Ashim Kumar Banerjee, J.

1. FACTS:

1. On perusal of the pleadings as well as documents disclosed in the proceedings before the arbitrator as well as before the learned Single Judge and included in paper book it appears that the parties agreed to have a business transaction under which the appellant would supply to the respondent wire required for telecommunication purpose. The facts reveal that the respondent issued a purchase order on December 5, 1985 as would appear from page 55 onwards of the paper book. The appellant contended before us that the agreement dated December 5, 1985 was the parent agreement under which different purchase orders were issued being one on December 5, 1985 followed by three others dated September 1, 1986, May 27, 1987 and March 7, 1988 respectively. The respondent, however, contended that all those four purchase orders were distinct and would constitute a separate agreement and had no connection with the first agreement dated December 5, 1985. Under the contract the main raw material being the steel was to be arranged by the respondent from various steel plants belonging to the Central Government. Facts remain that such arrangement could not be done and there had been some difficulty on the part of the parties to work on such terms being manufacture of the wires out of the steel to be supplied by SAIL. It was the case of the appellant that they had to purchase steel from open market resulting in substantial involvement of financial resource which could not be anticipated. According to the appellant, it was an additional burden upon them. Supplies were made by the appellant from time to time. Payments were made by the respondent from time to time. Last of such payment was made on August 13, 1991. The respondent contended, it was related to the third agreement/purchase order dated May 27, 1987 whereas the appellant contended that there was only one parent agreement under which the payments were made from time to time, last of which was received by them on August 13, 1991.

2. Dispute arose when the appellant demanded additional sums as and by way of compensation on two counts-

i) reimbursement of the additional sums which they incurred by purchasing steel from open market in view of the respondent's inability to supply the same through SAIL.

ii) interest on delayed payment.

3. In the backdrop as discussed above, the appellant vide letter dated February 1, 1994 appearing at page 228-231 of the paper book invoked the arbitration clause contained in the agreement and demanded arbitration in terms of the agreement. Plain reading of the said letter reveals that the appellant claimed a sum of Rs. 13.32 crores approximately, out of which Rs. 92 lakhs approximately was claimed on account of excess cost incurred by them on purchase of wire rods from market and the balance towards interest and damages suffered by them. The respondent initially vide letter dated February 17, 1994 appearing at page 233 informed the appellant that the said letter was 'under examination'. Vide letter dated May6 20, 1994 appearing at pages 234-238 the respondents denied the claim and refused to refer the dispute to arbitration.

4. Being aggrieved by the said reply of the respondent the appellant filed a writ petition before the learned single Judge of this Court on January 11, 1995 inter alia praying for a direction upon the respondents to consider the claim of the appellant. The learned single Judge vide judgment and order, December 12, 1995 appearing at page 435 asked the respondent to appoint an arbitrator in terms of the arbitration clause and refer the dispute for adjudication. Being aggrieved by the said order the respondent preferred an appeal before the Division Bench. The Division Bench vide judgment and order dated February 19, 1997 appearing at pages 436-441 set aside the said judgment and order and granted liberty to the appellant to move the arbitration Court. Their Lordships observed, '...it will be open to the forum before which any application under Section 20 may be filed to consider the issue independently of any observation of this Court'. The Division Bench further observed 'this decision however should not be taken to have prejudged any issue with regard to the rights of the parties inter se relating to the enforcement of any arbitration agreement between them'. When the issue was pending before the Division Bench vide ordinance dated January 26, 1996 the Arbitration Act of 1940 was repealed and the Arbitration and Conciliation Act, 1996 came into force. The said ordinance was transformed into a regular statute with effect from August 22, 1996.

5. On or about April 16, 1997 the appellant filed an application under Section 11 of the said Act of 1996 before the learned single Judge inter lia praying for appointment of arbitrator pursuant to the liberty granted by the Division Bench. The learned single Judge allowed the application and directed the Chief General Manager, Telecommunication Department either to adjudicate the dispute as arbitrator or to nominate any other person to act as arbitrator in terms of the Arbitration Agreement. The learned single Judge passed the said order of reference vide order dated December 3, 1908 appearing at pages 442-444.

