Holding

An arbitral award is upheld unless it is manifestly unsupported by evidence or based on an erroneous legal proposition, and interest may be awarded only for periods authorized under the Interest Act, with interest from the award date to decree permissible.

Summary

The Gujarat Water Supply & Sewerage Board entered into contracts with Unique Erectors for a water‑supply scheme and later referred disputes arising under clause 30 of the contract to arbitration. A sole arbitrator was appointed, decided the arbitrability of the claims, and issued a lump‑sum award on 8 July 1985, which the Board challenged on several grounds including lack of reasons, non‑speaking award, erroneous award of interest, and alleged unreasonableness. The Supreme Court held that an award need not contain detailed reasons and that it is not per se invalid for being non‑speaking; it must be set aside only if unsupported by evidence or based on an erroneous legal proposition. The Court found the arbitrator had, in fact, considered arbitrability and that the award was not unintelligible. Regarding interest, the Court limited the arbitrator’s award to the period from 6 August 1981 to 21 August 1984 under the Interest Act, deleted interest for the period 22 August 1984 to the award date, and allowed interest at the same rate from the award date to actual payment. The appeals were dismissed and the award upheld with the corrected interest directions.

Issues considered

The arbitrator’s failure to expressly decide or disclose the arbitrability of claims constitutes an error of law
Whether a non‑speaking arbitral award is per se invalid
Whether an arbitral award must contain detailed reasons and be ‘reasonable’
Whether interest pendente lite awarded by the arbitrator is permissible under the Interest Act, 1978 and the Arbitration Act, 1940
Whether interest can be awarded from the date of the award to the date of the decree
Whether the award is unreasonable or unsupported by evidence

Legislation cited

Arbitration Act, 1940s. 14, s. 17, s. 29, s. 30, s. 33, s. 8
Code of Civil Procedures. 34
Interest Act, 1978s. 15, s. 16, s. 17, s. 3(1)(a)

Subjects

ArbitrationArbitral awardArbitrabilityNon‑speaking awardInterest pendente liteInterest Act 1978Arbitration Act 1940ReasonablenessCivil appeal

Judgment

GUJARAT WATER SUPPLY & SEWERAGE BOARD
A
v.
UNIQUE ERECTORS {GUJARAT) (P) LTD. & ANR.

JANUARY 24, 1989

B [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.)
)I
Arbitration Act, 1940: Sections 14, 17, 29, 30 and 33-Award-
Setting aside of-No evidence to support conclusion-Based on legal
proposition which is erroneous-Award of arbitrator to be read reason-
ably as a whole--Unreasoned award-Effect of-Error apparent on
C face of award-What is-interest pendente lite-Cannqt be granted-
interest for period between date of award and date of decref! can be
allowed in cases governed by Interest Act, 1978.

Interest Act, 1978: Section 3(1)(a)-Arbitration proceedings-
grant of interest bY Court.
D
Wor¢s & Phrases.

'reqsonable'-Meaning of.

In 1978 the State Government undertook the construction of the
E '·Bhavnagar City Water Supply Scheme', and on 12th January, 1979,
two contracts in respect thereof were awarded to respondent No. 1. On
29th March, 1981, respondent No. 1 filed a civil suit with regard to
measurements recorded by the Deputy Engineer and alleged underpay-
ments- On 14t!t June, 1981, he gave notice to the State Government and
the petitioner Board requesting for reference of the d.isputes to an
F arbitrator as provided for under clause 30 of the Agreement, and gave
notice under section 8 of the Arbitration Act, 1940 calling upon the
petitioner tO'concur in the appointment of one Sbri G.G. Vaidhya. On
6th August, 19,81 respondent No_ 1 filed a civil miscellaneous applica-
tion for appoin~ent of the said Sbri G. G. Vaidhya as the sole
ar.bi.tr.ator. after withdrawing th.e _civil suit. The petitioner contended
.g tl!!lt the application_ was not maintainable. The Civil Jµdge however .
aPP'!in.t~!_I the s;ti.d Stu.i. G.G. Vaidbya as sole arbitrlltor. The arbitrl!tor
g!frll !l!l illtetjm !l"\Vl!!'cl h,!llcling thllt only two ~lllin_ts were not arbitrllble ~

