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GOVERNOR, STATE OF ORISSA
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WITH
Page1
placed
before
consideration
three-Judge
and
decision.
Bench
The
of
this
question
Court
before
for
this
Bench
order, is
of
this
Court,
by
the
said
reference
2.
Uttar
Pradesh
Cooperative
Federation
Limited
22
Page2
v.
aforementioned
cases,
principal
amount
upto
principal
amount
for
interest
under
the
the
the
Act,
the
interest
date
of
purposes
1996.
awarded
award,
of
The
on
the
becomes
the
awarding
future
appellants
would
and
erroneously
assumed
that
the
33
Page3
3.
of
execution
the
appellant
petition
order of attachment in
herein.
was
for
The
claim
the
in
the
payment
of
Orissa
by
its
order
dated
28.06.2006,
principal
Page4
the
total
amount
payable
under
the
award
S.L.
4.
based
on
an
inadvertent
erroneous
assumption
that
amount
upto
the
date
of
award
becomes
the
would
not
amount
to
award
of
interest
on
aforementioned
principle.
To
support
their
55
Page5
ISSUES :
5.
case
(supra)
and
McDermott
case
(supra)
there
1996
could
be
interpreted
to
include
interest
SUBMISSIONS :
6.
Shri
K.K.
appearing
for
instance,
would
the
Venugopal,
learned
appellants
submit
that
the
herein,
Senior
in
decision
in
Counsel
the
the
first
S.L.
66
Page6
the
McDermott
case
(supra),
the
ONGC
case
S.L.
Arora
case
(supra)
wrongly
held
that
the
7.
77
Page7
to
interest
and
in
such
case
18%
per
annum
(b)
would
be
the
totality;
fifthly,
that
the
1908
would
show
that
unless
the
phrase
and
interest;
sixthly,
that
the
entirety
of
Page8
8.
Per
contra,
Shri
L.
Nageshwara
Rao,
learned
S.L.
present
Arora
case
reference
(supra)
was
not
and
that,
required.
therefore,
the
Furthermore,
the
DISCUSSION :
99
Page9
9.
namely31
of
firstly,
whether
the
1996
Act,
sub-
section
authorised
the
(7)
of
arbitral
10.
grant
post-award
interest
extended
only
on
the
Page10
(b)
of
indicate
Sub-section
that
(7)
the
of
section
Section
31
contemplates
or
interest
upon
interest.
sum
11
1
Page11
11.
In
the
S.L.
case
Arora
(supra),
this
Court
substantive
disputes,
by
categorizing
them
under
well
as
payable
on
post
the
arbitral
amount
litigations,
awarded
often
the
interest
increases
to
awarded.
The
Court,
in
the
S.L.
Arora
case
of
interest
to
understand
the
authority
of
the
12.
The
present
reference
requires
this
Court
to
of
McDermott
previous
case
decisions
(supra)
and
of
the
this
Three
Court
in
Circles
the
case
12
1
Page12
13.03.2012
takes
note
of
the
contention
of
the
13.
Before
aforementioned
consider
decisions,
the
it
correctness
would
be
of
the
necessary
to
per
literally
incuriam
means
through
record.
As
regards
the
judgments
of
this
Court
13
1
Page13
Justice
R.M.
Sahai,
in
his
concurring
opinion
stated as follows:
per
appears
incuriam
to
mean
per
in
relaxation
of
the
rule
of
stare
14.
In
exceptional
circumstances,
where
owing
to
authority
plain
running
statutory
counter
to
provision
the
or
reasoning
obligatory
and
result
14
1
Page14
15.
referral
order
dated
13.03.2012,
to
determine
the
16.
placing
its
reliance
on
earlier
decisions,
by
its
of
time.
This
Court
in
McDermott
Page15
amount
the
date
and
of
interest
award
and
thereon
future
award
on
interest
on
interest
as
the
date
of
award
became
the
Court
while
considering
the
ground
of
'interest on interest'.
17.
Page16
case
(supra),
it
is
observed
that
the
substantive
interest.
The
proposition
on
interest
on
laid
down
the
discretion
of
the
arbitrator
to
The
power
of
the
arbitrator
to
award
Section 31(7)(a)provides
tribunal
may
award
that
interest,
at
the
such
Page17
interest
should
be
awarded;
(ii)
whether
award
money;
and
(iii)
whether
interest
The
1996
interest.
The
granted
10%
Act
provides
arbitrator
interest
for
in
both
award
his
for
of
18%
wisdom
has
the
principal
interest
was
awarded
on
the
principal
However,
resorted
Article
to
142
in
some
exercise
in
order
cases,
its
to
this
Court
jurisdiction
do
complete
has
under
justice
18
1
Page18
18.
makes
interest
imposed
nor
on
any
does
the
reference
it
allow
aggregate
of
to
awarding
post-award
the
of
compound
interest
principal
to
claim
be
and
said
rate
of
interest
in
order
to
do
complete
the
McDermott
surrounding
interest
case
arbitral
on
(supra),
tribunals
interest
was
not
that
the
authority
proposition
to
deliberated
award
upon
of
but
19
1
Page19
19.
