FAO-10464-2014 IN THE HIGH COURT OF PUNJAB AND HARYANA AT Punjab State Civil Supplies Corporation Ltd. and another M/s Sachdeva Agro Industries and others CORAM : HON’BLE MS. JUSTICE LAPITA BANERJI Present : Mr. for the appellants. Mr. Arvind Thakur, Advocate, for respondent No.2. LAPITA BANERJI Challenge in the present appeal is to the 28, 2014 passed by the learned Additi 2. An aw of 30% interest with effect from on the principal amount of Rs.1,34,54,513 claimants. 3. Challenge to the award was made by respondents No.1 to 3 by filing an application under Section 34 of the Arbitration and Concili Act, 1996 (for short, ‘the 1996 Act’) before the Judge, Chandigarh. 4. Vide impugned order dated February 28, 2014 ADJ after noticing that the rate of interest annum in Clause 17 o parties on October 16, 2002 The learned ADJ was of the opinion that keeping in view the prevalent rate 2014 (O&M) Sr. No.204 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO Date of Decision : Punjab State Civil Supplies Corporation Ltd. and another Versus M/s Sachdeva Agro Industries and others HON’BLE MS. JUSTICE LAPITA BANERJI Mr.Harpreet Singh Ghumman, Advocate, for the appellants. Mr. Arvind Thakur, Advocate, for respondent No.2. *** LAPITA BANERJI, J. (oral) Challenge in the present appeal is to the 28, 2014 passed by the learned Additional District Judge, Chandigarh. An award was passed on October 13, 200 of 30% interest with effect from November 1, 2004 on the principal amount of Rs.1,34,54,513 Challenge to the award was made by respondents No.1 to 3 by filing an application under Section 34 of the Arbitration and Concili Act, 1996 (for short, ‘the 1996 Act’) before the Judge, Chandigarh. Vide impugned order dated February 28, 2014 ADJ after noticing that the rate of interest lause 17 of the Milling Agreement entered into between the parties on October 16, 2002, reduced the rate of interest The learned ADJ was of the opinion that keeping in view the prevalent rate IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO-10464-2014 (O&M) Date of Decision :14.07.2026 Punjab State Civil Supplies Corporation Ltd. and another … Appellants ...Respondents HON’BLE MS. JUSTICE LAPITA BANERJI Harpreet Singh Ghumman, Advocate, Challenge in the present appeal is to the order dated February onal District Judge, Chandigarh. ard was passed on October 13, 2006 directing payment November 1, 2004 till the date of payment on the principal amount of Rs.1,34,54,513/-, in favour of appellants- Challenge to the award was made by respondents No.1 to 3 by filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, ‘the 1996 Act’) before the learned Additional District Vide impugned order dated February 28, 2014, the learned ADJ after noticing that the rate of interest being stipulated at 21% per f the Milling Agreement entered into between the reduced the rate of interest to 9% per annum. The learned ADJ was of the opinion that keeping in view the prevalent rate VANDANA 2026.07.23 09:46 I attest to the accuracy and integrity of this document FAO-10464-2014 of interest given by the banks and awarded by the would be served awarded by the learned arbitrator. had gone beyond its jurisdiction by not taking into account clause in the aforesaid A 5. Learned counsel appearing on behalf of the appellants submits that the learned ADJ misdirected himself by reducing the rate of interest 9% per annum after noticing that the agreed rate of interest parties was 21% per 6. Learned counsel appearing on behalf of respondent No.2 submits that no infirmity ha the rate of interest to 9% per annum keeping in mind the provision of Section 31 of the 1996 Act. 7. This Court has heard the learned counsel for the parties and perused the material on record. 8. It is true that vide award dated October 13, 2006 the learned Arbitrator allowed the claim of the appellants/claimants by awarding 21% interest from September 1, 2003 to June 30, 2004 and 30% per annum from July 1, 2004 Arbitrator also awarded interest at the rate of 30% November 1, 2004 till the date of recovery 9. To the mind of this Court, when the rate of interest stipulated by the learned A above the agreed rate. of the 1996 Act, 2014 (O&M) erest given by the banks and financial institutions, awarded by the learned arbitrator was on a higher side would be served by reducing the said rate to 9% per annum awarded by the learned arbitrator. He opined that the learned A gone beyond its jurisdiction by not taking into account the aforesaid Agreement. Learned counsel appearing on behalf of the appellants submits that the learned ADJ misdirected himself by reducing the