~n.'-1 t!t;::::~::::~::: :::::·ti!~ !IP~.!. w~~~r aP~ a
H was filed in this Court. This appelll was, however, disposed of by con-
,
·.
318
GUJARAT WATER SUPPLY BOARD v. UNIQUE ERECTORS 319

on 30th November, 1983 to the effect that a retired Secretary, A
•.+ sent
Public Department who was at that time sitting member of the peti-
tioner-Board be appointed as the sole arbitrator to decide all the dis-
putes between the parties- On 8th July, 1985, this sole arbitrator made
a lump sum award. The Civil Judge directed that the decree he passed
in terms of the award, rejecting the objections of the petitioner.
B
-:.::. The High Court by a common judgment dismissed the two appeals
of the petitioner challenging the award.

~
In the appeals to this Court by special leave, it was.contended: (1)
that the arbitrator had committed an error of law in not deciding or
disclosing his mind about the arbitrability of the claims or counter- c
claims, (2) in the award no basis or indication was given as to which
c).; claim was rejected, and further what amount was awarded as claim and
what amount towards element of interest, (3) there was an error appa-
rent on the face of the award inasmuch as the basis on which interest
had been awarded had not been disclosed and whether the interest has
D
been ·awarded from the date of the institution of the proceedings, (4)
that the granting of interest pendente lite was contrary to the decision of
this Court and (5) that the non-speaking award had resulted in great
prejudice to the petitioner inasmuch as against the claim of Rs.I lakh,
Rs.57 lakhs had been awarded.
x E
Disposing of the appeals, the Court,
'
HELD: l(a) There is a trend in modern times that reasons should
he stated in the award though the question whether the reasons are
necessary in ordinary arbitration awards is pending adjudication by the
~- Constitution Bench of this Court. Even if it be held that it is obligatory
for the arbitrator to state reasons, it is not obligatory to give any
F

detailed judgment. l325E]

l(b) An award ~f an arbitrator should be read reasonably as a
whole to find out the implication and the meaning thereof. Short intel-
ligible indications of the grounds shall be discernible to find out the G
mind of the arbitrator for his action. l325F]

~ l(c) The Court does not sit in appeal over the award and review
the reasons. The Court can set aside the award only if ii is apparent
from the award that there is no evidence to support the conclusion or if the
award is based upon any legai proposition which is erroneous. [325G-H I H
320 SUPREME COURT REPORTS [1989] 1 S.C.R.

A Indian Oil Corporgtion Ltd. v. Indian Corbon Ltd., [1988] 3 SCC
36, regerred to.
+
1(d) It is one thing to say that an award is unintelligible and it is
another thing to say that the award was bad because it was a non-
speaking award. [326F]
B
In the instant case, the arbitrator, in pursuance to the order of
this Court had to decide which of the disputes were arbitrable and
which were not. Reading the award along with the preamble, it appears
clear that the arbitrator had decided the arbitrability and the amount
which he has awarded was on the points which were arbitrable. In such
circumstances it will not ™; in consonance with justice to refer the
c matter to the Constitution Bench or to await the disposal of the point by
the Constitution Bench. [326B, G]

2. Reasonableness as such of an award unless per se preposterous
or absurd is not a matter for the Court to consider. Appraisement of
D evidence by the arbitrator is ordinarily not a matter for the Court. It is
difficult to give an exact definition of the word 'reasonable'. The word
'reasonable' has in law, prima facie meaning of reasonable in regard to
those circumstances of which the actor, called upon to act reasonably,
knows or ought to know. The award in the instant case cannot be
condemned as unreasonable. [327C-D]
E
Municipal Corporation of Delhi v. Mis. Jagan Nath Ashok
Kumar & Anr., [1987] 4 SCC 497 referred to.

3. The grant of interest pendente Ute is however one infirmity in.
the award which is apparent on the face of the award which in the .. --4!
F interest of justice should be corrected. [327E] ' -1
Executive Engineer (Irrigation) Balimela and Ors. v. Abhaduta
Jena & Ors., [1988] 1 SCC 418 and State of Orissa & Ors. v. Construc-
tion India, [1987] Supp. SCC 709 referred to.

