UNION OF INDIAversusMANRAJ ENTERPRISES

                          [2021] 7 S.C.R. 413                               413


                         UNION OF INDIA                                     A
                                   v.
                      MANRAJ ENTERPRISES
                   (Civil Appeal No. 6592 of 2021)
                        NOVEMBER 18, 2021                                   B
         [M. R. SHAH AND B. V. NAGARATHNA, JJ.]
       Interest: Interest pendente lite – Award of interest by arbitrator
contrary to clause 16(2) of the General Conditions of Contract –
Correctness of – Dispute related to work contract – Arbitrator
                                                                            C
awarded pendente lite and future interest at the rate of 12% and
18% respectively on the entire awarded amount except for the earnest
money deposit and security deposit – Said order upheld by the High
Court – On appeal, held: Once the contractor agrees that he shall
not be entitled to interest on the amounts payable under the contract,
including the interest upon the earnest money and the security              D
deposit as mentioned in clause 16(2) of the agreement/contract
between the parties, the arbitrator in the arbitration proceedings
has no power to award interest, contrary to the terms of the
agreement/contract between the parties and contrary to clause 16(2)
– Expression “amounts payable to the contractor under the
                                                                            E
contract” cannot be read in conjunction with “earnest money
deposit” or “security deposit” – It has to be read independently
and disjunctively to earnest money deposit and security deposit as
the word used is “or” and not “and” between “earnest money
deposit”, “security deposit” and “amounts payable to the contractor
under the contract” – Thus, the principle of ejusdem generis is not         F
applicable – Furthermore, even if the Government would have been
awarded interest, the same also was not permissible and could have
been a subject matter of challenge – There cannot be an estoppel
against law – Arbitrator erred in awarding pendente lite and future
interest on the amount due and payable to the contractor under the
                                                                            G
contract and the same was erroneously confirmed by the High Court,
thus, the order passed by both the High Courts and the award passed
by the arbitral tribunal set aside – Arbitration and Conciliation
Act, 1996 – ss. 34, 37.

                                                                            H
                                  413
414           SUPREME COURT REPORTS                      [2021] 7 S.C.R.


A           Allowing the appeal, the Court
             HELD: 1.1 The submission raised on behalf of the
      respondent that de hors the bar under clause 16(2) of the General
      Conditions of Contract, the Arbitral Tribunal independently and
      on equitable ground and/or to do justice can award interest
B     pendente lite or future interest has no substance and cannot be
      accepted. Once the contractor agrees that he shall not be entitled
      to interest on the amounts payable under the contract, including
      the interest upon the earnest money and the security deposit as
      mentioned in clause 16(2) of the agreement/contract between
      the parties herein, the arbitrator in the arbitration proceedings
C     being the creature of the contract has no power to award interest,
      contrary to the terms of the agreement/contract between the
      parties and contrary to clause 16(2) of the agreement/contract in
      question. [Para 8.1][427-D-F]
             1.2 The respondent submitted that clause 16 has to be read
D     as a whole and on doing so, it can be said that clause 16 pertains
      specifically to earnest money and security deposit and that the
      same can in no way be read in a manner to imply a bar on pendente
      lite interest. It is required to be noted that clause 16(1) is with
      respect to earnest money/security deposit. However, clause 16(2)
E     is specifically with respect to interest payable upon the earnest
      money or the security deposit or amounts payable to the
      contractor under the contract. The words used in clause 16(2) is
      “or”. Therefore, the expression “amounts payable to the
      contractor under the contract” cannot be read in conjunction with
      “earnest money deposit” or “security deposit” by applying the
F     principle of ejusdem generis. The expression “amounts payable
      to the contractor under the contract” has to be read
      independently and disjunctively to earnest money deposit and
      security deposit as the word used is “or” and not “and” between
      “earnest money deposit”, “security deposit” and “amounts
G     payable to the contractor under the contract”. Therefore, the
      principle of ejusdem generis is not applicable in the instant case.
      [Para 10][427-F-H; 428-A-B]
           1.3 In view of clause 16(2) of the GCC, the arbitrator could
      not have awarded the interest, pendente lite or future interest
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         UNION OF INDIA v. MANRAJ ENTERPRISES                         415


