: 1 : IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION APPEAL APPEAL APPEAL NO.615 OF 2007 NO.615 OF 2007 NO.615 OF 2007 IN IN IN ARBITRATION ARBITRATION ARBITRATION PETITION NO.10 OF 2007 PETITION NO.10 OF 2007 PETITION NO.10 OF 2007 The Cosmos Co-operative Bank Ltd. (Multi-State Co-op. Bank) Having its Branch Office at Thane ...Appellants V/s. 1. Mr.Syed Sohail Jaleel Age : 30 Occup.: Business 2. Mr.Syed Abdul Jaleel, Age : 59 Occup.: Business Both Resi. at: 5/D, Regency Park, Edenwood Hsg. Socy., Pokhran Road No.2, Thane (W), 400 601. 3. Mr.Qudri Adil Iqbal Ali, Age : 58, Milan Apt. B/21, K. Villa, 1st Floor, Rabodi, Thane (W), 400 601. ...Respondents Mr.Yashodhan Sakhare, Advocate, for the Appellants. Mr.P.G. Hartalkar, Advocate, for the Respondents. CORAM CORAM CORAM : SRI R.M.S. KHANDEPARKAR & : SRI R.M.S. KHANDEPARKAR & : SRI R.M.S. KHANDEPARKAR & SRI SRI SRI A.V. NIRGUDE, JJ. A.V. NIRGUDE, JJ. A.V. NIRGUDE, JJ. DATE DATE DATE : 21ST APRIL, 2008. : 21ST APRIL, 2008. : 21ST APRIL, 2008. ORAL ORAL ORAL JUDGMENT : JUDGMENT : JUDGMENT : [Per R.M.S. Khandeparkar, J.] [Per R.M.S. Khandeparkar, J.] [Per R.M.S. Khandeparkar, J.] 1. Heard. : 2 : 2. Admit. By consent heard forthwith. The learned Advocate for the respondents waives service. 3. This Appeal arises from the order dated 13th April, 2007 passed in Arbitration Petition No.10 of 2007. Only ground of challenge to the impugned order is that the learned Single Judge by the impugned order has reduced the rate of future interest from 15% to 9%. The contention on behalf of the appellants is that the learned Single Judge erred in applying the ratio of the decision of the Apex Court in the matter of Krishna Krishna Krishna Bhagya Bhagya Bhagya Jala Nigam Ltd. Jala Nigam Ltd. Jala Nigam Ltd. V/s. V.G. Harischandra Raddy V.G. Harischandra Raddy V.G. Harischandra Raddy & Anr. Anr. Anr., reported in 2007 AIR SCW 527 to the case in hand ignoring the fact that the decision of the Apex Court was not in relation to the claim by a Bank, and it was in peculiar facts of that case. 4. The impugned order discloses that the learned Single Judge while refusing to interfere in the Award as the same is based on the materials on record and does not disclose any infirmity or illegality has merely by referring to the decision of the Apex Court in Krishna Bhagya Jala Nigam’s case (supra) Krishna Bhagya Jala Nigam’s case (supra) Krishna Bhagya Jala Nigam’s case (supra) passed the order as regards reduction in the rate of future interest from 15% to 9% p.a., thereby totally ignored the terms of the agreement between the parties. The : 3 : entire discussion in relation to such reduction is comprised under paragraph Nos.10 and 11 of the impugned Judgment, which reads thus:- "10. The claim of future interest at the rate of 15% p.a. be replaced by 9% from the institution of claim i.e. 14.12.2005 till payment of the whole of the amount in view of the following extracts of the judgment of the Supreme Court in Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Raddy & Anr., 2007 AIR SCW 527. "1). .... 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 : 4 : pre-arbitration period, for the pendents lite period and future interest be reduced to 9%." 11. Considering the facts and circumstances of the case and as there is no substance in the merit of the matter except the future rate of interest, I am of the view that at this stage itself the award can be modified to save the further time as the purpose of the Arbitration Act which is to see that the parties should get the fruit of the award and/or arbitration proceedings, as early as possible." 5. Plain reading of the above two paragraphs would apparently disclose that, as rightly submitted by the learned Advocate on behalf of the appellants, merely by referring to the decision of the Apex Court in Krishna Bhagya Jala Nigam’s case (supra) Krishna Bhagya Jala Nigam’s case (supra) Krishna Bhagya Jala Nigam’s case (supra), the rate of future interest has been reduced from 15% to 9%. Only additional fact which has been observed is that there has been decrease in the rate of interest during : 5 : the recent times in relation to bank loans. The impugned order, however, nowhere refers to the terms of the contract between the parties particularly in relation to the rate of interest. 6. It is not in dispute that the Award for future interest at the rate of 15% per annum was not in consonance with the terms of the agreement between the parties. When the parties had specifically agreed to a particular rate of interest, unless it is disclosed and established by the parties before the arbitrator that the rate of interest was prejudicial to the party or was totally arbitrary, question of interference in the rate of interest in Arbitration Petition by the Court would not arise at all. 7. That apart, the fall in the rate of interest is a recent phenomena. That itself cannot be justification for granting lower rate of interest, where the parties knowing well about the recent phenomena of fall in the rate of interest had agreed for higher rate of interest. 8. Undoubtedly, the learned Single Judge could have reduced the rate of interest from 15% to 13% as that was the rate of interest which was agreed upon : 6 : under the terms of agreement between the parties. Being so, though the appellant is justified in contending that the reduction could not have been to 9% from 15%, at the same time, the respondent is also justified in contending that there was no justification for the Arbitrator to award future interest at the rate of 15% contrary to the terms of the agreement. To that extent, the impugned order needs to be modified. 9. The Appeal, therefore, partly succeeds. The impugned order is hereby set aside to the extent it reduces the future interest at the rate of 9% from 15% and the same is ordered to be reduced to the extent of 13% per annum in terms of the agreement between the parties. 10. Order accordingly. There shall be no orders as to costs. [A.V. [A.V. [A.V. NIRGUDE, J.] [R.M.S. KHANDEPARKAR,J.] NIRGUDE, J.] [R.M.S. KHANDEPARKAR,J.] NIRGUDE, J.] [R.M.S. KHANDEPARKAR,J.]