REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1146 OF 2003

Coal Linker ...Appellant(s)

- Versus -

Coal India Limited ..Respondent(s)

J U D G M E N T

GANGULY, J.

1. The  appellant  herein,  a  proprietary  

concern, was given a work order on or about  

5.7.1982 by Coal India Limited (hereinafter  

referred  to  as  “the  respondent”)  for  

transportation of coal/coke by road to the  

respondent’s stockyard at Kanpur and also  

for operation of the said stockyard.   1

2. Pursuant  to  such  work  order  a  formal  

agreement  was  entered  into  between  the  

appellant and the respondent and the said  

agreement contained an arbitration clause.  

As disputes and differences arose between  

the parties, a reference was made to the  

sole arbitrator for resolving the dispute  

and  an  award  dated  30.4.1993  was  passed  

awarding  an  amount  of  Rs.51,77,600/-  in  

favour  of  the  appellant.  Appellant  was  

granted  interest  of  Rs.11,39,560/-  

calculated at the rate of 15% from October,  

1990  to  April,  1993.   Interest  was  also  

granted for the pre-reference period to the  

extent of Rs.10,97,250/- but in the award  

no interest was granted from the date of  

the award till the date of the decree.

3. Challenging the said award, the respondent  

filed  an  application,  but  the  same  was  

dismissed by the learned Single Judge of  

2

the Calcutta High Court by a judgment and  

order  dated  3.11.1995.   Thereafter,  an  

appeal  was  preferred  before  the  Division  

Bench of the Calcutta High Court and the  

Division Bench also dismissed the appeal of  

the respondent on 25.04.1996.  Thereafter,  

a decree was passed by the learned Single  

Judge of the Calcutta High Court confirming  

the said award.  The said decree directed  

payment of interest @ 18% per annum from  

the date of the said award till the date of  

the decree.   

4. The  respondent  filed  a  special  leave  

petition before this Court challenging the  

order of the Division Bench of the Calcutta  

High  Court  dated  25.04.1996.   On  that  

special leave petition, this Court by an  

order  dated  10.5.1996  directed  the  

respondent to deposit an amount of Rs.40  

lakhs within 6 weeks with the Registrar,  

3

Original Side of the Calcutta High Court  

and permitted the appellant to withdraw the  

same  on  furnishing  a  bank  guarantee.  

Ultimately, by order dated 22.7.1996 this  

Court dismissed the special leave petition  

filed by the respondent.

5. Thereafter,  execution  proceeding  was  

initiated by the appellant for execution of  

the unsatisfied portion of the decree dated  

2.5.1996.   Against  the  said  execution  

proceeding, an application was filed by the  

respondent under Section 47 of the Code of  

Civil Procedure contending inter alia that  

the decree dated 2.5.1996 insofar as the  

same directs payment of interest from the  

date  of  the  award  till  the  date  of  the  

decree is a nullity and the same is not  

executable against the respondent.   

6. Learned Single Judge of the Calcutta High  

Court  by  judgment  and  order  dated  

4

13.12.1996 held that insofar as the decree  

was passed providing for grant of interest  

from the date of the award till the passing  

of  the  decree,  is  a  nullity  and  is  

inexecutable and the appellant was directed  

to refund the amount representing the same  

pendente lite interest.  Against the same  

judgment  and  order  the  present  appellant  

filed an appeal before the Calcutta High  

Court  and  the  Division  Bench  of  the  

Calcutta High Court by judgment and order  

dated 8.3.2001 was pleased to dismiss the  

appeal.

7. Challenging  the  said  appeal  this  special  

leave petition has been filed.

8.  The question in this appeal is whether the  

Division Bench was correct in setting aside  

the order of the Executing Court directing  

payment of interest at the rate of 18% from  

5

the date of the award till the date of the  

decree.

9. Few  facts  of  the  case  are  relevant  to  

understand  issues  involved  herein.  

Admittedly, in the award, interest from the  

date  of  the  award  till  the  date  of  the  

decree has not been granted. What has been  

granted is pre-reference interest and the  

interest from October 1990 to April 1993  

i.e the interest during the pendency of the  

arbitration  proceedings.   The  award  is  

dated 30.04.1993.  No post award interest  

has been granted.

10. The  appellant  herein-the  awardee  did  not  

raise any objection under Section 30 of the  

Arbitration Act (hereinafter referred to as  

“the  Act”)  to  the  award  about  denial  of  

such  interest.   On  the  other  hand,  the  

appellant  filed  an  application  under  

6

Section  17  of  the  Act  for  passing  of  a  

decree  in terms of the award.  Therefore,  

the Executing Court while passing a decree  

in terms of the award should not go beyond  

what has been given in the award.

11.   In this connection certain decisions have  

been cited which are not strictly attracted  

in the facts situation of the instant case.  