rate of interest 9% per annum after noticing that the agreed rate of interest parties was 21% per annum as per Clause 17 of the A Learned counsel appearing on behalf of respondent No.2 submits that no infirmity has been caused by the learned ADJ ate of interest to 9% per annum keeping in mind the provision of Section 31 of the 1996 Act. This Court has heard the learned counsel for the parties and perused the material on record. It is true that vide award dated October 13, 2006 the learned Arbitrator allowed the claim of the appellants/claimants by awarding 21% interest from September 1, 2003 to June 30, 2004 and 30% per annum from July 1, 2004 to October 31, 2004 for late deliver Arbitrator also awarded interest at the rate of 30% November 1, 2004 till the date of recovery. To the mind of this Court, when the rate of interest and between the parties at 21% the learned Arbitrator legally could not have awarded interest agreed rate. A reference can be made to Section 31(7)(a) 1996 Act, whereby it is unambiguously provided that it financial institutions, the rate of interest rbitrator was on a higher side and ends of justice by reducing the said rate to 9% per annum for the period e opined that the learned Arbitrator gone beyond its jurisdiction by not taking into account the agreed Learned counsel appearing on behalf of the appellants submits that the learned ADJ misdirected himself by reducing the rate of interest to 9% per annum after noticing that the agreed rate of interest between the annum as per Clause 17 of the Agreement. Learned counsel appearing on behalf of respondent No.2 s been caused by the learned ADJ by reducing ate of interest to 9% per annum keeping in mind the provision of This Court has heard the learned counsel for the parties and It is true that vide award dated October 13, 2006 the learned Arbitrator allowed the claim of the appellants/claimants by awarding 21% interest from September 1, 2003 to June 30, 2004 and 30% per annum , 2004 for late delivery of rice. The learned Arbitrator also awarded interest at the rate of 30% with effect from To the mind of this Court, when the rate of interest was between the parties at 21% per annum in the Contract, rbitrator legally could not have awarded interest over and eference can be made to Section 31(7)(a) and (b) is unambiguously provided that it is only when VANDANA 2026.07.23 09:46 I attest to the accuracy and integrity of this document FAO-10464-2014 there is no agreed Arbitrator can apply his independent mind to the rate of interest. The relevant provisions of the Act are “XXXX 31 so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the per and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment Explanation. have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978” 10. Vide the learned ADJ, annum in the was a justifiable rate according to him. 11. Again agreed to by and between the part the date of the award. Only the post award rate of intere modified by the learned ADJ after considering what he deemed reasonable in an application under Section 34 of the 1996 Act. 12. A beneficia judgment dated Novasoft Technologies Limited extract of the said judgment is reproduced hereinafter: “85. Gayatri Court has a limited power under 2014 (O&M) there is no agreed rate of interest between the parties Arbitrator can apply his independent mind to the rate of interest. The relevant provisions of the Act are reproduced hereinafter: “XXXX XXXX XXXX 1 (7) (a) Unless otherwise agreed by the parties, where and so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment. Explanation.—The expression “current rate of interest” shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978” Vide the impugned order dated February 28, 20 the learned ADJ, after noticing the agreed rate of interest in the Contract reduced the rate of interest to was a justifiable rate according to him. Again, to the mind of this Court, the rate of interest that was by and between the parties should have been the date of the award. Only the post award rate of intere modified by the learned ADJ after considering what he deemed reasonable in an application under Section 34 of the 1996 Act. A beneficial reference can be made to the Apex Court’s judgment dated April 30, 2025 passed in Ga Novasoft Technologies Limited reported in ( extract of the said judgment is reproduced hereinafter: 85. Accordingly, the questions of law referred to by Gayatri Balasamy (supra) are answered by stating that the Court has a limited power under rate of interest between the parties, the learned Arbitrator can apply his independent mind to the rate of