S.M Jhunjhunuwala, J.:— By this petition, the petitioner Union of India seeks to have the Award dated 7th June, 1995 filed in this Court and numbered as ‘Award No. 209 of 1995’ set aside.

2. The work of construction of sub-structure such as Abutments, Piles, Bed Block of proposed Road Over Bridge in lieu of level crossing No. 17 at Mahim (for short, ‘the said work’) was awarded to the respondent on the terms and conditions mentioned in Contract Agreement No. C & S/482 dated 11th February, 1981. Though the stipulated date for completion of the said work was 26th November, 1981, it was extended upto 15th September, 1982. The said work completed on 15th September, 1982. In respect of the said work executed by the respondent, the disputes and differences arose by and between the petitioner and the respondent and in view of existence of arbitration agreement by and between the parties, the respondent demanded reference thereof to arbitration. However, the Railway Administration declined to make reference to arbitration. The respondent, therefore, filed an Arbitration Suit in thus Court under section 20 of The Arbitration Act, 1940 (for short, ‘the Act’) for filing the arbitration agreement in Court and for order of reference to arbitration in accordance therewith. By an order passed on 7th January, 1988, the said Arbitration Suit was disposed of and pursuant to the directions of this Court, the general Mapper, Western Railway appointed one G. Rammohan, Chief Engineer (Survey), Western Railway and one Smt. Sunita Awasthi, Financial Adviser and Chief Accounts Officer (WST) as joint arbitrators vide reference letters dated 30th March, 1988 and 20th February, 1989. Since delay was caused in proceeding with the reference, the respondent filed Arbitration Petition No. 81 of 1991 in this Court for removal of the said arbitrators and appointment of another arbitrator in place thereof. By the order dated 30th November, 1984 passed by this Court in the said Arbitration Petition No. 81 of 1991, the said G. Rammohan and Smt. Sunita Awasthi were removed as arbitrators and one S.C Pandian, Chief Engineer (TP), Central Railway was appointed as the Sole Arbitrator in their place. The Court directed the Arbitrator to make the Award within four months from the date of entering upon the reference. The Sole Arbitrator has made the Award on 7th June, 1995 which has been filed in this Court and numbered as ‘Award No. 209 of 1995’ (for short, ‘the said Award’). By this petition, the petitioner has challenged the said Award only to the extent of award of interest by the Sole Arbitrator from 30th March, 1988 till the date of the decree of the Court or payment by the petitioner, which ever is earlier. Ms. Shah, the learned Counsel appearing for the petitioners, has submitted that the Sole Arbitrator failed to appreciate documentary evidence on record as well as terms and conditions of the said contract including the special conditions thereof and while awarding interest as awarded, travelled beyond such terms and conditions and as such, the said Award pertaining to the interest awarded with effect from 30th March, 1988 being bad in law is liable to be set aside. Ms. Shah further submitted that Clause 16(3) of the terms and conditions of the said contract specifically provided that no interest would be payable by the petitioner upon the earnest money and the security deposit or amounts payable to the respondent under the Contract and in view of specific prohibition for grant of interest as contained in Clause 16(3), the Sole-Arbitrator could not have awarded interest to the respondent and since the interest has been awarded in contravention and/or breach of the express term of the Contract, the said Award to that extent is bad in law. In support of her submission, Ms. Shah has put reliance on the judgment of the Supreme Court in the case of (Secretary, Irrigation Department, Government of Orissa v. G.C Roy)1, reported in (1992) 1 SCC 508 : A.I.R 1992 S.C 732.

3. Mr. Kamdar, the learned Counsel appearing for the respondent, has supported the said Award and submitted that the Sole Arbitrator has rightly awarded interest pendente lite from 30th March, 1988 since awarding of such interest by the Sole - Arbitrator did not fall within the ambit and scope of said Clause 16(3) of the General Conditions of Contract forming part of the terms and conditions of the said contract and as such, the Sole Arbitrator has neither ignored the express terms and conditions of the said Contract nor travelled beyond the same nor acted in contravention or breach thereof. In support of his submission, Mr. Kamdar has put reliance on the judgment of the Supreme Court in the case of (Board Of Trustees For The Port Of Calcutta v. Engineers-De-Space-Age)2, reported in (1996) 1 S.C Cases 516.

4. The said Award is non-speaking award. The Sole Arbitrator has awarded respondent's claim for interest at the rate of 8% per annum from 30th March, 1988 on the principal sum of Rs. 1,52,052/- adjudged as payable by the petitioner to the respondent. Such interest has been awarded till the date of decree of the Competent Court or payment by the petitioner whichever is earlier. In view of the appointment of the arbitrators by the General - Manager, Western Railway vide the above referred reference letters dated 30th March, 1988 and 20th February, 1989, there is no doubt that the Sole Arbitrator did not award any interest for pre-reference period but has awarded pendente lite interest i.e for post reference period only. Even in the case of G.C Roy, on which reliance has been placed by Ms. Shah, the Supreme Court, white dealing with powers of an arbitrator to award pendente lite interest has held:—

“A person deprived of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of section 34, C.P.C, and there is no reason or principle to hold otherwise in the case of arbitrator.”