Reference was made to the decision of this  

Court  in  the  case  of  Executive  Engineer  (Irrigation),  Balimela  and  others Vs.  Abhaduta  Jena  and  others –  (1988)  1  SCC  418.  In that case the question was about  

the  competence  of  arbitrator  to  award  

interest  on  a  reference  made  without  

intervention of the Court and the three-

Judge  Bench  of  this  Court  held  that  in  

cases coming after the commencement of the  

Interest Act of 1978 an arbitrator has the  

same power as the Court to award interest  

7

up  to  the  date  of  institution  of  the  

proceedings. In cases which arose prior to  

the commencement of the Interest Act 1978,  

the  arbitrator  has  no  such  power  under  

provisions of the previous Interest Act of  

1839.  In the instant case, as pointed out  

above,  there  is  no  dispute  about  the  

competence  of  the  arbitrator  to  grant  

interest. The arbitrator, as noted above,  

granted  interest  but  did  not  grant  any  

interest after the date of the award till  

the  date  of  the  decree.   Therefore,  the  

decision in  Abhaduta Jena (supra) has no  relevance. Reference was also made to the  

decision  of  this  Court  in  the  case  of  

Gujarat Water Supply and Sewerage Board Vs.  Unique  Erectors  (Gujarat)  (P)  Ltd.  and  another - (1989)   1 SCC 532, wherein a  two-Judge Bench of this Court relied on the  

previous decision of this Court in Abhaduta  Jena  (supra) and dealt with the aspect of  

8

grant  of  interest  by  the  arbitrator  in  

paragraphs  14,  15  and  16  of  the  said  

judgment.  In Gujarat Water Supply (supra),  this  Court  held  that  an  arbitrator  can  

award the interest which can cover three  

periods namely; (a) the period prior to the  

commencement of the arbitration proceeding,  

(b)  period  during  which  the  arbitration  

proceeding was pending and (c) the period  

between the date of the award to the date  

of the decree i.e the post award period.  

The  learned  Judge  has  held  that  in  the  

light  of  the  decision  in  Abhaduta  Jena  (supra)  the  arbitrator  could  not  have  

awarded  interest  “for  the  period  between  

August 22, 1984 and till the date of the  

publication of the award i.e. July 1985”.  

That  was  the  period  during  which  the  

arbitration  proceeding  was  pending.  

Ultimately, the Court deleted the interest  

awarded by the arbitrator for the period  

9

from August 22, 1984 till the date of the  

award. (See para 16 of the report).  It may  

be again pointed out here that in this case  

the award in which interest has been given  

by the arbitrator has been finally upheld.  

Therefore,  the  principles  decided  in  

Gujarat  Water  Supply (supra)  have  no  application to the facts of the case.

12. However,  in  the  case  of  Secretary,  Irrigation Department, Government of Orissa  and others Vs. G.C. Roy – (1992) 1 SCC 508,  the  Constitution  Bench  of  this  Court  

overruled the decision of the Abhaduta Jena  (supra)  and  held  on   construction  of  

Section 14 and 29 of the said Act that the  

arbitrator  can  grant  pendente  lite  

interest.  In paragraph 8 in the judgment  

of G.C. Roy (supra) the Constitution Bench  of  this  Court  clearly  mentioned  three  

periods for which the question of award of  

10

interest by the arbitrator may arise.  The  

said periods have been clearly pointed out  

in paragraph 8 of G.C. Roy (supra) and the  same is  set out as below:

“...(i) for the period commencing from  the date of dispute till the date the  arbitrator enters upon the reference;  (ii)  for  the  period  commencing  from  the date of the arbitrator’s entering  upon reference till the date of making  the award; and  (iii) for the period  commencing from the date of making of  the award till the date the award is  made the rule of the court or till the  date  of  realisation,  whichever  is  earlier...”

13. Admittedly,  in  the  instant  case  interest  

has been granted by the arbitrator in the  

award  for  the  first  two  periods.  But  

interest  has  not  been  granted  by  the  

arbitrator  in  the  award  for  the  last  

period.  

14. As  noted  above,  the  awardee-appellant  

herein, filed an application under Section  

17 of the Act for pronouncing a judgment in  

11

terms of the award. So there is no scope  

for the Executing Court to go beyond the  

award and grant interest for the post award  

period which was not granted in the award.

15. Here the Executing Court has gone beyond  

the  award  and  thus  had  gone  beyond  its  

jurisdiction and passed a decree which thus  

becomes a nullity.

16. Similar principles have been laid down by  

this  Court  in  the  case  of  Visakapatnam  Municipal Corporation Vs.  K. Satyanarayana  & Co. – (1995) 2 SCC 385. In paragraph 3 of  the report, the Court held:

“On the admitted facts, viz., that the  respondent  had  not  preferred  any  objection  to  the  award  in  question  under Section 30 of the Act and, in  fact,  had  applied  for  a  decree  in  terms of the award, the trial court  could not have granted  pendente lite  interest which was not a part of the  award. To that extent, the trial court  had exceeded its jurisdiction”.

12

17. The same facts are present here.  Here also  

the  appellant  herein  has  not  filed  any  

objection under Section 30 of the Act to  

the  award.   Rather  the  appellant  had  

applied for a decree in terms of the award  

under Section 17 of the Act.

18. In view of such clear factual position, we  

find no merit in this appeal and which is  

accordingly dismissed. There is no order as  

to costs.

.......................J. (MARKANDEY KATJU)

.......................J. New Delhi (ASOK KUMAR GANGULY) September 07, 2009

13