the applicant has to ‘prove’ the existence of any ground under section 34(2) of A & C Act 1996

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5139 OF 2009 (Arising out of SLP(C) No.16281 of 2009)
Fiza Developers & Inter-Trade P. Ltd. Vs. AMCI(I) Pvt. Ltd.


Held in Para 14:

Having regard to the object of the Act, that is providing an expeditious alternative binding dispute resolution process with minimal court intervention, it is difficult to envisage proceedings under section 34 of the Act as full-fledged regular civil suits under Code of Civil Procedure. Applications under section 34 of the Act are summary proceedings with provision for objections by the defendant/respondent, followed by an opportunity to the applicant to ‘prove’ the existence of any ground under section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the defendant/respondent to place his evidence by affidavit. Where the case so warrants, the court permits cross-examination of the persons swearing to the affidavit. Thereafter, court hears arguments and/or receives written submissions and decides the matter. This is of course the routine procedure. The Court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceedings under section 34 of the Act.

Territorial Jurisdiction

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION

TRANSFER PETITION (CIVIL) NO.61 OF 2007 Decided on 04/08/2009

Shree Baidyanath Ayurved Bhawan Pvt. Ltd. Versus Praveen Bhatia

Held in Para 13:

The parties hereto are governed by the terms of the contract. If, in terms of the provisions of the contract, they by agreement conferred jurisdiction on one of the courts which would have otherwise jurisdiction to deal with the matter, the same should ordinarily be given effect to.

'Guarantor as liable as debt defaulter'

Supreme Court of India CIVIL APPEAL NO. 4613 of 2000

INDUSTRIAL INVESTMENT BANK OF INDIA LTD. Versus BISWANATH JHUNJHUNWALA

Date of Judgment: 18 August, 2009 Judge(s): Dalveer Bhandari,H.L. Dattu


apex court has ruled that the principal debtor and the guarantor or surety are both equally liable to be proceeded against for recovery of a loan by the creditor. This means, if your friend was evasive in paying back the loan, then the bank would be fully within legal limits to initiate proceedings against you for recovering the outstanding loan amount.

whether the MM, while entertaining a complaint under Section 138 NI Act, at the pre-summoning stage, can insist upon the complainant producing some

whether the learned MM, while entertaining a complaint under Section 138 NI Act, at the pre-summoning stage, can insist upon the complainant producing some proof of despatch of the notice in terms of NI Act sent to the drawer of the dishonoured cheque

Crl.Rev.P. No. 296/2009

IN THE HIGH COURT OF DELHI AT NEW DELHI

Crl REV P No. 296/2009

HDFC BANK LIMITED Versus AMIT KUMAR SINGH

To recapitulate, a complainant in a case under Section 138 NI Act has
at the pre-summoning stage to satisfy the learned MM that the legal notice in terms of the Section 138 (b) NI Act was in fact “served” on the drawer of the dishonored cheque. If some proof of delivery, or an internet generated or postal delivery report or a signed acknowledgement due card of the drawer, or the unserved cover with the postal endorsement is produced before the learned MM, it will be in the discretion of the learned MM to form an opinion if a presumption of service should be drawn. If the complainant chooses to file an affidavit, the deponent should state that he either went personally and found that the accused was residing at the address or is able to produce some postal certificate or an endorsement by a courier service agency that the accused is in fact residing at the address and yet refusing to accept the notice. If the affidavit merely states that the accused is residing at the address without giving any further documentary proof in support thereof such an affidavit cannot be accepted as satisfying the requirement of Section 138 (b) read with Section 138 (c) of the NI Act 31. For the aforementioned reasons, it is held that no error was committed by the learned MM in rejecting the complaint in the instant case.

Whether a petitioner who has obtained ex parte orders and enjoyed the benefit thereof can be permitted to withdraw his petition without directions for

IN THE HIGH COURT OF DELHI AT NEW DELHI FAO (OS) No. 168/2009 & CM 1497/2009 in FAO(OS) 448/2008 DTC VERSUS M/s INTERNATIONAL AVENUES

Whether a petitioner who has obtained ex parte orders and enjoyed the benefit thereof can be permitted to withdraw his petition without directions for performance of his contractual obligations and restitution of the benefit which the petitioner has received pursuant to interim orders in his petition;

Whether compensation can be granted by this court or in other words can the court order restitution of the benefit received under interim orders in a petition which has been voluntarily withdrawn by the petitioner;

The principle of law is well established that where proceedings filed by any person have come to an end whether by withdrawal or by the same being dismissed then such person is bound to restitute the benefit which he has received under interim orders which he was successful in seeking during the pendency of the proceedings. This principle is unexceptionable because otherwise a person would simply take benefit of interim orders and thereafter not pursue either the interim proceedings or the final proceedings till its conclusion because the same may go against him and consequently he may prefer to quietly withdraw the proceedings and pocket the benefit derived out of interim orders which he had obtained in his favour. In fact, even if, proceedings are not withdrawn but are ultimately unsuccessful i.e., the same are dismissed, even then the principle of restitution will govern the parties.

