The New India Assurance Company Limited and ors. Vs. M/S. Alan Scott Industries Limited, and ors. - Court Judgment

Excerpt:
revision filed under article 227 of the constitution of india against the order dated 30.04.2010 returning the execution petition based on the award dated 22.01.2010 passed in o.s. no. 186 of 2009 on the file of the learned principal district court, erode1. arbitration petition no.101 of 2007 challenges an award made by the arbitral tribunal consisting of three arbitrators dated 13th june, 2006. by an order and judgment dated 5th june, 2008, the learned single judge found that the arbitral tribunal had not dealt with three contentions viz. the non arbitrability of the dispute; that the respondent had accepted a sum of rs.1,10,46,134/- in full and final settlement of the award and whether the respondent is entitled to claim any interest in the absence of a contract and if so, at what rate. the learned judge, accordingly, deferred the hearing of the other grounds of challenge till the decision of the arbitral tribunal on these questions. in other words, instead of setting aside the award, the learned judge considered it appropriate to remit the award to the arbitral tribunal for a decision on these three issues. 3 arbp101.07.sxw the arbitral tribunal, therefore, made and published what is termed as an auxillary award dated 5th may, 2009. the petitioner has challenged the auxillary award by filing the above arbitration petition no.1016 of 2009.2. both the arbitration petitions are, therefore, disposed of by this common judgment.3. the petitioner had issued two fire and special perils insurance policies in favour of the respondent for their socks manufacturing plant. under the first policy, the respondent insured the raw materials, stock in process, finished, semi-finished goods and packing material. under the other policy, the respondent insured the premises, machinery etc. under the policies, compensation was payable either on a depreciated value basis or, if the insured was able to reinstate/ replace the plant and machinery, on a reinstatement value basis provided the reinstatement/replacement was carried out within twelve months from the date of the loss or within such extended period as may have been allowed by the petitioner in writing. on 16th november, 2002, a fire occurred in the respondent's plant. the 4 arbp101.respondent informed the petitioner about the same. the petitioner appointed m/s. dilbhag singh & co. to carry out a preliminary survey. a preliminary report dated 27th november, 2002 was issued by the surveyor.4. thereafter, on 18th november, 2002, the petitioner appointed m/s. b.p. shah & associates (hereinafter referred to as "the surveyors") as the final surveyors to survey and assess the loss caused by the fire. the surveyors issued a preliminary report on 2nd december, 2002 and an interim report on 14th january, 2003. the interim report recommended payment of rs.80,00,000/-. the surveyors issued a final survey report on 8th march, 2004. the loss, on a reinstatement value basis, was assessed at rs.2,17,92,373.13 and on a depreciated value basis at rs.1,99,01,637.04. the assessment was based on the euro exchange rate of rs.52/-.5. the petitioner carried out other investigations which do not require any detailed mention. suffice it to state that one of the investigating agencies m/s. v.b. associates reported that the cause of the fire was not malicious and that it was accidental. there is no 5 arbp101 dispute in this regard.6. correspondence ensued between the parties wherein the respondent requested interim payment to assist it in re-instituting the plant and machinery and also an extension of twelve months to carry out the reinstatement/replacement.the petitioner made an on-account payment of rs. 80,00,000/- on 30th october, 2003.the respondent requested a further extension and on- account payment which was apparently not agreed to.7. ultimately, the respondent, by a letter dated 1st january, 2005, referred to the discussions between the parties and gave its consent for settling the loss at the depreciated value basis which amounted to rs.1,99,01,637/-, subject to adjustment of the payment already received of rs.80,00,000/-. by a letter dated 11th april, 2005, the respondent reserved its right for settlement on reinstatement value basis. details about the utilisation of the on-account payment of rs. 80,00,000/- were also furnished.6 arbp101.8. thereafter, almost fifteen months later, the surveyor issued an amended report on 24th may, 2005. the amount due on the depreciated value basis was reduced to rs.1,90,55,577.97. this reduction was on account of altering the euro exchange rate from rs.52/- to rs.48.625/-. under cover of a letter dated 8th june, 2005, the petitioner enclosed a cheque in the sum of rs.1,10,46,134/-. in other words, the aggregate amount paid was short by rs.8,55,503/- on the basis of the depreciated value calculated in the final report dated 8th march, 2004. correspondence ensued in this regard between the parties. the