TEHRI HYDRO DEV. CORPN. LTD.& ANR.versusJAI PRAKASH ASSO. LTD.

                     [2012] 8 S.C.R. 813


        TEHRI HYDRO DEV. CORPN. LTD.& ANR.                          A
                               v.
                JAi PRAKASH ASSO. LTD.
              (Civil Appeal No. 3682 of 2007)

                   SEPTEMBER 25, 2012
                                                                    B
            [R.M. LODHA, ANIL R. DAVE AND
                  RANJAN GOGOi, JJ.]

      Arbitration - Maintainability - Contract for execution of
works contained an arbitration clause - Grievance of C
respondent-contractor that though the works had been
completed, tile final bill was not prepared - Arbitration
proceedings initiated, in course of which, final bill prepared
and placed before the arbitrators by the appellant-corporation
- Subsequently, another process of arbitration initiated for the D
specific claims of respondent-contractor - Maintainability of
the second round of arbitration proceedings - Held: The
entitlement of respondent-contractor was not the subject
matter of the earlier proceedings before the arbitrators - The
claim of respondent-contractor got crystallized once the final E
bill was prepared and placed before the arbitrators - It is these
specific claims, after quantification, that were referred to the
arbitrators in the subsequent arbitration proceedings - Thus,
it cannot be said that the arbitration proceeding in respect of
the specific claims of respondent-contractor stood barred in F
view of the earlier arbitration proceedings between the parties.

     Arbitration - Arbitral award - Challenge to - Power of the
Court - Contract for execution of works - Disputes arising
therefrom - Matter referred to arbitration in terms of the
arbitration clause contained in the contract - Claim of             G
respondent-contractor for refund of security deposit not
adjudicated upon by the arbitrators on the ground that it was
not arbitrable - Held: In such a situation, it was clearly beyond
the power of the trial court to decree the claim - The High
                               813                                  H
    814      SUPREME COURT REPORTS                   [2012] 8 S.C.R.

A Court was justified in setting aside the claim, however, it erred
    in directing adjudication of the claim by an arbitrator
    nominated by it - The issue should have been left for
    determination in accordance with the procedure agreed upon
    by the patties.
B
          Arbitration - Arbitral award - Grant of interest pendente
    lite - Justification - Held: Not justified, in view of the express
    bar contained in the contract between the patties.

        Arbitration - Arbitral award - Grant of interest for the past-
e   award period - Justification - Held: Justified.

       The appellants and the respondent-contractor had
  entered into a contract for execution of certain works in
  connection with the Tehri Hydro Dam Project. Though the
0 works   in question were completed, the final bill of
  respondent-contractor was not prepared and security
  money, furnished by way of bank guarantee was not
  released. The parties went to arbitration in accordance
  with the arbitration clause under the contract/agreement.
E In course of the arbitration proceedings, the appellant-
  Corporation submitted the final bill.

       Subsequently, another arbi.tration proceeding
  commenced between the parties for the specific claims
  of respondent-contractor. The arbitral award passed in
F the aforesaid arbitration proceeding held the respondent-
  contractor entitled to Rs.10.17 lakhs on account of the
  work done with interest @ 6% p.a. from the date of
  invocation of the claim till the date of the award and @
  12% p.a. from the date of the award till payment or till the
G award was made Rule of court, whichever was earlier.
  Insofar as the claim of respondent-contractor of Rs.12.50
  lakhs lying in deposit with the appellant-Corporation, the
  Arbitrators held the same to be beyond the scope of the
  dispute raised in the arbitration proceeding.
H
  TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi             815
            PRAKASH ASSO. LTD.
     Objections against specific parts of the award by         A
which the respective parties felt aggrieved were filed
before the District Judge. The District Judge (trial court)
held the respondent-contractor entitled to both the
amounts- Rs.10.17 lakhs as also Rs.12.50 lakhs and
thereafter passed a decree in respect of the two amounts       B
alongwith interest thereon at the rate of 12% pendente lite
and 6% for the post award period. In appeal, the High
Court maintained the award of Rs.10.17 lakhs, however,
as regards the claim of Rs.12.50 lakhs, it took the view
that the said amount could not have been awarded by the        c
trial court as the said entitlement was not gone into by
the Arbitrators, and remanded such claim to be settled by
an Arbitrator appointed by it. The High Court did not deal
with the question of interest.