Deciding a notice is actually constituted a notice u/s 138 - after the evidence of the parties are recorded

In these circumstances, it will not be appropriate at this stage prima facie to say that the said fax constituted a notice to furnish a cause of action in favour of the petitioners to file a complaint under Section 138 of the Negotiable Instruments Act or that in the present case the notice which is the basis of the filing of the complaint is a second notice. All these questions can be gone into by the learned Metropolitan Magistrate after the evidence of the parties are recorded where the petitioners will have a right to cross-examination and to seek proper explanation.

Crl.M.C.5538-39/2005 & CM No. 10951/2005 % Date of reserve : 16.02.2009 Date of decision: 04.03.2009 M/s Delhi Automobiles Ltd. & Anr.Versus Mohan Exports India Ltd. HON’BLE MR. JUSTICE MOOL CHAND GARG

power of the Magistrate before filing the report

The role of the Magistrate starts only after filing of a report under Section 173 Cr.P.C. Till then the Magistrate is neither empowered nor justified in giving directions to the investigating agency to conduct investigation in any particular manner...They are bound by the procedure prescribed under the law and cannot transgress the limits of the law. Cr.P.C. does not give inherent powers to courts below High Court. The court of MM cannot devise a procedure other than the one provided under the Code:Delhi High Court-Crl.M.C. No. 2246/2002-Dated 06/08/2009

Contractor should not suffer due to wage rise

1


REPORTABLE


IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4427 OF 2009
[Arising out of SLP (C) No.3501/2007]

Union of India ... Appellant

Versus

Saraswat Trading Agency & Ors. ... Respondents




JUDGMENT

AFTAB ALAM,J.

Leave granted.
 2


This appeal, at the instance of Union of India, arises from an

arbitration award dated September 9, 2000 made in favour of the respondent.

The appellant challenged the award before the Calcutta High Court by filing

an application under section 34 of the Arbitration and Conciliation Act,

1996. A learned Single Judge of the High Court upheld the challenge

substantially and by judgment and order dated November 20, 2001 passed in

G.A.No.87/01, arising out of AP No.325/98, sustained the award only on

one issue and set it aside on two of the three issues under reference. Against

the judgment of the Single Judge the respondent preferred an internal court

appeal and the Division Bench of the High Court by its judgment and order

dated July 4, 2006 passed in G.A.No.87/01: APOT No.792/01 with APO

No.362/01 allowed the appeal, set aside the judgment of the Single Judge

and fully restored the arbitrator's award in favour of the respondent on all

the three issues in dispute. Against the judgment of the Division Bench of

the High Court the appellant has come in appeal to this Court.

The facts of the case are brief and simple and may be stated thus. For

the work of "handling of goods, parcels and booked luggage" at a group of

six stations falling in its Nagpur Division, the South Eastern Railway,

Calcutta, invited tenders that were opened on May 16, 1990. The tender

submitted by the respondent was the lowest. Hence, after some negotiations
 3


and extension of the validity of offer the respondent's tender was accepted

on August 2, 1991 and it was given the work for a period of three years

commencing from August 3, 1991. The grant of the contract was formalized

in an agreement executed by the parties on December 3, 1991. The

agreement was deemed to have come into force with effect from August 3,

1991 and it was to remain in force for a period of three years, till August 2,

1994 unless determined by either of the parties in terms of clause 1(1)