on the amount due and payable to the contractor under the             A
contract in the instant case. [Para 11][430-H; 431-A]
      1.4 It is required to be noted that the concession if any by
the counsel which is contrary to the law laid down by this Court
shall not be binding on the parties. Further, merely because the
appellant has claimed interest, does not imply that the contractor    B
shall be entitled to interest pendente lite. Even if the appellant
would have been awarded interest, the same also was not
permissible and could have been a subject matter of challenge.
In short, there cannot be an estoppel against law. [Para 12][431-
B-D]
                                                                      C
      1.5 The Arbitrator erred in awarding pendente lite and
future interest on the amount due and payable to the contractor
under the contract in question and the same has been erroneously
confirmed by the High Court. [Para 13][431-D-E]
      1.6 The impugned judgment and order passed by the               D
Division Bench of the High Court in an appeal under Section 37
of the 1996 Act and the order passed by the Single Judge in an
application under Section 34 of the 1996 Act and the award passed
by the Arbitral Tribunal awarding pendente lite and future interest
on the amounts held to be due and payable to the contractor under
the contract are quashed and set aside. In view of specific bar       E
contained in clause 16(2) of the GCC, the contractor shall not be
entitled to any interest pendente lite or future interest on the
amounts due and payable to it under the contract. [Para 14][431-
E-F]
      Union of India v. M/s Pradeep Vinod Construction Co.            F
      Civil Appeal No. 2099 of 2007 decided on 03.08.2017
      – held inapplicable.
      Union of India v. Bright Power Projects (India) (P) Ltd.
      (2015) 9 SCC 695 : [2015] 6 SCR 488; Jaiprakash
      Associates Ltd. v. Tehri Hydro Development Corporation          G
      (India) Ltd. (2019) 17 SCC 786 : [2019] 2 SCR 41 –
      relied on.



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416             SUPREME COURT REPORTS                        [2021] 7 S.C.R.


A             Garg Builders v. Bharat Heavy Electricals Limited (2021)
              SCC OnLine SC 855 : 2021 (11) SCALE 693;
              Secretary, Irrigation Department, State of Orissa v.
              G. C. Roy (1992) 1 SCC 508 : [1991] 3 Suppl. SCR
              417; Raveechee and Company v. Union of India (2018)
              7 SCC 664 : [2018] 5 SCR 138; Kailash v. Nanhku
B
              (2005) 4 SCC 480 : [2005] 3 SCR 289; State of
              Karnataka v. Shree Rameshwara Rice Mills (1987) 2
              SCC 160 : [1987] 2 SCR 398; Ambica Construction v.
              Union of India (2017) 14 SCC 323 – referred to.

C                             Case Law Reference

      2021 (11) SCALE 693                referred to            Para 3

      [1991] 3 Suppl. SCR 417            referred to            Para 4

D     [2018] 5 SCR 138                   referred to            Para 4

      [2005] 3 SCR 289                   referred to            Para 4

      [1987] 2 SCR 398                   referred to            Para 6

E     (2017) 14 SCC 323                  referred to            Para 7

      [2015] 6 SCR 488                   relied on.             Para 11

      [2019] 2 SCR 41                    relied on.             Para 11

F             CIVIL APPELLATE JURISDICTION: Civil Appeal No.6592 of
      2021.

            From the Judgment and Order dated 12.04.2021 of the High Court
      of Delhi at New Delhi in FAO(OS) No.52 of 2018.
G           K. M. Nataraj, ASG, Balendu Shekhar, Shailesh Madiyal, Balaji
      Srinivasan, Varun Chugh, Amrish Kumar, Advs. for the Appellant.

             Vikas Singh, Sr. Adv., Varun Singh, Nitin Saluja, Ms. Deepeika
      Kalia, Kapish Seth, Mrityunjai Singh, Satwik Misra, Ms. Priyanka Khosla,
      Ms. Parul Sharma, Advs. for the Respondent.
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          UNION OF INDIA v. MANRAJ ENTERPRISES                                 417


      The Judgment of the Court was delivered by                               A
      M. R. SHAH, J.
       1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 12.04.2021 passed by the High Court of Delhi in FAO(OS)
No.52/2018, whereby the Division Bench of the High Court has dismissed
the said appeal of the appellant and has confirmed the order passed by         B
the learned Single Judge upholding the award of interest by the sole
arbitrator, the Union of India has preferred the present appeal.
       2. That a contract was entered into between the appellant and the
respondent with regard to three work contracts. A dispute arose between
the parties and both the parties went into arbitration for the resolution of   C
the dispute. The learned sole arbitrator vide award dated 17.01.2011
awarded an amount of Rs.78,81,553.08. The learned arbitrator also
awarded pendente lite and future interest at the rate of 12% and 18%
respectively on the entire awarded amount except for the earnest money
deposit and security deposit.                                                  D
       2.1 That the Union of India preferred an appeal under Section 34
of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as
the ‘1996 Act’) challenging the award made on claim no.5 vide award
dated 17.01.2011 pertaining to pre-suit, pendente lite and future interest
awarded on the balance due payment, from the due date of payment.              E
      2.2 The learned Single Judge of the High Court dismissed the said
appeal. The matter was carried further before the Division Bench by
way of FAO(OS) No. 52/2018 under Section 37 of the 1996 Act. By the
impugned judgment and order, the Division Bench of the High Court has
dismissed the said appeal and has confirmed the award made by the              F
learned arbitrator awarding pendente lite interest and future interest
awarded on the balance due payment. Hence, the present appeal.
       3. Shri K.M. Nataraj, learned Additional Solicitor General
appearing on behalf of the appellant – Union of India has vehemently
submitted that as agreed between the parties and as per clause 16(2) of
                                                                               G
the General Conditions of Contract (for short, ‘GCC’) governing the
contract between the parties, there was a bar against payment of interest.
It is submitted that as agreed between the parties and as per clause
16(2), no interest shall be payable upon the earnest money or the security
deposit or the amounts payable to the contractor under the contract.
                                                                               H
418             SUPREME COURT REPORTS                           [2021] 7 S.C.R.