     In the instant appeal, the appellants contended that      D
the respondent-contractor resorted to another process of
arbitration without seeking-such leave in the first
arbitration proceeding; and thus the arbitration
proceeding leading to the impugned award was without
any authority of law. In regard to the claim of Rs.12.50       E
lakhs, the appellants contended that the said claim was
not adjudicated upon by the arbitrators and in such a
situation it was beyond the power of the trial court to hold
the said claim in favour of the respondent-contractor; that
though the High Court was justified in setting aside the       F
claim of Rs.12.50 lakhs, it could not have directed
adjudication of the said issue by an arbitrator nominated
by it. Further, the appellants relied on Clauses 1.2.14 and
1.2.15 of Part II of the contract to contend that thereunder
there was a specific bar to grant of interest and thus the     G
award of interest in favour of respondent-contractor was
wholly untenable.

     Partly allowing the appeal, the Court

     HELD: 1.1. The entitlement of the respondent -            H
    816     SUPREME COURT REPORTS                 [2012] 8 S.C.R.


A contractor to the two amounts -Rs.10,17,461/- and
   Rs.12.50 lakhs was not the subject matter of the earlier
   proceeding before the Arbitrators which arose out of the
  grievance of the respondent-contractor that though the
  execution of the work had been completed, the final bill
B had not been prepared and further that certain amounts
  lying in deposit as security had not been refunded. Once
  the final bill was prepared and placed before the
  Arbitrators the claim of the respondent-contractor got
  crystallized. It is these specific claims, after quantification,
c that had been referred to the Arbitrators in the proceeding
  in which the award has been passed. It will, therefore, not
  be correct to say that the arbitration proceeding in
  respect of the specific claims of the contractor stood
  barred in view of the earlier arbitration proceeding
  between the parties. That apart, from an order passed by
0
  the Arbitrators on 15th January, 1994, it appears that the
  arbitrators in the aforesaid order had clearly recorded that
  the" .... both the parties agree that we should adjudicate
  both the disputes relating to refund of deposit of Rs.12.5
  lakhs and payment of final bill to the tune of Rs.10.00
E lakhs and odd ...." In these circumstances, the award
  insofar as the claim of Rs.10,17,461/- made by the
  Arbitrator and affirmed by the courts below does not
  require any further scrutiny by this Court. [Para 9) [824-
  C-H]
F
      1.2. Insofar as the claim in respect of the sum of
  Rs.12.50 lakhs is concerned, the entitlement of the
  respondent - contractor to the said amount had not been
  adjudicated upon by the Arbitrators on the ground that
G the said issue was not an arbitrable issue and the same
  ought be resolved either by an amicable process or by
  way of a suit for recovery. If the aforesaid claim was not
  adjudicated upon by the Arbitrators the trial court (District
  Judge) was patently wrong in decreeing the said claim.
H Therefore, the High Court was perfectly justified in
  TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi             817
            PRAKASH ASSO. LTD.
reversing the said part of the decree. However, there is        A
no reasonable basis for the view taken by the High Court
that the entitlement of the respondent-contractor to the
said amount should now be determined by the Arbitrator
nominated by it. Rather, the aforesaid issue should have
been left for determination in accordance with the              B
procedure agreed upon by the parties, if the parties are,
at all, inclined to go into a further round of adjudication
at this stage. The aforesaid part of the order of the High
Court is, therefore, interfered with and, subject to the
observations made by this Court, the parties are                c
permitted to work out their remedies as may be
considered best and most appropriate in the facts and
circumstances of the case. [Para 10] [825-A-E]
     2.1. Clauses 1.2.14 and 1.2.15 of the contract
agreement between the parties clearly reveal that despite       D
some overlapping of the circumstances contemplated by
the two Clauses, no interest is payable to the contractor
for delay in payment, either, interim or final, for the works
done or on any amount lying in deposit by way of
guarantee. The aforesaid contemplated consequence               E
would be applicable both to a situation where
withholding of payment is on account of some dispute
or difference between the parties or even otherwise.
Since the said Clauses 1.2.14 and 1.2.15 imposed a clear
bar on either entertainment or payment of interest in any       F
situation of non payment or delayed payment of either the
amounts due for work done or lying in security deposit,
the grant of pendente lite interest on the claim of
Rs.10,17,461/- is not justified. The award as well as the
orders of the courts below are accordingly modified to          G
the aforesaid extent. [Paras 11, 12 and 17] [825-F; 826-E-
F; 829-G-H-; 830-A-B]
    2.2. However, the grant of interest for the post-award
period would stand on a somewhat different footing. The
grant of interest on the amount of Rs.10,17,461/-from the       H
    818      SUPREME COURT REPORTS                [2012] 8 S.C.R.