(authorizing the appellant to determine the contract by giving three months

notice) and its proviso (giving the same right to the contractor, after expiry

of the period of one year of the contract). Clause 2 of the agreement dealt

with the nature of the work the contractor was required to do. Clause 4 of the

agreement along with a detailed schedule mentioned fixed rates for every

piece of work covered by the contract. Clause 7 stated that the contractor

would not be entitled to any increase in the accepted rates of remuneration or

compensation due to fluctuations in the traffic (increase or decrease) due to

any reason. Under clause 13 the contractor indemnified the Railway

Administration against all claims that might be made under the Workmen's

Compensation Act, 1923 in consequence of any accident or injury sustained

by any labourer/servant or person in his employment and engaged in the

performance of the contract. Clause 14 bound the contractor to pay to the
 4


labourers engaged by him not less than the fair wage. It further provided that

`fair wage' would be the wage including the allowances, notified at the time

of inviting tenders for the work. Clause 15 made the contractor responsible

for compliance with the provisions of the Payment of Wages Act, 1936, and

the rules made thereunder in respect of the staff employed by him. Clause 16

similarly made the contractor responsible for compliance with the provisions

of the Contract Labour (Regulation and Abolition) Act, 1970 and the rules

made thereunder and required him to obtain the statutory license from the

licensing authority. Clause 18 made the contractor responsible for

compliance with the provision of the Hours of Employment Regulations in

respect of the staff employed by him in the manner decided upon by the

appropriate authorities. Clause 19 stipulated that no labourer would be

unfairly treated or removed from work except for valid reasons and further

provided that the porters engaged in the handling of goods, parcels and

booked luggage under the terms of the agreement would be deemed as

employees of the contractor within the meaning of the Industrial Disputes

Act, 1947 or any other enactment that might be applicable. This clause

further stated that the contractor would comply with all the laws, regulations

and rules for the benefit of labour that were in force or might come into

force and he would indemnify and keep the Railway Administration
 5


indemnified against all loss, damage, claims and costs arising in any manner

whatsoever. Clause 20 reserved the right of the Railway Administration to

deduct from the moneys due to the contractor or from his security deposit

any sum required or estimated to be required for making good the loss

suffered by the labour or labourers or any other person in his employment

for the reasons of non-fulfillment of the conditions for the benefit of the

labourers, non-payment of wages or deductions made from him or their

wages which were unjustified or illegal. Clause 31 stipulated that no interest

or damage would be paid to the contractor for delay in payment of the bill

`for any reason whatsoever'. Clause 32 with its various sub-clauses

contained the provision for arbitration and provided that the General

Manager of the South Eastern Railway or a person appointed by him would

be the sole arbitrator in respect of any dispute as to the respective rights,

duties and obligations of the parties to the agreement or as to the

construction or interpretation of any of the terms and conditions of this

agreement or as to its applications.

We next come to what is at the root of the dispute between the parties.

It needs to be noted that at the time of submission of tender by the

respondent the base fair rate of wages for the casual labour was Rs.31=15

paise as per the Circular dated January 17, 1990. During the period of the
 6


contract the Railway authorities are said to have issued circulars/guidelines

revising the rates of casual labourers from retrospective dates. The manner

in which rates were revised by the circulars/guidelines issued by the Railway

authorities is noted in the arbitrator's award as follows:


PARTICULARS

Circular No. Circular Effect Average
dated from rate of
unskilled
labour

P/EN/C- 17.1.90 1.7.89 Rs.31.15
RAT/1/90

P/EN/NGP/ P/EN/NGP/ 16.4.92 1.7.91 Rs.42.40
Casual Labour
90-91


P/EN/NGP 10.2.93 1.1.92 Rs.47.45

Casual
Labour/MS/92 10.2.93 1.7.92 Rs.50.50

P/EN/NGP 15.2.94 1.1.93 Rs.51.10

Casual Labour
93 15.2.94 1.7.93 Rs.53.50

P/EN/NGP/MS 16.3.95 1.1.94 Rs.57.45

/94
1.7.94 Rs.62.0
 7


On August 25, 1992, the respondent wrote a letter to the Railway

authorities demanding enhancement of rates under the contract on the

ground that the rates stated in the agreement were based on the circular dated

January 17, 1990 that had undergone a number of revisions and as a result

the contract rates had become unrealistic and unviable. The Railway

authorities rejected the respondent's demand for enhancement and/or

revision of rates taking the stand that the contract was a "fixed price

contract" and it had no clause for enhancement of rates. Faced with the

authorities' refusal to revise the contract rates the respondent terminated the

contract by giving three months notice as provided under the proviso to

clause 1(1) of the agreement. The Railway authorities accepted the

termination of the contract with effect from December 31, 1992 but in order

to avoid any dislocation requested the respondent to carry on the work on the

same terms and conditions, promising that its claim would receive due

consideration. On the appellant's request the respondent continued with the

work under the contract, though under protest, till august 1994.


At the time of the final settlement of the respondent's claims the

Railway authorities offered to it a sum of Rs.6,848=00 as additional

payment for the period January 1993 to August 1994. The respondent
 8


naturally declined to accept the paltry amount offered by the authorities and

requested for a proper consideration of its claim as earlier promised.

