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1. This is an appeal against the order of a learned single Judge of this Court dismissing the appellants petition under Section 34 of the Arbitration and Conciliation Act, 1996 against the interim award dated 16.6.2005 and the final award dated 9.8.2005 passed by the Arbitrator. The Arbitrator has denied the appellants claim for interest based on the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, hereinafter referred to as the "Interest Act".

2. The appellant is a private limited company and is registered as a small scale industry. The respondent is a company wholly owned by the Government of Maharashtra incorporated, inter alia, with the object of promoting small scale industries. In the usual course of business, the respondent was awarded a tender by Maharashtra State Electricity Board, for short "MSEB". MSEB placed three Work Orders upon the respondent as follows:

3. Supply Order No. 450/3576 dated 31st December 1991; and

4. Supply Order No. 533/4659 dated 10th March 1992.

The aggregate value of the supply order is Rs. 4,18,04,825/-.

3. Both the contracts between MSEB and the respondent and the respondent and the appellant are on a principal to principal basis. According to the appellant, the respondent delayed payment in terms of the Interest Act, though payment was made by the respondent soon after receipt of payment from MSEB, and is, therefore, liable to claim interest under Section 3 of that Act which reads as follows:

Relying on that clause, the Arbitrator held that the respondents obligation to pay the appellant arose only upon receipt of payment from MSEB. Since the respondent had made payment soon after receiving the corresponding payment from MSEB, there was no delay and, therefore, there is no question of paying any interest.

(iii) After 1998: The learned Arbitrator held that the appellant would be entitled to claim interest if the payment was made by the respondent beyond the period of 120 days provided by the amending Act.

6. The Arbitrator directed the parties to file their respective statements for ascertaining their claim for interest within the parameters set out above.

7. At the time of the final award, it was found that the appellant had not demonstrated that it was entitled to receive any interest for the period after August 1998. In the result, the appellants claim for interest was denied.

8. The appellant challenged the awards before the learned single Judge. The learned single Judge held that Clause 25 had been correctly construed by the Arbitrator and that the respondent was not bound to make payment to the appellant until it received payment from MSEB; there having been no delay in making the payment, after the respondent received payment from MSEB, the appellant was not entitled to any part of its claim. As regards the other clause, viz., Clause 47 which requires MSEB to make payment to the respondent within the specified time, the learned Judge observed that this clause did not have the effect of requiring the respondent to make payment to the appellant within the time stipulated therein.