A date of the award till the date of the decree or date of
  payment, whichever is earlier, is upheld. In the facts of
  the case, the rate of interest should be 12% per annum
  as determined in the arbitration proceeding between the
  parties. [Para 18] [830-B-D-E]
8
       Secretary, Irrigation Department, Government of Orissa
  and others vs. G.C. Roy and anr. (1992) 1 SCC 508: 1991
  (3) Suppl. SCR 417; Executive Engineer, Dhenkala/ Minor
  Irrigation Division, Orissa and others vs. N. C. Budhraj
  (deceased) By /rs. And others (2001) 2 SCC 721: 2001 (1)
C SCR 264; Union of India vs Krafters Engineers and Leasing
  Private Limited (2011) 7 SCC 279: 2011 (8) SCR 196;
  Sayeed Ahmed & Co. vs. State of Uttar Pradesh & Ors. (2009)
  12 SCC 26: 2009 (10) SCR 841; Sree Kamatchi Amman
  Constructions vs. Divisional, Railway manager (Works),
D Pa/ghat and others (2010) 8 SCC 767: 2010 (10) SCR 487
  and State of Orissa vs. B.N. Agarwal/a (1997) 2 SCC 469:
  1997 (1) SCR 704 - relied on.

        Board of Trustees for the Port of Calcutta vs. Engineers-
E De-Space-Age (1996) 1 SCC 516: 1995 (6) Suppl. SCR
  327; Madnani Construction Corporation Private Limited vs.
  Union of India and others (2010) 1 SCC 549: 2009 (16) SCR
  216; Asian Techs Limited vs. Union of India and others 2009
  10 SCC 354: 2009 (14) SCR 182 and Executive Eningeer
F (Irrigation), Balime/a and others vs Abhaduta Jena and others
  (1988) 1 SCC 418: 1988 (1) SCR 253 - referred to.

        Indian Oil Corporation Ltd. vs. Amritsar Gas service and
    others (1991) 1 SCC 533: 1990 (3) Suppl. SCR 196 - cited.

G                       Case Law Reference:
          1990 (3) Suppl. SCR 196 cited                Para 7
          1997 (1) SCR 704          relied on          Para 7
          2009 (14) SCR 182         referred to        Para 7
H
  TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi              819
            PRAKASH ASSO. LTD.
    1991 (3) Suppl. SCR 417 relied on             Para 13       A

    2001 (1) SCR 264            relied on         Para 13
    2011 (8) SCR 196            relied on         Para 13
    1995 (6) Suppl. SCR 327 referred to           Para 14
                                                                B
    2009 (16) SCR 216           referred to        Para 14
    2009 (10) SCR 841           relied on         Para 14
    2010 (10) SCR 487           relied on          Para 14
                                                                c
    1988 (1) SCR 253            referred to        Para 16

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3682 of 2007.

     From the Judgment & Order dated 20.07.2006 of the High     D
Court of Uttaranchal at Nainital in Appeal from Order No. 879
of 2001.

   Puneet Taneja, Gurpreet S. Parwanda, Monika Tyagi, Shail
Kumar Dwivedi for the Appellants.
                                                                E
   ·S.B. Upadhyay, Pawan Upadhyay, Pawan Kishor,
Sharmila Upadhyay for the Respondent.

