SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT OF ORISSA AND ORS. ETC. ETC. versus G. C. ROY ETC. ETC.

Citation: [1991] SUPP. 3 S.C.R. 417 · Decided: 12-12-1991 · Supreme Court of India · Bench: K.N. SINGH · Disposal: Dismissed

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Judgment (excerpt)

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SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT OF 
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ORISSA AND ORS. ETC. ETC. 
\I. . 
G. C. ROY ETC. ETC. 
DECEMBER 12, 1991 
[K. N. SINGH, CJ, P. B. SAWANT, N. M. KASLIWAL, B. P. 
JEEVAN .REDDY· AND G. N. RAY, JJJ 
Arbitration Act, 1940-Section 30--(/nreasoned awartJ.-;-When to be set 
aside, indicated. · 
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· Dispute-Settlement of-Methods-Arbitration a metho~ts 'features. 
Arbitration Act, 1940-Section 2( c)--'Court' -'Arbitrator' ;whether in-
cluded. 
Arbitration Act, 1940-Section 41-Applicability of provisions of C.P .C. 
to the proceedings under the Act_:_scope of 
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Arbitration Act, 1940-Section 41, Second Schedule, Rules 3,4.5-
C?urt' s powers under, enumerated. 
Arbitration Act, 1940-Sections 47, 3-ApplicabilitY of Act to arbitra-
tions-Arbitrat~r· s jurisdiction-Whether parties can ton/er additional power. 
Interest Act, 197&-;-SeC.2(a)--'Court'-lncludes'Arbitrator'. 
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c 
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Arbitration Act, 1940-section 29, Section 41, First Schedule, "Rule 8, F 
read with Section 34, CPC and Sections 3, 4 of Interest Act,'1978-Award of 
interest-Arbitrator's jurisdiction-Scope of. 
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Arbitration Act, 1940-Section 29-Award_ of interest-Duration--Na-
lure of. 
In C.A.No. 1403/86, the appeJJant-Goverriment and the respondent• 
contractor entered into an agreement for the construction of head works 
on 27.4.1977. The' work was completed oit 20.2.1980.· 
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A dispute arose between the parties, when the respondent's claim for 
certain amounts was not accepted by the appellant. 
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417 
418 
SUPREME COURT REPORTS 
(1991] SUPP. 3 S. C.R. 
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As per clause 23 of the agreement, the dispute was referred to an 
Arbitrator. The Arbitrator awarded interest @ 9% on the awarded 
amount from 20.3.1980 till the date of payment or decree whichever was 
earlier. 
The respondent made an application before the Subordinate.Judge 
B for making the award rule of the Court, which the appeJlant contested. 
The Subordinate Judge set aside the award on 29.11.1982, against 
which the respondent moved the High Court, on appeal. 
The High Court setting aside the order of the Subordinate Judge 
C made the award tule of the Court. 
This appeal was preferred by the appeJlant-Government by Special 
leave against the judgment of the High Court. 
In CA No. 2565/91, the High Court held that the Arbitrator has ju-
D risdiction to award interest pendente lite in the absence of agreement to the 
contrary. 
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The State-appellants contended that interest was never regarded as 
a matter of right at common law; that it was either a matter of agreement 
or a right created by statue; that though interest could also be awarded 
E on the ground of equity, that was applicable only to limited class or cases; 
that under Sections 3, 17 and 41 of the Arbitration Act, Arbitrator was 
denied such a power; and, that if it is held that the arbitrator has the 
power to award interest pendente lite under Section 34 of C.P.C., it would 
open the door for innumerable cases. 
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The respondent-contr~ctor urged that there was no good reason why 
the arbitrator should be held to have no power to award interest pendente 
lite; that as the arbitration is an alternative form for resolution of disputes, 
the arbitrator should be held to possess all the powers as are necessary to 
do complete and fuJI justice between the parties; that if the Arbitrator is 
G held to have no power to award interest pendente lite, the party claiming 
such interest would still be· required to go to the Civil Court for such 
interest and such a course was neither consistent with the concept of 
arbitration nor was conductive to the rule of avoidance of multiplicity or 
proceedings. 
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On the questions, (i) whether the award was vitiated on the ground 
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SECRETARY v. G.C. ROY 
419 
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of absence or reasons, and (ii) whether the Arbitrator had jurisdiction to 
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award pendente lite interest, dismissing the appeals, and over-ruling the 
earlier decision of this Court in Jena's case, (1988] 1 SCR 253, this Court, 
HELD:l. An award is not liable to be set aside merely on the ground 
of absence of reasons. Where however, the arbitration agreement itself 
stipulated reasons fo'!" the award the Arbitrator is under a legal obligation 
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to give reasons. [ 421 CJ 
Raipur Development Authority v. Chokamal Contractors, [1989] 2 SCC 
721, followed. 
2. The expression 'Court' as defined in section 2(a) of the Interest 
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Act, 1978 includes an 'Arbitrator'. [ 425C] 
3.01

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