petitioner having failed to pay the difference of rs.8,55,503/-, disputes arose between the parties which were referred to the arbitral tribunal.9. the award, including the auxillary award, was challenged before me on two grounds. before dealing with the same, it is necessary to mention that the auxillary award deals with the first two questions mentioned in the order dated 5th june, 2008, viz. the non- arbitrability of the dispute and that the respondent had accepted a sum of rs.1,10,46,134/- in full and final settlement of the award. the award in this regard was not questioned at the hearing. in any event, a 7 arbp101.07.sxw challenge in this regard would be unsustainable.10. i have examined the award even on these two questions which were not raised before me. the arbitral tribunal has dealt with these questions in detail and if i may say, with respect, in a well reasoned auxillary award.for instance, they have not merely stated that though the receipts executed by the respondents mentioned that the payments thereunder were in full and final satisfaction, it was not so. the arbitral tribunal has considered the legal position, including the various authorities in this regard. the arbitral tribunal has analysed all the facts which transpired from the time the fire broke out till the receipt of the payment while coming to the conclusion. it is on an analysis of these facts that the arbitral tribunal came to the conclusion that the receipts had not been executed in full and final settlement of the award and that the receipts were issued under coercion and in circumstances where the respondent had no option but to issue such receipts. the arbitral tribunal found as a matter of fact that had the receipts not been issued, the payments, which were already inordinately delayed, would never have been made which would have 8 arbp101.sxw affected the respondent drastically. the petitioner knew about the same.11. the analysis of the evidence in this regard can, by no stretch of imagination, be deemed perverse or unsustainable. it is a highly probable result of an appreciation of all the facts on record. thus, even if i were to come to a different conclusion on an appreciation of the evidence, it would not justify my setting aside the award.12. thus the first two questions stipulated in the order dated 5th june, 2008, were rightly answered in the respondent's favour. this brings me to the first ground of challenge to the award.13. mr. sheth, the learned counsel appearing on behalf of the petitioner stated that the award is perverse, in that it failed to take into consideration the correct exchange rate for the euro viz. rs.48.625 and wrongly considered the same at rs.52/- per euro. it was contended that there was no evidence on the basis of which the arbitral tribunal could have fixed the exchange rate at rs.52/- per euro.9 arbp101.14. the submission is not well founded. even assuming that no evidence of exchange rate in terms of quotations were furnished before the arbitral tribunal, it would make no difference in the facts and circumstances of the present case. the arbitral tribunal placed considerable reliance upon the fact that the surveyor, who was appointed by the petitioner, had himself while making the final report on 8th march, 2004, taken the euro exchange rate at rs.52/-. the arbitral tribunal expressed surprise as to how this surveyor, who was senior and experienced had, after a period of about fifteen months, altered this conversion rate to rs.48,625/-. as noted by the arbitral tribunal under the insurance regulatory and development authority (protection of policyholders' interests) regulations, 2002 (hereinafter referred to as "irda") clarifications to the report could have been called for within fifteen days. the same was not done and convincing reasons were not placed by the respondent for the delay in finalising the payment. the arbitral tribunal found the petitioner having violated the provisions of regulation 9 of the irda on several counts. in these circumstances, the arbitral tribunal cannot be faulted for having proceeded on the basis that the rate fixed by the surveyor 10 arbp101.07.sxw appointed by the petitioner initially was the correct rate. this is especially so in the absence of any valid, convincing reasons having been furnished by the petitioner/petitioner's surveyor for changing the exchange rate. i cannot fault the arbitral tribunal for not having accepted the petitioner/ petitioner's surveyor's contention regarding there being a mistake without their having adduced some evidence to establish the same.15. it is interesting to note the surveyor's evidence. he stated that on 11th april, 2005, the insurer i.e. the petitioner wanted the calculation with the exchange rate of rs.48.625 which was available from the website and that he, accordingly, gave the said calculation. in the cross-examination, there is no evidence which establishes that the exchange rate of rs.52/- for the euro was incorrect. the quotations on the website do not necessarily indicate the final exchange rate in all cases and the availability of exchange at that rate from all dealers.16. the challenge to the award in this regard is, therefore, rejected. 