Finally, the Railway authorities appointed a high level committee to

consider the respondent's claim for enhanced payment for the period

January 1, 1993 to August 31, 1994. The committee fixed the respondent's

claim at Rs.3, 61,058=00 but it was not acceptable to the respondent.


A departmental arbitrator was then appointed in order to resolve the

disputes and differences arising between the parties. The departmental

arbitrator gave his award on June 4, 1998. Not being satisfied with the award

the respondent challenged it by filing an application under section 34 of the

Act before the High Court. The High Court by its order dated February 12,

1999 upheld the award on items 1 & 2 but set it aside in respect of items 3, 4

& 5 and appointed a certain advocate, a member of the bar to decide afresh

in regard to the respondent's claim under those three items. On an

application made under section 11, the Acting Chief Justice of the High

Court, by order dated July 1, 1999, substituted another advocate as arbitrator

in place of the one appointed by the Court on the application under section

34 of the Act.
 9


The three issues/claims that came up before the arbitrator appointed

by the High Court were as follows:


"Claim No.3: Claim for increase in rates from

3.8.91 to 31.12.92 during the

Contractual period being sum

of Rs.10,74,408/-



Claim No.4: Claim for increase in rates from

1.1.93 to 31.8.94 during the

extended period being sum of

Rs.14, 454,581/-




Claim No.5: Payment of 18% interest on

Claim of contractor claim

No.3 and 4 on the (sic and)

from 1.11.94 till the (sic)date."




The arbitrator appointed vide order dated July 1, 1999 passed by the

Court took up the proceedings on August 3, 1999 and made and published

his award on September 9, 2000. The award held the respondent entitled to
 1
0

receive from the appellant the sum of Rs. 32, 71,774=00 along with interest

on that amount @ 18% per annum from the date of the award till the date of

payment.

The appellant challenged the award by filing an application under section

34 of the Act before the High Court on January 2, 2001. As noted above, a

learned Single Judge of the High Court substantially upheld the appellant's

challenge and set aside the award on items 1 and 3, upholding it only insofar

as the respondent's claim under item 4 was concerned. Against the judgment

and order passed by the learned Singe Judge the respondent preferred an

appeal before the Division Bench of the High Court. Here it is significant to

note that the appellant did not prefer any appeal against the judgment of the

Single Judge insofar as it upheld the arbitrator's award on item no.4. Thus

before the Division Bench of the High Court there was no challenge to the

arbitrator's award in regard to the respondent's claim for enhanced payment

from January 1, 1993 to August 31, 1994, that is to say, for the period after

the parties had agreed on the cancellation of the agreement.

The Division Bench of the High Court after an elaborate consideration

of the matter and after referring to a host of decisions of this Court and the

Calcutta High Court allowed the appeal, set aside the judgment and order
 1
1

passed by the learned Single Judge and restored the arbitrator's award fully

on all the three items.

Mr. S. Wasim Qadri, learned counsel appearing on behalf of the

appellant, submitted that in the absence of any escalation clause in the

agreement the respondent's claim for enhanced payments for the period

August 3, 1991 to December 31, 1992 during which the agreement was in

force was quite unfounded and both the arbitrator and the Division Bench of

the High Court were in error in granting the claim for that period. The

submission made by Mr. Qadri is fully answered by the decision of this

Court in Tarapore & Co. vs. State of M.P., (1994) 3 SCC 521, (noticed both

by the arbitrator and the Division Bench of the High Court). In paragraph 27

of the judgment this Court observed as follows:

"27. But then, the terms at hand did require the
appellant (who is the contractor) not to pay less
than fair wages as would appear from what has
been stated in Para 2.10 and Para 1 of Annexure-B.
The Explanation to latter Para states that where fair
wages have not been notified these wages would
be the one "prescribed by the PWD (Irrigation
Department) for the division in which the work is
done". Now these wages were being increased
from time to time as would appear from the
decisions of the wage committee referred to above;
and if the appellant was being required to pay
wages as per these decisions, we do read a meeting
of mind insofar as the claim of escalated payment
on account of increase of fair wages is concerned.
 1
2

It has to be assumed that when the appellant was
required to pay fair wages at increased rates, the
authorities did visualize that the appellant would
not do so by cutting down its profit. By asking the
appellant to give tender by taking into account the
fair wages notified at the time of inviting tenders,
the authorities did give an impression that fair
wages to be paid would be the one then
notified/prescribed, a 1a the explanation to para 1.
In such a situation, if rates of fair wages were
raised afterwards, the tendered sum cannot be
taken to be agreed amount for completing the
contract, in the face of the directions of the
authorities requiring the appellant to pay wages at
rates higher than those prescribed or notified at the
time of inviting tenders. On this fact situation, we
hold that the State had by necessary implication
agreed to reimburse this increased payment."