6. The Chief General Manager appointed the General Manager (Finance), Smt. S. Purokayastha as arbitrator. The arbitrator upon hearing the rival contentions of the parties published a reasoned award appearing at pages 500-516 of the paper book. The arbitrator awarded a sum of Rs. 48,23,819/- and Rs. 8,11,486/- as and by way of principal claim and Rs. 4,81,51,180/- and Rs. 69,69,857/- as and by way of interest calculated at the rate of 18.5 per cent per annum on quarterly compounded basis.

7. Being aggrieved by the said award the respondent filed an application for setting aside of the award before the learned single Judge. Although various points were urged before His Lordship perusal of the judgment of His Lordship reveals that three major issues were considered by the learned Judge on being invited by the parties:

i) The Division Bench granted specific liberty to the appellant to move under the old arbitration law whereas the appellant proceeded under the new law and as such the very reference was bad.

ii) The learned Judge could not have directed adjudication of the dispute through arbitration on the basis of a claim that was hopelessly barred by law of limitation.

iii) Assuming the appellant had a claim they could not have claimed any interest which was specifically barred under the agreement specially Clause 17 thereof. The learned single Judge found favour with the contention of the respondents and set aside the award.

8. Being aggrieved by the judgment and order by the learned single Judge dated October 15, 2004 appearing at pages 621 to 640 the appellant preferred the instant appeal which was heard by us on the above mentioned dates.

2. CONTENTION OF THE APPELLANT:

9. Mr. Jayantra Mitra, learned senior counsel appearing for the appellant argued on the three principles issued referred to above. According to Mr. Mitra, the Act of 1940 stood repealed by the ordinance dated January 26, 1996 which was substituted by a regular statute being the said Act of 1996 that came into force with effect from August 22, 1996. The appellant demanded arbitration in 1994. The respondent refused such prayer. Having no other alternative the appellant approached the writ Court. The writ Court vide order dated December 12, 1995 directed resolution of dispute through arbitration. Till that date the said Act of 1940 was in force. The respondent approached the Division Bench. The Division Bench vide judgment and order dated February 19, 1997 set aside the order of the Single Bench holding that the said order was bad as it was passed in a wrong proceeding. The Division Bench granted liberty to the appellant to approach the arbitration Court being the proper forum. While doing so, the Division Bench possibly overlooked the fact that the old law had since been repealed and the new law by that time came into effect. Hence, the observation of the Division Bench should be construed as a liberty to approach the arbitration Court in accordance with law.

10. As and by way of an alternative submission, Mr. Mitra contended that assuming the Division Bench directed application to be filed under Section 20 of the old law such direction must be construed as a direction to approach for identical relief under the appropriate law being the new law as the old law stood substituted by the new law. Hence, according to Mr. Mitra the new law was applicable and the learned Judge was wrong in holding otherwise.

11. On the issue of limitation Mr. Mitra contended that the parent agreement was executed on December 5, 1985. The subsequent purchase orders were issued under the parent agreement. There was no separate agreement entered into for the second, third and fourth purchase order. Hence, the payments received under all the four purchase orders should be construed as payment under the parent contract dated December 5, 1985. The last of such payment was received on August 13, 1991 whereas the demand for arbitration was made on February 1, 1994. Hence, the claim was well within the period of limitation.

12. Elaborating his argument on the point, Mr. Mitra contended that the demand for arbitration was made within three years from the date of last payment. The respondents vide letter dated May 20, 1994 denied arbitration. Within a few months the appellant approached the writ Court. The Writ Court passed an order on December 12, 1995 that was set aside by the Division Bench vide order dated February 19, 1997 granting liberty to the appellant to approach the arbitration Court within two months being April 16, 1997. The appellant approached the arbitration Court and filed application under Section 11 of the said Act of 1996. Hence, the claim was not in any way barred by limitation. According to Mr. Mitra, the learned Judge went on a wrong perception as would appear from page 634 to 637.