11 arbp101.17. the next challenge to the award is the grant of interest upto the date of the award at eighteen per cent per annum. mr. sheth stated that the insurance policies do not contain any provision for interest. he admitted that the interest is payable in view of the provisions of regulation 9 of the irda. regulation 9 reads as under :- "9. claim procedure in respect of a generalinsurance policy(1) an insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as maybe allowed by the insurer. on receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. in cases where a surveyor has to be appointed for assessing a loss/claim, it shall be done so within 72 hours of the receipt of intimation from the insured.(2) where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. the surveyor shall be subjected to the code of conduct laid down by the authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. in no case shall a 12 arbp101.07.sxw surveyor take more than six months from the date of his appointment to furnish his report.(3) if an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. such a request may be made by the insurer within 15 days of the receipt of the original survey report.(4) the surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer. (5) on receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. if the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be. (6) upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. in the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it."18. it was submitted that there was no evidence of the bank rate prevalent at the relevant time. the arbitral tribunal awarded interest at eighteen per cent per annum. the submission, therefore, is that 13 arbp101.07.sxw though interest could have been awarded under regulation 9(6), there was no evidence that the bank rate prevalent at the material time was sixteen per cent.19. i will presume that there was no independent evidence furnished as to the bank rate prevalent at the material time. i would be reluctant, however, to set aside the award on this ground in the facts of the present case. it is important to note that in the statement of claim, the respondent claimed interest at eighteen per cent per annum. the claim obviously was, at least, purportedly on the basis that it was as per law.in the reply to the statement of claim, the petitioner merely denied that the claimant i.e. the respondent is entitled to interest or interest at eighteen per cent per annum. there is no allegation that the rate of interest at eighteen per cent per annum was contrary to law. the averment, in fact, indicates that what was in fact denied was the right to claim interest at all. the auxillary award deals with the award of interest and the reasons for the same in detail. the arbitral tribunal has applied theprincipleunderregulation 9(6) in awarding interest. the liability to pay interest is not denied. in view 14 arbp101.07.sxw of the pleadings and in view of there being nothing on record to indicate that the implied assertion that the rate of eighteen per cent claimed in the statement of claim is as per law and in view of the fact that there is no evidence to indicate the contrary, i cannot fault the arbitral tribunal for having allowed interest at eighteen per cent per annum.20. at the highest, even in the event of there having been any evidence on the part of the petitioner about the bank rate being less than sixteen per cent, the award could have been modified by reducing the rate of interest. in the absence of anything to suggest that the rate of interest was otherwise than as claimed, i see no reason to do so. even assuming this to be a lacunae/error, the same could have been filled up/remedied without any difficulty. had the respondent suggested another rate of interest, i would readily have modified the award, had i found the suggestion to be justified.21. the challenge regarding the award of interest is also, therefore, rejected.15 arbp101.22. lastly, i see nothing wrong in the arbitral tribunal having awarded interest even for the period from the date of the interim report dated 14th january, 2003, and the on-account payment of rs. 80,00,000/- on 29th october, 2003. the arbitral tribunal held that there was an inordinate delay in finalising the payment. in the circumstances, the arbitral tribunal having awarded interest during this period, cannot be faulted.23. there are a few observations in the auxillary award which appear to be incorrect. however the award can be sustained even on the basis of the other findings in the award. the apparently incorrect observations therefore do not warrant setting aside the award.24. both the petitions are, therefore, dismissed with costs, fixed at rs.10,000/- to be paid on or before 31st october, 2010. this order is stayed upto 31st october, 2010, to enable the petitioner to challenge the same.