In a more recent decision in Food Corporation of India vs. M/s. A. M.

Ahmed & Co. & Anr., AIR 2007 SC 829, the Court reiterated the same view

and in paragraph 32 of the judgment observed as follows:

"Escalation, in our view, is normal and routine
incident arising out of gap of time in this
inflationary age in performing any contract of any
type. In this case, the arbitrator has found that
there was escalation by way of statutory wage
revision and, therefore, he came to the conclusion
that it was reasonable to allow escalation under the
claim. Once it was found that the arbitrator had
jurisdiction to find that there was delay in
execution of the contract due to the conduct of the
FCI, the Corporation was liable for the
consequences of the delay, namely, increase in
statutory wages. Therefore, the arbitrator, in our
opinion, had jurisdiction to go into this question.
 1
3

He has gone into that question and has awarded as
he did. The Arbitrator by awarding wage revision
has not mis-conducted himself. The award was,
therefore, made rule of the High Court, rightly so
in our opinion."


Mr. Qadri next questioned the grant of interest on the amounts arrived at by

allowing the respondent's claim for higher rates for the work done by it.

Learned counsel submitted that clause 31 of the agreement expressly barred

the claim of any interest by the contractor and hence, the award was clearly

unsustainable insofar as the grant of interest was concerned.

The arbitrator gave to the respondent pre-reference, pendente lite and

post-award interest on both its claims under items 3 & 4 as would be evident

from the following passages from the award:

"However, I am allowing interest to the claimant at
the rate of 16% per annum on and from 1st
November, 1994 till 9th September, 2000 the date
of award amounting to Rs.15, 85,359.85 on the
following basis.

Interest calculated from 1.11.94 to 9.9.2000 as per
demand notice dated 19th September, 1994 till the
date of award on Rs.16, 85,234.14 being the total
amount of claim item Nos.3 and 4."

**** **** ****

Therefore, I, hereby award to the claimant (1) a
sum of Rs.6,05,777.34 for the claim item No.3 (ii)
a sum of Rs.10,79,456.80 for the claim Item No.4
 1
4

and (iii) a sum of Rs.15,86,539.85 towards interest
on Item No.3 and 4 for the claim Item No.5. The
aggregate sum of Rs.32, 71,773.99 (Rupees Thirty
two lacs seventy one thousand seven hundred
seventy three and ninety nine paise only) rounded
to Rs.32, 71,774/-. I further award an interest @
18% per annum on the aforesaid sum till the date
of payment."

It is thus to be seen that the arbitrator allowed interest on the amounts

determined under Items Nos.3 and 4 both for the pre-reference period and

pendente lite at the rate of 16% per annum. He further allowed interest on

the consolidated amount for the post-award period at the rate of 18% per

annum till the date of payment.

The question of interest for the pre-reference period stands settled by

the Constitution Bench decision in Executive Engineer, Dhenkanal Minor

Irrigation Division, Orissa & Ors. Vs. N. C. Budharaj, 2001 (2) SCC 721.

The majority judgment (3:2) in that case held in paragraph 26 as follows:

"For all the reasons stated above, we answer the
reference by holding that the arbitrator appointed
with or without the intervention of the court, has
jurisdiction to award interest, on the sums found
due and payable, for the pre-reference period, in
the absence of any specific stipulation or
prohibition in the contract to claim or grant any
such interest. The decision in Jena case taking a
contra view does not lay down the correct position
and stands overruled, prospectively, which means
that this decision shall not entitle any party nor
shall it employer any court to reopen proceedings
 1
5

which have already become final, and apply only
to any pending proceedings. No costs."
(emphasis added)

The legal position in regard to interest for the different periods has been

summed up, with reference to the earlier decisions, in the decision in

Bhagawati Oxygen Ltd. Vs. Hindustan Copper Ltd., 2005 (6) SCC 462. In

paragraphs 38, 39 and 40 of the judgment it was observed as follows:



"38. So far as interest for pre-reference period is
concerned, in view of the conflicting decisions of
this Court, the matter was referred to a larger
Bench in Executive Engineer, Dhenkanal Minor
Irrigation Division vs. N.C. Budharaj, 2001 (2)
SCC 721. The Court, by majority, held that an
arbitrator has power to grant interest for pre-
reference period provided there is no prohibition in
the arbitration agreement excluding his jurisdiction
to grant interest. The forum of arbitration is
created by the consent of parties and is a substitute
for conventional civil court. It is, therefore, of
unavoidable necessity that the parties be deemed to
have agreed by implication that the arbitrator
would have power to award interest in the same
way and same manner as a court."