    The Judgment of the Court was delivered by
                                                                F
    RANJAN GOGOi, J. 1. This appeal is directed against the
judgment and order dated 20th July, 2006 passed by the High
Court of Uttaranchal at Nainital whereby the decree passed by
the learned trial court under the Arbitration Act, 1940
(hereinafter referred to as 'the Act') has been modified. The
terms of award as passed by the learned Arbitrator and the      G
decree passed by the learned trial court as well as the
modification thereof by the High Court will now have to be
noticed :

    2. The appellants and the respondent herein had entered     H
    820      SUPREME COURT REPORTS                 [2012] 8 S.C.R.


A into a contract for execution of certain works in connection with
  the Tehri Hydro Dam Project. The agreement between the
  parties was executed on 29th March, 1978 and the works in
  question were completed on 31st December, 1985. The
  completion certificate was issued by the competent authority
B of the appellant-Corporation on 27th ·April, 1986. As the final
  bill of the respondent-contractor had not been prepared and
  security money, furnished by way of bank guarantee was not
  released, the parties went to arbitration in accordance with the
  Arbitration clause under the contract/agreement. In the course
c of the aforesaid Arbitration proceeding the appellant-
  Corporation submitted a final bill which accordirg to the
  respondent-Contractor entitled it to receive a sum of
  Rs.10, 17,461.09 on account of work done besides a sum of
  Rs. 12 .. 50 lakhs that was lying in deposit with the Corporation.
  As the amounts due. according to the respondent-contractor,
D had become crystallized, another arbitration proceeding
  between the parties for the aforesaid specific claims
  commenced in accordance with the arbitration clause of the
  agreement.

E       3. The award in the aforesaid arbitration proceeding was
  passed on 29th January, 1996 holding the respondent -
  contractor to be entitled to the sum of Rs. 10, 17,461/-with the
   interest at the rate of 6% per annum from the date of invocation
  of the claim till the date of the award and at the rate of 12%
F per annum from the date of the award till payment or till the
  award is made Rule of court, whichever is earlier. Insofar as
  the claim of the respondent- contractor to the sum of Rs. 12.50
  lakhs lying in deposit with the Corporation, the Arbitrators held
  the said amount to be beyond the scope.of the dispute raised
G in the arbitration proceeding. Accordingly, the respondent -
  contractor was left with the option of settling the said claim in
  an amicable manner or by resorting to a civil suit for recovery
  of the same.

      4. Objections against the specific parts of the award by
H which the respective parties felt aggrieved were filed before the
  TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi                      821
    PRAKASH ASSO. LTD. [RANJAN GOGOi, J.)
learned District Judge, Tehri, Garhwal. The learned District             A
Judge by his order dated 15th October, 1997 upheld the claim
of the respondent - contractor to the sum of Rs.10,17,461/-
lakhs as awarded. In so far as the claim of Rs.12.50 lakhs is
concerned, the learned trial court, notwithstanding the fact that
the arbitrator did not decide the said claim, went into the issue        B
and held the respondent - contractor to be entitled to the said
amount also. Thereafter, a decree was passed in respect of
the two amounts alongwith interest thereon at the rate of 12%
pendente lite and 6% for the post award period. Aggrieved by
the aforesaid .order passed by the learned District Judge, Tehri         c
Garhwal, the appellant moved the High Court of Uttaranchal by
filing an appeal under the provisions of the Act. The High Court
 by its order dated 20th July, 2006 allowed the appeal in part.
While the claim of Rs.10,17,461/- awarded in favour of the
 respondent-contractor was maintained in so far as the claim             D
 of Rs. 12.50 lakhs is concerned, the High Court took the view
 that the aforesaid amount could not have been awarded by the
 learned trial court as the said entitlement was not gone into by
 the learned Arbitrators. Accordingly, the High Court remanded
 the aforesaid claim to be settled by an Arbitrator appointed by         E
 it. Insofar as the question of interest is concerned, the High
 Court did not deal with the said aspect of the matter at all.
Aggrieved, the Corporation is before this court challenging the
judgment and order dated 20th July, 2006 passed by the High
 Court of Uttaranchal.
                                                                         F
      5. We have heard Mr. Puneet Taneja, learned counsel for
the appellants and Mr. S.B. Upadhyay, learned senior counsel
for the respondent.

