A.K. SIKRI, J.

Leave granted.

2) The appellant herein was awarded the contract under which it was to execute certain Works. Agreement in this behalf was signed on 18th December, 1998. Some disputes arose between the parties. Since the agreement contained an arbitration clause, two claims raised by the appellant were referred for arbitration. Signature Not Verified Digitally signed by The arbitral tribunal was of three Arbitrators. This arbitration was SUSHIL KUMAR RAKHEJA Date: 2019.02.07 18:16:24 IST Reason: under the Arbitration and Conciliation Act, 1996 (hereinafter Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 1 of 25 referred to as the ‘1996 Act’). The majority award pronounced on October 10, 2010 allowed the two claims to certain extent. On the said claims awarded, the Arbitrators also granted interest at the rate of 10% per annum from the date when the arbitration was invoked, i.e., October 09, 2007, till 60 days after the award. Future interest at the rate of 18% per annum till the date of payment was also awarded.

3) Dispute which has travelled upto this Court pertains only to the question as to whether the Arbitrators could award any interest in view of Clauses 50 and 51 of the General Conditions of Contract (GCC) which governed the terms between the parties. The objections were filed before the High Court. A Single Judge of the High Court of Delhi passed the order dated November 15, 2011 quashing the award limited to the interest that was awarded by the Arbitrators. The appellant preferred intra-court appeal which has been dismissed by the Division Bench of the High Court, thereby upholding the judgment of the Single Judge. The effect is that the High Court has held that no interest is payable as Clauses 50 and 51 of GCC bar the arbitrators from granting interest.

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4) It may be pointed out that on interpreting Clauses 50 and 51 of the General Conditions of Contract, the view taken by the High Court is that these clauses categorically provide that no interest would be payable to the contractor on the money due to him. The said Clauses read as under:

Jai Prakash Associates Limited2. In the said judgment , this Court has categorically held that those clauses to mean that no interest was payable on claim for delayed payment due to the contractor. Therefore, same construction needed to be given to Clauses 50 and 51 of GCC in the instant case.

6) Mr. Rupinder S. Suri, learned senior counsel appearing for the appellant made two-fold submissions before us, which are to the following effect:

2 (2012) 12 SCC 10 3 (1999) 1 SCC 63 Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 5 of 25

(ii) Second submission, in the alternative, is that in order to resolve the conflict, the matter should be referred to a larger Bench.

7) Dilating on the first submission, an attempt of Mr. Suri was to show that the clauses of the contract in question, when interpreted correctly would clearly bring about that these clauses did not prohibit the Arbitrators from granting interest. The learned counsel emphasised the words “or any other respect whatsoever” occurring in Clause 51 of the GCC and argued that these are to be read ejusdem generis and should take their colour from the earlier part of clause. He submitted that when these words are read in the aforesaid manner, it is only in those cases where some amount or balance is lying with the respondent because of any dispute different or misunderstanding between the parties etc., interest is not payable. Such a situation would not arise in those cases where claim is raised on other counts and awarded by the Arbitrators. He also submitted that Clause 51 in the contract in the instant case was similar to Clause 1.9 of the contract in Harish Chandra case and the Court interpreted the said clause to mean that Arbitrator was not precluded from awarding the interest.

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8) In this hue, his alternate submission was that two similar or almost identical clauses are interpreted in a different manner in Harish Chandra case and Jayprakash Associates case and, therefore, conflict arises which needs to be resolved.

9) Mr. Gourab Banerji, learned Senior Counsel appearing for the respondent gave equally emphatic reply to the aforesaid submissions of Mr. Suri. His first argument was that clauses in Harish Chandra case and the present case were altogether different. Insofar as the instant case is concerned, it was governed by the law laid down in Jayprakash Associates judgment which was in fact a case between the same parties and in that case the Court had, while construing the identically worded clauses, came to the conclusion that the Arbitrators were precluded from granting any interest. His another contention was that there was a difference between the scheme provided under the Arbitration Act, 1940 (hereinafter referred to as the ‘1940 Act’) when contrasted with the 1996 Act. He argued that most of the judgments cited by the appellant including Harish Chandra were under 1940 Act whereas in the instant case award was passed under the 1996 Act. He also referred to certain recent judgments which have been rendered by this Court touching upon this very Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 7 of 25 aspect. The precise manner in which he structured his arguments are recapitulated below:

4 (2009) 12 SCC 26 Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 8 of 25 arose under the 1940 Act. Furthermore, clause 1.9 in Harish Chandra case was indeed restrictive and differed from the wordings of Clauses 50 and 51 of the GCC which were closer to Clause G1.09 in Sayeed Ahmed case. On that basis, Harish Chandra judgment was distinguished which position has been upheld by the Division Bench of the High Court also. Mr. Banerji submitted that by the time Division Bench decided the case in September, 2012, it had the benefit of another judgment of this Court in THDC case which was not only between the same parties but even the clauses in the said case are pari materia with the clauses in the present case.

11) We have considered the respective submissions and have gone through the legal position contained in the case laws cited before us by both the parties.

12) Insofar as power of the arbitral tribunal in granting pre-reference and/or pendente lite interest is concerned, the principles which can be deduced from the various judgments are summed up below:

G.C. Roy5 exhaustively dealt with this very issue, namely, power of the arbitral tribunal to grant pre-reference and pendente lite interest. The Constitution Bench, of course, construed the provisions of the 1940 Act which Act was in vogue at that time. At the same time, the Constitution Bench also considered the principle for grant of interest applying the common law principles. It held that under the general law, the arbitrator is empowered to award interest for the pre-reference, pendente lite or post award period. This proposition was culled out with the following reasoning:

5 (1992) 1 SCC 508 Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 10 of 25 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. 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 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 [Seth Thawardas Pherumal v. Union of India , (1955) 2 SCR 48 : AIR 1955 SC 468] 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 [(1988) 1 SCC 418 : (1988) 1 SCR 253] 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.

