STATE OF ORISSA versus NIRANJAN SWAIN

Citation: [1989] 3 S.C.R. 821 · Decided: 10-08-1989 · Supreme Court of India · Bench: L.M. SHARMA · Disposal: Case Partly allowed

Judgment (excerpt)

). 
"---~ 
'--( 
;-!, 
\.;,,.,.. 
. 
} 
-· 
,;r· 
~ 
>t-
STATE OF ORISSA 
v. 
NIRANJAN SWAIN 
AUGUST 10, 1989 
[L.M. SHARMA AND J.S. VERMA, JJ;] 
Arbitration Act, 1940: Award-Absence of retisons~Whether 
affects validity-Valid and invalid part_:_Severability and effect of~ 
Arbitrator-A competent witness-Court to exercise power ·of calling 
him as witness cautiously. 
· ·· 
Interest Act, 1978: Arbitration-Reference before the cClmmefi~, 
ment of Act-Arbitrator-Whether empowered to grant interest upio th.e 
date of submission or pendente lite upto the date of award. 
The respondent was awarded a contract for construction of Eanii 
Dam by. the appellant-State of Orissa. His dispute reliltfug fO the 
remaining claim for payment was referred to an arbitrat<ir for adjudi-
cBtion. Before the arbitrator the respondent claimed (i) the balance 
amount due to him; (ii) his security deposit with the appellant; and (iii) 
interest, on the ·balance amount due and security deposit, up to the date 
of award. On 2.12.1980 the arbitrator gave a lump-sum award in 
favour of the respondent inclusive ofinterest upto the date of award, 
The Trial Court made the award a rule of the Court and accord-
ingty passed a decree __ in_ favour of th~i>C!.nilc"'!h roi: the amount 
awarded together with interest at the rate of six per cent from the date 
of decree. The appeal filed by the State was dlsinis~d by the High 
Court. 
In this appeal it was contended on behalf of the State that the 
award was invalid because; (i) the arbitrator gave no reasons; (ii) no 
interest could be awarded by the arbitrator npto the date of award, and 
A 
B 
c 
ti 
E 
F 
the award being inclusive of interest was not se_yerable. It was also 
contended that the High Court was wrong in assuming that the Trial G 
Court was correct in refusing to call the arbitrator for being exainiiled. 
Allowing the appeal partly, 
HELD: I. The absence of reasons in the award does not by itself 
result in its invaliditL except where the giving of reasons by the. H 
821 
••
A 
E 
c 
D 
822 
SUPREME COURT REPORTS 
[1989] 3 S.C.R. 
arbitrator for the award is the requirement of the arbitration agree-
ment or the deed of submission or an order made by the Court or 
statute governing the arbitration. [823G-H] 
Raipur Development Authority & Ors. v. M/s Chokhamal Con-
tractors and Ors., [1989] 2 S.C.C. 721, applied. 
2. Even though an arbitrator is a competent witness, the Court 
must exercise the power of calling him as a witness cautiously and 
sparingly and not in a routine manner. When the Court is requested to 
call the arbitrator for examination as a witness it must be shown that 
there is some cogent ground for his examination within the permissible 
limits. [826D] 
· 
In the instant case, nothing has been shown to indicate that it was 
at all necessary to call the arbitrator as a witness to depose on any matter 
which could legitimately be examined by the Court in the proceedings. 
The High Court was, therefore, justified in refusing to call the arbi-
trator for examination. [826E] 
State of Orissa v. D.C. Routray, A.I.R. 1983 Orissa 163, 
approved. 
3. In cases wherein the reference to arbitrator was made prior to 
E 
the commencement of the Interest Act, 1978, on August 19, 1981 the 
arbitrator is not empowered to grant interest for the period either 
before the commencement of the proceedings or during the pendency of 
the arbitration. 
In the instant case, the reference to arbitrator was made and even 
F 
the award was given prior to the commencement of the Interest Act, 
1978. Therefore, the arbitrator had no jurisdiction to grant any amount 
as· interest for any period either up to the date ofsubmission of the claim 
before him or pendente lite upto the date of the award. [827F-G] 
Executive Engineer (Irrigation), Balimela & Ors. v. Abhaduta 
G 
Jena & Ors., [1988] 1sec418, applied. 
Gujarat Water Supply and Sewerage Board v. Unique Erectors 
(Gujarat) (P) Ltd. &Anr., [1989] 1 SCCS32, held inapplicable. 
4. In the instant case, the inclusion of the amount of interest in 
H the lumpsum award by the arbitrator does not render the whole award 
....
-j.( 
~ 
' .._
. 
ii 
STATE OF ORISSA v. NIRANJAN SWAIN [VERMA, J.] 
823 
J 
invalid since it is possible to sever the invalid part relating to interest. 
A 
The balance amount of award remaining after deduction of interest 
would not be tainted with any invalidity, and it would be just and 
proper to sustain the award to this extent onl

Excerpt shown. Read the full judgment & AI analysis in Lexace.