G In the instant case, April 2, 1984 is the date of the reference
to arbitration, on August 22, 1984 the arbitrator entered upon the
reference. July 8, 1985 is the date of the award and July 19, 1985 the ,l..
date of publication of the award. The latter date should be taken as the
date of the award. Since the reference to arbitration was made after the
commencement of the Interest Act, 1978 the arbitrator under section
H 3(1)(a) of the said Act was entitled to award interest from August 6,
GUJARAT WATER SUPPLY BOARD v. UNIQUE ERECTORS [MUKHAR.ll, J.J 321

1981 till August 21, 1984. He could not have awarded interest for the
A
period from August 22, 1984 till the date of publication of the award
viz. July 19, 1985. l327G-H; 328A]

4. So far as interest for the period from the date of the award
(July 19, 1985) till the date of the decree is concerned, interest should be
allowed for this period, on the principle that this Court can, once pro- B
ceeding under sections 15 to 17 are initiated, grant interest pending the
litigation before it, i.e. from the date of the award to the date of th_e
decree. It may be doubtful whether this can be done in cases arising
before the Interest Act, 1978 in view of the restricted scope of section 29
of the Arbitration Act. l328D-E]

5. The interest awarded by the arbitrator for the period from
c
August 22, 1984 till the date of award is deleted; and the interest on
the principal sum is confined to 9% from August 6, 1981 till August 21,
1984. However, exercising powers under section 3 of tl;le Interest Act,
1978 and section 29 of the Arbitration Act, 1940, the Court directed
that the principal sum or unpaid part thereof should carry interest at D
the same rate from the date of the award (July 19, 1985) till the date
of actual payment. l329A-B] ·

~ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 418-
, 19of1989. ·
E
From the Judgment and Order dated 29.4.1988 of the Gujarat
High Court.in F.A. Nos. 848-849 of 1986.

V.B. Patel, D. Patel, T.H Pandey and R.P. Kapur for the
Appellant.
F
Soli ]; Sorabjee, Atul Setalwad, N.J. Mehta, P. Shah, S.K.
Sharma, S. Sharma and P.H. Parekh for the Respondents.

The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. This is an application for leave G
to appeal under Article 136 of the Constitution from the judgment and
order of the High Court of Gujarat dated 29th April, 1988.

To appreciate the questions involved herein, few facts have to be
emphasized. In 1978, the State Government of Gujarat undertook a
scheme known as 'Bhavnagar City Water Supply Scheme'. The H
322 SUPREME COURT REPORTS [1989] 1 S.C.R.

A Scheme was divided into two parts: (i) Raising Main; and (ii) Gravity
Main. Raising Main was divided into two sections, namely, 10.1 k.ms.
and 7.4 k.ms. steel welded pipeline. On or about 15/16th December,
1978, the State Government issued letter of approval to the bargain
between the parties on certain terms. ·

B On 12th January, 1979, two contracts were awarded to the
respondent No. 1 for Rs.1,29,39,691 and Rs.94,30,435 which provided
the dates of completion as February 1979 and the 3rd week of
September, 1980 respectively. On 29th March, 1981 the respondent
No. 1 filed the Civil Suit No. 588 of 1981 in the City Civil Court with
regard to measurements recorded by the Deputy Engineer and alleged
underpayments. On 4th June, 1981, the respondent No. 1 gave notice
c to the State Government and the petitioner-Board requesting for
reference of the alleged disputes to the arbitrator under clause 30 of
the agreement. On or about 8th July, 1981 the respondent No. 1 gave
notice under Section 8 of the Arbitration Act, 1940 (hereinafter called
'the Act') calling upon the petitioner to concur in the appointment of
D one Shri G.G. Vaidhya. On 21st July, 1981, he withdrew the Civil Suit
No. 588 of 1981. On 6th August, 1981, the respondent No. 1 filed Civil
Miscellaneous Application No. 231of1981 in the Court of Civil Judge,
(SD), Ahmedabad for appointment of the said Shri G.G. Vaidhya as
the sole arbitrator. On 7th November 1981, the petitioner filed reply
contesting the arbitrability of the various claims made in the applica'
E tion and inter alia contending that the application was not maintain-
able. On or about 15th December, 1981 the learned Civil Judge
appointed Shri G.G. Vaidhya as the sole arbitrator with a direction
that he should first decide as to which disputes fell within the purview
of clause 30 of the agreement. On 5th May, 1982, Shri Vaidhya gave an
interim award holding that the claims at S. Nos. lO(g) and 10(1) only
F were not arbitrable and further that the other claims were arbitrable.
A petition was filed in High Court which was dismissed and then there
was an application to this Court under Article 136 of the Constitution
which was disposed of by consent on 30th November, 1983. The said
order inter alia provided that the parties had agreed to settle the
matter amicably and one Shri Mohanbhai D. Patel, Retired Secretary,
G Public Works Department, Gujarat and at that time Sitting Member of
the petitioner-Board was appointed as the sole arbitrator in place of
Shri V aidhya to decide all disputes between the parties relating to the
following works:

