IN THE HIGH COURT OF JUDICATURE ANDHRA PRADESH AT HYDERABAD THURSDAY THE SEVENTEENTH DAY OF SEPTEMBER TWO THOUSAND AND NINE PRESENT THE HONOURABLE SMT. JUSTICE T. MEENA KUMARI AND THE HONOURABLE SRI JUSTICE G.V. SEETHAPATHY. C.M.A.NO. 1 5 6 6 OF 2008. Between: Union of India, Represented by its Divisional Engineer (South) Hyderabad Division, South Central Railway, Secunderabad & Anr. … Appellants V/s M/s. Ramakrishna Construction Represented by Sri R. Venkata Reddy, Aged : not known, H.No.3-5-170/C/1/2, Narayanaguda, Hyderabad-500 029 & Anr. … Respondents Counsel for the Appellants : M/s. C.V. Vinitha Reddy Counsel for the Respondents: Sri Keerti Prabhakar for Respondent No.1 THE HONOURABLE SMT. JUSTICE T. MEENA KUMARI AND THE HONOURABLE SRI JUSTICE G.V. SEETHAPATHY C.M.A.NO. 1 5 6 6 OF 2008. J U D G M E N T : (Per the Hon’ble Smt. Justice T. Meenakumari) The present Civil Miscellaneous Appeal is filed under section 37 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act’) against the judgment and decree dated 05-6-2008 passed in OP.No. 269 of 2002 by the learned First Additional Chief Judge, City Civil Court, Secunderabad, wherein the learned Additional Chief Judge confirmed the award of the arbitrator on the ground that it is in terms of substantive law and also the terms and conditions of the contract and it is not in conflict with public policy. 2. Facts in brief are that the first respondent herein entered into an agreement on 03-10-1994 with the appellant in respect of the works at Mudkhed and Jambhali Halt Station and the value of the work is fixed at Rs.9,85,890-00. The first respondent being experienced contractors in the field made necessary arrangements immediately on receipt of the acceptance letter, fixing the labour, installing the machineries and vehicles required for the work, as the period stipulated for completing the work is only three months. At the request of the contractor, by letter dated 09-09-1994, the relevant working drawings were supplied on 27-9-1994. But the work has to be commenced within seven days from the date of acceptance i.e., 31-8-1994, as the appellants- petitioners failed to deliver the site in question and only a part of the same was delivered on 03-10-1994. Thereafter, the first respondent requested for supply of RH Girders by letter dated 06-12-1994 also did not get attention by the appellants-petitioners. The first respondent has a dispute and also put forth his claims and the Arbitrator has been appointed by the High Court in pursuance of the orders in Arbitration Application No. 22 of 2000. Respondent No.2 has been appointed sole arbitrator to adjudicate the dispute by the High Court. The Arbitrator has stayed claims after hearing both sides, award has been passed by the second respondent on 28-8-2002. Under the award, the arbitrator awarded interest on Rs.16,41,622-00 at 18% per annum from the date of settlement of final bill i.e., 12-10-1997 and ordered to be paid on or before 31-12-2002 and it is also ordered that the appellants-petitioners shall be liable to pay interest @ 10% per annum till the amount is paid to the first respondent pursuant to the award. It is also the case of the appellant that the Arbitrator has allowed only claim No.1 and rejected the other claims. Aggrieved by the judgment and decree, dated 05-6-2008 passed in OP.No. 269 of 2002 by the learned First Additional Chief Judge, City Civil Court, Secunderabad, dismissing OP.No. 269 of 2002 the appellants-petitioners preferred the present appeal. 3. It is contended before us that the learned Arbitrator granted interest on Rs.16,41,622-00 at 18% per annum from the date of settlement of final bill i.e., 12-10-1997 and till the date of the award. It is also argued that if the amount is not paid by the appellants-petitioners on or before 31-12-2002, the appellants-petitioners shall liable to pay interest @ 10% per annum till the amount is paid to the first respondent pursuant to the award. 4. In view of the above, the appellants herein, i.e., South Central Railway were awarded interest on Rs.16,41,622-00 at 18% per annum from the date of settlement of final bill i.e., 12-10-1997 and ordered to be paid on or before 31-12-2002 by the Arbitrator and now they have disputed the award of interest @ 18% per annum on the ground that it is too excessive. The learned counsel for the appellants relied upon a decision of the Apex Court in KRISHNA BHAGYA JALA NIGAM LIMITED V/s. G. HARISHCHANDRA REDDY AND ANR [1]., at para No.11, which reads as hereunder: On the merits of the claims made by the contractor, we find from the impugned award dated 25-6-2000 that it contains several heads. The arbitrator has meticulously examined the claims of the contractor under each separate head. We do not see any reason to interfere except on the rates of interest and on the quantum awarded for letting machines of the contractor remaining idle for the periods mentioned in the award. Here also we may add that we do not wish to interfere with the award except to say that after rates have substantially reduced and, therefore, we are of the view that the pendente lite period and future interest be reduced to 9%. 5. In view of the above law laid down by the Apex Court, the respondents are not entitled to claim 18% interest awarded by the Arbitrator and interest has to be reduced to 9%, more so the principal amount has already been paid. 6. On the other hand, the learned counsel appearing on behalf of the first respondent contended that the learned Arbitrator after taking into consideration all the facts and circumstances has come to the conclusion and awarded interest @ 18% per annum from the date of the settlement of final bill i.e., 12-10-1997 and there cannot be any deduction more so when there is a reasoned award which has been confirmed by the learned First Additional Chief Judge, City Civil Court, Secunderabad. The learned counsel has also contended that in view of the interest granted by the learned Arbitrator, the contention of the appellants counsel that the interest should be reduced to 9% cannot be accepted. 7. We also had occasion to go through the judgment of the Apex Court referred-1 supra, as contended by the learned counsel for the appellants that the Hon’ble Supreme Court after taking into consideration the economic reforms in our country the interest regime has changed and the rates have substantially reduced and, therefore, the interest awarded by the arbitrator at 18% has to be reduced to 9%. 8. Following the dicta laid down by the Hon’ble Supreme Court in the decision referred-1 supra, we deem it appropriate that the judgment and decree dated 05-6-2008 passed in OP.No. 269 of 2002 by the learned First Additional Chief Judge, City Civil Court, Secunderabad, to the extent of awarding interest @ 18% per annum on Rs.16,41,622=00 has been modified to the extent of granting interest @ 9% per annum for the entire period i.e., pre-arbitration period, pendente lite period and future interest. 9. Accordingly, the Civil Miscellaneous Appeal is allowed to the extent indicated above. In the circumstances, there shall be no order as to costs. ____________________________ JUSTICE T. MEENA KUMARI ____________________________ JUSTICE G.V. SEETHAPATHY 17-09-2009. I s L [1] ) (2007) 2 Supreme Court Cases-720