M/S. MUKUND LTD. versus HINDUSTAN PETROLEUM CORPORATION LTD.

Citation: [2006] SUPP. 1 S.C.R. 182 · Decided: 21-04-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off

Judgment (excerpt)

A 
M/S. MUKUND LTD. 
v. 
HINDUSTAN PETROLEUM CORPORATION LTD. 
APRIL 2 I, 2006 
B 
[S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.] 
Arbitration Act, 1940-Section 30-Arbitra/ award-Post-decree interest 
of 11% per annum granted by High Court-Challenge to--Held: On facts, 
C reduced to 7'lS % per annum. 
The present appeal arises out of an arbitral award passed by a single 
arbitrator under the Arbitration Act, 1940. In terms of the award, the 
Appellant was directed to pay a sum of Rs. 1.26 crores and costs of 
Rs. 75,600/- to Respondent and on failing to make the payment within the 
D stipulated date, pay post-decree interest at the rate of It% per annum. 
High Court rejected objections of the Appellant to the award except as 
regards the quantum which it reduced to Rs.71 lakhs with further interest 
at the rate of 11 % per annum from the date of the decree till the date of 
payment or final realization. 
E 
The Appellant pleaded in appeal to this Court that in the facts and 
circumstances of the case, post-decree interest be reduced from 11 % per 
annum to 6% per annum. 
Disposing of the appeal, the Court 
F 
HELD: 1. Having considered the rival submissions and having taken 
note of the circumstances and the transaction in question in the light of 
the correspondence between the parties and on an overall view of the 
situation, it would be appropriate to reduce the post-decree interest 
awarded by the High Court. In the circumstances, seven and a half per 
G cent per annum would .be the reasonable rate of interest that could be 
directed to be paid by the Appellant to the Respondent, for the period 
subsequent to the decree. The amount awarded by the High Court would 
bear interest at the rate of seven and a half per cent per annum from the 
date of that decree till the date of final payment and/or realization plus 
H 
costs of the arbitration proceedings as awarded therein. [185-D-G] 
182 
MUKUND LTD. v. HINDUSTAN PETROLEUM CORPN. LTD. [P.K. BALASUBRAMANY AN, J.J 183 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2153 of2006. A 
From the Judgment and Order dated 17.12.2004 of the High Court of 
Judicature at Bombay in Appeal No. 1147(98 in A.P. No. 177/1994. 
Ashok H. Desai, Prakash Sah, Reena Bagga and Jay Savla for the_ 
~~ 
B 
T.R. Andhiyarujina, Parijat Sinha, Snehasish Mukherjee, S.C. Ghosh 
and Mrinal Kanti Manda! for the Respondent. 
The Judgment of the Court was delivered by 
P.K. BALASUBRAMANY AN, J. Leave granted. 
1. This appeal arises out of an award made by the arbitrator on a 
reference made to him under the Arbitration Act, 1940 (for short "the Act"). 
Though there was controversy between the appellant and the respondent as 
c 
to whether there existed an arbitration clause justifying reference to an D 
arbitrator, ultimately, the appellant agreed to the appointment of one of the 
arbitrators suggested by the respondent clarifying that the appellant was 
agreeing to the appointment of the arbitrator "not under the alleged contract 
but outside the alleged contract to decide whether there is a concluded contract 
and in any event can you invoke the arbitration clause under the alleged 
contract'~ Thus, the dispute stood referred to a sole arbitrator. The sole arbitrator E 
while making an award held that there had come into existence a valid 
contract between the parties; that there was an arbitration clause in the contract 
and proceeded to adjudicate the claim on merits and passed an award directing 
the appellant to pay a sum of Rs.1,26,67,529.l 0 and costs of Rs. 75,600/- to 
the respondent on or before 31.07.1994 and failing payment, directed the F 
appellant to pay interest at the rate of 11 per cent per annum on the sum of 
Rs.1,26,67,529. l 0 from 28.06.1994 till the date of payment. The award was 
pronounced on 27 .06.1994. 
2. The appellant moved the High Court of Bombay in its original civil 
jurisdiction seeking to have the award set aside in terms of Section 30 of the G 
Act. A learned single Judge of the Bombay High Court rejected the objections 
of the appellant to the award except as regards the quantum-. The single judge 
modified the award by reducing the amount payable by the respondent to the 
appellant to Rs.71,31,954.40 with costs of arbitration of Rs.75,600/-, with 
further interest at the rate of 11 per cent per annum from the date of the H 
184 
SUPREME COURT REPORTS [2006] SUPP. I S.C.R. 
A decree till payment or final realization. An appeal filed by the appellant 
before the Di

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