A            3.1 It is urged that even under Section 31(7)(a) of the 1996 Act,
      unless otherwise agreed between the parties, the Arbitral Tribunal may
      include in the sum for which the award is made interest, at such rate as
      it deems reasonable, on the whole or any part of the money. It is submitted
      that if there is an expression “agreed between the parties” governing
      the contract that no interest shall be payable, parties are bound by such
B
      an agreement and no interest either pendente lite or future interest on
      the amount due and payable under the contract shall be awarded.
             3.2 It is contended that in the present case, clause 16(2) of the
      GCC governing the contract between the parties specifically bars payment
      of interest, not only on the earnest money or security deposit, but also
C     upon any amounts payable to the contractor under the contract. It is
      urged that since the parties are governed by the contract and the arbitrator
      and the arbitration proceedings are creatures of the contract, they cannot
      traverse beyond what has been contemplated in the contract between
      the parties.
D           3.3 It is further submitted that the power of the arbitrator to award
      pendente lite interest considering parimateria clause to clause 16(2) of
      the GCC has been examined by a three Judge Bench of this Court in the
      case of Union of India v. Bright Power Projects (India) (P) Ltd.,
      (2015) 9 SCC 695. It has been specifically observed and held in the
E     said case that in view of the specific contract between the parties and
      the bar for awarding the interest, the payment of interest was not
      permissible even on earnest money deposit or security deposit or amounts
      payable to the contractor under the contract. It is submitted that
      the expression “amounts payable to the contractor under the contract”
      is wide enough to cover every payment of amount payable under the
F     contract.
             3.4 It is submitted that the expression “money due under the
      contract” has been dealt with and considered by this Court in the case
      of Garg Builders v. Bharat Heavy Electricals Limited, 2021 SCC
      OnLine SC 855 = 2021 (11) SCALE 693. It is observed and held that if
G     the contract prohibits pre-reference and pendente lite interest, the
      arbitrator cannot award interest for the said period. It is contended that
      in the aforesaid case, the expression used was “any moneys due to the
      contractor” by the employer which includes the amount awarded by the
      arbitrator. Therefore, where the contract contains a specific clause which
H
          UNION OF INDIA v. MANRAJ ENTERPRISES                                 419
                     [M. R. SHAH, J.]

expressly bars payment of interest, then it is not open for the arbitrator     A
to grant pendente lite interest.
        3.5 It is further submitted by Shri Nataraj, learned ASG that the
expression “amounts payable to the contractor under the contract” cannot
be read with “earnest money deposit” or “security deposit” by applying
the principle of ejusdem generis. It is urged that the expressions have        B
been employed in clause 16(2) of the GCC disjunctively by use of the
word “or” and are intended to cover different situations which may arise.
It is submitted that the earnest money deposit and security deposit are
the amounts which are payable by the contractor whereas the amount
awarded by the arbitrator or any other amounts payable under the contract
could be under different circumstances and could be payable by either          C
party. It is submitted therefore that the expression “amounts payable to
the contractor under the contract” has been employed to cover such
other situations or circumstances. It is therefore submitted that it is not
possible to apply the principle of ejusdem generis. Heavy reliance is
placed on the decision of this Court in the case of Jaiprakash Associates      D
Ltd. v. Tehri Hydro Development Corporation (India) Ltd., (2019)
17 SCC 786 (paragraphs 22 & 23). It is contended that in the
aforesaid decision also, while discussing the power of the arbitrator to
grant pendente lite interest, it has been held that if the agreement between
the parties specifically prohibits grant of interest, the arbitrator cannot
award pendente lite interest in such cases.                                    E

       3.6 Making the above submissions and relying upon the aforesaid
decision, it is prayed to allow the present appeal and quash and set aside
the judgments and orders passed by the High Court as well as the award
passed by the learned arbitrator awarding the interest, pendente lite and
future interest.                                                               F