This
paragraphs
in
Court,
the
on
perusal
aforesaid
of
the
decisions,
held
relevant
that
the
the
case,
but
is
only
reference
to
the
Paras
to
27
(of
the
SCC
report)
in
Counsel
in
for
reply
to
Mcdermott,
the
the
submissions
appellant
made
on
Page20
for
Mcdermott
on
the
question
of
seriatum
in
paras
45
to
160.
The
Three
Circles
that
Mcdermott
held
that
incuriam
due
to
an
inadvertent
erroneous
assumption.
20.
claim.
This
Court,
in
the
McDermott
case
interest
upon
interest
or
compound
interest.
21
2
Page21
It
amount
upto
the
date
of
award.
Thus,
the
21.
Further,
the
decision
of
Three
case
circles
case
McDermott
contention
upon
the
interest.
raised
issue
(supra)
by
of
the
merely
respondent
interest
Therefore, in
but
on
re-stated
therein
interest
my considered
to
or
the
decide
compound
view, the
Three
compound
interest,
due
to
such
an
inadvertent
22.
decisions
would
support
the
proposition
that
22
2
Page22
23.
this
Court
has
recognised
and
accepted
the
power
of
has
considered
compensatory
such
measure
interest
along
such
an
award
for
delayed
with
the
as
payment
principal
requisite
and
included
amount
in
the
There
cannot
be
any
doubt
that
the
1940.
It
is
clear
that
interest
is
not
the
appellant
delayed
amount
and
the
payment.
certified
second
That
is
and
is
how
paid
the
the
by
the
interest
on
claim
for
Page23
the
time
the
Arbitrators.
claim
was
Therefore,
filed
the
before
power
of
the
the
which
would
also
become
part
of
the
we
do
not
think
that
Section
of
the
matter
which
present
case.
raised
by
we
are
Therefore,
Shri
Datta,
dealing
the
with
first
though
in
the
contention
interesting,
(supra),
(supra)
both
as
well
pertained
as
to
the
Three
the
awards
Circles
case
under
the
Page24
the
awards
under
the
old
Arbitration
Act
and
observation
pendente
therein
lite
that
period
arbitrator
and
the
has
the
inspite
of
any
bar
against
interest
25.
period
and
pendente
lite
period
has
been
the
arbitrators
power
to
award
interest
25
2
Page25
26.
the
(supra)
ONGC
related
case
to
(supra)
awards
and
under
Circles
case
Arbitration
Act,
Three
the
1940, they can be of no assistance in interpreting subsection (7) of section 31 of the Act, 1996. I concur with
the above reasoning to show the inapplicability of the
ONGC case (supra) and the Three Circles case (supra) to
the present case.
27.
The
last
case
relied
upon
by
the
appellants
the
liability
of
Code),
the
sought
to
determine
borrower
to
pay
whether
interest
on
the
the
26
2
Page26
principal
compound
sum
interest
would
thereon.
include
liability
However,
the
to
issue
pay
with
respect to award of interest upon interest under subsection (7) of Section 31 of the Act, 1996 was not the
subject matter in the aforesaid decision.
28.
case
cannot
be
relied
upon
by
the
appellants
possessed
the
power
to
award
interest
on
27
2
Page27
29.
suggested
amendments
to
the
Act,
1996.
On
the
indicated
that
the
award
of
interest
on
said
view
taken
by
the
Commission.
It
is
my
Page28
(supra)
is
sound
and
wholly
conclusive
on
the
1996
on
the
issue
of
awarding
interest
on
30.
interest
case
has
been
(supra),
the
correctly
decided
present
reference
in
the
may
S.L.
not
be
case
(supra)
pertained
to
the
Act,
1940,
and,
29
2
Page29
therefore,
in
light
of
the
settled
principle
of
law,
31.
two-Judge
Bench
of
this
Court,
would
clarify
the
30
3
Page30
interest
at
the
rate
of
eighteen
per
the
first
instance,
it
applies
only
to
an
33.
Page31
with
thereby
at
Unless
the
legislature
otherwise
onset
has
of
agreed
the
provided
by
the
sub-section
for
parties,
itself,
restriction
on
the
the
words
parties
unless
otherwise
categorically
agreed
clarifies
by
that
the
the
cause
of
action
to
the
date
of
award.
Page32
In
the
context
of
the
Act,
1996,
the
phrase
otherwise.
During
the
arbitral
is
required
procedure.
