JUDGMENT Prakash Krishna, J.
1. Present revision arises out of proceedings under Section 14(2) of the Indian Arbitration Act, 1940 and is directed against the order dated 17th September, 1998 passed by HI Additional District Judge, Ballia, ordering making award of the Arbitrator as Rule of the Court.
2 Late Prabhu Narain Gupta along with his two sons Aditya Narain and A. Kumar entered into partnership as first party with Manoj Kumar Jaiswal, Shiv Gopal Jaiswal, Ghan Shyam Jaiswal and Smt. Seema Jaiswal as a second party, on 27 September, 1991 to construct a Cinema house and to run a cinema business in the name and style of M/s Shyam Place Chhitbergaon, district Ballia. An arbitration deed was also entered into between the parties on September 16, 1993, Five Arbitrators were named in the said arbitration agreement. A dispute had arisen between the parties, the same was referred to the arbitration of five arbitrators named in the arbitration agreement. The arbitrators after taking into consideration the respective claims of the parties gave the award on 24th August, 1994. The said award was got registered by the arbitrators. Subsequently the present applicants with their father Prabhu Narain Gupta (who died during the pendency of the proceedings in the court below) filed an application under Section 14 of the Arbitration Act, 1940, hereinafter referred to as the Act. Objections against the said award were filed by the second party, who are opposite parties in the present revision. The matter remained pending before the court below for a considerable period of time, ultimately the second party filed application No. III-C, dated 17th July, 1998, staling that the proceeding for making the award the rule of the Court is being unnecessarily lingered on by the first party and they have no objection if the award dated 24.8.1994 is made rule of the Court. The amount thus awarded amounting to Rs. 7,26,908/- with interest at the rate of 2% per annum may be given to them. The present applicants namely the first party filed objections to the aforesaid application No. III -C of the second party being paper No. 125-C, stating that the objection for payment of interest is not legally maintainable. It was further pleaded that Manoj Kumar had filed suit No. 163 of 1994 Manoj Kumar and Ors. v. Prabhu Narain and had obtained the injunction order which was subsequently vacated and thus, the first party could obtain the possession of the cinema hall only on 12th January, 1995. The court below by the order under revision ordered the making of award as rule of the Court after rejecting the objection raised by the first party with regard to their liability to pay interest at the rate of 2% per month as provided for under the award of the Arbitrators.
3. Against the impugned order, a writ petition No. 39197/1998 was filed by the first party in this Court. The said writ petition was dismissed by the judgment and order dated 23rd September, 2003 on the ground that it is not maintainable, as the order is revisable under Section 115 C.P.C. However, the writ court further directed that the respondents of the writ petition, (opposite parties in the present revision) are entitled to obtain the amount payable under the award with interest expeditiously.
4. Feeling aggrieved against the aforesaid order after obtaining leave from the Apex Court, Civil Appeal No. Nil of 2003 was filed before the Apex Court. The Apex Court by its judgment and order dated September 19, 2003 held that when the writ petition was found not an appropriate remedy, the High Court should not have given direction for payment of the amount payable under the award with interest expeditiously. The Apex Court set aside the following portion of the High ('mill's order which reads as follows:
All the respondents are entitled to obtain the amount payable in the award with interest expeditiously within six months from the date of this order.
5. Subsequently present revision was filed along with an application for condonation delay of five year and three days on the plea of that the time spent in prosecuting the writ petition and the matter before the Supreme Court be excluded as the first party was pursuing that remedy bonafidely. This court by the order dated 30th January, 2004 allowed the application for condonation of delay by a detailed order and found that it is a fit case where the delay ought to be condoned. The revision was treated within time after condoning the delay.
6. Heard Sri Sankatha Rai, learned Counsel for the applicant (first party) and Sri Ramendra Asthana, learned Counsel for the opposite party (second party).
7. Sri Sankatha Rai, learned Counsel for the applicant submitted that the award of interest at the rate of 2% per month is not admissible in view of State Amendment in the second schedule of the Arbitration Act and as such, he submitted the court below should have modified the award accordingly before making it the rule of the Court. In contra Sri Ramendra Asthana, learned Counsel for the opposite party submitted that the present applicants have no locus standi to raise any objection against the award, in as much as they themselves applied for making it the rule of the Court.