     6. Learned counsel for the appellants has contended that            G
the claims of the respondent - contractor for the unpaid amounts
under the firal bill as well as for return/refund of security deposit,
including amounts furnished by way of bank guarantee, was the
subject matter of an earlier arbitration between the parties. In
the course of the said arbitration the final bill was placed before
                                                                         H
    822     SUPREME COURT REPORTS                  [2012] 8 S.C.R.


A the arbitrators by the Corporation. On scrutiny of the aforesaid
  final bill the respondent-contractor claimed the two specific
   amounts in question and resorted to another process of
  arbitration without seeking leave in the first arbitration
  proceeding to have recourse to a second round of arbitration.
B The arbitration proceeding leading to the award is, therefore,
  without any authority of law. Specif ally, insofar as the amount
  of Rs.12.50 lakhs is concerned, according to the learned
  counsel for the appellants, the said amount was not adjudicated
  upon by the Arbitrators and the same was to be recovered by
c an amicable process or by resorting to a civil suit. In such a
  situation it was clearly beyond the power of the learned trial
  court to hold the said claim in favour of the respondent-
  contractor. Though the High Court was justified in setting aside
  the said claim of Rs.12.50 lakhs for the aforesaid reason, it
  could not have directed adjudication of the said issue by an
0
  Arbitrator nominated by it as has been done by the impugned
  order of the High Court. According to the learned counsel, the
  adjudication of the said claim of the respondent - contractor,
  if at all, should have been directed by a process contemplated
E by the specific provisions of the Arbitration agreement between
  the parties.

       Insofar as the grant of interest is concerned, learned
  counsel for the appellants has relied on Clauses 1.2.14 and
  1.2.15 of Part II of the contract agreement between the parties
F to contend that under the aforesaid clauses of the agreement
  governing the parties there was a specific bar to grant of
  interest. Relying on several judgments of this court, details of
  which will be noticed in the discussions that will follow, learned
  counsel has contended that the award of interest in favour of
G the respondent-contractor being clearly contrary to the terms of
  the agreement between the parties is wholly untenable and
  therefore needs to be interfered with by this court.

       7. Controverting the submissions advanced on behalf of
  the appellants, learned counsel for the respondent - contractor
H has contended that the appellants had actively participated in
     TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi               823
       PRAKASH ASSO. LTD. [RANJAN GOGOi, J.]
the proceeding before the Arbitrators and therefore, cannot, at      A
this stage, question the jurisdiction of the Arbitrators to make
the award in question. It is contended that the claim of the
respondent to the amount of Rs.10,17,461/- having been held
in its favour all along, the same does not disclose any basis
for interference. In so far as the amount of Rs.12.50 lakhs is       B
concerned the only issue that will require deterimination is the
manner in which the de novo adjudication is required to be
carried out. So far as the question of interest is concerned,
learned counsel has placed before the court the UP Civil Laws
(Reforms and Amendment) Act, 1976 by which certain                   c
provisions of the Arbitration Act of 1940 have been amended
in its application to the State of UP. The attention of the court
has been drawn to Paragraph 7A which has been added after
 Para 7 of the First Schedule to the Act. According to the learned
counsel, Paragraph 7A authorized and empowered the                   D
 arbitrator as well as the courts below to grant interest. Learned
counsel has also relied on the decisions of this court in Indian
oil Corporation Ltd. vs. Amritsar Gas service and others', State
 of Orissa vs. B.N. Agarwalfa 2 and Asian Techs Limited vs.
 Union of India and others3 2009 10 SCC 354 (para 21) in
                                                                     E
 support of the contentions advanced.

     8. Para 7A of the U.P. Civil Laws (Reforms and
Amendment) Act, 1976 referred to above may now be
reproduced :
                                                                     F
      "7A. Where and in so far as an award is for the payment
      of money, the arbitrators of the umpire may, in the award,
      order interest at such rate as the arbitrators or umpire may
      deem reasonable to be paid on the principal sum awarded,
      from the date of the commencement of the arbitration as        G
      defined in sub-section (3) of section 37, to the date of
      award, in addition to any interest awarded on such
1.   [(1991) 1 sec 533.
2.   [(1997) 2 sec 469.
3.   2009 10 sec 354 (para 21).                                      H
     824       SUPREME COURT REPORTS                   [2012] 8 S.C.R.


