Arbitration Act, 1940 — Sections 30 & 33 — Objections to award — Withholding of legitimate claim

April 2nd, 2013

Arbitration Act, 1940 — Sections 30 & 33 — Objections to award — Withholding of legitimate claim — Entitlement to interest — Respondent entered into a contract with the appellant — Respondent did not adhere to the time schedule and supply part of the contract was not completed within the stipulated period — Contract was ultimately abandoned — Disputes arose between the parties referred to sole Arbitrator, who was the Chief Engineer, In-Charge of the appellant’s project — Appellant not satisfied with the Award filed objections — Single Judge noted that view taken by the Arbitrator being a plausible one; he being an expert in the field and being aware of the ground realities; the Award on this count did not suffer from any illegality — Challenged — Held, Single Judge rightly noted that only when the appellant retains the money payable under the performance bank guarantee; the contractor shall have no claim for interest; the prohibition of payment of interest would not apply to any legitimate claim made by the contractor for a wrongful withholding of the moneys payable to him and once it is held that some money was due to the contractor which was not legitimately paid to him then obviously the prohibition against payment of interest would be inapplicable — There was no absolute prohibition on the payment of interest if the claim set up by the contractor was a legitimate claim — Compound interest has been disallowed by the Single Judge and to that extent the Award stood modified directing that the interest would be payable only on the principal sum — On neither count does the order of the Single Judge brook any interference — Appeal is without any merit and same is dismissed — Arbitration and Conciliation Act, 1996 — Section 34 — Objections to award.

(Para 9 & 10)

National Hydro-Electric Power Corporation Ltd. v. Ali Mohammed Baba & Sons[DB], FAO (OS) 78/2013(05/02/2013), 2013(2) AD(Delhi) 550 [Sanjay Kishan Kaul, J.: Indermeet Kaur, J.]

Entry Filed under: Commercial Laws,Judgements,News that Matter