UNION OF INDIA versus M/S. AMBLCA CONSTRUCTION

Citation: [2016] 2 S.C.R. 810 · Decided: 16-03-2016 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Reference answered

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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(2016] 2 S.C.R. 810 
UNION OF INDIA 
v. 
MIS. AMBlCA CONSTRUCTION 
(Special Leave Petition (Civil) No.11114 of2009) 
MARCH 16,2016 
[RANJAN GOGOi, ARUN MISHRA AND 
PRAFULLA C. PANT, JJ.] 
Arbitration Act,19./0: ss.3, 31 - Puwer of arbitrator to award 
pendente lite interest in case contract bars the same - Held: If 
contract expressly bars award of interest pendente lite, the same 
cannot be awarded by the Arbitrator -· Bar to award interest on 
delayed payment by itself will not be readily inferred as express bar 
to award interest pendente lite by the Arbitrator as ouster. of power 
of Arbitrator has to be considered on various relevant aspects -
The award of pendente lite interest inter alia must depend upon the 
overall intention of the agreement and what is expressly excluded. 
Answering the reference, the Court 
HELD: 1. Section 3 of the Act of 1940 deals with the 
provisions which are implied in the arbitration agreement. The 
provisions of section 3 make it clear that unless a different 
intention is expressed in the arbitration agreement, the 
agreement would include the provisions contained in the First 
Schedule so far as they arc applicable to the reference. Provisions 
in the First Schedule contain 8 paragraphs. It provides for 
reference to a sole Arbitrator and in case there are even numbers 
of Arbitrators, appointment of umpire is also provided. An 
Arbitrator is required to pass award within 4 months from the 
date of entering on the reference. In case Arbitrator fails to pass 
an award within the specified time the umpire shall make the 
award within 2 months. Para 6 of First Schedule provides that the 
G Arbitrator or umpire shall examine the matters in difference and 
the award shall be final and binding. Arbitrator or umpire has the 
power for examining the witnesses and production of relevant 
documents. Para 8 of Schedule I provides for costs of reference 
and awards shall be in the discretion of the Arbitrator. [Para 5] 
H (816-A-D] 
810 
UNION OF INDIA v. M/S. AMBICA CONSTRUCTION 
2. "Court" has been defined in section 2(c) of the Act to 
mean a civil court having jurisdiction to decide the questions 
forming the subject-matter of the reference. The court can 
exercise the power specified in Second Schedule of the Act. 
However, Arbitrator is not a court. Arbitrator is the outcome of 
agreement. He decides the disputes as per the agreement entered 
into between the parties. Arbitration is an alternative forum for 
resolution of disputes but an Arbitrator ipso facto does not enjoy 
or possess all the powers conferred on the courts of law. Section 
29 of the Act confers on the court power to award interest from 
the date of decree. Section 34 of the C.P.C. confers on the court 
power to award interest prior to the institution of the suit and 
during pendency of the suit and post decree. Section 31(7)(a) of 
the 1996 Act confers power on Arbitrator to award interest 
pendente lite, "unless otherwise agreed by parties". Thus, it is 
clear from the provisions contained in section 31(7)(a) that the 
coniract between the parties has been given importance and is 
h;nding on t.he Arbitrator. Arbitration clause is also required to 
be looked into while deciding the power of the Arbitrator and in 
case there is any bar contained in the contract on award of interest, 
it operates on which items and in the arbitration clause what are 
the powers conferred on Arbitrator and whether bar on award of 
interest has been confined to certain period or it relates to 
pendency of proceedings before Arbitrator. Grant of pemle11te lite 
interest may depend upon several factors such as phraseology 
used in the agreement, clauses conferring power relating to 
arbitration, nature of claim and dispute referred to Arbitrator and 
on what items power to award interest has been taken away and 
for which period. (Paras 6, 7, 16, 23] (816-E; 817-A-C; 828-D-E; 
836-C-D] 
Board of Trustees for the Port of Calcutta v. Engineers-
De-Space-Age 1995 (6) Suppl. SCR 327 : (1996) 1 SCC 
516; Madnani Construction Corporation (P) Ltd. v. 
Union of India and Others 2009 (16) SCR 216 : (2010) 
1 SCC 549; Secretary, Irrigation Department, 
Government of Orissa & Ors. v. GC. Roy 1991 (3) 
Suppl. SCR 417: (1992) 1 SCC 508; Executii"e 
Engineer, Dhenkanal Minor Irrigation Division, Orissa 
& Ors. v. NC Budharaj (DJ by L.Rs. & Ors. 2001 (1) 
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SUPREME COURT REPORTS 

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