13. On the issue of interest Mr. Mitra contended that the claim made in arbitration was principally on account of difference of price which the appellant had to incur purchasing steel from open market. Such amount was paid by the appellant contemporaneously during the period 1985 to 1988 when supplies were made by the appellant to the respondent after manufacturing the wire. The said amount was not paid despite repeated reminders. Hence, the claimant was entitled to interest on the unpaid outstanding. Mr. Mitra further contended that because of blockage of such capital the appellant had to pay interest to its banker at the usual bank lending rate and that too compounded on quarterly rate. Hence, the claimant was entitled to have reimbursement of such interest which the claimant/appellant had to pay to its banker. According to Mr. Mitra, the learned Judge possibly overlooked such issue.

14. On a query made by the Court Mr. Mitra submitted that even if the interest was calculated at the rate of 8% per annum (flat) a sum of Rs. 67,62,366/- would become payable for the period of February 1994 to September 2000 being the period when the arbitration was demanded and the award was published. A calculation sheet to the said extent was also handed over to Court by Mr. Mitra.

15. In support of his contentions Mr. Mitra cited the following decisions:

i) : AIR 1951 Cal 230 (Ebrahim Kassam v. N.I Oil Industries)

ii) : All India Reporter 1956 Calcutta Page 321 (Saha & Co. v. Ishar Singh Kripal Singh & Co.)

iii) : All India Reporter 1961 Supreme Court Page 1236 (Shapoor Fredoom Mazda v. Durga Prosad Chamaria and Ors.)

iv) : All India Reporter 1971 Supreme Court Page 1482 (Lakshmiratan Cotton Mills, Co. Ltd. v. The Aluminium Corporation of India Ltd.)

v) : All India Reporter 1987 Supreme Court Page 2316 (Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar and Anr.)

vi) : All India Reporter 1992 Supreme Court Page 732 (Secretary to Government of Orissa and Ors. v. G.C. Roy)

vii) : All India Reporter 1994 Supreme Court Page 860 (Renusagar Power Co. Ltd. v. General Electric Co.)

viii) : All India Reporter 1999 Supreme Court Page 3923 (Thyssen Stahlunion GMBH v. Steel Authority of India Ltd.)

ix) : 2001 Volume VIII Supreme Court Cases Page 470 (Union of India v. Popular Construction Co.)

x) : 2003 Volume VI Supreme Court Cases Page 36 (Delhi Transport Corporation Ltd. v. Rose Advertising)

xi) 2005 8 SCC 618 (SBP & Co. v. Patel Engineering Ltd. and Anr.)

3. CONTENTION OF THE RESPONDENT:

16. Opposing the appeal, Mr. Debabrata Saha Roy, learned Counsel appearing for the respondent contended that the Division Bench categorically granted liberty to approach the Court under the old Act. Hence without any clarification being obtained from Division Bench, the appellant could not have proceeded under the new Act. The order passed thereunder and the subsequent proceedings were thus vitiated by illegality. As and by way of an alternative submission, Mr. Saha Roy contended that if Section 21 of the said Act of 1996 could be read along with Section 85(2) thereof it would appear that although the old law stood repealed the proceeding commenced under the old Act was permitted to continue to be governed by the old law and the new law would have no application. On the commencement, Mr. Saha Roy contended that the day when the arbitration was demanded by the appellant the ball started rolling and that should be the relevant date for the purpose of commencement of the arbitration proceeding. Hence, the new law would have no application.

17. On the plea of limitation Mr. Saha Roy contended that the contract dated December 5, 1985 would relate to the first purchase order. In this regard he referred to page 366 of the paper book wherein the appellant requested for further orders. According to Mr. Saha Roy considering such request the respondents issued the second, third and fourth purchase orders appearing at pages 158, 164 and 166 respectively. The payment received on August 13, 1991 related to the fourth purchase order. Hence, the claims made under other three purchase orders were barred by limitation and could not be saved by virtue of last payment dated August 13, 1991.

18. On the issue of interest, Mr. Saha Roy contended that there could not have been any claim on principal amount. Hence, the claim for interest had no basis. According to Mr. Saha Roy, the first purcahse order was given on December 5, 1985. No complaint was made contemporaneously as would appear from page 148. The appellant on the other hand made request for issue of further order as would appear from page 366. Had there been any such additional claim made by the appellant contemporaneously the respondents would not have issued the second, third and fourth purchase orders. Hence, the principal claim was without any basis and the interest claim made thereunder had no basis. In this regard he relied on the Apex Court decision reported in : All India Reporter 1999 Supreme Court Page 3196 (State of Jammu and Kashmir and Anr. v. Dev Dutt Pandit).

