Appeal No.372 of 1995,Notice of Motion No.734 of 1994,Award No. 46 of 1979

4th July, 1996

Petitioner Counsel: Mr. MAHENDRA SHAH with Mr. G.J.DESAI i/by Mr.I.S.KHEMANI
Respondent Counsel: Mr. M.P.S.RAO with Ms. KAVITA SHAH i/by Mr. A.G.SHAH, Mr. Z.A.ZARIWALLA

Cases Cited:
(1994) 4 SCC 665 [Para 1,4]
AIR 1989 SC 973 [Para 1,8]
AIR 1992 SC 2192 [Para 1,8]
AIR 1975 SC 1148 [Para 3]
(1981) 2 All ER 746 [Para 4]
AIR 1967 Bom 347 [Para 5]
AIR 1985 Raj 148 [Para 6]
AIR 1987 SC 593 [Para 7]
(1991) 6 JT 349 : AIR 1992 SC 732 [Para 8]
(1967) 1 SCR 324/329 : AIR 1967 SC 1032 [Para 8]
(1989) 1 SCR 318 [Para 8]
AIR 1993 SC 43 [Para 9]
AIR 1971 SC 530 [Para 9]

JUDGMENT

DR. B.P.SARAF, J.- The sole controversy in these appeals is whether Court can award interest under section 29 of the Arbitration Act from the "date of the award" or it can be awarded only from the "date of the decree". According to the appellant, in view of the clear language of section 29 of the Arbitration Act, 1940, interest can be awarded by the Court only from the date of the decree and not from the date of the award. Reliance is placed in support of this contention on the decision of the Supreme Court in Union of India Vs. Jain Associates, (1994) 4 SCC 665. This contention of the appellant is vehemently opposed by the learned counsel for the respondents who submits that the power of the Court under section 29 of the Arbitration Act is wide enough to enable it to grant interest even from the date of the award. Reliance is placed in support of this contention on the decisions of the Supreme Court in Gujarat Water Supply and Sewerage Board V. Unique Erectors (Gujarat) (P) Ltd. AIR 1989 SC 973 and Hindustan Construction Company Ltd. V. State of Jammu & Kashmir, AIR 1992 SC 2192. So far as the latest decision of the Supreme Court in Union of India V. Jain Associates (supra) is concerned, the learned counsel for the respondents submits that the same is contrary to and inconsistent with the above decisions of the Supreme Court and, therefore, a decision per incuriam and hence the ratio thereof should not be followed by this Court.

2. Before dealing with the rival submissions of the counsel for the parties in regard to the scope and ambit of the powers of the Court in the matter of grant of interest under section 29 of the Arbitration Act, it may be expedient to set out briefly the material facts of the case and some of the relevant dates. The dispute between the parties was referred to arbitration on 17th September, 1973 and the award was made on 15th March, 1979. The award was thereafter filed in the Court. Petition filed by respondent Nos. 1 and 2 for setting aside certain portions of the award was dismissed by the learned Single Judge by his order dated 20th/21st April, 1983. Appeal against the same was also dismissed by a Division Bench of this Court on 10th November, 1987. The matter was thereafter taken to the Supreme Court. The Supreme Court modified the award. In the meantime respondent No.1 took out a notice of motion before the learned Single Judge claiming decree in terms of the award. The learned Single Judge by his judgment and order dated 9th March, 1995, made the notice of motion absolute and passed decree in terms of the award, as modified by this Court as well as the Supreme Court with interest at the rate of 12% per annum from the date of the award till realisation. It is the latter part of the above order by which interest has been awarded by the Court from the "date of the award" which has been challenged by the appellants in these appeals on the ground that under section 29 of the Arbitration Act interest can be awarded by the Court only from the date of the award.

3. We have given our careful consideration to the rival submissions of the counsel for the parties. The sole question that arises for determination is whether interest can be awarded by the Court on the principal sum adjudged by an award from "the date of the award" or it can be granted only from the "date of the decree". The answer to this question would depend on the true and correct interpretation of section 29 of the Arbitration Act which provides for award of interest. Section 29 reads as follows :

" 29. Interest on awards. - Where and in so far as an award is for the payment of money the court may in the decree order interest, from the date of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree."

A plain reading of this section clearly goes to show that in a decree, the Court has been empowered to award interest only "from the date of the decree". The language of this section is clear and unambiguous and by no stretch of imagination or interpretation, the expression "the date of the decree" can be construed to mean "the date of the award". Any attempt to do so will amount to rewriting the section to provide for award of interest from "the date of the award" contrary to not only the clear language of the statute but also the clear intention of the Legislature which can be discerned from the fact that the words "from the date of the award" which appeared in section 29 in the Bill on the lines of section 11 of the English Arbitration Act of 1934, were substituted by the words "from the date of the decree" following the recommendation of the Select Committee to which the said Bill was referred by the Parliament. The Select Committee's recommendation on this aspect of the matter, which was accepted by the Parliament, reads as follows :

"Instead of fixing by the Act the rate of interest which an award shall bear and enacting that interest shall run from the date of the award, we have provided in accordance with the analogous provision in the code of Civil Procedure that the Court may fix the rate of interest, but we have made the date from which the interest shall run from the date of the decree."