       4. The present appeal is vehemently opposed by Shri Vikas Singh,
learned Senior Advocate appearing on behalf of the respondent. It is
submitted that if the entire clause 16 of GCC is read, it is evident that it
pertains specifically to earnest money and security deposits and the same
can in no way be read in a manner to imply a bar on pendente lite              G
interest or other amounts as contended on behalf of the Union of India.
       4.1 It is submitted that none of the judgments cited by the learned
ASG has taken into account the fact that the law laid down by various
judicial pronouncements under the Arbitration Act, 1940 has been codified
statutorily under Section 31(7)(a) of the 1996 Act.                            H
420             SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A            4.2 It is submitted that a five Judge Bench of this Court in the
      case of Secretary, Irrigation Department, State of Orissa v. G.C.
      Roy, (1992) 1 SCC 508 had an occasion to consider the question of
      power of the arbitrator to award interest pendente lite and it has been
      held that when the agreement between the parties does not prohibit
      grant of interest and where the party claims interest and the dispute has
B
      been referred to an arbitrator, then the arbitrator does have the power to
      award interest pendente lite.
             4.3 It is submitted that even in the case of Raveechee and
      Company v. Union of India, (2018) 7 SCC 664, it has been held that
      the power to grant interest pendente lite is inherent in an arbitrator who
C     also exercises the power to do equity and unless the agreement expressly
      bars the arbitrator from awarding interest pendente lite, the arbitrator
      has all the powers to grant pendente lite interest. It is urged that in the
      present case, clause 16 does not bar an arbitrator to award interest
      pendente lite. It is submitted that the arbitrator is never a party to the
D     agreement and therefore it does not bar the arbitrator from awarding
      pendente lite interest. It is contended that the bar is on the parties from
      claiming interest on security deposits and earnest money and not on the
      arbitrator from awarding interest pendente lite on other amounts. In
      support of the same, reliance is placed on the decision of this Court in
      the case of Kailash v. Nanhku, (2005) 4 SCC 480, wherein this Court
E     while dealing with Order VIII Rule 1 CPC, has held that the bar is on a
      party before the Court and not on the court’s inherent powers. It is
      submitted that even on a fair reading of Section 31(7)(a) of the 1996
      Act, it is clear that the bar to claim interest is on the parties and not the
      arbitrator specifically.
F            4.4 It is contended that in the present case, the High Court has
      correctly placed reliance on Union of India v. M/s Pradeep Vinod
      Construction Co., Civil Appeal No. 2099 of 2007 decided on 03.08.2017
      and has rightly distinguished the judgments relied upon by the appellant
      as the said judgments did not contain any discussion on clause 16(2) of
G     the GCC. It is submitted that this Court in the case of M/s Pradeep
      Vinod Construction Co. (supra) has considered clause 16(2) of the
      GCC and after having considered the judgments relied upon by the
      appellant, namely, Bright Power Projects (India) P. Ltd. (supra) and
      other judgments relied upon, has held that no interest is awardable on
      earnest money and security deposit. It is submitted therefore that unless
H
          UNION OF INDIA v. MANRAJ ENTERPRISES                                421
                     [M. R. SHAH, J.]

there is an express and specific bar against the arbitrator to award the      A
pendente lite interest, the arbitrator is not precluded from awarding the
interest on the amounts awarded.
       4.5 It is urged that the decision of this Court in the case of Tehri
Hydro Development Corporation Ltd. (supra), relied upon on behalf
of the appellant, is not applicable to the facts of the case on hand as the   B
clauses in the said case were materially different from clause 16(2). It is
submitted that clauses 50 & 51 contained an express bar on payment of
interest on money due to the contractor and payment of interest on money
due to dispute.
       4.6 It is further submitted that as such before the High Court,        C
learned counsel appeared on behalf of the appellant conceded to the
fact that the issue raised in the present appeal is covered by the judgment
of this Court in the case of M/s Pradeep Vinod Construction Co.
(supra) and therefore once it has been conceded, thereafter it is not
open for the Union of India to raise the same issue after having made a
clear concession.                                                             D

       4.7 It is submitted that in the present case, even the appellant too
had claimed interest at the rate of 18% from the respondent by way of
counter-claim and the same has been recorded in the Arbitral Tribunal’s
award dated 17.01.2011. It is submitted that the appellant cannot now
be permitted to say that no interest pendente lite is liable to be awarded    E
by the learned arbitrator.
      4.8 Making the above submissions and relying upon the aforesaid
decisions, it is prayed to dismiss the present appeal.
       5. In rejoinder, it is submitted by Shri Nataraj, learned ASG that     F
decision of this Court in the case of M/s Pradeep Vinod Construction
Co.(supra) does not lay down any law/legal precedent. It is urged that
in any case, the same has been rendered prior to the three Judges Bench
decision in the case of Jaiprakash Associates Ltd. v. Tehri Hydro
Development Corporation (India) Ltd. (supra).
                                                                              G
      6. We have heard learned counsel for the respective parties at
length and pondered over the issues raised before us.
      6.1 The short question which is posed for the consideration of this
Court is in view of the specific clause 16(2) of the GCC, whether the
contractor is entitled to any interest pendente lite on the amounts payable
                                                                              H
422            SUPREME COURT REPORTS                           [2021] 7 S.C.R.


