Ori HC | Party to arbitration agreement not entitled to pre reference and pendente lite interest, in absence of provision regarding the same in arbitration agreement

Orissa High Court: Biswanath Rath, J. dismissed an arbitration appeal filed under Section 37(1) of the Arbitration and Conciliation Act, 1996.

The appellant in his appeal, challenged the judgment of the District Judge, Sambalpur in Arbitration Petition No. 2 of 2004 dated 27-11-2006 where the District Judge while dismissing the Arbitration Petition confirmed the award passed by the learned Arbitrator involving Arbitration Case No. 2 of 2001

Learned counsel for the appellant, S. Mohanty, restricted his submission to the extent that for the receipt of the payment on the final bill without protest and having no claim any further involving the contract, whether the Arbitrator, as well as the District Judge, arrived in right conclusion involving the award and judgment therein? In filing the written note of argument, the learned counsel extended his claim to the interest part also.

The Court upheld the Arbitrator’s findings that the appellant has got the work executed through the claimant unnecessarily delayed the payment of final bill and that sole object behind the same was to ensure that in future the claimant would not make any claim against the respondent as in course of the execution of the work, the respondent had committed breach of contract and caused undue harassment to the claimant. In the contract, there was no provision for obtaining any such no claim undertaking from the contractor before payment of the final bill.

Relying on Asian Techs Ltd. v. Union of India, (2009) 10 SCC 354, the Court found that the final protest was received by the respondent under protest and therefore, the contract was not concluded. In view thereof, the Court found no scope for interfering on this aspect particularly exercising power under Section 37 of the Act.

On the issue of payment of interest, the Court relied upon Jiprakash Associates Ltd. (Jal) v. Tehri Hydro Development Corporation India Ltd., 2019 SCC Online SC 143 and Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), (2010) 8 SCC 767 and held that unless and until there was an agreement, a party was not entitled to pre and pendente lite interest.

In view of the above, the Court found no scope for interfering in the aspect pertaining to payment of interest and dismissed the arbitration appeal.[Mahanadi Coal Fields Ltd. v. Kishorilal Loomba and Sons, 2019 SCC OnLine Ori 188, decided on 13-05-2019]

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