Case: Visakapatnam Municipal Corporation Vs. K. Satyanarayana and Company

1. The short question involved in these appeals is whether the trial court could have granted interest pendente lite to the respondent although the arbitrators had declined to grant the same and the respondent had not filed any objection to the award under Section 30 of the Arbitration Act (the Act) 2. The relevant facts are that the arbitrators made their Award on 20-4-1989. The respondent had prayed for interest pendente lite but the arbitrators depending upon the law as it obtained on that date, had declined the relief. Thereafter, the award was filed before the trial court, i.e., the IInd Additional Subordinate Judge, Visakhapatnam and the appellant herein filed their petition under Section 30 of the Act. However, admittedly, the respondent did not file any objection under the said provision. Subsequently, in the year 1991, i.e., about two years after the filing of the award in the court, the respondent filed a petition before the trial court for a decree in terms of the award. In this petition, no doubt the respondent claimed interest from the date of reference till the date of payment. The trial court, while making a decree in terms of the award granted interest from the date of reference till the date of payment which obviously included the interest pendente lite. The appellant approached the High Court by an appeal making a grievance about the pendente lite interest granted in favour of the respondent. The High Court relying upon the later decision of this Court in Secretary, Irrigation Department, Government of Orissa v. G. C. Roy delivered on 12-12-1991 upheld the grant of pendente lite interest and dismissed the appellants appeal before it. It is this decision which is challenged before us 3. On the admitted facts, viz., that the respondent had not preferred any objection to the award in question under Section 30 of the Act and, in fact, had applied for a decree in terms of the award, the trial court could not have granted pendente lite interest which was not a part of the award. To that extent, the trial court had exceeded its jurisdiction. The learned counsel appearing for the respondent tried to defend the action of the trial court relying upon the provisions of Section 15(b) of the Act. The said provisions read as follows"15. Power of Court to modify award. - The Court may by order modify or correct an award - (a) * * *(b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; " * The learned counsel contended that in view of the later decision of this Court in G. C. Roy case it was an obvious error on the part of the arbitrators not to grant the interest and, therefore, the trial court was justified in correcting the said error. We are afraid that the expression "obvious error" is sought to be interpreted by the learned counsel without the context in which the expression appears. It is made clear in the said provision that obvious error must be such which can be amended without affecting the decision. Any addition of the amount of interest which is specifically denied by the arbitrators is bound to affect the award in substantial measure. Hence the reliance placed on the said provision is obviously misplaced. The learned counsel then relied upon the order of this Court in Shakambari & Co. v. Union of India where after condoning the delay in filing the special leave petition, this Court had given the benefit of pendente lite interest in a proceeding which was already closed. It is not clear from this order as to whether any objection was taken to the award before the trial court under Section 30 of the Act on the ground that the pendente lite interest was wrongfully denied and whether the trial court had negatived the claim and the party concerned, had not chosen to file the appeal against the trial courts decision in view of the ten law on the subject. It appears from the other proceeding which has been dealt with by the very same order, that in that case, arbitrator had in fact, granted interest pendente lite and that was upheld by this Court in view of the aforesaid decision of this Court. This order is, therefore, not helpful for the respondent4. We are, therefore, of the view that if the respondent had not raised any objections to the award, it was not open for the trial court to grant the pendente lite interest while passing the decree in terms of the award. Both, therefore, the trial court as well as the High Court were wrong in awarding the interest.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We are afraid that the expression "obvious error" is sought to be interpreted by the learned counsel without the context in which the expression appears. It is made clear in the said provision that obvious error must be such which can be amended without affecting the decision. Any addition of the amount of interest which is specifically denied by the arbitrators is bound to affect the award in substantial measure. Hence the reliance placed on the said provision is obviouslyis not clear from this order as to whether any objection was taken to the award before the trial court under Section 30 of the Act on the ground that the pendente lite interest was wrongfully denied and whether the trial court had negatived the claim and the party concerned, had not chosen to file the appeal against the trial courts decision in view of the ten law on the subject. It appears from the other proceeding which has been dealt with by the very same order, that in that case, arbitrator had in fact, granted interest pendente lite and that was upheld by this Court in view of the aforesaid decision of this Court. This order is, therefore, not helpful for the respondent4. We are, therefore, of the view that if the respondent had not raised any objections to the award, it was not open for the trial court to grant the pendente lite interest while passing the decree in terms of the award. Both, therefore, the trial court as well as the High Court were wrong in awarding the interest.