M/S B.L. GUPTA CONSTRUCTION (P) LTD. versus BHARAT COOPERATIVE GROUP HOUSING SOCIETY LTD.

Citation: [2003] SUPP. 5 S.C.R. 269 · Decided: 05-11-2003 · Supreme Court of India · Bench: V.N. KHARE, S.B. SINHA, AR. LAKSHMANAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

MIS B.L. GUPTA CONSTRUCTION (P) LTD. 
A 
v. 
BHARAT COOPERATIVE GROUP HOUSING SOCIETY LTD. 
NOVEMBER 5, 2003 
[V.N. KHARE, CJ., S.B. SINHA AND DR. AR. LAKSHMANAN, JJ.] 
B 
Arbitration : 
Interest-Pre-reference interest-Work contract-Dispute between parties 
referred to arbitrator-Contractor claiming pre-reference interest as also fature C 
interest@24% per annum-Arbitrator allowing 18% pre-reference, pendente 
lite and post award interest-Division Bench of High Court holding contractor 
not entitled to interest prior to date of award and reducing interest to 10% 
from date of award till date of decree-Held, in view of the agreement between 
the parties, contractor entitled to pre-reference interest @12% per annum- D 
As regards interest pendente lite, arbitrator having exercised his jurisdiction 
uls 34 CPC, High Court could not have interfered with the discretionary order 
where/or no reason was assigned-However, on facts, contractor would be 
paid pre-reference and pendente lite interest @ 10% per annum-Code of 
Civil Procedure, 1908-s. 34. 
Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa and 
Ors. v. N.C. Budharaj and Ors., (2001) 2 SCC 721, relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2902-2903 
of 2002. 
From the Judgment and Order dated 1.8.2001 Corrected on 3.9.2001 of 
the Delhi High Court in F.A.O. (OS) No. 78 of 1996. 
O.P. Khadaria, Deepak Khadaria for Mis. Mitter & Mitter Co. for the 
Appellant. 
Ram K. Watel, Ms. Praveena Gautam for Pramod B. Agarwala for the 
Respondent. 
The following Order of the Court was delivered by 
269 
E 
F 
G 
H 
270 
SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R. 
A 
These appeals arise out of a judgment dated 1st August, 2001, passed 
by a Division Bench of the High Court of Delhi in FAO (OS) No. 78of1996, 
whereby and whereunder the pre-reference interest and pendente lite interest 
has been denied and the post award interest was reduced from 18% to I 0% 
per annum. 
B 
The appellant' tender has been accepted by the respondent and an 
agreement was executed between the parties for raising 308 dwelling units. 
The agreement provided for resolution of dispute by arbitration. It is not 
disputed that the appellant completed the work. However, certain disputes 
arose. As per the arbitration agreement, the matter was referred to the sole 
C Arbitrator, who entered into the reference. Before the Arbitrator, the appellant 
herein claimed pre-interest reference as also future interest at the rate of 24% 
per annum. On 18th December, 1992, the Arbitrator gave an Award for a 
sum of Rs. 24,64,424 against the appellant's claim of Rs. 46,92,461. The 
Arbitrator allowed the claim of interest raised by the appellant herein and 
directed that int~rest @ 18% per annum should be paid on the awarded 
D amount in respect of pre-reference, pendants lite and post A ward. The appellant 
filed the said Award for being made Rule of the Court. Before the learned 
Single Judge of the Delhi High Court, the respondent filed an objection. 
However, the said objection was rejected and the learned Single Judge of the 
High Court by judgment dated 5th February, 1996 made the Award as Rule 
E of the Court and granted the decree in terms of the Award. It also further 
directed that future interest by payable at 18% per annum till payment is 
made. The Division Bench, although upheld the other part of the Award, 
inter alia, directed that the appellant would not be entitled to interest prior 
to the date of the Award. As regards the interest granted from the date of the 
Award till the date of decree @ 18% per annum was considered to be excessive 
F and the same was reduced to 100/o. It was directed as follows: 
"Consequently, decree shall stand modified to the extent that the 
claim of respondent to interest prior to 18th December, 1992 stands 
rejected. Respondents shall be entitled to future interest @100/o per 
annum on the amount of award under claim no. I from 18th December, 
G 
1992 till the date of decree and from the date of decree till date of 
payment on the amount payable by the society to the respondent in 
terms of the award. 
H 
It is against the said judgment of the High Court, the appellant is in 
appeal before us. 
B.L GUPTA CONSTRUCTION (P) LTD."· BHARA TCOOPERATIVEGROUPHOUSING SOCIETY LTD. · 2 71 
Learned counsel appearing for the appellant urged that the view taken A 
by the High Court in deleting the pre-reference interest and pendent lite is 
contrary to the
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