19. In support of his contention on the issue of old law-new law controversy and limitation Mr. Saha Roy relied on the following decisions:

i) : All India Reporter 1987 Supreme Court Page 2316 (Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar and Anr.)

ii) : 1998 Volume V Supreme Court Cases Page 599 (Shetty's Constructions Co. Pvt. Ltd. v. Konkan Railway Construction and Anr.)

iii) : 1999 Volume IX Supreme Court Cases Page 334 (Thyssen Stahlunion GMBH v. Steel Authority of India Ltd.)

iv) : 2004 Volume VII Supreme Court Cases Page 288 (Milkfood Ltd. v. GMC Ice Cream (P) Ltd.)

v) : 2005 Volume V Supreme Court Cases Page 404 (Neeraj Munjal and Ors. (III) v. Atul Grover and Anr.)

4. REPLY:

20. Giving reply to the contentions raised by Mr. Saha Roy, Mr. Mitra contended that the agreement dated December 5, 1985 was a composite one as would appear from the contract itself. The Division Bench decision could not have validated a proceeding under the old law after the same stood repealed. Moreover the question once decided under Section 11(6) attained finality. The objection if any on the part of the respondent stool waived in terms of Section 4. In this regard Mr. Mitra relied on the ratio decided in the case of Patel Engineering (Supra). Distinguishing the cases cited by Mr. Saha Roy, Mr. Mitra contended that each and every ratio decided in the precedents should be applied considering the facts and circumstances of a particular case. The decisions cited by Mr. Saha Roy on the old law-new law controversy, were delivered on a factual scenario pertaining to the period prior to new Act coming into force. Hence, those decisions would not have any application at all.

21. Mr. Mitra lastly contended that rightly or wrongly arbitrator published a reasoned award. While awarding sums in favour of the appellant the arbitrator gave his reasons which were not available for reconsideration by the Court under Section 34 of the new Act or under Sections 30/33 of the old Act as the case may be. In this regard he relied on the Apex Court decision reported in : All India Reporter 1987 Supreme Court Page 2316 (Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar and Anr.).

22. On the issue of interest, Mr. Mitra distinguished the decision in the case of State of Jammu & Kashmir (Supra) and contended that the ratio decided therein had no application in the instant case. According to him, once the principal claim was adjudged in favour of the claimant, interest was a natural consequence. He referred to the grounds of challenge to the award to show that payability of interest was not undisputed as the respondent challenged the rate of interest and not otherwise.

5.OUT VIEW:

A. OLD-NEW

23. To resolve the controversy let us discuss the law on the subject which would take care of the first issue.

24. Prior to 1996 the said Act of 1940 was prevalent. In case any of the parties under an arbitration agreement is unsuccessful in getting an arbitrator appointed either for non-cooperation of his counter part or any other reason the aggrieved party was entitled to approach the Court of law being the principal civil Court competent to resolve the controversy, if approached, under Section 20 of the said Act of 1940 inter alia praying for a direction upon the parties to file the arbitration agreement in Court and direct a reference in terms thereof. In the instant case, admittedly the agreement contained an arbitration clause. The appellant raised a dispute. They demanded arbitration vide letter dated February 1, 1994, the respondents refused. Hence, the appellant was entitled to move the principal Civil Court under Section 20. They however did not do so. They approached a wrong forum being the writ Court. The writ Court however acceded to their request and directed reference to arbitration. The Division Bench rightly set aside the order of the learned single Judge after being found it irregular. The Division Bench however did not brush aside the grievance of the appellant and their competence to pray for arbitration. Keeping it in mind, the Division Bench granted liberty to the appellant to approach the Civil Court for appointment of arbitrator. The Division Bench, however, mentioned about a proceeding under Section 20. In our view the order of the Division Bench should be construed to mean that the Division Bench wanted to extend the benefit to the appellant so that they could resolve their dispute through arbitration in terms of the arbitration agreement. The Division Bench permitted the appellant to approach the appropriate Court in an appropriate proceeding. Prior to 1996, the appropriate proceeding was under Section 20. After 1996 the appropriate procedure is under Section 11 of the said Act of 1996. Merely because the Division Bench specifically mentioned about Section 20 of the said Act of 1940 the arbitration Court per se could not assume jurisdiction if it was otherwise not entitled to in view of repeal of the old law and coming into force of the new law. In our considered view, the Division Bench order should be construed as such.

