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PETITIONER: OIL & NATURAL GAS COMMISSION

       Vs.

RESPONDENT: M/S MC CLELLAND ENGINEERS S.A.

DATE OF JUDGMENT:       23/04/1999

BENCH: S.Rajendra Babu, S.N.Phukan

JUDGMENT:

RAJENDRA BABU, J.  :

     This   appeal  arises  out   of  certain   arbitration proceedings  between the parties to this appeal resulting in an  award  made  on February 29, 1988.  The  Arbitrators  by their  award  directed that the appellant shall pay  to  the respondent as follows :  (i) US $ 1004.50 being interest on US $ 40, 102.97 at 12% p.a.  from 10.12.1985 to 16.4.1986.

     (ii) US $ 59,583 being interest on US $ 3,12,011.00 at 12% p.a.  from 3.5.1983 to 5.11.1984.

     On  these  two  items of claim  the  Arbitrators  also awarded  interest  at 12% per annum from the date  of  award till  realisation.  The award so made by the Arbitrators was filed  into  the  Court.   Objections  filed  thereto  stood dismissed  and  decree  was passed in terms  of  the  award. Against  that order made by the learned Single Judge in  his original  jurisdiction  an appeal was carried to a  division bench which also stood dismissed.  Hence this appeal.

     Shri   B.Datta,  learned  senior   counsel   for   the appellant,   contended   that  what   was  awarded  by   the Arbitrators in respect of the two claims referred to earlier in the course of this order is itself interest for different periods.   He,  therefore, submitted that Arbitrators  could not  have further awarded interest on the claims awarded  at 12%  per annum from the date of award till realisation.   He did  not  dispute, and very fairly and correctly,  that  the Arbitrators  do  have  the power to grant  interest  on  the amount  claimed  in  the arbitration and the  power  of  the Arbitrators  was very characteristically described by him as before,  during and after of the arbitration  proceedings. His  point  is that there cannot be interest  upon  interest when  the claim itself is one of interest and interest  upon that  amount could not have been granted by the  Arbitrators and relied upon Section 3 of the Interest Act.

     There  cannot  be any doubt that the Arbitrators  have powers to grant interest akin to Section 34 of the CPC which is  the  power  of the court in view of Section  29  of  the Arbitration  Act,  1940.  It is clear that interest  is  not granted  upon interest awarded but upon the claim made.  The claim  made  in the proceedings is under two heads - one  is the  balance  of  amount claimed under invoices  and  letter

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dated February 10, 1981 and the amount certified and paid by the  appellant  and  the second is the interest  on  delayed payment.   That  is  how the claim for interest  on  delayed payment  stood crystallized by the time the claim was  filed before  the  Arbitrators.   Therefore,   the  power  of  the Arbitrators  to  grant  interest on the amount  of  interest which  may, in other words, be termed as interest on damages or  compensation for delayed payment which would also become part  of the principal.  If that is the correct position  in law,  we do not think that Section 3 of the Interest Act has any  relevance  in  the context of the matter which  we  are dealing  with  in  the present case.  Therefore,  the  first contention  raised  by  Shri   Datta,  though   interesting, deserves to be and is rejected.

     The  next  contention urged by Shri Datta is that  the claim  made  by  the appellant for interest on  the  alleged delayed  payments made by the respondent is barred by law of limitation.  It is pointed out that the award itself notices that  the claimants cannot lose their right to interest  due on  the  next delayed payment at the end of the three  years per  each  due  date  the claim would  be  barred  and  that principle  was  not applied on the delayed payment  for  the period  May 3, 1983 to November 5, 1984.  On this aspect  of the  matter  we  may notice the pleading raised  before  the Arbitrators.  It is stated at para 10(a) as follows :

     The   present  arbitration  itself   is   barred   by limitation  as  the alleged claims are relating to the  work done in 1981-82

     This  is a very bald statement without setting out the details  as  to how the claim made by the respondent  before the  Arbitrators  have  become   barred  by  the  limitation particularly  when the stand of the respondent is that  they had  running bills and payments were made from time to  time and  an account has to be taken as to what amount became due and  when;  the same has to be worked out.  Whether all such details  have to be worked out and whether the  transactions between  the  appellant  and the respondent did  not  become complete  until the payment of final amount are matters  for adjudication.  Thus, it becomes very difficult to appreciate that  the plea raised before the Arbitrators was  sufficient to  meet  the  situation to defeat the claim on the  bar  of limitation.   Therefore, we do not think that we can examine the  matter in the light suggested now by the learned senior counsel  for the appellant when no foundation has been  laid in  the  course  of the proceedings before  the  Arbitrators either  in  the  pleadings  or in  the  evidence.   We  are, therefore,  of the view that the High Court was justified in dismissing  the appeal against the decree passed in terms of the award.

     The  appeal, therefore, stands dismissed.  However, in the circumstances of the case, there shall be no order as to costs.