"39. Regarding interest pendent lite also, there was
cleavage of opinion. The question was, therefore,
referred to a larger Bench in Secy., Irrigation
Deptt., Govt. of Orissa vs. G. C. Roy, 1992 (1)
SCC 508. The Court considered several cases and
laid down the following principles: (pp.532-33,
para 43)
 1
6

43. The question still remains whether
arbitrator has the power to award the interest
pendente lite, and if so on what principle.
We must reiterate that we are dealing with
the situation where the agreement does not
provide for grant of such interest nor does it
prohibit such grant. In other words, we are
dealing with a case where the agreement is
silent as to award of interest. On a
conspectus of aforementioned decisions, the
following principles emerge:

(i) a person deprived of the use of money
to which he is legitimately entitled
has a right to be compensated for the
deprivation, call it by any name. It
may be called interest, compensation
or damages. This basic consideration
is as valid for the period the dispute is
pending before the arbitrator as it is
for the period prior to the arbitrator
entering upon the reference. This is
the principle of Section 34, Civil
Procedure Code and there is no reason
or principle to hold otherwise in the
case of arbitrator.
(ii) An arbitrator is an alternative forum
for resolution of disputes arising
between the parties. If so, he must
have the power to decide all the
disputes or differences arising
between the parties. If the arbitrator
has no power to award interest
pendente lite, the party claiming it
would have to approach the court for
that purpose, even though he may
have obtained satisfaction in respect
of other claims from the arbitrator.
 1
7

This would lead to multiplicity of
proceedings.
(iii) An arbitrator is the creature of an
agreement. It is open to the parties to
confer upon him such powers and
prescribe such procedure for him to
follow, as they think fit, so long as
they are not opposed to law. (The
proviso to Section 41 and Section 3 of
the Arbitration Act illustrate this
point). All the same, the agreement
must be in conformity with law. The
arbitrator must also act and make his
award in accordance with the general
law of the land and the agreement.
(iv) Over the years, the English and Indian
courts have acted on the assumption
that where the agreement does not
prohibit and a party to the reference
makes a claim for interest, the
arbitrator must have the power to
award interest pendente lite.
Thawardas has not been followed in
the later decisions of this Court. It has
been explained and distinguished on
the basis that in that case there was no
claim for interest but only a claim for
unliquidated damages. It has been
said repeatedly that observations in
the said judgment were not intended
to lay down any such absolute or
universal rule as they appear to on
first impression. Until Jena case
almost all the courts in the country
had upheld the power of the arbitrator
to award interest pendente lite.
Continuity and certainty is a highly
desirable feature of law.
 1
8

(v) Interest pendente lite is not a matter of
substantive law, like interest for the
period anterior to reference (pre-
reference period). For doing complete
justice between the parties, such
power has always been inferred."

"40. As to post-award interest, the point is covered
by the decision of this Court in Hindustan
Construction Co. Ltd. vs. State of J & K , 1992 (4)
SCC 217. It was held there that an arbitrator is
competent to award interest for the period from the
date of the award to the date of decree or date of
realization, whichever is earlier."

In the case in hand, the respondent's claim was in regard to two periods; one

from August 3, 1991 to December 31, 1992 when the agreement was

subsisting and the parties were bound by its terms, and the other from

January 1, 1993 to August 31, 1994 when the agreement was admittedly

terminated and the respondent was carrying on the work on the request of

the appellant. In our view the fact that the first period was covered by the

agreement while the second fell beyond it is significant and on that score the

two periods must receive different treatments.

Clause 31 of the agreement provided as follows:

"31. No interest or damage for delay in payment
- No interest or damage shall be paid to the
Contractor for delay in payment of the bill or any
other amount due to the contractor for any reason
whatsoever. The Railway Administration will,
however, make every endeavour for payment of
 1
9

the bills or other amount due to the contractor
within a reasonable time."
(emphasis added)

