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REPORTABLE

IN THE SUPREME COURT OF INDIA

  CIVIL APPELLATE JURISDICTION

CIVIL  APPEAL NO. 2751  OF 2012               [ARISING OUT OF S.L.P. (C) NO. 26581 OF 2009]   

H.P.HOUSING & URBAN DEVT.AUTH.& ANR. ...   APPELLANT(s)

                     Versus

RANJIT SINGH RANA ...   RESPONDENT(s)

J U D G M E N T  

 R.M. LODHA,J.

Leave granted.

2. Pursuant  to  the  agreement  between  the  parties  

being  agreement  No.  11  of  1989-90  concerning  

construction of residential complex at Shimla, certain  

disputes arose.  As per the terms of the contract, the  

Arbitrator was appointed to adjudicate the claims of  

the  respondent  and  counter-claims  of  the  appellants.  

On August 12, 1998, the Arbitrator passed the award.  

Aggrieved  thereby,  the  appellants  filed  objections  

under Section 34(3) of the Arbitrator and Conciliation  

Act, 1996 (for short “the Act”).  The objections were  

accepted  by  the  High  Court  to  the  extent  that  the  

reasons  were   not  given  by  the  Arbitrator  and,

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accordingly,  the  matter  was   sent  back  to  the  

Arbitrator for giving reasons in support of the award.  

3. After  remand,  the  Arbitrator  considered   the  

matter and passed  the  award on  February 14, 2001.  

The appellants filed objections against the award dated  

February  14,  2001.   They  also  deposited  the  entire  

amount due under the award before the High Court on May  

24, 2001.  The objections filed by the appellants were  

ultimately rejected by the single Judge of the  High  

Court on February 26, 2008.  Against this order, intra-

court appeal is said to be pending.  The respondent,  

however, started execution of the Award dated February  

14, 2001 by filing Execution  Petition on August  12,  

2008.  The appellants filed objections to the Execution  

Petition.   

4. The question before the High Court was whether  

the respondent was entitled to  interest @ 18% p.a.  

from the date of the award dated February 14, 2001 till  

the date of actual payment to the respondent.  

5. The High Court considered the diverse provisions  

of the Act including Section 31(7)(a) and (b) of the  

Act and few decisions of this Court and ultimately held  

that the respondent was entitled to post-award interest  

@ 18% p.a. from the date of the award  till the date of

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the  actual  payment.   It  is  this  order  which  is  in  

appeal before us.

6. There is no dispute that the entire amount due  

under the Award dated February 14, 2001 was deposited  

by  the  appellants  before  the  High  Court  on  May  24,  

2001.   The  question  that  arises  for  determination  

before  us  is,  whether   deposit  of  the  entire  award  

amount by the appellants on May 24, 2001 into the High  

Court  amounts  to  payment  to  the  respondent  and  the  

appellants liability to pay interest @ 18% p.a. from  

the date of the award ceased from that date.

7. Section  31(7)(a)  and  (b)  of  the  Act  reads  as  

under:

“31(7) (a) Unless otherwise agreed by the  parties,  where  and  in  so  far  as  an  arbitral  award  is  for  the  payment  of  money, the arbitral tribunal may include  in the sum for which the award is made  interest,  at  such  rate  as  it  deems  reasonable, on the whole or any part of  the money, for the whole or any part of  the period between the date on which the  cause  of  action  arose  and  the  date  on  which the award is made.

(b)  A  sum  directed  to  be  paid  by  an  arbitral  award  shall,  unless  the  award  otherwise directs, carry interest at the  rate of eighteen per centum per annum from  the  date  of  the  award  to  the  date  of  payment.”

8. The above provision has been recently considered

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by this Court in State of Haryana and others vs. S.L.  

Arora and Company (2010)3 SCC 690.   This Court held as  

under:

“........In a nutshell, in regard to pre-award  period,  interest  has  to  be  awarded  as  specified in the contract and in the absence  of contract, as per discretion of the Arbitral  Tribunal.   On the other hand, in retard to  the post-award period, interest is payable as  per  the  discretion  of  the  Arbitral  Tribunal  and  in  the  absence  of  exercise  of  such  discretion, at a mandatory statutory rate of  18% per annum.”

This Court further observed in para 24.6 as under:

“.........but if the award is silent in regard  to the interest from the date of award, or does  not specify the rate of interest from the date  of  award,  then  the  party  in  whose  favour  an  award for money has been made, will be entitled  to interest at 18% per annum from the date of  award.   He  may  claim  the  said  amount  in  execution even though there is no reference  to  any post-award interest in the award.  Even if  the pre-award interest is at much lower rate, if  the award is silent in regard to  post-award  interest, the claimant will be entitled to post- award interest at the higher rate of 18% per  annum.    

9. Learned counsel for the parties are ad idem that  

the Arbitrator has not exercised any discretion in the  

matter pertaining to the interest  for the post-award  

period.  Obviously, in absence thereof, by virtue   of  

Section  31(7)(b)  of  the  Act,  the  award  would  carry  

interest @ 18% p.a. from the date of the  award till

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the date of payment.  Whether May 24, 2001 when the  

entire  award  amount  was  deposited  by  the  appellants  

into the High Court is the date of payment ?

10. Payment is not defined in the Act.  The Concise  

Oxford  English  Dictionary  (Tenth  Edition-revised)  

defines  'payment'  '1.  the  action  of  paying  or  the  

process of being paid.  2. an amount paid or payable'.  

Webster  Comprehensive  Dictionary  (International  

Edition) Volume two defines 'payment' '1. the act of  

paying. 2 Pay; requital; recompense.'  The Law Laxicon,  

2nd Edition reprint by P. Ramanatha Aiyar, inter alia,  

states 'payment is defined to be the act of paying, or  

that which is paid; discharge of a debt, obligation or  

duty;  satisfaction  of  claim;  recompense;  the  

fulfillment  of  a  promise  or  the  performance  of  an  

agreement; the discharge in money of a sum due.'

11. The word 'payment' may have different meaning in  

different  context  but  in  the  context  of  Section  

37(1)(b); it means extinguishment of liability arising  

under  the  award.   It  signifies  satisfaction  of  the  

award.  The deposit of the award amount into the Court  

is nothing but a payment to the credit of the decree-

holder.   In  this  view,  once   the  award  amount  was  

deposited by the appellants before the High Court on

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May 24, 2001, the liability of post-award interest from  

May 24, 2001 ceased.  The High Court, thus, was not  

right in directing the appellants to pay the interest @  

18% p.a. beyond May 24, 2001.

12. The appeal is, accordingly, allowed in part.  The  

impugned order of the High Court is modified  and it is  

directed that the appellants shall be liable to pay  

interest @ 18% p.a. for the post-award period from the  

date of award until May 24, 2001.  After May 24, 2001,  

the appellants are not  liable to pay any interest on  

the award amount under Section 37(1)(b) of the Act.

13. We are informed by Mr. Y. Prabhakara Rao, learned  

counsel for the appellants that the  amount as per the  

impugned order dated March 5, 2009 was deposited  by  

the  appellants  which  has  been  withdrawn  by  the  

respondent.  In light of this, we observe that  the  

High Court shall now  re-determine the amount due and  

payable to the respondent under the award and the post-

award interest as indicated above. The excess amount,  

if withdrawn by the respondent shall be refunded to the  

appellants within two months of re-determination  by  

the High Court.

14. No costs.   

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              .....................J.                                  (R.M. LODHA)

               .....................J.                           (H.L. GOKHALE)

  NEW DELHI    MARCH 12, 2012.

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