RAJENDRA CONSTRUCTION COMPANY versus MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ORS.

Citation: [2005] SUPP. 2 S.C.R. 582 · Decided: 11-08-2005 · Supreme Court of India · Bench: C.K. THAKKER · Disposal: Case Partly allowed

Judgment (excerpt)

A 
B 
RAJENDRA CONSTRUCTION COMPANY 
v. 
MAHARASHTRA HOUSING AND AREA DEVELOPMENT 
AUTHORITY AND ORS. 
AUGUST I I, 2005 
[C.K. THAKKER AND P.K. BALASUBRAMANY AN, JJ.] 
Arbitration Act, 1940: 
C 
Section 17-Arbitration award-No reasons in support of-Validity-
D 
E 
Neither the arbitration agreement nor the contract provided for recording 
of reasons by the Arbitrator-Held: High Court could not set aside the award 
on the ground that it was not supported by reasons and was not a speaking 
award-Arbitration and Conciliation Act, 1996, S. 31 (3). 
Sections 13 and 29-lnterest-Award of-Power of Arbitrator-
Arbitrator awarded interest@ 18% per annum on the principal amount from 
the date of the suit till the date of the award as also from the date of the award 
to the date of payment or the date of decrees, "whichever was ear/ier"-
Validity of-Held: Arbitrator had power to award interest at pre-reference, 
pendente lite and post-award stages-However, on facts, interest reduced to 
10% per annum being proper, equitable and in the interest of justice. 
The appellant was a partnership firm doing business in construction 
work. The appellant completed certain construction work for the 
F 
respondent. However, the respondent made no payment to the appellant. 
G 
Therefore, the disputes were referred to the sole Arbitrator under Section 
21 of the Arbitration Act, 1940. 
The sole Arbitrator awarded a certain amount and interest@ 18% 
per annum on the principal amount of the award from the date of the 
suit till the date of the award as also from the date of the award to the 
date of payment or the date of decrees, 'whichever was earlier'. The 
award was made rule of the court under Section 17 of the Act. 
The High Court set aside the award on the ground that the award 
H 
passed by the sole Arbitrator was not a speaking award. The High Court 
582 
RAJENDRA CONST. v. MAHARASHTRA HOUSG. AND AREA DEV. AUTH. 583 
further held that the directions to pay interest@ 18% per annum for the 
A 
post pendente lite period were not supported by any reasons. Henoe, the 
appeal. 
On behalf of the appellant, it was contended that the proceedings 
were governed by the Arbitration Act, 1940 (old Act) and the Arbitration 
and Conciliation Act, 1996 (new Act) had no application; that since it was 
not necessary for the Arbitrator to record reasons under the old Act and 
as there was no agreement between the parties nor the contract provided 
for recording of reasons by the Arbitrator, he was under no obligation 
B 
to make reasoned awards; that the trial court had again considered the 
objections raised by the respondent and the awards were made rule of C 
the court; that the trial court also ordered to draw decrees in terms of 
the awards; and, therefore, there was no reason for the High Court to 
interfere with the awards passed by the sole Arbitrator as also the judgment 
and order passed by the trial court. 
On behalf of the respondent, it was contended that it was incumbent 
on the sole Arbitrator to apply his mind to the rival contentions of the 
parties, to consider the issues framed by the trial court and to record 
findings on those issues supported by reasons and to make awards; that 
D 
even if there \Vas no clause in the contract or agreement providing for 
recording of reasons, since the Arbitrator was to decide the question and 
E 
to adjudicate the matter, he ought to have recorded reasons in support 
of his decision; and that recording of reasons in support of the order was 
part and parcel of 'natural justice' and, therefore, an unreasoned award 
should be treated as null and void and ineffective. 
Allowing the appeal in part, the Court 
HELD: I. The present awards are not under the Arbitration and 
Conciliation Act, 1996 but under the Arbitration Act, 1940. It is, therefore, 
obvious that they could not have been set aside by the High Court on the 
ground that they were not supported by reasons and were not speaking 
awards. [593-F-G! 
Raipur Development Authority v. Mis. Chokhamal Contractors, [1989] 
2 sec 721, followed. 
F 
G 
T.N. Electricity Board v. Bridge Tunnel Construction, [1997] 4 SCC H 
584 
SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R. 
A 
121; Kundale & Associates v. Konkan Hotels (P) Ltd., ( 1999] 3 SCC 533 and 
Build India Construction System v. Union of India, (2002] 5 SCC 433, relied 
on. 
State of Punjab v. Bhag Singh, (2004] 1 SCC 547 and Gora Lal v. 
B 
Union of India, [2003] 12 sec 459, held inapplicable. 
Breen 

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