Judgment:
1. Arbitration Petition No.101 of 2007 challenges an award made by the arbitral tribunal consisting of three arbitrators dated 13th June, 2006. By an order and judgment dated 5th June, 2008, the learned single Judge found that the arbitral tribunal had not dealt with three contentions viz. the non arbitrability of the dispute; that the Respondent had accepted a sum of Rs.1,10,46,134/- in full and final settlement of the award and whether the Respondent is entitled to claim any interest in the absence of a contract and if so, at what rate. The learned Judge, accordingly, deferred the hearing of the other grounds of challenge till the decision of the arbitral tribunal on these questions. In other words, instead of setting aside the award, the learned Judge considered it appropriate to remit the award to the arbitral tribunal for a decision on these three issues. 3 ARBP101.07.sxw The arbitral tribunal, therefore, made and published what is termed as an auxillary award dated 5th May, 2009. The Petitioner has challenged the auxillary award by filing the above Arbitration Petition No.1016 of 2009.

2. Both the Arbitration Petitions are, therefore, disposed of by this common judgment.

3. The Petitioner had issued two fire and special perils insurance policies in favour of the Respondent for their socks manufacturing plant. Under the first policy, the Respondent insured the raw materials, stock in process, finished, semi-finished goods and packing material. Under the other policy, the Respondent insured the premises, machinery etc. Under the policies, compensation was payable either on a depreciated value basis or, if the insured was able to reinstate/ replace the plant and machinery, on a reinstatement value basis provided the reinstatement/replacement was carried out within twelve months from the date of the loss or within such extended period as may have been allowed by the Petitioner in writing. On 16th November, 2002, a fire occurred in the Respondent's plant. The 4 ARBP101.Respondent informed the Petitioner about the same. The Petitioner appointed M/s. Dilbhag Singh & Co. to carry out a preliminary survey. A preliminary report dated 27th November, 2002 was issued by the surveyor.

4. Thereafter, on 18th November, 2002, the Petitioner appointed M/s. B.P. Shah & Associates (hereinafter referred to as "the surveyors") as the final surveyors to survey and assess the loss caused by the fire. The surveyors issued a preliminary report on 2nd December, 2002 and an interim report on 14th January, 2003. The interim report recommended payment of Rs.80,00,000/-. The surveyors issued a final survey report on 8th March, 2004. The loss, on a reinstatement value basis, was assessed at Rs.2,17,92,373.13 and on a depreciated value basis at Rs.1,99,01,637.04. The assessment was based on the Euro exchange rate of Rs.52/-.

5. The Petitioner carried out other investigations which do not require any detailed mention. Suffice it to state that one of the investigating agencies M/s. V.B. Associates reported that the cause of the fire was not malicious and that it was accidental. There is no 5 ARBP101 dispute in this regard.

6. Correspondence ensued between the parties wherein the Respondent requested interim payment to assist it in re-instituting the plant and machinery and also an extension of twelve months to carry out the reinstatement/replacement.The Petitioner made an on-account payment of Rs. 80,00,000/- on 30th October, 2003.The Respondent requested a further extension and on- account payment which was apparently not agreed to.

7. Ultimately, the Respondent, by a letter dated 1st January, 2005, referred to the discussions between the parties and gave its consent for settling the loss at the depreciated value basis which amounted to Rs.1,99,01,637/-, subject to adjustment of the payment already received of Rs.80,00,000/-. By a letter dated 11th April, 2005, the Respondent reserved its right for settlement on reinstatement value basis. Details about the utilisation of the on-account payment of Rs. 80,00,000/- were also furnished.6 ARBP101.