Reason
being,
to
follow
the
the
said
arbitrator
is
33
3
Page33
35.
In
the
event
that
the
terms
of
the
given
are
silent
on
the
question
of
interest
award
was
made.
The
principles
for
levying
such
34
3
Page34
36.
given
the
discretionary
power
of
not
only
imposing
to
decide
whether
such
interest
would
be
whether
it
would
be
imposed
for
the
entire
upon
or
in
mere
fancy
Authority
the
of
the
concerned.
words
of
It
Lord
Court
or
must
be
Halsbury,
Page35
37.
38.
It
is
settled
principle
of
interpretation
of
into
consideration.
In
support
of
the
said
36
3
Page36
principle
of
Constitution
contextual
Bench
interpretation,
decision
of
this
refer
Court
in
to
Darshan
An
indefinite
or
specified
amount
of
money.
37
3
Page37
Book
4,
defines
sum,
inter
as
alia,
the
following:
Sum. When used with reference to values, sum
imports a sum of money.
Corpus Juris Secundum, Volume LXXXIII, defines the word
sum as follows:
Sum. While the word sum must be construed in
connection with the context, it has a definite
meaning
appropriate
to
use
with
reference
to
to
money,
and
in
sense
it
is
38
3
Page38
mean money. The term money has also been used in subsection (7) of section 31 of the Act, 1996. Therefore, I
would not hesitate in finding that the terms sum and
money have been used by the legislature, in the given
provision, interchangeably. In this light, it would be
pertinent to take note of the given clause once again.
The said clause states that interest may be awarded on
the sum for which the arbitral award is made, or the
same could be read as- interest may be awarded on the
money
for
which
the
arbitral
award
is
made.
This
to
the
money
as
adjudicated
by
the
arbitral
41.
39
3
Page39
42.
Whartons
Law
Lexicon,
Fourteenth
Edition,
1.
Advantage
or
profit,
esp.
of
financial nature.
Websters Third New International Dictionary, Volume
III
defines
interest
to
mean,
inter
alia,
the
following:
interest. The price paid for borrowing money
generally
expressed
as
percentage
of
the
40
4
Page40
Judicial
2,
p.
Dictionary,
1385,
defines
Seventh
the
Edition,
term
2008,
interest
as
follows:
Interest is compensation paid by the borrower
to the lender for deprivation of the use of his
money.
43.
would
the
return
or
compensation
for
the
use
or
41
4
Page41
44.
Bank
Ltd
v.
Riches,
[1947]
A.C.
390,
the
to
compensation
for
the
deprivation.
42
4
Page42
45.
there is
general
rule
satisfied
the concept
two
for
that as
requirements
payment
to
must
amount
a
be
to
or
inescapable.
payments
money
Thus
should
if
that
they
are
do
not
not
be
interest
lends
money
to
see
B
why
of
and
43
4
Page43
if
provide
the
parties
for it
to be
to
contract
wrapped up
with
of
single
indivisible
sum.
The
not
be
denatured,
into
something
or
different,
transmuted
simply
by
44
4
Page44
before
being
made
payable
under
the
46.
The
sum
of
money
must,
generally,
be
due
to
the
payment
aggregation
would
of
not
different
alter
the
nature,
distinct
the
said
nature
of
47.
45
4
Page45
on
the
due
date.
Essentially,
it
is
Therefore,
it
interest,
appears
amount
which
on
to
it
may
be
be
concluded
distinct
is
from
imposed.
that
the
the
term
principal
Furthermore,
the
providing
compensation
for
withholding
the
said
(7)
withholding
of
the
Section
money
31
awarded
of
as
the
per
Act,
the
1996,
for
claim,
as
Page46
49.
(b)
of
the
said
provision.
As
noticed
above,
uses
the
phrase
unless
the
award
otherwise
become
inapplicable.
By
the
said
award,
the
47
4
Page47
50.
51.
Page48
15.
The
word
payment
may
have
different
liability
arising
under
the
award.
It
payment
to
the
credit
of
the
decree-
by
the
appellants
before
the
High
pay
the
interest
18%
p.a.
beyond
24-5-
2001.
52.
the
1996
further
states
that
the
interest
as
49
4
Page49
53.
words
to
be
given
same
meaning.
It
is
will
be
taken
to
have
that
meaning
elsewhere.
54.
Page50
assigned
the
same
meaning
so
as
to
avoid
same
word
or
expression
occurring
at
two
Singh,
construction
introduce
7th
is
Edn.
to
1999,
be
uncertainty,
p.
113).
That
rejected
which
will
friction
or
confusion
situation
when
the
same
word
or
been
the
consistent
view
of
the
Supreme
expression
in
different
parts
of
the
same
is,
as
held
by
the
House
of
Lords
in
Page51
the
contextual
expression
and
then
avoiding
collision
use
of
the
determine
its
with
word
or
direction
icebergs
of
of
meaning,
the
unless
contrary.
