THE BOARD OF TRUSTEES FOR THE PORT OF CALCUTTA versus ENGINEERS-DE-SPACE-AGE

Citation: [1995] SUPP. 6 S.C.R. 327 · Decided: 07-12-1995 · Supreme Court of India · Bench: A.M. AHMADI, S.C. SEN · Disposal: Dismissed

Judgment (excerpt)

THE BOARD OF TRUSTEES FOR THE PORT OF CALCUTTA 
A 
v. 
ENGINEERS-DE-SPACE-AGE 
DECEMBER 7, 1995 
[AM. AHMADI, CJ AND S.C. SEN, J.] 
B 
Arbitration 
Award of interest pendente lite despite prohibition contained in Con-
tract against payment of interest on delayed payments-Validity of-Held, the C 
clause merely prohibited the Commission-Arbitrator has the discretion and 
was well within jurisdiction in awarding interest pendente lite. 
In a contract between the appellant and respondent, clause 13(g) 
provided that no claim for interest would be entertained by the Commis-
sioners with respect to any money or balance which might be in their hands D 
owing to any dispute between themselves and the Contractor or with 
respect to any delay on the part of the Commissioners in making interim 
or final payment or otherwise. 
In this appeal against the High Court's judgment, the appellant E 
contended that the Arbitrator had wrongly awarded interest pendente lite 
despite the absolute prohibition contained in clause 13(g) of the contract. 
It was also contended that the Arbitrator has to function in terms of the 
contract and not de hors the contract and he has no power to travel beyond 
the contract and if he does so he would be acting without jurisdiction. 
Dismissing the appeal, this Conrt 
HELD : 1.1. The term in sub-clause (g) of clause 13 of the contract 
merely prohibits the Commissioner from entertaining any claim for inter-
F 
est and does not prohibit the Arbitrator from awarding interest. The G 
opening words 'no claim for interest will he entertained by the 
Commissioner' clearly establishes that the intention was to prohibit the 
Commissioner from granting interest on account of delayed payment to 
the contractor. The clause 'h' has to be strictly construed for the simple 
reason that ordinarily a person who has a legitimate claim is entitled to 
payment within a reasonable time and if the payment has been delayed H 
327 
328 
SUPREME COURT REPORTS [1995) SUPP. 6 S.C.R. 
A beyond reasonable time he can legitimately claim to be compensated for 
that delay whatever nomenclature one may give to his claim in that behalf. 
Strictly construed the term of the contract merely prohibits the Commis-
sioner from paying interest to the contractor for delayed payment but once 
the matter goes to arbitration the discretion of the Arbitrator is not, in 
any manner, stifled by this term of the contract and the Arbitrator would 
B be entitled to consider the question of grant of interest pendente lite and 
award interest if he finds claim to be justified. Under the clause of the 
contract the Arbitrator was in no manner prohibited from awarding 
interest pendente lite. [332 F-H; 333 A-CJ 
C 
1.2. Looked at from another point, if there was a dispute as to 
whether nnder this term of the contract the Arbitrator was prohibited from 
awarding interest pendente lite, that was a matter which fell within the 
jurisdiction of the Arbitrator, as the Arbitrator would have to interpret 
sub-clanse(g) of Clause 13 of the contract and decide whether that clause 
prohibits him form awarding interest pendente lite. In that case it cannot 
D be said that the arbitrator had wandered outside the contract to deny to 
him jurisdiction to decide the question regarding payment of interest 
pendente lite. Thus the Arbitrator was well within his jurisdiction in 
awarding interest pendente lite. [333-C-E] 
E 
Secretary, Irrigation Department, Government of Orissa & Others v. 
F 
G.C. Roy, [1992] l SCC 508 and Executive Engineer( Irrigation), Balimela & 
Ors. v. Abhaduta Jena & Ors., [1988) 1 SCC 418, relied on. 
Associate Engineering Co. v. Government of Andhra Pradesh & 
Another, AIR (1992) SCC 232, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7384 of 
1994. 
From the Judgment and Order dated 19.5.94 of the Calcutta High 
G Court in A. No. 1016193. 
Harish N. Salve, AK. Sil and G. Joshi for the Appellant. 
K.K. Venugopal and Bijan K. Ghosh for the Respondent. 
H 
The following Order of the Court was delivered : 
BOARDOFTRUSTEES v. ENGINEERS-DE-SPACE-AGE 
329 
This appeal came up before a bench of two learned Judges on A 
7.11.1994 when it passed the following order : 
"The question for decision in the present case relates to the award 
of interest pendente lite by the Arbitrator. The effect of the decision 
in Secretary, Irrigation Depmtment, Govt. of Orissa and Ors. v. G.C. 
Roy Etc., [1992) 1 SCC 508 is stated to be pending before a thre

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