IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 8317-8318 OF 2010 [Arising out of SLP(C) No.16599-16600/2010

A.P. STATE TRADING CORPORATION LTD. .......APPELLANT

Versus

G.V. MALLA REDDY & CO. .....RESPONDENT

O R D E R

Mr.  M.  Vijaya  Bhaskar,  learned  counsel  

appears  on  caveat  for  the  respondent.   Leave  granted.  

Heard.

2. The arbitrator made an award dated 6.7.1991  

allowing claims 1 to 8, 11 and 12 (Note: claims 1,2 and 5  

were allowed only in part) and disallowing claims 9, 13 to  

20 of the respondent.  The arbitrator also granted interest  

from 10.3.1989 to 6.1.1990 and from the date of award to  

date  of  decree  at  18%  per  annum.   On  the  award  being  

challenged, the Civil Court, by judgment dated 19.2.2001  

set aside the award on claims 5, 6 and 8. The Civil Court  

limited the interest awarded (for the periods 10.3.1989 to  

6.1.1990 and from date of awarded to date of decree) only  

in regard to amounts awarded under claims 1 to 4 and 7 and  

made the award a rule of the Court with further interest at  

18% per annum from the date of decree to date of payment on  

the  amounts  allowed  under  claims  1  to  4  and  7.   Both

respondent  

.....2.

- 2 -

and  the  appellant  challenged  the  decision  of  the  Civil  

Court. The High Court, by impugned order dated 30.12.2009,  

dismissed the appeal and revision filed by the appellant.  

It allowed the appeal and revision filed by the respondent  

in  part  and  held  that  the  respondent  is  entitled  to  

interest from the date of reference to date of award. In  

other words, in view of the judgment of the High Court, the  

interest is payable pendente lite and in future at 18% per  

annum. The said judgment is challenged in these appeals by  

special leave.

3. The award of the Arbitrator is governed by  

the  Arbitration  Act,  1940.   This  court  has  been  

consistently  taking  a  view  that  in  the  absence  of  any  

specific contract in regard to rate of interest, pendente  

lite and future interest should not normally exceed 9% per  

annum.  [See State of Rajasthan & Anr. Vs. Ferro Concrete  

Construction Pvt. Ltd., (2009) 12 SCC 1]

4. In view of the above, the appeals are allowed  

in part and the interest awarded is reduced from 18% to 9%  

per annum.  In all other respects, the judgment of the  

Civil Court as modified by the High Court is upheld.

  ......................J.              ( R.V. RAVEENDRAN

)

New Delhi;             .....................J. September 27, 2010.              ( H.L. GOKHALE )