A          principal sum for any period prior to such comr;nencement,
           with further interest at such rate not exceeding six per cent
           per annum as the arbitrators or umpire may deem
           reasonable on such principal sum from the date of the
           award to the date of payment or to such earlier date as
B          the arbitrators or umpire may think fit, but in no case
           beyond the date of the decree to be passed on the award."

        9. Insofar as the jurisdiction of the Arbitrator to adjudicate
   on the two claims of Rs.10, 17,461/- and Rs.12.50 lakhs are
   concerned, the dispute is capable of resolution within a short
C compass. The entitlement of the respondent - contractor to the
   aforesaid two amounts was not the subject matter of the earlier
   proceeding before the Arbitrators which arose out of the
   grievance of the respondent - contractor that though the
   execution of the work had been completed, the final bill had not
D been prepared and further that certain amounts lying in deposit .
   as security had not been refunded. Once the final bill was
   prepared and placed before the Arbitrators the claim of the
   respondent-contractor got crystallized. It is· these specific
  claims, after quantification, that had been referred to the
E Arbitrators in the proceeding in which the award has been
   passed. It will, therefore, not be correct to say that the a.rbitration
  proceeding in respect of the specific claims of the contractor
  stood barred in yiew of the earlier arbitration proceeding
  between the parties. That apart, from an order passed by the
F Arbitrators on 15th January, 1994, which is available on record
  as an enclosure to the counter affidavit of the respondent, it
  appears that the arbitrators in the aforesaid order dated 15th
  January, 1994 had clearly recorded that the" .... both the parties
  agree that we should adjudicate both the disputes relating to
G refund of deposit of Rs.12.5 lakhs and payment of final bill to
  the tune of Rs.10.00 lakhs and odd .... "

       In these circumstances, the award insofar as the claim of
  Rs.10,17,461/- made by the learned Arbitrator and affirmed by
  the learned courts below will not require any further scrutiny by
H us.
  TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi                825
   PRAKASH ASSO. LTD. [RANJAN GOGOi, J.]
      10. Insofar as the claim in respect of the sum of Rs.12.50 A
lakhs is concerned, it has already been noticed that the
entitlement of the respondent - contractor to the said amount
had not been adjudicated upon by the Arbitrators on the ground
that the said issue was not an arbitrable issue and the same
ought be resolved either by an amicable process or by way of B
a suit for recovery. If the aforesaid claim was not adjudicated
upon by the Arbitrators the learned trial court was patently
wrong in decreeing the said claim. Therefore, the High Court
was perfectly justified in reversing the said part of the decree.
However, we do not find any reasonable basis for the view taken    c
by the High Court that the entitlement of the respondent-
contractor to the said amount should now be determined by the
Arbitrator nominated by it. Rather, according to us, the
 aforesaid issue should have been left for determination in
 accordance with the procedure agreed upon by the parties, if D
the parties are. at all. inclined to go into a further round of
 adjudication at this stage. We, therefore, interfere with the
 aforesaid part of the order of the High Court and, subject to our
 observations above, we leave the parties to work out their
 remedies as may be considered best and most appropriate E
 in the facts and circumstances of the case.

     11. This will lead the court to a consideration of what is
the principal bone of contention between the parties in the
present case, namely, the issue with regard to payment of
interest. Clauses 1.2.14 and 1.2.15 on which much arguments        F
have been advanced by learned counsel for both sides may
now be extracted below :

                          "PART-II

               CONDITIONS OF CONTRACT                              G

      1.2.14    NO CLAIM FOR DELAYED PAYMENT DUE
            TO DISPUTE ETC.

     The contractor agrees that no claim for interest of damages   H
         826       SUPREME COURT REPORTS                 [2012] 8 S.C.R.


A              will be entertained or payable by the Government in
                respect of any money or balances which may be lying with
               Government owing to any disputes, differences or
               misunderstandings between the parties or in respect of
               any delay or omission on the part of the Engineer-in-charge
B              in making immediate or final payments or in any other
               respect whatsoever.