8. Thereafter, almost fifteen months later, the surveyor issued an amended report on 24th May, 2005. The amount due on the depreciated value basis was reduced to Rs.1,90,55,577.97. This reduction was on account of altering the Euro exchange rate from Rs.52/- to Rs.48.625/-. Under cover of a letter dated 8th June, 2005, the Petitioner enclosed a cheque in the sum of Rs.1,10,46,134/-. In other words, the aggregate amount paid was short by Rs.8,55,503/- on the basis of the depreciated value calculated in the final report dated 8th March, 2004. Correspondence ensued in this regard between the parties. The Petitioner having failed to pay the difference of Rs.8,55,503/-, disputes arose between the parties which were referred to the arbitral tribunal.

9. The award, including the auxillary award, was challenged before me on two grounds. Before dealing with the same, it is necessary to mention that the auxillary award deals with the first two questions mentioned in the order dated 5th June, 2008, viz. the non- arbitrability of the dispute and that the Respondent had accepted a sum of Rs.1,10,46,134/- in full and final settlement of the award. The award in this regard was not questioned at the hearing. In any event, a 7 ARBP101.07.sxw challenge in this regard would be unsustainable.

10. I have examined the award even on these two questions which were not raised before me. The arbitral tribunal has dealt with these questions in detail and if I may say, with respect, in a well reasoned auxillary award.For instance, they have not merely stated that though the receipts executed by the Respondents mentioned that the payments thereunder were in full and final satisfaction, it was not so. The arbitral tribunal has considered the legal position, including the various authorities in this regard. The arbitral tribunal has analysed all the facts which transpired from the time the fire broke out till the receipt of the payment while coming to the conclusion. It is on an analysis of these facts that the arbitral tribunal came to the conclusion that the receipts had not been executed in full and final settlement of the award and that the receipts were issued under coercion and in circumstances where the Respondent had no option but to issue such receipts. The arbitral tribunal found as a matter of fact that had the receipts not been issued, the payments, which were already inordinately delayed, would never have been made which would have 8 ARBP101.sxw affected the Respondent drastically. The Petitioner knew about the same.

11. The analysis of the evidence in this regard can, by no stretch of imagination, be deemed perverse or unsustainable. It is a highly probable result of an appreciation of all the facts on record. Thus, even if I were to come to a different conclusion on an appreciation of the evidence, it would not justify my setting aside the award.

12. Thus the first two questions stipulated in the order dated 5th June, 2008, were rightly answered in the Respondent's favour. This brings me to the first ground of challenge to the award.

13. Mr. Sheth, the learned counsel appearing on behalf of the Petitioner stated that the award is perverse, in that it failed to take into consideration the correct exchange rate for the Euro viz. Rs.48.625 and wrongly considered the same at Rs.52/- per Euro. It was contended that there was no evidence on the basis of which the arbitral tribunal could have fixed the exchange rate at Rs.52/- per Euro.9 ARBP101.

14. The submission is not well founded. Even assuming that no evidence of exchange rate in terms of quotations were furnished before the arbitral tribunal, it would make no difference in the facts and circumstances of the present case. The arbitral tribunal placed considerable reliance upon the fact that the surveyor, who was appointed by the Petitioner, had himself while making the final report on 8th March, 2004, taken the Euro exchange rate at Rs.52/-. The arbitral tribunal expressed surprise as to how this surveyor, who was senior and experienced had, after a period of about fifteen months, altered this conversion rate to Rs.48,625/-. As noted by the arbitral tribunal under the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002 (hereinafter referred to as "IRDA") clarifications to the report could have been called for within fifteen days. The same was not done and convincing reasons were not placed by the Respondent for the delay in finalising the payment. The arbitral tribunal found the Petitioner having violated the provisions of Regulation 9 of the IRDA on several counts. In these circumstances, the arbitral tribunal cannot be faulted for having proceeded on the basis that the rate fixed by the surveyor 10 ARBP101.07.sxw appointed by the Petitioner initially was the correct rate. This is especially so in the absence of any valid, convincing reasons having been furnished by the Petitioner/Petitioner's surveyor for changing the exchange rate. I cannot fault the arbitral tribunal for not having accepted the Petitioner/ Petitioner's surveyor's contention regarding there being a mistake without their having adduced some evidence to establish the same.