8. The crux of the argument of the learned Counsel for the applicant (first party) is that there has been State Amendment in the first schedule of the Arbitration Act 1940 by which para 7-A has been inserted therein.
9. The said amendment reads as follows:
7-A. Where and in so far as an award is for the payment of money, the arbitrators or the umpire may, in the award, order interest at such rate as the arbitrators or umpire may deem reasonable to be paid on the principal sum, awarded from the date of the commencement of the arbitration, as defined in sub section (3) of Section 37, to the date of award in addition to any interest awarded on such principal sum for any period prior to such commencement, with further interest or such rate not exceeding six per cent, per annum as the arbitrators or umpire may deem reasonable on such principal sum from the date of the award to the date of payment or to such earlier date as the arbitrators or umpire may think fit, but in no case beyond the date of the decree to be passed on the award.
10. It was submitted in the light of the aforesaid State Amendment that the interest at said rate not exceeding 6% per annum as the arbitrators or umpire may deem reasonable on such principal sum from the date of the award to the date of payment or to such earlier date as arbitrator or umpire may think fit, but in no case beyond date of the decree to be passed on the award. The principal grievance against the impugned order is that the Civil Court should have modified the award in the light of aforesaid State Amendment by reducing it from 2% per month to 6% per annum, Flaborating the argument it was submitted that the arbitration agreement is silent with regard to the award of interest by the arbitrators, therefore, the State Amendment, reproduced above, would be operative on appointed arbitrators as well as on the parties. In other words the interest amount at any rate can not exceed 6% per annum. Me placed reliance upon certain judgments of this Court including the U.P. Power Corporation v. Universal Insulator Ceramics Ltd. 2006 (3) Allahabad Law Journal 10 in support of his above contention. But before adverting to the aforesaid submission it is desirable to take into account the admissibility of such plea at the instance of first party in the facts and circumstances of the case.
11. The application filed under Section 14(2) of the Act is on the record. The said application was filed by the present applicants and their father Sri Prabhu Narain (namely the first party). A bare perusal of the said application would show that the applicants accepted the award of the arbitrators in so many words and there is no whisper of any dissatisfaction or challenge to the award of the arbitrator. On the contrary the said application clearly demonstrates that they were fully satisfied with the award dated 24.8.1994 and submitted to the court that the said award may be made rule of the court. The opposite parties filed certain objections which remained pending and subsequently they gave up their objections through application paper No. III-C. The second fact to be noted is that when the opposite parties gave up their objection and accepted the award and expressed their willingness to the award and conceded to the fact that the said award may be made rule of the Court only then an objection was filed disputing the rate of interest as provided for in the award. An attempt was made on behalf of the applicants to justify their objection to the award of the interest at the rate of 2% per month on the ground that it is the opposite parties second set who got the proceeding delayed by" obtaining some injunction order in a suit as already referred to above, At this stage it is desirable to have a look to the award in its entirety.
12. Before discussing the legal proposition it may be taken into account the basis of the award and the factors which led the arbitrators to award the interest at the rate of 2% per month. The court below has examined this aspect of the matter in great detail.