(Emphasis supplied)

It is this suggestion of the Select Committee that was accepted by the Parliament and the words "from the date of the decree" in section 29, which appeared in the Bill, were substituted by the words "from the date of the decree".

This gives us an insight into the back-ground in which the Legislature provided in section 29 for grant of interest from "the date of the decree" and not from "the date of the award". Though the statement of objects and reasons or the Select Committee report cannot be the ultimate guide in interpretation of statutes, it can definitely be used as an aid to find out what really persuaded the Legislature to enact a particular provision or to use a particular expression therein. There is no bar on referring to and relying upon the Statement of Objects and Reasons and Notes on clauses or the Select Committee Report for that limited purpose. In fact, such material may be of great help to the Court in cases where clear words or expressions in a statute are sought to be construed to mean something different than what emerges from a plain reading thereof. In such cases, as observed by Krishna Iyer J. in B. Banerjee V. Anita Pan, AIR 1975 SC 1148, the Courts should follow the more legally realistic and socially responsible cannon of listening to the Legislative authors when their artifact is being interpreted that the 'sound proof theory' of ignoring voices from parliamentary debates, once sanctified by British tradition.

4. In the instant case, however, no aid or assistance is required from the Statement of Objects and Reasons or the Select Committee Report in view of the fact the meaning of the words "from the date of the decree" in section 29 is quite clear and no ambiguity, whether patent or latent, lurks within them. In such a case, the only safe and correct way of construing statutes, as stated by Lawaton LJ in Mc Cormick V. Horsepower Ltd. (1981) 2 All ER 746 (at p.751), is to apply the plain meaning of the words. If we apply this rule in the present case, there can be no dispute that the plain meaning of the words in section 29 of the Arbitration Act is that interest can be awarded by the Court from the date of the decree. By no rule or canon of interpretation, it can be construed to mean "from the date of the award".

5. The very same controversy whether a Court has the power to grant interest from the date of the award till payment came to be considered by a Single Judge Bench of this Court in Srikanta & Co. V. Union of India, AIR 1967 Bom 347. After elaborate discussion on the construction of section 29 of the Arbitration Act Tulzapurkar J. (as His Lordship then was) held as follows (at p. 354) :

"Section 29 of the Act is exhaustive of the whole law upon the subject of "interest on awards" and since the said section enables the Court to award interest on the principal sum adjudged by an award from the date of the decree onwards, it must be held that it carries with it the negative import that it shall not be permissible to the Court to award interest on the principal sum adjudged by an award for any period prior to the date of the passing of the decree."

6. The above decision was followed by the Rajasthan High Court in Ramsingh V. Ramsingh, AIR 1985 Raj. 148. In the above case, the High Court also considered the question whether section 34 of the Code of Civil Procedure can be applied in the case of an award brought before the Court and held that the said section has no application in such a case. The legal position was summed up by S.K.Mal Lodha, J. in the following words :

"S. 29 of the Act empowers the court where the award is for payment of money to award the reasonable rate of interest from the date of the decree. S.34 C.P.C. provides for award of pendente lite and further interest. It is thus clear that under S.29 of the Act, the Court can only award interest from the date of the decree of the Court till the realisation of the amount."

It was observed :

"Under S.34 of the Act (C.P.C.?) interest from the date of the suit to the date of the decree and from the date of the decree until realisation can be awarded. S.29 of the Act, however, does not grant that power to the court inasmuch as the court can grant interest only from the date of the decree at such rate as the court deems reasonable and that too, on the principal sum as adjudged by the award and confirmed by the decree."

(emphasis supplied)

7. Both these decisions recently came to be considered by the Supreme Court in Union of India V. Jain Associates (1994) 4 SCC 665. The Supreme Court, while dealing with an identical controversy whether interest pendente lite can be granted by the Court under section 29 of the Arbitration Act, 1940, on consideration of section 29 of the Act, categorically held that under section 29 the Court cannot grant interest pendente lite. The Supreme Court referred to the decision of this Court in Srikantia & Co. (supra) and the Rajesthan High Court in Ram Singh (supra) and summed up the legal position as follows :

" The first question that arises for consideration is whether the Court could award interest pendente lite. Section 29 of the Act says that insofar as award is, for the payment of money, the court may in the decree, order interest from the date of the decree at such rate as it deems reasonable, to be paid on the principal sum adjudged by the award and confirmed by the decree. In Srikantia & Co. V. Union of India it was held that Section 29 carries with it the negative import that it shall not be permissible to the court to award interest on t he principal sum adjudged in the award for a period prior to the date of the passing of the decree. The same principle was reiterated in Ram Singh V. Ram Singh. Section 29 of the Act empowers the Court, that where the award is for payment of money, to grant reasonable rate of interest on the principal amount adjudged and confirmed in the decree, only from the date of the decree. Section 34 CPC empowers the Court, where there is a decree for payment of money to grant interest pendente lite and future, till the date of realisation. Since Section 29 of the Act enables Court to grant interest on the principal amount adjudged in the award and confirmed in the decree only from the date of the decree, it carries a negative import with it that the Court has no power to grant interest pendente lite. The High Court, therefore, was not right in granting interest pendente lite, which the arbitrator himself had not granted."

