STATE OF U.P. versus HARISH CHANDRA AND CO.

STATE OF U.P. versus HARISH CHANDRA AND CO.

Court held that, after Interest Act, 1978, arbitrators have the authority to grant pre-reference interest when the cause of action arises after the Act came into force. Clause 1.9 of Special Conditions of Contract does not bar claim for such interest as it applies only to amounts like security deposit or retention...

Source-derived case information.

Parties
Appellant: State of U.P.; Respondent: Harish Chandra & Co.
Jurisdiction
India
Judgment Date
11 November 1998
Procedural Posture
Civil Appeal / Supreme Court Appellate Judgment on Appeals From Allahabad High Court Decision in FAFO No. 206/93 and Slp(c) No. 6307 of 1995
Outcome
Appeal of State of U.P. dismissed; Appeal of Contractor (Harish Chandra & Co.) partly allowed.
Legal Topics
Interest on Arbitral Awards, Power of Arbitrator, Contract Interpretation, Scope of Judicial Intervention
Arbitration Contract Law Civil Procedure Interest on Arbitral Awards Power of Arbitrator Contract Interpretation Scope of Judicial Intervention

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Parties

State of U.P.

Appellant

Harish Chandra & Co.

Respondent

Procedural Posture

Civil Appeal / Supreme Court Appellate Judgment on Appeals From Allahabad High Court Decision in FAFO No. 206/93 and Slp(c) No. 6307 of 1995

Legal Issues

  1. 1 Whether arbitrator had power to award pre-reference interest under Arbitration Act, 1940 after Interest Act, 1978
  2. 2 Whether Clause 1.9 of Special Conditions of Contract barred award of interest
  3. 3 Whether objections as to merits of award or contract interpretation can be raised under Section 30 of Arbitration Act

Ratio Decidendi

Court held that, after Interest Act, 1978, arbitrators have the authority to grant pre-reference interest when the cause of action arises after the Act came into force. Clause 1.9 of Special Conditions of Contract does not bar claim for such interest as it applies only to amounts like security deposit or retention monies, not unpaid dues for work done. Questions on quantum or factual disputes determined by the arbitrator cannot be questioned under Section 30. Paragraph 7-A only restricts arbitrator but not the court, which retains discretion to award interest above 6% post-decree; therefore, the High Court erred in reducing the interest decreed by the trial court from 15.5% to 6%.

Court Disposition

Appeal of State of U.P. dismissed; Appeal of Contractor (Harish Chandra & Co.) partly allowed.

Orders

  • Trial court decree awarding interest at 15.5% p.a. from date of decree until payment is restored, reversing High Court reduction to 6%.
  • No order as to costs.