The Division Bench of the High Court took the view that Clause 31 of the

agreement operated as a bar only between the parties but it would not affect

the authority of the arbitrator to grant interest for the pre reference period

and pendente lite. In this connection the High Court has referred to the

decisions of this Court in Executive Engineer, Dhenkanal Minor Irrigation

Division, Orissa (supra), Executive Engineer (Irrigation) vs. Abhaduta Jena,

(1988) 1 SCC 418 (which was overruled by Executive Engineer, Dhenkanal)

and Secretary, Irrigation Department, Govt. of Orissa vs. G.C. Roy, (1992) 1

SCC 508, (which was referred to in Executive Engineer, Dhenkanal). But in

Executive Engineer, Dhenkanal it is not even remotely said that a clause in

the agreement like clause 31 (quoted above) would only act as a bar between

the parties to the agreement and would not restrict the powers of the

arbitrator to allow interest for pre-reference period and pendente lite. The

High Court has then relied upon another decision of this court in The Board

of Trustees for the Port of Calcutta vs. Engineers-De-Space-Age, AIR 1996

SC 2853. The High Court has observed that in this case a similar clause in

the agreement was held not restrictive of the arbitrator's powers to allow

interest pendente lite and for pre reference period. We have closely
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examined the decision in Engineers-De-Space-Age and we find that the

relevant clause in the agreement in that case was completely differently

worded and the view taken by the High Court cannot be supported on the

basis of that decision. In Engineers-De-Space-Age the court was dealing

with a case in regard to award of interest for the post-reference period and

clause 13(g), the relevant clause in the agreement, was as follows:

"No claim for interest will be entertained by the
Commissioners with respect to any money or
balance which may be in their hands owing to any
dispute between themselves and the Contractor or
with respect to any delay on the part of the
Commissioners in making interim or final payment
or otherwise."

In that context this court held that clause 13(g) of the agreement merely

prohibited the Commissioners from entertaining any claim for interest and

did not affect the arbitrator's powers to award interest.

In the case in hand clause 31 of the agreement is materially different.

It bars payment of any interest or damage to the contractor for any reason

whatsoever. We are, therefore, clearly of the view that no pre-reference or

pendente lite interest was payable to the respondent on the amount under

Item No.3 and the arbitrator's award allowing pre-reference and pendente

lite interest on that amount was plainly in breach of the express term of the

agreement. The order of the High Court insofar as pre-reference and
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1

pendente lite interest on the amount under Item No.3 is concerned is,

therefore, unsustainable.

The position with regard to the claim under Item No.4 is quite

different. That relates to the period after the termination of the agreement

and hence, the bar of clause 31 would not apply to it in the same way as it

would apply to Item No.3. We, therefore, find no infirmity in grant of pre-

reference and pendente lite interest on the amount under Item No.4.

In light of the discussions made above, the respondent shall be entitled

to interest only on the sum of Rs.10, 79,456=80, the amount determined

under Item No.4, at the rate of 16% per annum for the period November 1,

1994 to September 9, 2000. The final amount under the award shall be

accordingly worked out. The consolidated amount of the award after being

re-calculated shall carry, as provided in the award, interest at the rate of 18%

from the date of the award till the date of payment. In working out the

amount of interest for the post-award period, the period(s) for which the

operation of the award was stayed by the court would be excluded.

In the result the appeal is allowed to the limited extent indicated

above. There shall be no order as to costs.



....................................J.
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2

[Tarun Chatterjee]



...................................J.
[Aftab Alam]

New Delhi,
July 16, 2009.

Meaing of "suit"

