BHARAT HEAVY ELECTRICALS LTD. versus TATA PROJECTS LTD.

Citation: [2014] 9 S.C.R. 479 · Decided: 01-09-2014 · Supreme Court of India · Bench: F.M. IBRAHIM KALIFULLA · Disposal: Disposed off

Judgment (excerpt)

[2014) 9 S.C.R. 479 
BHARAT HEAVY ELECTRICALS LTD. 
v. 
TATA PRQjECTS LTD. 
(Civil Appeal No. 8373 of 2014) 
SEPTEMBER 01, 2014 
[FAKKIR MOHAMED IBRAHIM KALIFULLA AND 
SHIVA KIRTI SINGH, JJ.] 
A 
B 
Arbitration and Conciliation Act, 1996 - s.34 - Works 
contract - Appel/ant-BHEL engaged respondent as a sub-
C 
contractor to erect, test and commission boilers - Disputes and 
differences between the parties - Award passed by Arbitral 
Tribunal - Objections raised by appellant, claiming payment 
of crane hire_ charges by the respondent - Held: On facts, 
provisions contained in the Work Order read with the Tender 
D 
Document/agreement made it clear that appellant was entitled 
for crane hire charges which were wrongly disallowed by the 
order under appeal - Such amount to be deducted from the 
amount payable to respondent under the Award on other 
heads. 
E 
Arbitration and Conciliation Act, 1996 - s. 34 - Works 
contract - Dispute between the parties - Arbitral award - Grant 
of pre-Award interest - Propriety - Held: On facts, not proper, 
in view of clause 1. 15. 5 of the tender document I agreement 
entered into between the parties. 
Arbitration and Conciliation Act, 1996 - ss.31(7)(b) and 
F 
34 - Works contract - Dispute between the parties - Arbitral 
award - Post-Award interest granted by Arbitral Tribunal @ 
10.5% -- Plea of respondent for enhancement of Post-Award 
G 
interest to 18% p.a. in light of s.31(7)(b) - Held: Not tenable, 
since the Arbitral Tribunal had, already granted post-Award 
interest@ 10.5% -- Only if the Award had not made such a 
479 
H 
480 
SUPREME COURT REPORTS [2014] 9 S.C.R. 
A direction, the statutory rate of interest@ 18% p.a. would have 
been payable from the date of the Award to the date of 
' 
payment as per the statutory provision. 
The appellant-SHEL engaged respondent as a sub-
s contractor to erect, test and commission two 120 MW 
boilers (Unit II and Unit Ill) on behalf of the appellant. 
Pursuant to disputes and differences between the parties, 
an Arbitral Tribunal came to be constituted which 
awarded Rs.69.22 lac on various heads and Rs.25.39 lac 
C on account of interest. The appellant instituted 
proceedings under Section 34 of the Arbitration and 
Conciliation Act, 1996. A Single Judge of the High Court 
allowed the objections of the appellant in part in respect 
of over-run charges, crane hire charges and interest. The 
0 respondent filed appeal which the Division Bench 
allowed in part- in respect of crane hire charges and 
interest. 
In the present appeal, it was contended on behalf of 
the appellant that the Division Bench had wrongly 
E reversed the order of Single Judge on the issue of crane 
hire charges. In respect of the issue relating to interest, 
the appellant confined its claim only against grant of pr~­
Award interest. 
F 
Disposing of the appeal, the Court 
HELD:1.1. On behalf of respondent, the gr.ant of pre-
Award interest could not be successfully defended in 
view of clause 1.15.5 of the Agreement which provides 
that "no interest shall be payable by BHEL on earnest 
G money/security deposit or any money due to the 
contractor by BHEL". The ambit and scope of aforesaid 
clause was subject matter in Civil Appeal No.7423 of 2005 
between the .appellant and M/s. Globe Hl-Fabs Ltd. 
decided on 12.11.2009 wherein this Court accepted and 
H held that in view of such a provision in the Agreement, 
BHARAT HEAVY ELECTRICALS LTD. v. TATA 
481 
PROJECTS LTD. 
interest is only payable from the date of the Award. The 
A 
aforesaid legal position ought to have been accepted by 
the Division Bench of the High Court. Clearly the order 
under appeal ought not to have approved grant of any 
pre-Award interest. [Paras 4, 6] [484-E-G; 485-D] 
1.2. On the issue of award of interest, the respondent 
B 
tried to persuade this Court to enhance the post-Award 
interest granted by the Arbitral Tribunal@ 10.5% to 18% 
p.a. in the light of provisions in Section 31 (7)(b) of the Act. 
This contention cannot be accepted because the Arbitral C 
Tribunal has already granted post-Award interest@ 10.5%. 
Only if the Award had not made such a direction, the 
statutory rate of interest @ 18% p.a. would have been 
payable from the date of the Award to the date of payment 
as per the statutory provision. [Para 5] [485-B, CJ 
Sayeed Ahmed & Co. v. State of UP. & Ors. (2009) 12 
SCC 26: 2009 (10) SCR 841 and Union of India v. Concrete 
Products & Construction Co. & Ors. (2014) 4 SCC 416 -

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