A     to the contractor other than upon the earnest money or the security
      deposit.
            6.2 Clause 16 of the GCC reads as under:
            “16: Earnest Money and Security Deposit- (1) The earnest money
            deposited by theContractor with his tender will be retained by the
B           Railway as part of security for the dueand faithful fulfilment of
            the contract by the contractor. The balance to make up this
            securitydeposit which will be 10 per cent of the total value of the
            contract, unless otherwise specifiedin the special conditions, if
            any, may be deposited by the Contractor in case or in the form of
C           Government Securities or may be recovered by percentage
            deduction from theContractor’s “on account” bills provided also
            that in case of a defaulting contractor theRailway may retain any
            amount due for payment to the contractor on spending ‘on
            accountbills’, so that the amount or amounts so retained may not
            exceed 10% of the total value ofthe contract.
D
            (2) No interest will be payable upon the earnest money or the
            security deposit or amountspayable to the Contractor under the
            Contract, but Government Securities deposited in termsof Sub-
            clause (1) of this Clause will be repayable with interest accrued
            thereon.”
E
            Thus, as such, as per clause 16(2) no interest would be payable
      upon the earnest money or the security deposit or amounts payable to
      the contractor under the contract.
             6.3 The scope of the expression “money due under the contract”
F     has been considered by this Court in the case of State of Karnataka v.
      Shree Rameshwara Rice Mills, (1987) 2 SCC 160. In paragraph 9, it
      is observed and held as under:
            “9. ……..What the Full Bench has failed to notice is that even
            though the damages become payable on account of breach of
            conditions of the contract, the liability to pay damages does not
G
            fall outside the terms of the contract but within the terms of the
            contract. The words “any amount that may become due or payable
            by the first party to the second party under any part of this
            agreement” have to be read in conjunction with the earlier portion
            of the clause stipulating liability on the party contracting with the
H           State to pay damages for breach of conditions. Therefore, it follows
         UNION OF INDIA v. MANRAJ ENTERPRISES                                  423
                    [M. R. SHAH, J.]

      that though damages become payable on account of breach of               A
      conditions of the agreement they nevertheless constitute amounts
      payable under the contract i.e. under one of the terms of the
      contract imposing liability to pay damages for breach of conditions.
      To illustrate the position if the agreement provides for a liquidated
      sum being paid as damages for breach of conditions instead of a
                                                                               B
      sum to be assessed by the Deputy Commissioner, it cannot be
      said that the specified damages will not be money due under the
      contract and hence the damages cannot be recovered under the
      Revenue Recovery Act. What applies to specified damages will
      likewise apply to damages which are quantified after
      assessment…..”                                                           C
       Therefore, it is held that though damages become payable on
account of breach of conditions of the agreement they nevertheless
constitute amounts payable under the contract.
      7. An identical question came up for consideration before this
Court in the recent decision of this Court in the case of Garg Builders        D
(supra). In the said case, this Court considered clause 17, which reads
as under:
      “Clause 17 : No interest shall be payable by BHEL on Earnest
      Money Deposit, Security Deposit or on any moneys due to the
      contractor.”                                                             E

                                                    [Bold letters are ours]
       After considering various decisions on award of interest pendente
lite and the future interest by the arbitrator and after discussing the
decisions of this Court in the cases of Ambica Construction v. Union           F
of India, (2017) 14 SCC 323 and Raveechee and Company
(supra)and other decisions on the point, this Court has observed in
paragraphs 9 to 18 as under:
              “9. On the other hand, Mr. Pallav Kumar, learned counsel
      for the respondent, submitted that Section 31(7)(a) of the 1996
                                                                               G
      Act gives paramount importance to the contract entered into
      between the parties and categorically restricts the power of an
      arbitrator to award pre-reference and pendente lite interest when
      the parties themselves have agreed to the contrary. He argued
      that if the contract itself contains a specific clause which expressly
      bars the payment of interest, then it is not open for the arbitrator     H
424      SUPREME COURT REPORTS                         [2021] 7 S.C.R.


A     to grant pendente lite interest. It was further argued that Ambica
      Construction (supra) is not applicable to the instant case because
      it was decided under the Arbitration Act, 1940 whereas the instant
      case falls under the 1996 Act. It was further argued that Section
      3 of the Interest Act confers power on the Court to allow interest
      in the proceedings for recovery of any debt or damages or in
B
      proceedings in which a claim for interest in respect of any debt or
      damages already paid. However, Section 3(3) of the Interest Act
      carves out an exception and recognizes the right of the parties to
      contract out of the payment of interest arising out of any debt or
      damages and sanctifies contracts which bars the payment of
C     interest arising out of debt or damages. Therefore, Clause 17 of
      the Contract is not violative of any the provisions of the Indian
      Contract Act, 1872. In light of the arguments advanced, the learned
      counsel prays for dismissal of the appeal.
             10. We have carefully considered the submissions of the
D     learned counsel for both the parties made at the Bar. The law
      relating to award of pendente lite interest by Arbitrator under
      the 1996 Act is no longer res integra. The provisions of the 1996
      Act give paramount importance to the contract entered into
      between the parties and categorically restricts the power of an
      arbitrator to award pre-reference and pendente lite interest when
E     the parties themselves have agreed to the contrary. Section
      31(7)(a) of the 1996 Act which deals with the payment of interest
      is as under:
             “31(7)(a) Unless otherwise agreed by the parties, where
      and insofar as an arbitral award is for the payment of money, the
F     arbitral tribunal may include in the sum for which the award is
      made interest, at such rate as it deems reasonable, on the whole
      or any part of the money, for the whole or any part of the period
      between the date on which the cause of action arose and the date
      on which the award is made.”
G           11. It is clear from the above provision that if the contract
      prohibits pre-reference and pendente lite interest, the arbitrator
      cannot award interest for the said period. In the present case,
      clause barring interest is very clear and categorical. It uses the
      expression “any moneys due to the contractor” by the employer
H     which includes the amount awarded by the arbitrator.
   UNION OF INDIA v. MANRAJ ENTERPRISES                                  425
              [M. R. SHAH, J.]