25. Let us now discuss about the repeal. If we consider Section 21 of the said Act of 1996 we would find that the legislature fixed a bench mark for commencement of arbitral proceeding under the said Act of 1996 being the date on which request for referring the dispute to arbitration is received by the respondent. Similar provision was there in Section 37(3) of the said Act of 1940 Mr. Saha Roy wanted to put emphasis on the said provision. According to him, the commencement would relate to the date of request. In the instant case the date of request was admittedly prior to the said Act of 1996 coming into force. Hence, if we consider Section 21 per se without having any reference to the backdrop or any other event we would have to hold that unless there was a specific request or demand for arbitration under the said Act of 1996 the arbitral proceeding could not have commenced. We are however considering a case where the facts are somewhat peculiar in view of the transition period. In 1994 the prayer for arbitration was made. It was refused in 1994. The appellant could have approached the arbitration Court under the old law contemporaneously. However, they approached a wrong forum. They were granted leave to approach the right forum, however at a stage when the new Act came in force. Hence, we are to consider whether in the said circumstance the appellant was entitled to move under the old law. To consider such situation we have to interpret Section 85 of the said Act of 1996. Section 85(1) clearly repealed the said Act of 1940. Sub-section 2 however provided that not withstanding such repeal the old law would continue to apply in relation to arbitration proceedings already commenced before the said Act of 1996 coming into force 'unless otherwise agreed by the parties'. The Act of 1996 would however apply in relation to arbitration proceedings which commenced on or after the said Act of 1996.

26. Six Apex Court decisions are relevant to be discussed on this score. Those are Shetty's Constructions Co. Pvt. Ltd. (Supra); Thyssen Stahlunion GMBH (Supra); Delhi Transport Corporation Ltd.(Supra) Milkfood Ltd(Supra); Neeraj Munjal and Ors. (III)(Supra) & SBP & Co.(Supra)

27. In the case of Shetty's Construction Co. Pvt. Ltd. (Supra), the Apex Court observed that when request was made prior to the new law coming into force the old law would continue to prevail. In the said case the arbitration suit was filed on January 26, 1996 whereas the said Act came into force in 22nd August, 1996. In the case of Thyssen Stahlunion GMBH (Supra), the Apex Court held that when the arbitration was conducted and the award was published under the old law it could only be challenged under the old law despite new law coming into force. According to the Apex Court, once the arbitral proceedings commenced under the old Act it would be the old Act which would apply for enforcing the award as well. The Apex Court however observed in paragraph 35 that the parties could agree to the applicability of the new Act even before the new Act coming into force when the old Act was holding the filed. The Apex Court observed, there was nothing in the language of Section 85(2)(a) which bared the parties from so agreeing. In the case of Delhi Transport Corporation Ltd.(Supra), the Apex Court observed that when the parties agreed and expressed their intention to be governed by the new law the old law would have no application. In the case of Milkfood Ltd(Supra), the Apex Court while interpreting Section 21 read with Section 85(2)(a) of the said Act of 1996 held, 'Section 21 of the Act must therefore be construed having regard to Section 85(2)(a) of the 1996 Act. Once it is construed, indisputably the service of notice and/or issuance of request for appointment of an arbitrator in terms of the arbitration agreement must be held to be determinative of the commencement of the arbitration proceeding.' In the case of Neeraj Munjal and Ors. (III)(Supra), the award was published in a proceeding initiated under the old law. Hence, the Apex Court held that it could only be enforced under the old law and not under the new law.

28. In the case of SBP & Co.(Supra) the Apex Court once again construed the relevant provisions of the said Act of 1996 and ultimately held that an order under Section 11(6) must be construed to have judicious flavour and could not be termed as an administrative order.