"i) providing, fabricating, laying and jointing 1000 mm dia.
·- 10,000 M long steel welded pipe line under Bhavnagar
GUJARATWAIBRSUPPLYBOARD v. UNIQUE ERECTORS [MUKHARJI, J.] 323

Emergency Water Supply Scheme based on · Shetrunji A
Dam-Agreement No. 5/2-1 of 1978-79.

ii) providing, fabricating laying and jointing 1000 mm dia
7,400 M long steel welded pipe line under Bhavnagar
Emergency Water Supply Scheme based on Shetrunji Dam
Agreement No. B-2/2of 1978-79." B

It was further provided that all disputes concerning the said two
works in question should be referred to the sole arbitrator and the
Board could also be entitled to put counter-claims before him. The
consent terms also provided the following terms:

"That the arbitration proceedings shall be started de novo c
meaning thereby that the earlier appointment and proceed-
ings before the Sole Arbitrator Shir G.G. Vaidhya shall be
inoperative and void.

That the Board shall have a right to agitate all points both D
in fact and in law before the Sole Arbitrator as per the
terms and conditions of the contract including the question
of arbitrability within the meaning of clausse 30 of the
contract.

Both parties shall have a right to be representi;d by an E
Advocate and/or their representatives .
.. The expenses of arbitration shall be borne by both the
parties as per rules of Government in this behalf. That both
parties shall agree to extend time as and when necessary for
completition of arbitration proceedings. F

That a formal agreement for arbitration shall be executed
betwe.en.the parties defining the scope ofArbitration.

That the provisions of the Indian Arbitration Act, 1940
shall apply to the proceedings before this Sole Arbitrator." G

-~ On 31st March, 1984, Shri M.D. Patel was appointed as the sole
arbitrator jointly by the parties, and on 2nd April, 1984 he accepted
his appointment and directed the parties to file their claim statments
within 15 days. Thereafter, the respondent No. 1 filed claim to the
tune of Rs.4,92,20,683 and a counter-claim to the extent of H
324 SUPREME COURT REPORTS 11989] 1 S.C.R.

A Rs.26,87,217.40. On 22nd August, 1984 the parties appeared before
the arbitrator after filing of claims and counter-claims. ~·
I
On 1st October, 1984 the petitioner filed an application before '

the arbitrator praying that preliminary issues be raised and decided
first as to which of the disputes were arbitrable under clause 30 cif the
B agreement. On 8th July, 1985, a lumpsum award was made by the
arbitrator, and on 19th July, 1985 the parties were informed about the
signing of the award. On the same day the award filed by the respon-
dent No. l's Advocate which was dated 8. 7 .1985 was registered as
Civil Miscellaneous Application No. 144/85. Thereafter, notice was
issued on the same day and served on the petitioner also on the same
day. The petitioner filed objections to the award and the Objection
C Petition was registered as Civil .Miscellaneous Application No. 158/85.
Reply to the objections was filed by the respondent No. 1. On 17th
June, 1986, however, the learned Civil Judge directed that decree be
passed in terms of the award. Two appeals were filed by the petitioner.
On the 29th April, 1988 the High Court by a judgment dismissed the
D petition challenging the award and upheld the award. Aggrieved
thereby, the petitioner has moved this Court as mentioned herein-
before.

