EXECUTIVE ENGINEER, DHENKANAL MINOR IRRIGATION DIVISION, ORISSA, ETC. ETC. versus N.C. BUDHARAJ (DEAD) BY LRS. ETC. ETC.

Citation: [2001] 1 S.C.R. 264 · Decided: 10-01-2001 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Dismissed

Cited by 5 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
EXECUTIVE ENGINEER, DHENKANAL MINOR IRRIGATION 
DIVISION, ORISSA, ETC. ETC. 
v. 
N.C. BUDHARAJ (DEAD) BY LRS. ETC. ETC. 
JANUARY IO, 2001 
[G.B. PATTANAIK, S. RAJENDRA BABU, D.P. MOHAPATRA, 
DORAISWAMY RAJU AND SHIVARAJ V. PATIL, JJ.] 
Arbitration: 
Arbitration Act, 1940-Section 29-/nterest Act, 1839/ Interest Act, 
1978-Award-Cases arising during the enforceability of the Interest Act, 
1839-/nterest-Pre-reference period-Grant of-Arbitrator appointed 
without the intervention of Coz;rt-Jurisdiction of-Interest Act. 1839 only 
D envisaging and enabling courts to grant or award interest-However, nothing 
in the said Act confining its applicability only to proceedings before ordinary 
and conventional courts or excluding its applicability before forums created 
in lieu of conventional civil courts-Held, an arbitrator appointed with or 
without the intervention of the Court, has jurisdiction to award interest, on 
the sums found due and payable, for the pre-reference period, br the absence 
E of any specific stipulation or prohibition in the contract to claim or grant 
any such interest-Arbitrator possessing a11 the powers necessary to do 
complete and full justice between the parties in the same manner as a Civil 
Court. 
F 
Substantive Lav.~Meaning of-Explained. 
Appointment of the arbitrators in the present cases were made without 
the intervention cf the Court on a demand made by the contractor concerned. 
The said arbitrators, while sustaining portions of the claim made in the 
awards also allowed on those amounts interest from the due date of the 
G amount till date of Award. The awards were made Rule of Court by the Civil 
Court. Aggrieved, State approached the High Court which sustained the 
• claim of the contractor for interest from the due date up to the date of the 
Award. Hence the present appeals. The appeals were referred to for 
consideration of the Constitution Bench on the question as to whether the 
Arbitrator had got jurisdiction to award interest for the pre-reference period 
H 
2M 
; 
MINOR IRRIGATION DIVISION. ORISSA v. N.C. BUDHARAJ 
265 
iii cases which arose prior to the commencement into force or the Interest A 
Act, 1978. 
On behalf of the appellant it was contended that having regard to the 
principles and ratio laid down in various Supreme Court decisions, the 
Arbitrator had no jurisdiction to award interest for the pre-reference period 
in a matter relating to the pre-1978 Act. 
B 
On behalf of the respondents it was contended that the Arbitrator had 
jurisdiction to award interest for pre-reference period as long as there was 
no specific prohibition as such in the agreement/contract between parties 
restraining the claim/payment of interest; that on the principle of an implied C 
term of the agreement between the parties that the Arbitrator could award 
interest in a case where the Court could award it, when the parties referred 
all their disputes to the Arbitrator, he had the necessary power to award 
interest. 
Dismissing the appeals, the Court 
HELD: (Per Raju J. for himself and Rajendra Babu and Patil JJ.) 
D 
1.1. The Arbitrator appointed with or without the intervention of the 
Court, has jurisdiction to award interest, on the sums found due and payable, E 
for the pre-reference period, in the absence of any specific stipulation or 
prohibition in the contract to claim or grant any such interest. The submission 
that the Arbitrator cannot have jurisdiction to award interest for the period 
prior to the date of his appointment or entering into reference which alone 
confers him power is too stale and technical to be countenanced, for the 
simple reason that in every case the appointment of an arbitrator or even F 
resort to Court to vindicate rights could be only after disputes have cropped 
up between the parties and continue to subsist unresolved. If the Arbitrator 
has the power to deal with and decide disputes which cropped up at a point 
of time and for the period prior to the appointment of an Arbitrator, it is 
beyond comprehension as to why and for what reason the Arbitrator.should G 
be denied only the power to award interest for the pre-reference period when 
such interest becomes payable and has to be awarded as an accessory or 
incidental to the sum awarded as due and payable. [289-C-D-E-F-Gl 
/ 
Secretmy, Irrigation Department, Government of Orissa and Others v. 
G. c. Roy, [ 19921 1 sec 508, relied on. 
H 
266 
SUPREME COURT REPORTS 
[2001] I S.C.R. 
A 
Exec

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