The
same
statute
there
only
is
must
be
anything
exception
given
to
to
the
same
indicate
this
the
rule
of
used.
The
word
may
be
understood
in
different
herein,
that
is,
under
clause
(a)
and
under
52
5
Page52
The
word
sum
has
been
used
in
both
clauses
in
the
56.
note
the
Central
Bank
of
case
India
(supra)
with
burdened
oppressive
Central
debtors
compound
Bank
of
from
interest
India
case
being
rates,
this
(supra),
charged
Court
stated
with
in
the
that
the
was
superseded
by
legislation.
Furthermore,
this
Page53
period.
Interest
once
capitalised,
of
principal
so
as
to
bind
the
debtor/borrower.
57.
fiscal
legislation
to
ensure
that
the
Page54
shrug
off
its
apparent
obligation
to
interest
for
the
period
of
undue
58.
was
of
the
view
that
it
would
be
the
actual
proceeds
at
the
disposal of
the
payee.
The
said
55
5
Page55
59.
aggregate
amount
is
paid
to
the
party
in
whose
the
interest
amount
is
within
the
physical
and
the
principal
amount.
Therefore,
in
the
present
and
interest
on
interest
the
aggregate
pendente
lite,
of
the
since
principal
the
said
56
5
Page56
reference
to
compounding
of
interest,
nor
to
awarding
interest on interest.
60.
based
on
the
claim
of
the
parties
to
the
57
5
Page57
61.
is answered in the following termsI find no infirmity with the S.L. Arora case (supra),
whereby it was held that if the arbitral award is silent
about interest from the date of award till the date of
payment, the person in whose favour the award is made
will be entitled to interest at 18% per annum on the
principal amount awarded, from the date of award till the
date of payment.
62.
In
view
of
the
above,
while
answering
the
58
5
Page58
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 3148 OF 2012
M/S. HYDER CONSULTING (UK) LTD.
. APPELLANT
VERSUS
GOVERNOR STATE OF ORISSA TH. CHIEF ENG. .. RESPONDENT
WITH
SLP (C) No. 19895/2008
SLP (C) No. 20282/2008
CIVIL APPEAL No. 3149 OF 2012
CIVIL APPEAL No. 3147 OF 2012
SLP (C) No. 18614/2012
CIVIL APPEAL No. 1390 OF 2013
SLP (C) No. 21896/2010
JUDGMENT
S. A. BOBDE, J.
1.
59
Page59
The Arbitral
60
Page60
S.L.
Aroras case that Section 31(7) of the Act does not require
that interest, which accrues till the date of the Award, be
included in the sum from the date of Award for calculating
the post-award interest. In my humble view, this conclusion
does not seem to be in consonance with the clear language
of Section 31(7) of the Act.
3.
61
Page61
4.
62
Page62
63
Page63
6.
The sense in
of
money
or
currency;
any
amount
64
Page64
65
Page65
66
Page66
67
Page67
68
Page68
of
construction
even
if
they
be
strange
or
2
IRC v. Hinchy, [1960] 1 ALL ER 505, pp. 508, 512 (HL).
69
Page69
Cartledge v. E. Jopling & Sons, Ltd. [1963] A.C. 758. Cf. Miller v. Salomons
[1853] 7 Ex. 475, per Pollock C.B.; Re British Farmers, etc., Co. (1878) 48 L.J.Ch. 56,
per Jessel M.R.; Magor and St. Mellons R.D.C. v. Newport Corporation [1952] A.C. 189.
5
Gwynne v. Burnell (1840) 7 Cl. & F. 572 per Coleridge J.
70
Page70
7
[1844] 11 Cl & F 85, p. 143.
71
Page71
.........................................J.
[S.A. BOBDE]
NEW DELHI,
NOVEMBER 25th, 2014
72
Page72
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3148 OF 2012
Appellant(s)
VERSUS
Respondent(s)
73
Page73
WITH
Special Leave Petition (C) No.19895 of 2008
Special Leave Petition (C) No.20282 of 2008
Civil Appeal No.3149 of 2012
Civil Appeal No.3147 of 2012
Special Leave Petition (C) No.18614 of 2012
Civil Appeal No.1390 of 2013
Special Leave Petition (C) No.21896 of 2010
JUDGMENT
Abhay Manohar Sapre, J.
1.
agreement
with
the
reasoning
and
the
eventual
judgment
delivered
by
brother
Bobde
J.
74
Page74
75
Page75
5.
Pre-
Longer the
Pre-award
76
Page76
77
Page77
7.
8.
78
Page78
9.
79
Page79
80
Page80
81
Page81
82
Page82