Various grounds were urged in support of this application. It was
contended, firstly, that there was an error apparent on the face of the
E award and that the award was bad. It was submitted that the arbitrator
had committed an error of law in not deciding or disclosing his mind
about the arbitrability of claims or counter-claims, more so when the
Board's application for deciding the same, was pending before the
..
arbitrator. Before the learned Trial Judge the Board had submitted an
application to the arbitrator seeking to raise a preliminary issue
p regarding arbitrability of the claims. As noted by the learned Trial
Judge, it appears that the third meeting specifically mentioned that the
claims were placed before the arbitrator and their contentions about
the arbitrability were considered. So, these issues were gone into and
it appears that the parties had agreed and proceeded on the basis that

~b
the claims may be examined and it was not necessary to decide pre-
issue of arbitrability and it was agreed that all the claims be decided
claimwise. So, it cannot be said that the arbitrator had acted arbitrarily

~.
in discussing all the questions raised before him without first deciding
the question of arbitrability or non-arbitrability of an issue as such.

The Court in its judgment has discussed the conduct of the
H parties. It appears that the Court found that the parties themselves had
-
'.J.. '·.
GUJARAT WATER SUPPLY BOARD v. UNIQUE ERECTORS IMUKHARJI;J.J 325

-----+ agreed that the arbitrator should decide claimwise and on merit. The A
Court so found, and in or opinion, rightly. The arbitrator so.:procee-
ded. There was no error committed by the arbitrator in so oonducting
himself. It was, secondlj.:, contended that out of the numerous claims
before the arbitrator, some of which, according to the petitioner, were
ex facie not arbitrable and some were withdrawn including the claims
B
...
- ~ for interest of Rs.54,61,073 and compound interest of Rs.82,26,039
and in the award no basis or indication was given as to which claim was
rejected and further of the amount which was awarded·as claim and
what amount towards element of interest. It was, thirdly, contended
-~ /
that there was an error apparent on the face of the award inasmuch as
the basis on which interest has been awarded has not been disclosed
and whether the interest has been awarded from the date of the institu- c
ti on of the proceedings. It was, fourthly, contended that granting of
• )le interest pendente lite was contrary to the decision of this Court. It was,
lastly, contended that non-speaking award ·had resulted in great pre-
judice inasmuch as against the claim of Rs. I lakh, Rs.57 lakhs have
been awarded.
D

The scope and extent of examination by the Court of the award
made by an arbitrator has been laid down in various decisions. It hasto
be noted that there is a trend in modem times that reasons should be
~ stated in the award though the question whether the reasons are neces-
sary in ordinary arbitration awards between the parties is pending E
adjudication by the Constitution bench of this Court. Even, however,
if it be held that it is obligatory for the arbitrator to state reasons, it is
not obligatory to give any detailed judgment. An award of an
arbitrator should be read reasonably as a whole to find out the implica-

~
tion and the meaning thereof. Short intelligible indications of the
grounds should be discernible to find out the mind of the arbitrator for F
·his action even if it ·be en joined that in all cases of award· by any
arbitrator reasons have to be stated. The reasons should not only be
intelligible but should also deal either expressly or impliedly with the
substantial points that have been railied. Even in a case where the
arbitrator has to state reasons, the sufficiency of the reasons depends
upon the facts and the circumstances of the case. The Court, however, G
does not sit in appeal o':'er the award and review the reasons. The Court
~. • iscannosetevidence
aside the award only if it is apparent from the award that there
to support the conclusion or if the award is based upon
any legal proposition which is erroneous. See the observations 'Ot lhis
Court in 1ndian Oil Corporation Ltd. v. 1ndian Cat'bon L'tii.; U'9'88l 3
SCC36. H
326 SUPREME COURT REPORTS I1989] 1 S.C.R.

