LexOIL AND NATURAL GAS COMMISSION versus M/S M.C. CLELLAND ENGINEERS S.A.
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A B OIL AND NATURAL GAS COMMISSION v. MIS M.C. CLELLAND ENGINEERS S.A. APRIL 23, 1999 [S. RAJENDRA BABU AND S.N. PHUKAN, JJ.] Arbitration Act, 1940-Section 29-Interest upon interest-Grant a/- Arbitration proceedings-Award for payment of balance amount claimed and interest on delayed payment-Interest on the amount awarded-Validity of- C Held, Arbitrators have power to grant interest-Interest on the amount of interest may be termed as interest on damages or compensation for delayed payment, which becomes part of the principal-Thus, interest is not granted upon interest awarded but upon the claim made-Interest Act, 1978- Section 3. D E F G limitation Arbitration-Claim for interest on delayed payment-Plea that it was barred by limitation-Insufficient Pleadings before the arbitrators-Held, plea of bar of limitation cannot be entertained. In an Arbitration proceeding between the parties, an award was passed directing the appellant company to pay the amount claimed along with interest at 12% p.a. from the date of award till realisation. Subsequently a decree was passed in terms of the award, by single Judge of High Court. Appeal before Division Bench was also dismissed. Hence the present appeal. The appellant contended that what was awarded by the Arbitrators in respect of two claims was itself interest for different periods and under Section 3 of the Interest Act, the arbitrators could not have awarded interest upon interest; the claim of respondent for delayed payments was barred by limitation. Dismissing the appeal, this Court HELD : 1.1. The Arbitrators have power to award interest under Section 29 of the Arbitration Act, 1940. H 1.2. Interest is not granted upon interest awarded but upon the claim 830 - O.N.G.C. v. M.C. CLELLAND ENGINEERS S.A. (RAJENDRA BABU, J.] 831 made. The claim made in the proceedings is under two heads-One is the A ·balance of amount claimed under invoices and letter and the amount certified and paid by the appellant and the second is the interest on delayed payment. That is how the claim for interest on delayed payment stood crystallized by the time the claim was filed before the Arbitrators. Therefore, the power of the Arbitrators to grant interest on the amount of interest which may, in B other words, be termed as interest on damages or compensation for delayed payment which would also become part of the principal. In the instant case Section 3 of the Interest Act has no relevance in the context of the matter. The High Court was justified in dismissing the appeal against the decree passed in terms of the award. (832-E-GI 2. Before the Arbitrator a very bald statement without setting out the details was made on the point of limitation. The plea raised was not sufficient to meet the claim on the bar of limitation. No foundation was laid in the course of the proceedings before the Arbitrators either in the pleadings or · in the evidence. Thus, the plea regarding bar of limitation cannot be c entertained. [833-C-DI D CIVIL APPELLATE JURISDICTION: Civil Appeal No. 932of1991. From the Judgment and Order dated 25.10.88 of the Bombay High Court in A. No. 1253 of 1988. B. Datta, (R.K. Joshi) for Sushi! Kumar Jain for the Appellant. E.C. Agrawala for the Respondent. The Judgment of the Court was delivered by RAJENDRA BABU, J. This appeal arises out of certain arbitration P.roceedings between the parties to this appeal resulting in an award made on February 29, 1988. The Arbitrators by their award directed that the appellant shall pay to the respondent as follows : E F "(i) US$ 1004.50 being interest on US$ 40, 102.97 at 12% p.a. from G 10. ~2.1985 to 16.4.1986. (ii) US$ 59,583 being interest on US$ 3,12,011.00 at 12% p.a. from 3.5.1983 to 5.l l.1984." On these two items of claim the Arbitrators also awarded interest at 12% H 832 SUPREME COURT REPORTS (1999) 2 S.C.R. A per annum from the date of award till realisation. The award so made by the • Arbitrators was filed into the Court. Objections filed thereto stood dismissed 1 and decree was passed in terms of the award. Against that order made by the learned Single Judge in his original jurisdiction an appeal was carried to a division bench which also stood dismissed. Hence this appeal. B Shri B. Datta, learned senior counsel for the appellant, contended that what was awarded by the Arbitrators in respect of the two claims referred to earlier in the course of this order i
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