5. The Supreme Court has further held:

“An Arbitrator is an alternative form for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties, if the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the Court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator. This would lead to multiplicity of proceedings. An arbitrator is the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, as along as they are not opposed to law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement.”

6. The Supreme Court has further held:—

“Over the years, the English and Indian Courts have acted on the assumption that where the agreement does not prohibit and a party to the reference a claim for interest, the arbitrator must have the power to award interest pendente lite, interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred. Having regard to the above considerations the following principle should be followed in the matter of awarding interest pendente lite by the arbitrator:

Where the agreement between the parties does not 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 pendente lite. This is for the reason that in such a case it must be presumed that 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 necessarily award interest pendente lite. 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.”

7. The said Clause 16(3) of the General Conditions of Contract reads as under:

“16(3) No interest will be payable upon the earnest money and 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. This clause of the Contract has to be strictly construed for the reasons that ordinarily a person who has legitimate claim is entitled to payment within a reasonable time and if the payment has been delayed beyond reasonable time he can legitimately claim to be compensated for that delay whatever nomenclature one may give to his claim in that behalf. Strictly construed the term of the contract merely prohibits the Railway Authorities from paying interest to the contractor upon the earnest money and security deposit or amounts payable to the contractor under the Contract but once the matter goes to arbitration the discretion of the arbitrator is not, in any manner, stifled by this term of the Contract and the arbitrator would be entitled to consider the question of grant of interest pendente lite and award interest if he finds the claim to be justified.

9. In the case of Board of Trustees for the Port of Calcutta, (supra) a question similar to the question in the instant case arose for consideration by the Supreme Court. In that case, the contract between the parties did contain prohibition against the payment of interest on delayed payments. Clause 13(g) of that Contract was as under:

“No claim for interest will be entertained by the Commissioners with respect to any money or balance which may be in their hands owing to any dispute between themselves and the Contractor or with respect to any delay as the part of the Commissioners in making interim or final payment or otherwise.”

10. In that case, the Supreme Court was also not dealing with a case in regard to award of interest for the period prior to the reference but with a case in regard to award of interest by the arbitrator post reference. The Supreme Court considered whether in view of sub-clause (g) of Clause 13 of that Contract extracted above, the arbitrator was prohibited from granting interest under the Contract. The Supreme Court held that the said Clause 13(g) merely prohibited Commissioner from entertaining any claim for interest and did not prohibit the arbitrator from awarding interest pendente lite. While referring to the decision of the Constitution Bench in the case of G.C Roy, it was held by the Supreme Court as follows:

“Clause has to be strictly construed for the simple reason that as pointed out by the Constitution Bench, ordinarily, a person who has a legitimate claim is entitled to payment within a reasonable time and if the payment has been delayed beyond reasonable time he can legitimately claim to be compensated for that delay whatever nomenclature one may give to his claim in that behalf.”

11. The Supreme Court further held that under the said clause in the contract the arbitrator was in no manner prohibited from awarding interest pendente lite.

12. Accordingly, Clause 16(3) did not prohibit the Sole Arbitrator to grant interest pendente rite and hence, I find no infirmity in the said Award made by the Sole Arbitrator.

13. Even otherwise, if there was a dispute as to whether under Clause 16(3) of the said Contract the Sole Arbitrator was prohibited from awarding interest pendente lite, that was a matter which fell within the jurisdiction of the Sole Arbitrator, as the Sole Arbitrator was to interpret the said Clause 16(3) and decide whether that clause prohibited him from awarding interest pendente lite. Hence, it cannot be said that the Sole Arbitrator had wandered outside the said Contract to deny him jurisdiction to decide the question regarding payment of interest pendente lite. In my view, the Sole Arbitrator was well within his jurisdiction in awarding interest pendente lite.

14. In view of the above, I see no merit in this petition and dismiss at this stage itself. There shall, however, be no order as to costs of the petition. In view of refusal to set aside the said Award, Mr. Kamdar applied for decree in terms of the said Award. In view of rule 787(5) of the rules of this Court as applicable on its Original Side and since the petition of the petitioner to have the said Award set aside has been dismissed, the respondent is entitled for decree in terms of the said Award. Hence, judgment is pronounced and decree passed in terms of the Award dated 7th June, 1985 filed in this Court and numbered as ‘Award No. 209 of 1995’. The petitioner is also ordered and decreed to pay further interest at the rate of 8% per annum on the principal sum of Rs. 1,52,052/- from the date hereof tilt payment or realisation, whichever is earlier.

15. C.C expedited.

16. Petition dismissed.