A
In the instant case, the arbitrator by virtue of the terms
mentioned in the order of this Court had to decide which of the dis-
+
putes were arbitrable and which were not. It is true that the arbitrator
has not specifically stated in the award that he had to decide the
question of arbitrability. The arbitrator has rested by stating that he
had heard the parties on the point of arbitrability of the claim and the
B counter-claim. He has further stated that after 'considering all the
above aspects' and 'the question of arbitrability or non-arbitrability'
he had made the award on certain aspects. Reading the award along
with the preamble, it appears clear that the arbitrator had decided the
arbitrability and the amount he has awarded was on the points which
were arbitrable. The contention that the arbitrator had not decided the
question t\f arbitrability as a preliminary issue cannot also be sus-
c tained. A reference to the arbitrator's proceedings which were discus-
sed in detail by the High Court in the judgment under appeal reveal
that the procedure adopted by the arbitrator, i.e., that he will finally
decide the matters, indicated that the parties had agreed to and the
arbitrator had proceeded with the consent of the parties in deciding
D the issues before him and in not deciding the question of arbitrability
as a separate, distinct and preliminary issue. The arbitrator has made
his award bearing all the aspects including the question of arbitrability
in mind. It was contended before us that the arbitrator has made a
non-speaking award. It was obliged to make a speaking award, it was
submitted by terms of the order of this Court. We cannot sustain this
E submission because it is not obligatory as yet for the arbitrator to give
reasons in his decision. The arbitrator, however, has in this case indi-
cated his mind. It appears to us that the point that the non-speaking
award is per se bad was not agitated before the High Court. We come
to that conclusion from the perusal of the judgment under appeal
though, however, this point has not been taken in the appellant's
p appeal. It is one thing to say that an award is unintelligible and is
another to say that the award was bad because it was a non-speaking
award. The point taken was that the award was unintelligible and not
that it was non-speaking. But there was nothing unintelligible about
the award.

G We were invited to refer the matter to the Constitution Bench
and await the disposal of this point by the Constitution Bench. The
contract in this case was entered into in 1978. The proceedings for
initiation of arbitration started in 1981. The matter had come up to this
Court before which resulted in the order dated 30th November, 1983.
Pursuant thereto, the award has been made and no grounds specifi-
H cally were urged though they were taken in the appeal in the High
GUJARATWATERSUPPl'.YBOARDv. UNIQUEERECTORSIMUKHARJJ,J.1327

Court in the arguments before the High Court about the award being
A
\Jad because it is non-speaking. In those circumstances, it will not be in
conson:mce with justice for us to refer the matter to the Constitution
B.e.i:wh or to i\Wait the disposal of the point by the Constitution Benc!t·
It was further submitted before us that the award was unreasonable
<111ci thilt the arbitrator had awarded a large amount to money but the
otjgi.11al cl11im W\IS not so large and as such the award was dispro- B
poi,1io11ate. Th.is contention, as it is, it appears from the judgment of
the High Court, was not urged and canvassed before the High Court.
The claim and the counter-claim together in its totality, in our opinion,
qoes no( make the award amount disproportionate. Reasonableness as
Sl\Cll of an award unless the award is per se preposterous or absurd is not
<!. w.a.Her for the court to consider. Appraisement of evidence by the
axl;l~(rator is ordim1rily not a matter for the court. It is difficult to give
c
a.!\ e.l\\l.cJ <.l.efi11i(ion of the word 'reasonable'. Reason varies in its con-
el\\~ol).S a,cc<mling to tile idiosyncrasy of the individual and the times
•rnd. U•e tjrcumstances in which he thinks. The word 'reasonable' has in
law prima facie meaning of reasonable in regard to those circum-
s.tances of whi.ch the actor, called upon to act reasonably, knows D
or ought to kn.ow. See the observations on this point in Municipal
C'!rp.Qrqtio!J. of /)efhi v. Mis. ]agan Nath Ashok Kumar & Anr., [19871
4: ~CC 497. J,u.<\ge.d l;Jy the aforesaid yardstick the award cannot be
C<?Ad.e.w.11.ie<Ji a.s u.1:i.rea.s.011a.b\e.

Tu.ere. i,s, l;\o.we.ver, 9ne infirmity in the award which is apparent E
9P. t\I.e. f(lce. o~ tti.e a.wa.rcl which in ttie interest of justice as the law now
stands decla.red by t\:\(s Court, we should correct, viz., the question of
interest pendente lite. The right to get interest without the intervention
of the Court and th.e powers of the court to grant interest on judgment
have been examined by this Court in Executive Engineer (Irrigation)
Balimela and Ors. v. Abhaduta Jena & Ors., [19881 1SCC418 which F
observations were also followed by this Court in State of Orissa & Ors.
v. Construction India, [1987] Supp. SCC 709. In accordance with t.he
principles stated therein and the facts in this case, it appears that the
principal amount awarded is Rs.57,65,273. This is confirmed. In this
case, 2nd April, 1984 is the date of the reference to arbitration, on
22nd August, 1984 the arbitrator entered upon the reference. 8th July, G
1985 is the date of the award and 19th July, 1985, is the date of the
A. pQblication of the award.