29. Taking a sum total of the ratio decided by the Apex Court as discussed above, we are of the view that when the arbitration proceeding commenced under the old law the old law would continue to prevail until the proceeding attained finality. For this purpose, the relevant date would be the date when the request for arbitration was made by one party to the other. However, the parties may agree to be bound by the new law by agreement. Such agreement may be express and/or implied and/or manifested by their conduct. In the instant case, the facts so discussed above would show that the respondents not only acted upon the order passed under Section 11 which is a judicial order. The respondents not only accepted the said order but also acted upon it by appointing arbitrator. Hence, it would be too late in the day to contend that the said proceeding and the result therefrom is a nullity as it should have been initiated under the old law and not the new law.

30. The matter may be viewed from another angle. Assuming we accept the contention of Mr. Saha Roy and approve his interpretation of the law on the subject, considering the facts and circumstances of this case there would be hardly any change in the ultimate scenario. Sub-section 2 of Section 85 makes it clear that the old law may apply if the parties agree to the same. In the instant case, the appellant filed the application under Section 11 on April, 16, 1997. The respondent allowed the same to be disposed of vide order dated November 9, 1997. The respondent did not raise any objection with regard to the application of the new law. The respondent acted upon the said order and appointed arbitrator in terms of the agreement. The respondent submitted to the jurisdiction of the arbitrator. The arbitrator ultimately published her award upon considering the rival contentions made on merits. Hence, it would be too late in the day to contend that the entire proceeding was vitiated by illegality. Section 4 of the said Act of 1996 provides that when a party knowingly does not ventilate his grievance or exercise his right contemporaneously or without undue delay he would be deemed to have waived his right. The conduct of the respondent would show that the right, if any, stood waived, rather the conduct of the respondent as discussed above would show that they impliedly agreed to have resolution of the dispute through the process of arbitration initiated in terms of the order passed by learned single Judge under Section 11 of the said Act of 1996. Initially it was the trend of the Courts to term the order passed under Section 11 as an administrative one until the issue was settled by the seven judges bench in the case of Patel Engineering (Supra) where the Division Bench categorically held that an order under Section 11 was a judicial order. Hence, the order passed under Section 11 attained finality when parties acted upon the same and submitted to the jurisdiction of the arbitrator and allowed her to publish the award. Hence, the contention of Mr. Saha Roy at this belated stage, that the proceeding was a nullity as it was initiated under the new law, is not tenable and as such is rejected.

B. LIMITATION:

31. It is an admitted fact that the parties entered into the agreement dated December 5, 1985. The respondent issued purchase orders in terms of the agreement. Mr. Saha Roy relied on page 366 where we find that the appellants requested for placement of further orders for an additional quantity. The relevant extract is quoted below:

Since only a small quantity of order is to be executed by us, we shall request you to please place on us your order for additional quantities immediately so that our production programme etc. can be made.' Mr. Saha Roy tried to contend that the second, third and fourth purchase orders appearing at pages 158, 164 and 166 were independent contracts. We have perused the subsequent purchase orders. These purchase orders were issued as a follow up action in relation to the parent order dated December 5, 1985. In this regard the references made in the purchase orders appearing in pages 158, 164 and 166 are quoted below:

'25% Additional Order for G.I. Wires against this office Purchase Order No. W- 266/85/6905 dt. 5.12.85 place on you.'(from page 158 of the paper book)

'Sub: Placement of Repeat Order of G.I. Wires against this office P.O. No. W- 266/85/6905 dated 5.12.85'(from page 164 of the paper book)

'Purchase Order No. W-266/88/7024'(from page 166 of the paper book)

32. Plain perusal of the aforesaid quotations would belie Mr. Saha Roy's contention on the issue. The parties, in our view, by their conduct understood the parent order dated December 5, 1985 as a single contract and subsequent purcahse orders were issued under the said contract. Hence, the last payment made on August 13, 1991 would be the relevant date for the purpose of computation of the period of limitation for entire claim made by the appellant under the said agreement dated December 5, 1985.