ITEM NO.125 COURT NO.10 SECTION XVII
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CIVIL APPEAL NO(s). 4290 OF 2003
E.I.C.M. EXPORTS LTD. Appellant (s)
VERSUS
SOUTH INDIAN CORPN. (AGENCIES) LTD.&ANR. Respondent(s)
(With office report )
Date: 21/07/2009 This Appeal was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE MARKANDEY KATJU
HON'BLE MR. JUSTICE V.S. SIRPURKAR
For Appellant(s) Mr.Kailash Vasdev, Sr. Adv.
Mr. Vipin Gogia, Adv.for
Ms. Jaspreet Gogia,Adv.
For Respondent(s) Mr. E.C. Agrawala,Adv.
UPON hearing counsel the Court made the following
O R D E R
The Appeal is accepted in terms of the Reportable signed order which is
placed on the file and the matter is remanded to the National Consumer Disputes
Redressal Commission, New Delhi to decide the complaint afresh in accordance
with law by applying Section 24-A of the Consumer Protection Act, 1986. No order
as to costs.
(Parveen Kr. Chawla)
Court Master
( Indu Satija)
Court Master
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4290 OF 2003
E.I.C.M. Exports Limited ..Appellant
versus
South Indian Corpn. (Agencies) Ltd. & Anr. ..Respondents
O R D E R
1. This Appeal has been filed against the impugned order of the National
Consumer Disputes Redressal Commission, New Delhi (for short 'National
Commission') dated 06th February, 2003 passed in Original Petition No. 285 of 1997.
2. The facts of the case are:
The Appellant is an export house. It had booked certain goods through respondent
No.1 for carriage through respondent No.2 to New York, U.S.A. According to the
appellant, the goods were expected to reach in the second week or early third week
of February, 1995. It is alleged that the goods were never delivered to the consignee
in New York, although the goods had allegedly reached New York. According to
the appellant, the goods were kept in the Custom's Bonded Ware House in New
York which demanded US Dollars 5000 as demurrage.
-2-
3. Since the shipment was delayed and consequently the foreign buyer
refused to accept the consignment, the appellant filed a complaint before the
National Commission seeking a direction to the respondents to pay a sum of
Rs.39,81,351/- along with interest thereon @ 24% per annum from the date of filing
of the petition till realization due to the negligence on the part of the respondents.
4. The National Commission, by its impugned order, has dismissed the
complaint filed by the appellant as barred by limitation, applying Article III Clause
6 of the Indian Carriage of Goods by Sea Act, 1925 in which limitation of one year
has been provided for filing a complaint.
5. Heard learned counsel for the parties.
6. Learned counsel for the appellant has contended that the National
Commission has erred in dismissing the complaint as barred by limitation, applying
the Indian Carriage of Goods by Sea Act, 1925 in which limitation of one year has
been provided. He further contended that this Act does not apply at all to the facts
of the present case and instead Section 24-A of the Consumer Protection Act, 1986
will apply.
7. Article III, clause 6 of the Schedule of the Indian Carriage of Goods by
Sea Act, 1925 provides:
“....In any event the carrier and the ship shall be discharged
from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date
when the goods should have
-3-
been delivered. This period may, however, be extended if the
parties so agree after the cause of action has arisen.
Provided that a suit may be brought after the expiry of the
period of one year referred to in this sub-paragraph within a
further period of not more than three months as allowed by
the court.”
8. On a plain reading of the aforesaid provision, it is clear that the
aforesaid provision will be applicable in the cases where a suit is filed. In the
present case, the appellant did not file any suit but filed a complaint before the
Consumer Forum.
9. The word “suit” has a technical meaning which denotes proceedings
instituted under Section 9 of the Civil Procedure Code, 1908. All legal proceedings
in the country are not suits. There are petitions/complaints/applications before
various Tribunals or authorities but they are not suits as per Section 9 of the CPC.
In our opinion, a complaint before Consumer Forum is not a suit, and hence,
the Indian Carriage of Goods by Sea Act, 1925 is not applicable to the facts of the
present case and the Consumer Protection Act, 1986 will only be applicable.10. Learned counsel for the respondent contended that assuming that the
Consumer Protection Act will be applicable to the facts of the case, even then the
complaint is barred by limitation.
-4-
11. Section 24-A of the Consumer Protection Act reads as under:
“Section 24-A – Limitation period – (1) The District Forum,
the State Commission or the National Commission shall not
admit a complaint unless it is filed within two years from the
date on which the cause of action has arisen.
(2) Notwithstanding anything contained in sub-section
(1), a complaint may be entertained after the period specified
in sub-section (1), if the complainant satisfies the District
Forum, the State Commission or the National Commission, as
the case may be, that he had sufficient cause for not filing the
complaint within such period:
Provided that no such complaint shall be entertained unless
the National Commission, the State Commission or the District
forum, as the case may be, records its reasons for condoning
such delay.”
12. Sub-section (2) of Section 24-A, quoted above, clearly mentions that a
complaint can be entertained by the District forum, the State Commission or the
National Commission, as the case may be, even after the prescribed period of two
years if the complainant satisfies that he had sufficient cause for not filing the
complaint within such period.
13. Accordingly, we accept this appeal, set aside the impugned order of the
National Commission and remand the matter to the National Commission to decide
the complaint afresh in accordance with law by applying Section 24-A of
-5-
the Consumer Protection Act, 1986 and not the Indian Carriage of Goods by Sea
Act, 1925. If the National Commission comes to the conclusion that the complaint
had been filed beyond the prescribed period of two years, the National Commission,
after hearing both the parties, may condone the delay if it is satisfied that the delay
was because of sufficient cause and if it does so it shall decide the case on merits.
14. We make it clear that this shall not be taken as an expression of opinion
as if we are inclined to condone the delay. The National Commission shall be at
liberty to decide this issue on its own merits in accordance with law
without being influenced by any of the observations made in this order.
15. No order as to costs.
.................J.
[MARKANDEY KATJU]
NEW DELHI; .................J.
JULY 21, 2009. [V. S. SIRPURKAR]