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PETITIONER: M/S JAGDISH RAI & BROTHERS

       Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT:       19/03/1999

BENCH: S.Rajendra, S.N.Phukan

JUDGMENT:

RAJENDRA BABU, J.  :

     A claim has been made for grant of interest in respect of  an  amount  awarded  pursuant   to  arbitration  in   an application  under  Section 29 of the Arbitration Act,  1940 read  with  Section 34 CPC.  However, such a claim does  not seem  to  have been made before the Court of  the  Sub-Judge when  the proceedings were pending for making the award  the rule of the court.  The Subordinate Judge passed a decree in terms  of the award and against which an appeal was filed in the  High  Court.  When that appeal was pending in the  High Court  an  application  was made as stated earlier  but  was rejected  firstly  on the ground that the appellant  is  not entitled to award of interest when such a claim had not been made  before  the court of the Sub-Judge by challenging  the award  and  secondly on the ground that when interim  relief was granted against the order making the award a rule of the court  to  make payment to an extent of 50% which  could  be withdrawn  after furnishing security to the satisfaction  of the court and having withdrawn the money the appellant would not be entitled to claim interest.

     There  are four stages of grant of interest.  Firstly, from  the stage of accrual of cause of action till filing of the  arbitration proceedings;  secondly, during pendency  of the proceedings before arbitrator;  thirdly, future interest arising  between date of award and date of the decree;   and fourthly,   interest  arising  from   date  of  decree  till realisation of award.

     The claim for interest not having been made before the court  in which proceedings for making the award the rule of the  court  were  pending would certainly dis-  entitle  the appellant  for making such a claim during first three stages of  pre-arbitration  and  post-arbitration that  is  between award   and  filing  of   application  inasmuch  as  several considerations  will  have  to be examined before  award  of interest  and  at what rate.  Therefore, when the award  had not  been  challenged for not granting interest,  the  award could  not  be upset to that extent.  The view taken by  the High  Court appears to be correct to that extent.   However, that  is not the end of the matter.  The High Court ought to have  further examined whether the appellant was entitled to any  interest  after  the decree was made in  terms  of  the

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award.   The  courts  have  taken the  view  that  award  of interest  under Section 34 CPC is a matter of procedure  and ought  to be granted in all cases when there is a decree for money  unless there are strong reasons to decline the  same. In  the  present  case the appellant had made  a  claim  for interest  before the arbitrator but the same had been denied and  no reasons are forthcoming thereto.  Whatever that  may be,  at any rate after the Sub-Judge made an award the  rule of  the  court the decree ought to contain a  provision  for making  payment  of interest.  If such payment had not  been made,  appropriate correction of the decree could be ordered to be made when an application had been made before the High Court.

     We  are  conscious of the fact that the appellant  had not preferred any appeal against the order made by the court of  Sub-Judge  which made the award the decree of the  court but  did  not  grant any interest.  Even so,  the  grant  of interest  being  a  matter of procedure  and  the  appellant having  made  an application before the High Court  in  that regard, we do not think there is any impediment to grant the same  by bringing decree of subordinate court in  conformity with law, namely, by awarding appropriate interest.

     The  learned  counsel  for the appellant  relied  upon several  decisions  of this Court to state  the  proposition that  such interest could be granted.  It is unnecessary  to make   any  detailed  reference  to   them.   We  think   it appropriate  to modify the decree of the court of  Sub-Judge by  including a direction for payment of interest @ 12%  per annum  from  the date when the award was made the decree  of the  court  of  Sub-Judge till realisation.  The  appeal  is allowed  to  the  extent indicated above.  However,  in  the circumstances  of  the case, there shall be no orders as  to costs.