13. The arbitrators got done the valuation of the picture hall along with the land by a registered valuer who valued it at Rs. 21,12,000/- Another expert Sri Ganesh Pandey under whose supervision the cinema hall was got constructed valued it at Rs. 23,35,000/-. Taking into consideration the above facts, the arbitrators valued the picture hall on the date of its opening at Rs. 24 lac to which none of the parties have any grievance. Thereafter the arbitrators have taken into account that the valuation of the land as also the expenses incurred by the first party, which comes to Rs. 9,75,000/- including other expenses incurred by the first party out of the total valuation of the cinema hall valued at Rs. 24 lac. The first and second party having equal shares were required to contribute the funds in equal shares while the first party had contributed only a sum of Rs. 9,75,000/- which necessarily follows that the second party (opposite party) as on the date of the opening of the cinema hall had invested Rs. 2,25,000/- excess amount in addition to Rs. 12,00,000/- and they are entitled for the recovery of the said amount, The arbitrators after taking into account the facts that the cinema hall was named in the name of ancestors of the first party and was being handed over to them as they were interested to run the cinema, while the second party had provided for the funds after making calculation of the entire assets and liabilities of the respective parties found that a sum of Rs. 7,26,908/- is payable by the first party to the second party. It may be noted here that the possession and ownership of cinema hall was given to the first party, under the award who had made contribution worth Rs. 9,75,000/- only. Adjusting the equities between the parties and also having taken into account that the possession and ownership of the cinema hall is being given exclusively to the first party, the arbitrators in their wisdom awarded the payment of interest at the rate of 2% per month on the amount of Rs. 7.26.908/- from 24th August 1994 to the date of actual payment. It is not in dispute that the first party are running the cinema and they are in exclusive possession of the cinema hall from 12 January, 1995. From the record it is clear that the first party has not paid even a single shell towards the aforesaid amount as awarded by the arbitrators, although they are enjoying the possession and ownership of the cinema hall and earning the profit and thus, have deprived of the second set opposite party in the profits. On a query put by the court why the payment of the said amount was not made by the applicant to the opposite party, they come out with the case that they offered to make the payment through their notice dated 15th February, 1995 to Manoj Kumar Jaiswal and others to appear before the Sub Registrar, Ballia on 22.2.1995 between 10,00 a.m. to 5.00 p.m. so that they may receive the principal amount and interest after adjusting the realized amount received by Satyendra Mohan, the power of attorney holder to the second party. In the opinion of the court the sending of the said notice was pesh bandi and only an eye wash, and there is no evidence on the part of the present applicant to honour the award and make the payment accordingly. Had there been any genuine intention on the part of the present applicants namely the first party to make payment of the sum awarded under the aforesaid award, they could have very easily tendered the amount either through the cheque or bank draft by registered post instead of sending notice. They could also tender the said amount in the court below to establish their bonafides in the matter. It is clear that after obtaining the possession and ownership of the cinema hall under the aforesaid award it is the applicants who are lingering on and postponing the payment of the sum awarded under the award for no justifiable reasons. In this view of the matter on the equity side there is no justification for this Court to interfere with the order passed by the court below. Till date, no payment as due under the award has been made by the first party, although admittedly they have got exclusive possession of the disputed cinema hall on 12.1.1995. No interest has been awarded to second party from the date of their investments. But it has been granted only from the date of the award to the date of actual evidence with a view for facilitation of early payment. It also strikes a balance as well. It is also important to note that in the notice dated 15.2.1995, the offer was not made to make the payment of the entire amount only a small portion was offered. It maybe placed on record that in revision no argument was advanced nor could possibly be advanced that the first party is liable to pay a lesser amount than the sum so awarded under the award. Thus, it is crystal clear that the said notice will not in any way impair or take away the right of the second party to receive the interest as granted under the awarded.
14. Besides the above factual aspect of the case the vital issue is that present revision is not maintainable and is liable to be dismissed. To recapitulate the facts as pointed out above, application under Section 14(2) of the Act was filed by the present applicants- first party without any reservation/objection to make the award of the arbitrator as rule of the court. To be a specific no objection was filed by the applicants before the court below with regard to the grant of interest at the rate of 2% per month. The period of limitation for filing the objection as prescribed under Section 30 of the Arbitration Act had already been expired For the first time through the objection being paper No. 125, dated 22.9.98, i.e. after expiry of the period of more than four years, the applicants came out with the case that the aforesaid award of the arbitrator be accepted and be made rule of the court with the modification that they would be liable to pay a sum of Rs. 2,16,572.95 after adjusting a sum of Rs. 5000/- as compensatory cost and