        12. In Sayeed Ahmed and Company v. State of Uttar                A
Pradesh, (2009) 12 SCC 26, this Court has held that a provision
has been made under Section 31(7)(a) of the 1996 Act in relation
to the power of the arbitrator to award interest. As per this section,
if the contract bars payment of interest, the arbitrator cannot award
interest from the date of cause of action till the date of award.
                                                                         B
       13. In Sree Kamatchi Amman Constructions v. Divisional
Railway Manager (Works), Palghat, (2010) 8 SCC 767, it was
held by this Court that where the parties had agreed that the interest
shall not be payable, the Arbitral Tribunal cannot award interest
between the date on which the cause of action arose to the date
of the award.                                                            C

      14. Bharat Heavy Electricals Limited v. Globe Hi-Fabs
Limited, (2015) 5 SCC 718, is an identical case where this Court
has held as under:
       “16. In the present case we noticed that the clause barring       D
interest is very widely worded. It uses the words “any amount
due to the contractor by the employer”. In our opinion, these words
cannot be read as ejusdem generis along with the earlier words
“earnest money” or “security deposit”.”
       15. In Sri Chittaranjan Maity v. Union of India, (2017)           E
9 SCC 611, it was categorically held that if a contract prohibits
award of interest for pre-award period, the arbitrator cannot award
interest for the said period.
      16. Therefore, if the contract contains a specific clause
which expressly bars payment of interest, then it is not open for        F
the arbitrator to grant pendente lite interest. The judgment on
which reliance was placed by the learned counsel for the appellant
in Ambica Construction (supra) has no application to the instant
case because Ambica Construction was decided under the
Arbitration Act 1940 whereas the instant case falls under the 1996
Act. This has been clarified in Sri Chittaranjan Maity (supra)           G
as under:
       “16. Relying on a decision of this Court in Ambica
Construction v. Union of India, (2017) 14 SCC 323, the learned
Senior Counsel for the appellant submits that mere bar to award
interest on the amounts payable under the contract would not be          H
426             SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A           sufficient to deny payment on pendente lite interest. Therefore,
            the arbitrator was justified in awarding the pendente lite interest.
            However, it is not clear from Ambica Construction (supra) as to
            whether it was decided under the Arbitration Act, 1940 (for short
            “the 1940 Act”) or under the 1996 Act. It has relied on a judgment
            of Constitution Bench in State of Orissa v. G.C. Roy, (1992) 1
B
            SCC 508. This judgment was with 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
C           the pre-award period, the arbitrator cannot award interest for the
            said period. Therefore, the decision in Ambica Construction
            (supra) cannot be made applicable to the instant case.”
                  17. The decision in Raveechee and Company (supra) relied
            on by the learned counsel for the appellant is again under the
D           Arbitration Act 1940 which has no application to the facts of the
            present case.
                  18. Having regard to the above, we are of the view that
            the High Court was justified in rejecting the claim of the appellant
            seeking pendente lite interest on the award amount.”
E            In the case of Garg Builders(supra), this Court observed and
      held that the decisions of this Court in the cases of Ambica Construction
      (supra) and Raveechee and Company (supra), relied upon by the
      learned senior counsel appearing on behalf of the respondent herein,
      shall have no application as the same were under the Arbitration Act,
F     1940. It is not in dispute that in the present case, the parties are governed
      by the 1996 Act.
             8. In the case of Bright Power Projects (India) (P) Ltd. (supra),
      while considering parimateria clause with clause 16(2) of the GCC, a
      three Judge Bench of this Court has held that when the parties to the
G     contract agree to the fact that interest would not be awarded on the
      amount payable to the contractor under the contract, they are bound by
      their understanding and having once agreed that the contractor would
      not claim any interest on the amount to be paid under the contract, he
      could not have claimed interest either before a civil court or before an
      Arbitral Tribunal. In the aforesaid case, this Court considered clause
H     13(3) of the contract, which reads as under:
          UNION OF INDIA v. MANRAJ ENTERPRISES                                  427
                     [M. R. SHAH, J.]