33. Let us now proceed further by taking into account the last date of payment as discussed above. If we take the last date of payment the period of limitation would end on August 13, 1994 whereas the appellant demanded arbitration on February 1, 1994. The respondent refused to accede such request on May 20, 1994. Hence, the right to approach the Court of law arose on May 20, 1994 and the appellant was entitled to move the Court within three years from the said date i.e. within May 20, 1997. In the instant case ultimately the respondent approached the arbitration Court by filing their application on April 16, 1997. Hence, the claim was not barred by limitation. The learned Judge however proceeded on an erroneous conception as we find from pages 634-636. His Lordship rightly held that the limitation period would expire on May 20, 1997. His Lordship however observed that since the order was passed on November 8, 1998 and December 3, 1998 it was barred by limitation. With deepest regard we have for His Lordship, we are unable to agree. In our considered view, the date of the order was not relevant for the purpose of computation and limitation. The date of filing of the petition was relevant. In the instant case, the petition was filed before May 20, 1997. The plea of limitation is, thus, rejected.

C. INTEREST:

34. On the issue of interest Mr. Saha Roy relied on the case of Jammu and Kashmir and Anr. (Supra). He relied on paragraphs Nos. 17, 18 and 23. In the said paragraphs, the Apex Court was of the view that when the principal claim was disputed the arbitrator could not have awarded interest. We fully agree. However, the ratio does not fit in the case in hand. In the instant case, the arbitrator after considering the rival contentions came to a finding that the appellant was entitled to the principal claim to the extent of Rs. 48,23,819/- and Rs. 8,11,486/- and then awarded interest on the said two amounts. Mr. Saha Roy tried to rely upon Clause 17(2). We do not wish to make any comment on the applicability of the said Clause. We are of the view that once the principal claim was allowed by the learned arbitrator, the arbitrator was entitled to award interest. In this regard, we may refer to paragraph 20 and 21 of the Apex Court decision in the case of State of Jammu and Kashmir (Supra) relied on by Mr. Saha Roy. The Supreme Court observed that Section 5 of the Interest Act and Section 34 of the Code of Civil Procedure would also apply to the arbitrator and the arbitrator is entitled to award interest pendente lite as well as future interest. Hence, we are of the view that the arbitrator did not commit any error in awarding interest on the principal claim.

35. We however join issue as to the rate and mode. The arbitrator awarded interest at the rate of 18.5 per cent that too compounded on quarterly rest. In our view, Section 31 of the said Act of 1996 has empowered the arbitral tribunal to award interest. It also provides that in case the award is silent the awarded sum would carry interest at the rate of 18% per annum. Considering such provision of law we are of the view that interest of justice would be subserved if we modify the award and awarded simple interest at the rate of 18 per cent per month. Mr. Mitra however strenuously contended before us that payment of interest was nothing but a compensation for delayed payment. Compensation could only be assessed taking into account the amount of prejudice the aggrieved party suffered. In the instant case, because of delayed payment the appellant could not repay the dues of the bank. The bank charged interest at such high rate that too on quarterly rest. Hence, the appellant was entitled to have reimbursement on that score. Mr. Mitra referred to interest statements incorporated in paper book. Mr. Mitra however in his usual fairness handed over to us the interest chart calculating simple interest at the rate of 18 per cent per annum at the desire of the Court. We find that the issue was pending for arbitration during the period February 1994 to September 2000. The interest accrued on the principal sum so awarded by the arbitrator for the said period at the rate of 18% per annum is Rs. 67,62,366/-. We feel that respondent should pay the said amount in full and final settlement of the interest claim made by the claimant.

6. RESULT:

36. The appeal thus succeeds in part. The order of the learned single Judge setting aside the award is set aside. The award dated September 26, 2000 is upheld as modified to the extent that the principal sum awarded therein would carry interest for Rs. 67,62,366/- in full and final settlement of the interest claim.

7. DIRECTION:

37. The respondents are directed to pay of the awarded amount so modified by the foregoing judgment and order within two months from date, if not paid earlier and in default the principal sum of Rs. 48,23,819/- and Rs. 8,11,486/- would carry further interest at the rate of 18 per cent per annum to be calculated on the expiry of the two months' period referred to above.

38. The appeal is disposed of accordingly without any order as to costs.

39. Urgent xerox certified copy would be given to the parties, if applied for.

Kalidas Mukherjee, J.

40. I agree.