The w.terest "a.wru:ded, ii;t. th.e W.tant case, covers three. ~~~.:
~\) 6~1'1, ..,\\l~l!.St,, 19,8J t.o 21st Aug11,st, 1984 pripr to. \l;i,e l'QJ,W;l.l,e.\\~W.e\\\
\l~ tl;i,4< Wi\J~~~\l.t\oQ, I?Wceed~ngs; (\i) ;!21\d .(\~~~~. 11!&'1. to. \~ll ~·· Ii
328 SUPREME COURT REPORTS [1989) 1 S.C.R.

A 1985 pendente lite; and (iii) 19th July, 1985 to 17th June, 1986 (date of
award to date of decree).

Having regard to the position in law emerging from the decision
of this Court in Executive Engineer (Irrigation) Balime/a & Ors.
(supra) and section 29 of the Arbitration Act, 1940 and section 34 of
B
the Code of Civil Procedure, we would modify the grant of interest in
this case. The arbitrator has directed interest to be paid at 17% per
annum from 6.8.1981 upto the date of decree viz., 17.6.1986. Since in
this case the reference to arbitration was made after the commence-
ment of the Interest Act, 1978, the arbitrator under section 3(1)(a) of
the said Act was entitled to award interest from 6.8.1981 till 21.8.1984
C in view of this Court's decision in Abhaduta Jena's case (supra). In the
light of the same decision, he could not have awarded.interest for the
period from 22.8.1984 till the date of the publication of the award viz.
19. 7.1985. So far as interest for the period from the date of the award
(19.7.1985) till the date of the decree is concerned, the question was
not specifically considered in Abhaduta Jena's case (supra) but special
0
leave had be.:n refused against the order in so far as it allowed interest
for this period. We think interest should be allowed for this period, on
the principle that this Court can, once proceedings under sections 15 to
17 are initiated, grant interest pending the litigation before it, i.e.,
from the date of the award to the date of the decree. It may be doubt-
E ful whether this can be done in cases arising before the Interest Act,
1978 in view of the restricted scope of section 29 of the Arbitration
Act. But there can be no doubt about the court's power to grant this
interest in cases governed by the Interest Act, 1978 as section 3(l)(a)
which was applied by Ahhadwa Jena to arbitrators will equally apply
to enable this Court to do this in these proceedings.
F
In this connection, it is necessary to consider whether the date of
commencement of the arbitration proceedings should be taken as the
date of the reference or the date on which the arbitrator entered upon
the reference as the date of the calculation of interest. In this case, the
proceedings commenced on 2nd April, 1984 and the arbitrator entered
G upon the reference on 22nd August, 1984. Having regard to the facts
and the circumstances of the case, it is necessary, in our opinion, to
take 22nd August, 1984 as the date. It is also necessary to consider
whether the date of award should be taken as the date of its making or
its publication. The award was made on 8th July, 1985 and it was
published on 19th July, 1985, and, therefore, the latter date would be
H taken as the date of the award.
GUJARAT WATER SUPPLY BOARD v. UNIQUE ERECTORS [MUKHARJJ,J.[ 329

We would, however, delete the interest awarded by the arbi- A
trator for the period from 22.8.1984 till the date of the award and
confine the interest on the principal sum of Rs.57,65,273 to interest at
9 per cent from 6.8.1981till21.8.1984 (which has been worked out at
Rs.29,82,443). However, in exercise of our powers under section 3 of
the Interest Act, 1978 and section 29 of the Arbitration Act, 1940, we
B
·,4, direct that the above principal sum or the unpaid part thereof should
carry interest at the same rate from the date of the award ( 19. 7 .1985)
till the date of actual payment.

The appeals are disposed of in the above terms.

N.V.K. Appeals disposed of. C

.'x