      “13.3 – No interest will be payable upon the earnest money and            A
      the security deposit or amounts payable to the contractor under
      the contract, but government securities deposited in terms of sub-
      clause (1) of this clause will be repayable with interest accrued
      thereon.”
       8.1. In the said decision, this Court also considered Section 31(7)(a)   B
of the 1996 Act. It is specifically observed and held that Section 31(7) of
the 1996 Act, by using the words “unless otherwise agreed by the parties”
categorically specifies that the arbitrator is bound by the terms of the
contract insofar as award of interest from the date of cause of action to
date of the award is concerned. It is further observed and held that
where the parties had agreed that no interest shall be payable, the Arbitral    C
Tribunal cannot award interest. Thus, the aforesaid decision of a three
Judge Bench of this Court is the answer to the submission made on
behalf of the respondent that despite the bar under clause 16(2) which is
applicable to the parties, the Arbitral Tribunal is not bound by the same.
Therefore, the contention raised on behalf of the respondent that de            D
hors the bar under clause 16(2), the Arbitral Tribunal independently and
on equitable ground and/or to do justice can award interest pendente lite
or future interest has no substance and cannot be accepted. Once the
contractor agrees that he shall not be entitled to interest on the amounts
payable under the contract, including the interest upon the earnest money
and the security deposit as mentioned in clause 16(2) of the agreement/         E
contract between the parties herein, the arbitrator in the arbitration
proceedings being the creature of the contract has no power to award
interest, contrary to the terms of the agreement/contract between the
parties and contrary to clause 16(2) of the agreement/contract in question
in this case.                                                                   F
       10. The further submission made on behalf of the respondent is
that clause 16 has to be read as a whole and on doing so, it can be said
that clause 16 pertains specifically to earnest money and security deposit
and that the same can in no way be read in a manner to imply a bar on
pendente lite interest. It is required to be noted that clause 16(1) is with    G
respect to earnest money/security deposit. However, clause 16(2) is
specifically with respect to interest payable upon the earnest money or
the security deposit or amounts payable to the contractor under
the contract. The words used in clause 16(2) is “or”. Therefore, the
expression “amounts payable to the contractor under the
                                                                                H
428            SUPREME COURT REPORTS                              [2021] 7 S.C.R.


A     contract”cannot be read in conjunction with “earnest money deposit”
      or “security deposit” by applying the principle of ejusdem generis. The
      expression “amounts payable to the contractor under the contract”
      has to be read independently and disjunctively to earnest money deposit
      and security deposit as the word used is “or” and not “and”between
      “earnest money deposit”, “security deposit” and “amounts payable to
B
      the contractor under the contract”. Therefore, the principle of ejusdem
      generis is not applicable in the present case. On the principle of ejusdem
      generis, this Court in the case of Tehri Hydro Development
      Corporation (India) Ltd. (supra), in paragraphs 22 and 23, has
      observed and held as under:
C           “22. 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: [Jaiprakash
D           Associates Ld. V. Tehri Hydro Development Corpn. (India) Ltd.,
            2012 SCC OnLine Del 6213]
            “18. The rule of ejusdem generis guides us that where two or
            more words or phrases which are susceptible of analogous meaning
            are coupled together, a noscitur a sociis, they are to be understood
E           to mean in their cognate sense and take colour from each other
            but only if there is a distinct genus or a category. Where this is
            lacking i.e., unless there is a category, the rule cannot apply.”
            As rightly held, the rule of ejusdem generis would be applied
            only if there is distinct genus or a category, which is lacking in the
F           instant case. This rule is applicable when particular words
            pertaining to a clause, category or genus are followed by general
            words. In such a situation, the general words are construed as
            limited to things of same kind as those specified. In that sense,
            this rule reflects an attempt “to reconcile incompatibility between
            the specific and general words in view of the other rules of
G           interpretation that all words in a statute are given effect, if possible,
            that a statute is to be construed as a whole and that no words in a
            statute were presumed to be superfluous”. [See Lokmat
            Newspapers (P) Ltd. v. Shankarprasad [Lokmat Newspapers
            (P) Ltd. v. Shankarprasad, (1999) 6 SCC 275].
H
   UNION OF INDIA v. MANRAJ ENTERPRISES                                   429
              [M. R. SHAH, J.]