15. It is interesting to note the surveyor's evidence. He stated that on 11th April, 2005, the insurer i.e. the Petitioner wanted the calculation with the exchange rate of Rs.48.625 which was available from the website and that he, accordingly, gave the said calculation. In the cross-examination, there is no evidence which establishes that the exchange rate of Rs.52/- for the Euro was incorrect. The quotations on the website do not necessarily indicate the final exchange rate in all cases and the availability of exchange at that rate from all dealers.

16. The challenge to the award in this regard is, therefore, rejected. 11 ARBP101.

17. The next challenge to the award is the grant of interest upto the date of the award at eighteen per cent per annum. Mr. Sheth stated that the insurance policies do not contain any provision for interest. He admitted that the interest is payable in view of the provisions of Regulation 9 of the IRDA. Regulation 9 reads as under :- "9. Claim procedure in respect of a generalinsurance policy

(1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as maybe allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/claim, it shall be done so within 72 hours of the receipt of intimation from the insured.

(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a 12 ARBP101.07.sxw surveyor take more than six months from the date of his appointment to furnish his report.

(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report.

(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.

(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.

(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it."

18. It was submitted that there was no evidence of the bank rate prevalent at the relevant time. The arbitral tribunal awarded interest at eighteen per cent per annum. The submission, therefore, is that 13 ARBP101.07.sxw though interest could have been awarded under Regulation 9(6), there was no evidence that the bank rate prevalent at the material time was sixteen per cent.

19. I will presume that there was no independent evidence furnished as to the bank rate prevalent at the material time. I would be reluctant, however, to set aside the award on this ground in the facts of the present case. It is important to note that in the statement of claim, the Respondent claimed interest at eighteen per cent per annum. The claim obviously was, at least, purportedly on the basis that it was as per law.In the reply to the statement of claim, the Petitioner merely denied that the claimant i.e. the Respondent is entitled to interest or interest at eighteen per cent per annum. There is no allegation that the rate of interest at eighteen per cent per annum was contrary to law. The averment, in fact, indicates that what was in fact denied was the right to claim interest at all. The auxillary award deals with the award of interest and the reasons for the same in detail. The arbitral tribunal has applied theprincipleunderRegulation 9(6) in awarding interest. The liability to pay interest is not denied. In view 14 ARBP101.07.sxw of the pleadings and in view of there being nothing on record to indicate that the implied assertion that the rate of eighteen per cent claimed in the statement of claim is as per law and in view of the fact that there is no evidence to indicate the contrary, I cannot fault the arbitral tribunal for having allowed interest at eighteen per cent per annum.

20. At the highest, even in the event of there having been any evidence on the part of the Petitioner about the bank rate being less than sixteen per cent, the award could have been modified by reducing the rate of interest. In the absence of anything to suggest that the rate of interest was otherwise than as claimed, I see no reason to do so. Even assuming this to be a lacunae/error, the same could have been filled up/remedied without any difficulty. Had the Respondent suggested another rate of interest, I would readily have modified the award, had I found the suggestion to be justified.

21. The challenge regarding the award of interest is also, therefore, rejected.15 ARBP101.

22. Lastly, I see nothing wrong in the arbitral tribunal having awarded interest even for the period from the date of the interim report dated 14th January, 2003, and the on-account payment of Rs. 80,00,000/- on 29th October, 2003. The arbitral tribunal held that there was an inordinate delay in finalising the payment. In the circumstances, the arbitral tribunal having awarded interest during this period, cannot be faulted.

23. There are a few observations in the Auxillary award which appear to be incorrect. However the award can be sustained even on the basis of the other findings in the award. The apparently incorrect observations therefore do not warrant setting aside the award.

24. Both the petitions are, therefore, dismissed with costs, fixed at Rs.10,000/- to be paid on or before 31st October, 2010. This order is stayed upto 31st October, 2010, to enable the Petitioner to challenge the same.