IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE EIGHTTH DAY OF SEPTEMBER, TWO THOUSAND AND NINE PRESENT THE HON'BLE MRS JUSTICE T.MEENA KUMARI AND THE HON'BLE MR JUSTICE G.V.SEETHAPATHY
C.M.A. NO. 1055 of 2004 AND
C.M.A. NO. 1585 OF 2004
Between:
M/s. Hindustan Steel Works Construction Limited, A wholly owned Government of India Undertaking, Rep. By its Depputy General Manager, Steel Plant Area, Visakhapatnam . APPELLANT AND M/s. Tarapore & Company, A partnership firm having its Regd. Office at Dhun Building, 827, Anna Salai, Chennai – 600 002 . RESPONDENT
THE HON'BLE SMT. JUSTICE T.MEENA KUMARI AND
THE HON'BLE MR JUSTICE G.V.SEETHAPATHY
C.M.A. NO. 1055 OF 2004 AND
C.M.A. NO. 1585 OF 2004
COMMON JUDGMENT: (per the Hon’ble Smt. Justice T.Meena Kumari) Since these two Miscellaneous Appeals arise out of the same Award dated 23.08.2001 passed by the learned Arbitrators, they were heard together and are being disposed of by this common judgment.
The parties will be referred to they are arrayed in CMA No.1055 of 2004, for the purpose of convenience.
The respondent i.e., M/s. Tarapore & Company, Engineers and contractors, had entered into a contract with the appellant viz., M/s. Hindustan Steel Works Construction Limited for civil construction works in connection with the blast furnace Zone 1 and 2 at Visakhapatnam Steel Plant. Pursuant to certain disputes that arose between the parties, two separate references were made and two different Awards dated 26.9.1996 and 28.9.1996 came to be passed, whereby among other claims, final bill was also allowed. Thereafter, both the parties filed O.Ps. seeking to set aside the awards and also for remission of the award dated 29.8.1996 in respect of the final bill, inasmuch as the arbitrators failed to apportion the security deposit amount in the final bill and by a common order dated 17.01.2000 the final bill was remitted to the Arbitrator for apportionment of the security deposit. Apart from the same, Claim Nos. 7 and 9 were also remitted insofar as they relate to arithmetical calculations errors. Aggrieved thereby, the appellant preferred CRP No. 2166 of 2000 before this court, which was dismissed on 02.03.2001 giving liberty to the appellant to raise all legal pleas before the Arbitrators.
Pursuant to the said order, the Arbitrators have taken up the matter and passed an Award on 23.08.2001 directing the appellant herein to pay an amount of Rs.2,15,000/- to the respondent towards principal amount under claim No.9 with interest at 15% p.a. from 19.10.1988 till the date of the Award and from the date of the Award till payment or decree, whichever is earlier. It is further directed that the appellant shall pay a sum of Rs.20,34,447/- towards the balance against the final bill and to pay interest at 15% from the date of Award till the date of payment or decree whichever is earlier. Pursuant to the Award, the Appellant filed OP No. 1 of 2002 under Sec. 30 of the Arbitration Act, 1940 to set aside the same and to award the amount as per the calculation whereas the respondent had filed an application under Sec. 17 of the Arbitration Act to make the Award dated 23.08.2001 as Rule of the Court.
The learned Senior Civil Judge, Gajuwaka, dismissed O.P. No.1 of 2002 filed by the appellant observing that the learned Arbitrators did not commit any error in passing the award and hence, made the Award dated 23.08.2001 as Rule of the Court and thus allowed O.P. No. 4 of 2002 filed by the respondent.
Aggrieved by the same, the present Civil Miscellaneous Appeals are filed by the M/s. Hindustan Steel Works Construction Limited.
It is contended by the learned counsel for the appellant that the learned Arbitrators ought not to have granted interest at 15% from 19.10.1988 till the date of Award and from the date of the Award till the date of payment or decree which ever is earlier on both the counts i.e. Rs.2,15,000/- towards principal amount and Rs.20,34,447/- towards the balance against the final bill and placed reliance on a judgment of the Apex Court in Krishna Bhagya Jala Nigam Limited Vs. G.Harishchandra Reddy and another ([1]).
Per contra, the learned counsel for the respondent has vehemently contended that in the facts and circumstances of the case, the learned Arbitrators are perfectly justified in awarding the interest at 15% p.a. on the belated payment of principal and balance amount and, therefore, the Arbitrators cannot be found fault for granting interest at 15% p.a.
Heard learned counsel for the appellant and the respondent at length.
The court below on extensive and meticulous consideration of the claims made by the respondent under different heads, had confirmed the findings of the Joint Arbitrators by the orders and decrees impugned herein. As such, we need not delve on the said issue, inasmuch as there is nothing on record which suggest interference. But, however, the Apex Court in Harishchandra Reddys case, has observed that after economic reforms in our country, the interest regime has changed and the interest rates are substantially reduced, and, therefore, scaled down the rate of interest to 9%. For better understanding, it is apt to extract paragraph No.11 of the said judgment:
“..On the merits of the claims made by the contractor, we find from the impugned dated 25.6.2000 that it contains several heads. The arbitrator has meticulously examined the claims of the contractor under each separate head. We do not see any reason to interfere except pm the rates of interest and on the quantum awarded for letting machines of the contractor remaining idle for the period mentioned in the award. Here also, we may add that we do not wish to interfere with the award except to say that after economic reforms in our country, the interest regime has changed and the rates have substantially reduced and, therefore, we are of the view that the interest awarded by the arbitrator at 18% for the pre-arbitration period, for the pendente lite period and future interest be reduced to 9%…”
In terms of the above judgment of the Apex Court, while confirming the Award passed by the learned Arbitrators in all other respects, the rate of interest is scaled down from 15% to 9% per annum. With the above modification in the rate of interest, the orders and decrees passed by the court below, are confirmed and the appeals are accordingly, allowed in part, as indicated above. There shall be no order as to costs in any of the appeals.
Justice T.Meena Kumari Justice G.V.Seethapathy September 8, 2009 MAS.
[1] (2007)2 SCC 720