a sum of Rs. Four lac towards interest to Rapti Finance i.e. the remaining amount comes to Rs. 2,16,572.95. It is an acknowledged legal position that in view of Section 16 of the Arbitration Act it is apparent that once the objection made by the parties under Section 30 of the Act has been rejected or if the time for filing the objection has expired and objections are not made, the court has no option except to make the award a rule of the Court. Section 17 of the Act does not envisage that the Civil Court will decide the merit of an award after rejecting the application of a party under Section 30 of the Act, vide U.P. Power Corporation Limited v. Universal Insulator Ceramics Ltd. 2006 (3) ALJ 10. The learned Counsel for the applicant could not give any reply to the query put by the court as to how the present revision is maintainable as the applicants themselves applied for making the award rule of the court and no objection was raised within the statutory prescribed period. Indisputably no objection within the time prescribed under Section 30 of the Act was filed by the present applicants. The present applicants thus are estopped to challenge the legality and validity of the award in question. In other words the court below was perfectly justified in making the award the rule of the court and committed no illegality by passing the order under revision, even if for the sake of argument, it is assumed that the award is not in accordance with para 7-A as amended in the State of U.P. The Apex Court in the case of State of U.P. v. Harish Chand & Company (1999) 1 SCC 630 held that para 7-A may bar the power of arbitrator to award interest at more than 6% but it does not bar the power of the court so far as the court concerned. It is in the discretion to award interest over and above 6%. In that case the Supreme court confirmed the judgment of the High Court awarding interest 15,5% on the decretal amount from the date of decree till satisfaction of the decree. The relevant portion reads as follows:
In fact, he had no authority or power to go beyond 6 per cent interest. So far as the Court is concerned, it is in its discretion to award 15.5 per cent interest on the decretal amount from the date of the decree till satisfaction of the decree. As that was within the realm of the discretionary jurisdiction of the trial court, it could not have been set aside by the High Court in appeal. The cross appeal will stand allowed to this extent by modifying the judgment and order of the High Court by substituting 15.5 per cent interest instead of 6 per cent interest per annum from the date of the decree till payment.
15. Strong reliance was placed by the learned Counsel for the applicant upon Union of India v. Madnanai Construction Corporation (P) Ltd. 2003 ALJ 2595 equivalent to AIR 2003 Allahabad 346 for the proposition that in view of State Amendment by adding Para 7-A to Schedule 1 of the Act, the interest more than 6% from the date of the award till the date of payment or in the earlier date can not be granted. Strong reliance was placed upon para 37 of the report which is reproduced below:
37. Section 3 (See Appendix -1) of the Act states that unless different intention is expressed the items mentioned in Schedule 1 of the Act are implied in an arbitration agreement. This schedule did not include anytime related to interest. It has been amended in our State and paragraph 7-A (See Appendix 1) has been inserted by U.P. Civil Laws (Reforms and Amendment) Act (Act No. 57 of 1976) with effect from 11.9.1977. It is clear from paragraph 7-A to the Schedule 1 of the Act that in case award is for payment of money then arbitrator may award interest for following period:
(i) up to the date of commencement of the arbitration.
(ii) From the date of commencement of arbitration proceedings (as defended in Section 37(3) of the Act) till the date of award.
(iii) From the date of the award till the date of payment or any earlier date.
There is; no ceiling to the rate of interest for the first two period though it has to be reasonable, but there is ceiling of 6% per annum, on the rate of interest for the third period namely from the date of award till the date of payment or any earlier date.
16. The aforesaid decision should be read in the light of the judgment of the Apex Court in the case of State of U.P. v. Harish Chandra & Co. (supra). In this view of the matter the grant of interest at the rate of 2% per month taking into considering the totality of the facts and circumstances of the case discussed above is justified. Assuming if the arbitrator could not award the interest at the rate of 2% per month in view of para 7-A, there is no ceiling limit for a court to award interest provided the same is reasonable as held by the Apex Court in the case of State of U.P. v. Harish Chandra & Co. (supra). The interest awarded by the arbitrator can be justified treating it that the same has been awarded by the court.
17. Before parting with this case it may be noted that although the award is dated 24th April, 1994, till date the applicants have not paid any amount towards awarded amount and have postponed its payment on one pretext or the other. Although they have reaped the fruits of the award, in as much as they have got possession on 12.1.1995 of the disputed cinema hall. Keeping in view that it is the opposite parties/second party who had made major capital investment in the erection of the cinema hall, they have been deprived of their investment for all these period with no return, nor any interest amount has been awarded under the award for the period from the date of their investment, the grant of interest @ 2% per month from the date of award till the date of actual payment is perfectly justified in equity. In this view of the matter also, there is no justification for this Court to exercise its discretionary power to interfere with the matter in any matter.
18. In view of above, there is no merit in the revision.
19. The revision is dismissed with costs of Rs. 5000/-.