                1.2.15   INTEREST ON MONEY DUE TO THE
                      CONTRACTOR :

C              No omission on the part of the Engineer-in-charge to pay
               the amount due upon measurement or otherwise shall
               vitiate or make void the contract, nor shall the contractor
               be entitled to interest upon any guarantee or payments in
               arrears nor upon any balance which may on the final
D              settlement of his accounts be due to him."

        12. A reading of the aforesaid two Clauses of the contract
  agreement between the parties clearly reveal that despite
  some overlapping of the circumstances contemplated by the
E two Clauses, no interest is payable to the contractor for delay
  in payment, either, interim or final, for the works done or on any
  amount lying in deposit by way of guarantee. The aforesaid
  contemplated consequence would be applicable both to a
  situation where withholding of payment is on account of some
  dispute or difference between the parties or even otherwise.
F
        13. Of the several decisions of this Court referred to by
  the learned counsel for the appellant the judgments of the
  Constitution Bench of this Court in Secretary, Irrigation
  Department, Government of Orissa and others vs. G. C. Roy
G and anr4. and Executive Engineer, Dhenkalal Minor Irrigation
  Division, Orissa and others vs. N. C. Budhraj (deceased) By
  /rs. And others5 will require specific notice. The true ratio laid

    4.    (1992) 1 sec 508.
H 5.      (2001) 2 sec 121.
     TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi               827
       PRAKASH ASSO. LTD. [RANJAN GOGOi, J.]
down in the aforesaid two judgments have been elaborately            A
considered in a more recent pronouncement of this court in the
case of Union of India vs. Krafters Engineers and Leasing
Private Limited. 6 In Krafters Engineers's case (supra) the ratio
of the decision in G.C. Roy's case (supra) was identified to
mean that if the agreement between the parties does not              B
prohibit grant of interest and the claim of a party to interest is
referred to the arbitrator, the arbitrator would have the power
to award the interest. This is on the basis that in such a case
of silence (where the agreement is silent) it must be presumed
that interest was an implied term of the agreement and,              c
therefore, whether such a claim is tenable can be examined by
the arbitrator in the reference made to him. The aforesaid view,
specifically, is with regard to pendente lite interest. In the
subsequent decision of the Constitution Bench in N. C.
Budhraj's case (supra) a similar view has been taken with            D
regard to interest for the pre reference period.

      14. In Krafters Engineers' case (supra) the somewhat
discordant note struck by the decisions of this court in Board
of Trustees for the Port of Calcutta vs. Engineers-De-Space-
Age7 and Madnani Construction Corporation Private Limited            E
vs. Union of India and others 8 were also taken note of.
Thereafter, it was also noticed that the decision in Engineers-
De-Space-Age's case (supra) was considered in Sayeed
Ahmed & Co. vs. State of Uttar Pradesh & Ors9 . and the
decision in Madnani Construction case (supra) was                    F
considered in Sree Kamatchi Amman Constructions vs.
Divisional, Railway manager (Works), Pa/ghat and others' 0 •
In Sayeed Ahmed's case (supra) (para 24) it was held that in
the light of the decision of the Constitution bench in GC Roy's
                                                                     G
6.   (1992) 1 sec 508.
7.   (1996) 1 sec 516.
8.    (201 o) 1 sec 549.
9.    (2009) 12 sec 26.
10. (2010) 8 sec 767.                                                H
    828      SUPREME COURT REPORTS                   [2012) 8 S.C.R.


A case and NC Budhraj's case it is doubtful whether the
  observations in Engineers-de-Space-Age's case (supra) to the
  effect that the Arbitrator could award interest pendente lite,
  ignoring the express bar in the contract, is good law. In Sree
  Kamatchi Amman Constructions's case(Supra) while
s considering Madnani's case (supra) this court noted that the
  decision in Madnani's case follows the decision in Engineers-
  de-Space-Age's case (supra).

       15. From the above discussions, it is crystal clear that
  insofar as pendente lite interest is concerned, the observations
C contained in Para 43 and 44 of the judgment in GC Roy's case
  (supra) will hold the field. Though the gist of the said principle
  has been noticed earlier it would still be appropriate to set out
  para 44 of the judgment in G.C. Roy's case (supra) which is in
  the following terms :
D
              " 44. Having regard to the above consideration, we
       think that the following is the correct principle which should
       be followed in this behalf.

