SUDHIR BROTHERS versus DELHI DEVELOPMENT AUTHORITY AND ANR.

Citation: [1995] SUPP. 5 S.C.R. 424 · Decided: 16-11-1995 · Supreme Court of India · Bench: A.S. ANAND, M.K. MUKHERJEE · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
SUDHIR BROTHERS 
v. 
DELHI DEVELOPMENT AUTHORITY AND ANR. 
NOVEMBER 16, 1995 
B 
[DR. AS. ANAND AND M.K. MUKHERJEE, JJ.] 
Arbitration Act, 1940: Sections 14, 17 and 29. 
Arbitration-Pre-reference period-Award of interest for-Held Ar-
C bitrator can award interest for pre-reference period in references made after . 
coming into force of the Interest Act, 1978. 
The appellant was awarded a contract by the respondent- Authority 
for construction of certain work. Disputes having arisen between the 
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parties a reference was made to an Arbitrator on 1.4.1984 who entered 
upon the reference on 8.2.1985. He made an award on 15.7.1987 in favour 
of the appellant and also awarded 12% simple interest on the amount 
awarded from 1.4.1984 to the date of payment. A single Judge of the High 
Court made the award Rule of Court except in respect of claims under 
clauses 1, 3 and 4 amounting to Rs. 23,685 and rejected the appellant's 
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claim relating to both the award of pendente lite interest (between 8.2.1985 
and 15.7.1987) as well as the pre-reference interest (from 1.4.1984 to 
8.2.1985). On appeal the Division ~ench restored the order of Arbitrator 
regarding pendente lite interest but upheld the order of the Single Judge 
r~fusing the pre-reference interest as well as the claims under clauses 1, 3 
F 
and4. 
In appeal to this Court on the question whether the Arbitrator had 
jurisdiction to award interest for the period between the making of the 
reference to him and his entering upon the reference (pre-reference period) 
G after the coming into force of the Interest Act, 1978 : 
Allowing the appeal in part, this Court 
HELD : 1. The arbitrator has the power and jurisdiction to grant 
pre-reference interest in references made after the coming into force of the 
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Interest Act, 1978. The Division Bench of the High Court, therefore, erred 
424 
SUDHIR BROS. v. D.D.A 
425 
in holding that the arbitrator had no jurisdiction to award interest from A 
1.4.1984 till 8.2.1985 in the post Interest Act, 1978 era. The order of the 
Division Bench in that regard is set aside and the award of the arbitrator 
in that behalf is restored. [ 428-G; 429-B] 
2. No error has been committed by the High Court in disallowing the 
claim of the appellant for Rs. 23,685 under Clauses 1, 3 and 4. [428-H] 
Secretary, Irrigation Department, Government of Orissa and Ors. v. 
G.C. Roy, JT (1991) 6 SC 349, explained and distinguished. 
Executive Engineer (Irrigation), Balimela & Ors. v. Abhaduta Jena & 
Ors., [1988) 1 SCC 418; fugal Kishore Prabhatilal Sharma & Ors. v. 
Vijayendra Prabhatilal Shamia &Anr., [1993) 1SCC114 and State of 01issa 
v. B.N. Agarwala, [1993) 1 SCC 140, relied on. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10613 of 
1995. 
From the Judgment and Order/decree dated 15.7.92 of the Delhi 
High Court in F.A.O. (OS) No. 85 of 1991. 
Dr. AM. Singhvi and P.K. Manohar for the Appellant. 
Sunil Gupta and Mrs. Indu Malhotra for the Respondents. 
The following Order of the Court was delivered : 
Leave granted. 
The only issue involved in this appeal relates to the power and 
jurisdiction of an arbitrator to award interest for the period between the 
making of the reference to the arbitrator and his entering upon the refer-
ence (pre-reference period) after the coming into force of The Interest 
Act, 1978 (post Interest Act era). 
A reference to brief facts for deciding the issue would be apropos. 
The first respondent - Delhi Development Authority-Awarded certain 
work of construction of middle income group houses at Pitam Pura, New 
Delhi to the appellant and entered into a contract with him. Differences 
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c 
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F 
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and disputes arose between the parties relating to tlie execution of the H 
426 
SUPREME COURT REPORTS [1995] SUPP: 5 S.C.R. 
A 
contract on 1.4.1984, when a reference to arbitration was sought by the 
appellant and in terms of Clause 25 of the General Conditions of Contract, 
the same were referred to arbitration of the second respondent. The 
arbitrator entered upon the reference on 8.2.1985. He made an award on 
15.7.1987. The award together with the proceedings was filed in the court 
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by the learned arbitrator. The award was substantially in favour of the 
appellant. The arbitrator also awarded 12% simple interest on the amount 
awarded from 1.4.1984 to the date of payment. The appellant filed an 
application under sections 14 and 17 of the Arbitration Act for making the 
Award a Rule of the Court. On not
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