(emphasis supplied)

The Supreme Court has thus categorically held that under section 29 of the Act the Court can grant interest only from the date of the decree and not from the date of the award. That is the clear ratio of the above decision and there can be no controversy in that regard.

8. The learned counsel for the respondents, however, submits that the ratio of the above decision should not be followed because it is a decision per in-curiam as it is contrary to and inconsistent with the earlier decision of the Supreme Court in Gujarat Water Supply and Sewerage Board V. Unique Electors (Gujarat) (P) Ltd., AIR 1989 SC 973, which has been relied upon by the learned Single Judge, and Hindustan Construction Company Ltd. V. State of Jammu & Kashmir, AIR 1992 SC 2192. We have carefully perused the above decisions. We, however, do not find any conflict between the decision of the Supreme Court in Union of India V. Jain Associates and the two decisions relied upon by the counsel for the respondents. The issue before the Supreme Court in Gujarat Water Supply and Sewerage Board V. Unique Electors (Gujarat) (P) Ltd. (supra) was "the power of the arbitrator to award interest for the period from the date of the award till the date of the decree" and not the power of the Court. Similarly, in Hindustan Construction Co. Ltd. V. State of Jammu & Kashmir (supra) also, the subject matter of challenge was award of interest by the arbitrator at the rate of 6% per annum from the date of reference to the date of payment or decree, whichever was earlier. The point at issue before the Supreme Court thus was the power of the arbitrator to award interest from the date of the award till the date of the decree or the date of realisation and it was in that context that the Supreme Court observed :

" The question of interest can be easily disposed of as it is covered by recent decisions of this Court. It is sufficient to refer to the latest decision of a five-Judge Bench of this Court in Secretary, Irrigation Department of Orissa V. C.C.Roy, (1991) 6 JT 349 : (AIR 1992 SC 732). Though the said decision deals with the power of the Arbitrator to award interest pendente lite, the principle of the decision makes it clear that the arbitrator is competent to award interest for the period commencing with the date of award to the date of decree or date of realisation, whichever is earlier. This is also quite logical for, while award of interest for the period prior to arbitrator entering upon the reference is a matter of substantive law, the grant of interest for the post-award period is a matter of procedure. Section 34 of the Code of Civil Procedure provides both for awarding of interest pendente lite as well as for the post decree period and the principle of S.34 has been held applicable to proceedings before the arbitrator. though the section as such may not apply. In this connection, the decision in Union of India v. Bango Steel Furniture (P) Ltd., (1967) 1 SCR 324/329 : (AIR 1967 SC 1032 at p.1035) maybe seen as also the decision in Gujarat Water Supply & Sewerage Board v. Unique Erectors, (1989) 1 SCR 318 : (AIR 1989 SC 973) which upholds the said power though on a somewhat different reasoning. We, therefore, think that the award on item No.8 should have been upheld."

On the other hand, the controversy before the Supreme Court in Union of India v. Jain Associates (supra), specifically pertained to the scope and ambit of the power of the Court to award interest under section 29 of the Arbitration Act and it was in that context that the Supreme Court held that section 29 enables the Court to grant interest from the date of the decree and not from the date of the award.

9. It is well-settled that a judgment must be read as a whole and the observations from the judgment have to be considered in t he light of the questions which were before the Court. As observed by Dr. A.S.Anand J. in CIT v. Sun Engineering Works P. Ltd., AIR 1993 SC 43 (at p. 57).:

"It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court to support their reasonings."

In this connection, the following note of caution given by the Supreme Court in Madhav Rao Jivaji Rao Scindia Bahadur v. Union of India, AIR 1971 SC 530 (at p.578), which was also quoted with approval in the above decision, is also apposite :

"It is difficult to regard a word, a clause or a sentence occurring in a judgment of this Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment."

10. From the above discussion, it is clear that the decision of the Supreme Court in Union of India v. Jain Associates (supra) is a binding authority on the powers of the Court to award interest under section 29 of the Act and following the same, there is no escape from the conclusion that the Court can award interest under section 29 of the Arbitration Act, 1940 only from the date of the decree and not from the date of the award.

11. In the instant case, no interest was awarded by the arbitrator. It was for the first time that while passing the decree in terms of the award, the learned Single Judge awarded interest under section 29 of the Arbitration Act from the date of the award till realisation which he could not have done having regard to the legal position set out above. We, therefore, modify the judgment and order of the learned Single Judge under appeal in so far as it relates to award of interest and direct that the decree in terms of the award shall be with interest at the rate of 12 per cent per annum from the date of the decree till realisation.

12. In the result these appeals are allowed to the extent indicated above. In the facts and circumstances of the case, we make no order as to costs.

Appeal allowed.