2019
Union of India represented by
The Divisional Railway Manager / Works,
Southern Railway,
Chennai Division,
Park Town,
Chennai 600 003 ... Petitioner
Vs
1. M/s.Mars Construction,
Railway Contractor,
No.5/14, Home Finders Estate,
Ramapuram,
Chennai 600 089.
2. Sri Hari Om Kushwaha,
Senior Divisional Signal and
Telecommunication Engineer / II,
Southern Railway,
Chennai - 3
(Sole Arbitrator) ... respondents
Prayer: Original Petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 to set aside the award of the learned 2nd
respondent dated 26.10.2010 made in relation to the disptues arising
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O.P.No.850 of 2019
out of agreement No.127/MAS in so far as claim No.4 towards interest,
which has been awarded in the sum of Rs.2,25,172/- is concerned.
For Petitioner : Mr.P.T. Ram Kumar
For respondents : Not ready in notice.
ORDER
The respondent before the arbitral Tribunal, the Divisional Railway Manager / Works, Southern Railway, Chennai Division is the petitioner before this Court challenging the award passed by the arbitral Tribunal in and by which the petitioner herein has been directed to pay a sum of Rs.4,12,815/- to the first respondent / claimant which includes interest to the tune of Rs.2,25,172/-. Since the challenge to the arbitral award is only with reference to the interest that has been granted, namely, a sum of Rs.2,25,172/- this Court is not delving into the minute details which preceed the filing of the Claim Petition.
2. Suffice it to state that the first respondent had been awarded a contract for construction of RR compound wall along side of the track falling within Chennai Division. An agreement was entered into 2/6 http://www.judis.nic.in O.P.No.850 of 2019 between the Railways and the first respondent on 16.07.1998. The first respondent / claimant had raised a dispute since the amounts due to them towards the Final bill, Refund of Security Deposit, Consultation Charges, Earnest Money deposit, etc, were not given by the petitioner. Therefore invoking the arbitral clause they had sought for the constitution of the arbitral Tribunal. Ultimately, the arbitral Tribunal had awarded a total of sum of Rs.4,12,815/- and a sum of Rs.2,25,172/- out of above sum was under the head interest.
3. It is that portion of the award relating to interest which is the subject mater of the challenge. When the matter was taken up, the learned counsel for the first respondent fairly conceded that the position is settled by a catena of Judgements where in the Honourable Apex Court and this Court have held that since the general conditions of the contract entered into between the petitioner and the first respondent does not consider the grant of pendente lite interest the award in so far it related to the pendente lite interest has to be set aside.
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4. In an unreported Judgement of the Supreme Court in Civil Appeals Nos.1539 of 2019 – Jaiprakash Associates Limited (JAL) Vs. Tehri Hydro Development Corporation India Limited in which the grant of pendente lite interest was the subject mater, the Honourable Supreme Court held that after the coming into force of the Arbitration and Conciliation Act, 1996 and the introduction of Section 31(7), the grant of interest is subject to the agreement between the parties. In the Instant case clause 16(2) and 64.5 of the General conditions of contract has specifically provided that no interest shall be payable on any amounts due under the contract. In the light of the terms of the agreement, Section 31 (7) of the Arbitration and Conciliation Act, 1996, the Judgement of the Honourable Supreme Court in the case of Jaiprakash Associates Limited (JAL) Vs. Tehri Hydro Development Corporation India Limited the impugned award in so far as it relates to the pendente lite interest i.e., a sum of Rs.2,25,172/- is set aside. In all other aspects the award is confirmed. It is needless to state that the petitioner shall take immediate steps to comply with the award which has been passed as early as on 26.10.2010.
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5. The Original Petition is allowed to the extent above mentioned. There shall be no order as to costs.
05.02.2020 srn Index : Yes/No Speaking order/non-speaking order 5/6 http://www.judis.nic.in O.P.No.850 of 2019 P.T.ASHA, J., srn O.P.No.850 of 2019 05.02.2020 6/6 http://www.judis.nic.in