23. In fact, construing the similar clause, this Court                    A
in BHEL v. Globe Hi-Fabs Ltd., (2015) 5 SCC 718 has held that
rule of ejusdem generis, is No. applicable inasmuch as : (BHEL
case [BHEL v. Globe Hi-Fabs Ltd., (2015) 5 SCC 718 : (2015)
3 SCC (Civ) 287] , SCC pp. 722-23, paras 12 & 15-16)
“12. The rule of ejusdem generis has to be applied with care              B
and caution. It is not an inviolable rule of law, but it is only
permissible inference in the absence of an indication to the contrary,
and where context and the object and mischief of the enactment
do not require restricted meaning to be attached to words of general
import, it becomes the duty of the courts to give those words their
plain and ordinary meaning. As stated [Quazi v. Quazi, 1980 AC            C
744 : (1979) 3 WLR 833 HL] by Lord Scarman:
‘If the legislative purpose of a statute is such that a statutory
series should be read ejusdem generis, so be it, the rule is helpful.
But, if it is not, the rule is more likely to defeat than to fulfil the
purpose of the statute. The rule like many other rules of statutory       D
interpretation, is a useful servant but a bad master.’
So a narrow construction on the basis of ejusdem generis rule
may have to give way to a broader construction to give effect to
the intention of Parliament by adopting a purposive construction.
                                                                          E
15. A word of caution is here necessary. The fact that the ejusdem
generis rule is not applicable does not necessarily mean that the
prima facie wide meaning of the word “other” or similar general
words cannot be restricted if the language or the context and the
policy of the Act demand a restricted construction. In the
expression “defect of jurisdiction or other cause of a like nature”       F
as they occur in Section 14(1) of the Limitation Act the generality
of the words “other cause” is cut down expressly by the words
“of a like nature”, though the rule of ejusdem generis is strictly
not applicable as mention of a single species “defect of jurisdiction”
does not constitute a genus. Another example that may here be             G
mentioned is Section 129 of the Motor Vehicles Act which
empowers any “police officer authorised in this behalf or other
person authorised in this behalf by the State Government” to detain
and seize vehicles used without certification of registration or
permit. The words “other person” in this section cannot be
                                                                          H
430            SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A           construed by the rule of ejusdem generis for mention of single
            species, namely, “police officer” does not constitute a genus but
            having regard to the importance of the power to detain and seize
            vehicles it is proper to infer that the words “other person” were
            restricted to the category of government officers. In the same
            category falls the case interpreting the words “before filing a written
B
            statement or taking any other steps in the proceedings” as they
            occur in Section 34 of the Arbitration Act, 1940. In the context in
            which the expression “any other steps” finds place it has been
            rightly construed to mean a step clearly and unambiguously
            manifesting an intention to waive the benefit of arbitration
C           agreement, although the rule of ejusdem generis, has No.
            application for mention of a single species viz. written statement
            does not constitute a genus.
            16. In the present case we noticed that the clause barring interest
            is very widely worded. It uses the words “any amount due to the
D           contractor by the employer”. In our opinion, these words cannot
            be read as ejusdem generis along with the earlier words “earnest
            money” or “security deposit”.”
              11. Further, heavy reliance is placed on the decision of this Court
      in the case of M/s Pradeep Vinod Construction Co. (supra) by the
E     learned counsel appearing on behalf of the respondent. The same shall
      not be applicable for the reason that the said decision is by a two Judge
      Bench and the contrary view taken by this Court in the case of Bright
      Power Projects (India) (P) Ltd. (supra) is by a three Judge Bench.
      Also, in the case of M/s Pradeep Vinod Construction Co. (supra),
      this Court has not considered the binding decision of this Court in the
F     case of Bright Power Projects (India) (P) Ltd. (supra), which is by a
      Bench of three Judges. Even otherwise, the same is prior to the decision
      of this Court in the case of Tehri Hydro Development Corporation
      (India) Ltd. (supra), and the said subsequent decision of this Court is
      also a three Judge Bench decision. Moreover, in the case of M/s Pradeep
G     Vinod Construction Co. (supra), though in clause 16(2), the expression
      used is “or amounts payable to the contractor under the contract”, this
      Court has only considered the non-award of interest on earnest money
      and security deposit. In any case, in view of the subsequent decisions of
      this Court, referred to hereinabove and in view of clause 16(2) of the
      GCC, the arbitrator could not have awarded the interest, pendente lite or
H
             UNION OF INDIA v. MANRAJ ENTERPRISES                               431
                        [M. R. SHAH, J.]

future interest on the amount due and payable to the contractor under           A
the contract in the instant case.
        12. The last submission made on behalf of the respondent is that
as the learned counsel appearing on behalf of the appellant herein, before
the High Court, conceded that the issue raised in the petition is covered
by the judgment of this Court in M/s Pradeep Vinod Construction Co.             B
(supra) and that even the appellant has claimed interest @ 18% against
the respondent-contractor, therefore it is not open for the appellant to
re-agitate the issue before this Court is concerned, it is required to be
noted that the concession if any by the counsel which is contrary to the
law laid down by this Court shall not be binding on the parties. Further,
merely because the appellant has claimed interest, does not imply that          C
the contractor shall be entitled to interest pendente lite. Even if the
appellant would have been awarded interest, the same also was not
permissible and could have been a subject matter of challenge. In short,
there cannot be an estoppel against law.
      13. In view of the aforesaid discussion and for the reasons stated        D
above, we hold that the learned Arbitrator in the instant case has erred
in awarding pendente lite and future interest on the amount due and
payable to the contractor under the contract in question and the same
has been erroneously confirmed by the High Court.
       14. Accordingly, the present appeal succeeds. The impugned               E
judgment and order passed by the Division Bench of the High Court in
an appeal under Section 37 of the 1996 Act and the order passed by the
learned Single Judge in an application under Section 34 of the 1996 Act
and the award passed by the learned Arbitral Tribunal awarding pendente
lite and future interest on the amounts held to be due and payable to the       F
contractor under the contract are hereby quashed and set aside. It is
held that in view of specific bar contained in clause 16(2) of the GCC,
the contractor shall not be entitled to any interest pendente lite or future
interest on the amounts due and payable to it under the contract.
      15. The appeal is allowed accordingly. However, in the facts and          G
circumstances of the case, there shall be no order as to costs.


Nidhi Jain                                                    Appeal allowed.


                                                                                H