EXECUTIVE ENGINEER (R AND B) AND OTHERS versus GOKUL CHANDRA KANUNGO (DEAD) THR. HIS LRS.

EXECUTIVE ENGINEER (R AND B) AND OTHERS versus GOKUL CHANDRA KANUNGO (DEAD) THR. HIS LRS.

The arbitrator erred by awarding interest at 18% p.a. without assigning reasons and by awarding interest for periods during which the respondent remained inactive; the Supreme Court, exercising its Article 142 powers and having regard to the respondent's delay, disallowed interest for specified dormant periods and reduced the rate of interest to 9% p.a. for the remaining pre-reference, pendente lite and post-award periods.

Parties
Appellants: Executive Engineer (R and B) and Others; Respondent: Gokul Chandra Kanungo (dead) through his LRs.
Jurisdiction
India
Judgment Date
30 September 2022
Procedural Posture
Civil Appeal / Final Judgment by Supreme Court
Outcome
Partly allowed
Legal Topics
Interest on Arbitral Awards, Section 31(7)(a), Article 142
Arbitration Constitutional Law Interest on Arbitral Awards Section 31(7)(a) Article 142

Case Brief

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Parties

Executive Engineer (R and B) and Others

Appellants

Gokul Chandra Kanungo (dead) through his LRs.

Respondent

Procedural Posture

Civil Appeal / Final Judgment by Supreme Court

Legal Issues

  1. 1 Whether an arbitral tribunal exercising discretion under Section 31(7)(a) must give reasons for the rate and period/quantum of interest awarded
  2. 2 Whether the respondent is disentitled to interest for periods of inaction/delay (30 Aug 1977–25 Jul 1989 and 14 Feb 1990–4 Feb 2000/15 Oct 2001)
  3. 3 Whether the Supreme Court can reduce the rate of interest under Article 142 in view of long delays and conduct of parties

Ratio Decidendi

The arbitrator erred by awarding interest at 18% p.a. without assigning reasons and by awarding interest for periods during which the respondent remained inactive; the Supreme Court, exercising its Article 142 powers and having regard to the respondent's delay, disallowed interest for specified dormant periods and reduced the rate of interest to 9% p.a. for the remaining pre-reference, pendente lite and post-award periods.

Court Disposition

Partly allowed

Orders

  • The respondent shall not be entitled to any interest for the period between 30th August 1977 and 25th July 1989 and for the period between 14th February 1990 and 4th February 2000.
  • In respect of the remaining period at all three stages (pre-reference period, pendente lite and post-award period) the respondent shall be entitled to interest at the rate of 9% per annum.