interest. The reproduced hereinafter:- XXXX (7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of iod between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of The expression “current rate of interest” shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978” impugned order dated February 28, 2014 passed by he agreed rate of interest at 21% per reduced the rate of interest to 9% per annum as it to the mind of this Court, the rate of interest that was ies should have been made payable till the date of the award. Only the post award rate of interest could have been modified by the learned ADJ after considering what he deemed reasonable in an application under Section 34 of the 1996 Act. l reference can be made to the Apex Court’s Gayatri Balasamy Vs. M/s ISG (2025) 7 SCC 1. The relevant extract of the said judgment is reproduced hereinafter:- Accordingly, the questions of law referred to by Balasamy (supra) are answered by stating that the Court has a limited power under Sections 34 and 37 of the VANDANA 2026.07.23 09:46 I attest to the accuracy and integrity of this document FAO-10464-2014 1996 Act to modify the arbitral award. This limited power may be exercised under the following circumstances: I. “invalid” portion from the “valid” portion of the award, as held in Part II o II. by correcting any clerical, computational or typographical errors which appear erroneous on the face of the record, as held in Part IV and V of our Analysis; III. post award interest may be modified in some circumstances as he IV. must be exercised limits of the constitutional power as outlined in Part XII of our Analysis. 13. Consi the awarded 12, 2006 and remits the learned ADJ to take a fresh decision in the matter a decision of the Apex Court in 14. As far as the post the learned ADJ reasonable. There is the appellants. Therefore, this Court is not inclined to set aside the pos award rate of interest claimant/appellants. 15. With the FAO-10464-2014 is partly July 14, 2026 vandana Whether speaking/reasoned : Whether reportable : 2014 (O&M) 1996 Act to modify the arbitral award. This limited power may be exercised under the following circumstances: I. when the award is severable, by severing the “invalid” portion from the “valid” portion of the award, as held in Part II of our Analysis. II. by correcting any clerical, computational or typographical errors which appear erroneous on the face of the record, as held in Part IV and V of our Analysis; III. post award interest may be modified in some circumstances as held in Part IX of our Analysis; and/or IV. Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power as outlined in Part XII of our Analysis.” Considering the law governing the issue, interest @ 9% per annum from November 1, 2004 to October 12, 2006 and remits the application under Section learned ADJ to take a fresh decision in the matter a decision of the Apex Court in Gayatri Balasamy As far as the post-award interest the learned ADJ from October 13, 2006 is concerned reasonable. There is no infirmity in the said rate of interest being granted to the appellants. Therefore, this Court is not inclined to set aside the pos rate of interest granted by the learned ADJ claimant/appellants. With the aforesaid observations 2014 is partly allowed. (LAPITA BANERJI) JUDGE 6 Whether speaking/reasoned : Yes/No Whether reportable : Yes/No 1996 Act to modify the arbitral award. This limited power may be exercised under the following circumstances: when the award is severable, by severing the “invalid” portion from the “valid” portion of the award, as II. by correcting any clerical, computational or typographical errors which appear erroneous on the face of the record, as held in Part IV and V of our Analysis; III. post award interest may be modified in some ld in Part IX of our Analysis; and/or Article 142 of the Constitution applies, albeit, the power with great care and caution and within the limits of the constitutional power as outlined in Part XII of our dering the law governing the issue, this Court sets aside interest @ 9% per annum from November 1, 2004 to October application under Section 34 of the 1996 Act to the learned ADJ to take a fresh decision in the matter after considering the Balasamy’s case (supra). @ 9% per annum granted by is concerned, this Court finds it no infirmity in the said rate of interest being granted to the appellants. Therefore, this Court is not inclined to set aside the post by the learned ADJ to the observations, the present appeal being (LAPITA BANERJI) JUDGE VANDANA 2026.07.23 09:46 I attest to the accuracy and integrity of this document