(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.” It is clear from the above that the Court decided to fall back on general principle that a person who is deprived of the use of money to which he is legitimately entitled to, has a right to be Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 11 of 25 compensated for the deprivation and, therefore, such compensation may be called interest compensation or damages.

(b) As a sequitur, the arbitrator would be within his jurisdiction to award pre-reference or pendente lite interest even if agreement between the parties was silent as to whether interest is to be awarded or not.

(c) Conversely, if the agreement between the parties specifically prohibits grant of interest, the arbitrator cannot award pendente lite interest in such cases. This proposition is predicated on the principle that an arbitrator is the creature of an agreement and he is supposed to act and make his award in accordance with the general law of the land and the agreement. This position was made amply clear in G.C. Roy case in the discussion that ensued thereafter:

However, there is a significant departure on this aspect insofar as 1996 Act is concerned. This distinction has been spelt out in Sayeed Ahmed case in the following manner:

G.C. Roy, (1992) 1 SCC 508] . This judgment was with 6 (2010) 8 SCC 767 7 (2015) 9 SCC 695 8 (2017) 9 SCC 611 Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 14 of 25 reference to the 1940 Act. In the 1940 Act, there was no provision which prohibited the arbitrator from awarding interest for the pre-reference, pendente lite or post-award period, whereas the 1996 Act contains a specific provision which says that if the agreement prohibits award of interest for the pre-award period, the arbitrator cannot award interest for the said period. Therefore, the decision in Ambica Construction [Ambica Construction v. Union of India , (2017) 14 SCC 323] cannot be made applicable to the instant case.”

14) In a recent judgment in the case of Reliance Cellulose Products Limited v. Oil and Natural Gas Corporation Limited 9, the entire case law on the subject is revisited and legal position re- emphasised. That was also a case which arose under the 1940 Act. The Court held that under the 1940 Act, an arbitrator has power to grant pre-reference interest under the Interest Act as well as pendente lite and future interest, however, he is constricted only by the fact that an agreement between the parties may contain an express bar to the award of pre-reference and/or pendente lite interest. Further, the Court has evolved the test of strict construction of such clauses, and unless there is a clear and express bar to the payment of interest that can be awarded by an arbitrator, clauses which do not refer to claims before the arbitrators or disputes between parties and clearly bar payment of interest, cannot stand in the way of an arbitrator awarding pre-reference or pendente lite interest. Further, unless 9 (2018) 9 SCC 266 Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 15 of 25 a contractor agrees that no claim for interest will either be entertained or payable by the other party owing to dispute, difference, or misunderstandings between the parties or in respect of delay on the part of the engineer or in any other respect whatsoever, leading the Court to find an express bar against payment of interest, a clause which merely states that no interest will be payable upon amounts payable to the contractor under the contract would not be sufficient to bar an arbitrator from awarding pendente lite interest. Further, the grant of pendente lite interest depends upon the phraseology used in the agreement, clauses conferring power relating to arbitration, the nature of claim and dispute referred to the arbitrator, and on what items the power to award interest has been taken away and for which period. Also, the position under Section 31(7) of the 1996 Act, is wholly different, inasmuch as Section 31(7) of the 1996 Act sanctifies agreements between the parties and states that the moment the agreement says otherwise, no interest becomes payable right from the date of the cause of action until the award is delivered.

15) After discussing and analysing almost all the judgments on this subject, the legal position is summed up in the following manner: Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 16 of 25

Notwithstanding the same, it awarded the interest by relying upon Board of Trustees for the Port of Calcutta case. The High Court, both Single Bench as well as Division Bench, rightly noted that the aforesaid judgment was under the 1940 Act and the legal position in this behalf have taken a paradigm shift which position is clarified in Sayeed Ahmed and Company case. This rationale given by the High Court is in tune with the legal position which stands crystallised by catena of judgments as noted above.

17) Another reason given by the High Court is equally convincing.

The Clauses 50 and 51 of GCC are pari materia with Clauses 1.2.14 and 1.2.15 of GCC in THDC case. Those clauses have Civil Appeal arising out of SLP (C) No. 13551 of 2013 Page 18 of 25 been interpreted by holding that no interest is payable on claim for delayed payment due to the contractor. Same construction adopted in respect of these clauses, which, in fact, is a case between the same parties, is without any blemish.

18) In this backdrop, the only argument of the appellant that remains to be considered is as to whether such a construction is contrary to the judgment in Harish Chandra case.

19) Complete answer to this argument is provided in Reliance Cellulose Products Limited judgment. Following discussion contained therein which discussed THDC judgment would amply demonstrate this:

Above all, these clauses is pari materia with with Clauses 1.2.14 and 1.2.15 of GCC in THDC case which was a judgment between the same parties.

21) Insofar as argument based on the principle of ejusdem generis is concerned, the Division Bench has held that that is not applicable in the present case. We find that it is rightly so held. Ejusdem generis is the rule of construction. The High Court has negated this argument in the following manner:

.............................................J. (A.K. SIKRI) .............................................J. (S. ABDUL NAZEER) .............................................J. (M. R. SHAH) NEW DELHI;

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