               Where the agreement between the parties do~ not
E
         prohibit grant of interest and where a party claims interest
         and that dispute (along with the claim for principal amount
         or independently) is referred to the arbitrator, he shall have
         the power to award interest pendent elite. This is for the
         reason that in such a case it must be presumed that
F        interest was an implied term of the agreement between the
         parties and therefore when the parties refer all their
        disputes - or refer the dispute as to interest as such - to
        the arbitrator, he shall have the power to award interest.
        This does not mean that in every case the arbitrator should
G        necessarily award interest pendent elite. It is a matter
        within his discretion to be exercised in the light of all the
        facts and circumstances of the case, keeping the ends of
        justice in view."

H         16. The provisions of the UP Civil (Reforms and
   TEHRI HYDRO DEV. CORPN. LTD.& ANR. v. JAi             829
    PRAKASH ASSO. LTD. [RANJAN GOGOi, J.)
Amendment) Act amending the First Schedule to the Arbitration A
Act, 1940 does not assist the respondent - contractor in any
manner to sustain the claim of award of interest pendente lite,
inasmuch, as paragraph ?A to the First Schedule, as amended,
is only an enabling provision which will have no application to
a situation where there is an express bar to the entertainment B
or payment of interest on the delayed payment either of an
amount due for the work done or of an amount lying in deposit
as security. The decision in BN Agarwal/a's case (supra) on
which reliance has been placed by the learned counsel for the
 respondent, once again, does not assist the claim of the c
respondent to interest pendente life inasmuch as in BN
Agarwalla's case (supra) the views of the Constitution Bench
 in GC Roy's case (supra) with regard to interest pendente lite
 could not have been and, infact, were not even remotely
doubted. The obseNation of the bench in B.N. Agarwalla's case D
 that in G. C.Roy's case (supra) the decision in Executive
 Eningeer (Irrigation), Balime/a and others vs. Abhaduta Jena
 and others1' was not overruled was only in the context of the
 issue of award of interest for the pre reference period. The
 decision in Asian Techs Limited case (supra) also relied on E
 by the respondent takes note of the decision in Engineers-De-
  Space-Age case (supra) to come to the conclusion the
 prohibition on payment of interest contained in clause 11 of the
 agreement between the parties was qua the department and
 did not bar the Arbitrator from entertaining the claim. It has
 already been noticed that the correctness of the propositions F
 laid down in Engineers-De-Space-Age case (supra) have been
  doubted in the subsequent decisions of this court, reference to
 which has already been made.

    17. Clauses 1.2.14 and 1.2.15, already extracted and         G
analysed, imposed a clear bar on either entertainment or
payment of interest in any situation of non payment or delayed
payment of either the amounts due for work done or lying in

11. (1988) 1 sec 418.                                            H
    830      SUPREME COURT REPORTS                   (2012] 8 S.C.R.


A security deposit. On the basis of the discussions that have
  preceded we, therefore, take the view that the grant of
  pendente lite interest on the claim of Rs.10,17,461/- is not
  justified. The award as well as the orders of the courts below
  are accordingly modified to the aforesaid extent.
B
      . 18. However, the grant of interest for the post-award period
   would stand on a somewhat different footing. This very issue
   has been elaborately considered by this Court in B.N. Agarwal/a
   (supra) in the light of the provisions of Section 29 of the
  Arbitration Act, 1940. Eventually this Court took the view that
C in a situation where the award passed by the arbitrator granting
  interest from the date of the award till the date of payment is
  not modified by the Court "..... the effect would be as if the Court
  itself had granted interest from the date of the decree till the
  date of payment. .. " In view of the above, the grant of interest
D on the amount of Rs.10, 17,461/-from the date of the award till
  the date of the decree or date of payment, whichever is earlier,
  is upheld. In the facts of the case we are of the view that the
  rate of interest should be 12% per annum as determined in the
  arbitration proceeding between the parties.
E
         19. In view of the foregoing discussions we allow this
    appeal in part and modify the order of the High Court dated
    20th July, 2006 as indicated above.

    B.B.B.                                   Appeal partly allowed.