IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA Ex. Petition No. 08 of 2021 Decided on 15th May 2025 M/s Ajay Kumar Sood …Petitioner Versus State of Himachal Pradesh and another …Respondents Coram Hon’ble Mr. Justice Ajay Mohan Goel, Judge 1Whether approved for reporting? Yes For the petitioner: Mr. Vishal Mohan, Senior Advocate, with M/s Shriyek Sharda and Anuj Bali, Advocates. For the respondents: Mr. Anup Rattan, Advocate General, with Mr. Pushpinder Jaswal, Additional Advocate General. Ajay Mohan Goel, Judge (Oral) By way of this execution petition, the petitioner has sought the execution of the award dated 29.04.2015 as upheld in Arbitration Case No.62 of 2015, decided on 01.05.2017 as also Arbitration Appeal No.1 of 2019, decided on 02.05.2019. 2. Now, the only issue left to be adjudicated is whether the execution petitioner is entitled for interest @18% per annum on the principal amount as well as interest component of pre pendente lite and pendente lite period or only on principal award amount. Otherwise save and accept for this particular issue, the award stands satisfied by the award debtor. 2 3. When the matter was listed in the Court on 03.07.2023, Hon’ble Coordinate Bench was pleased to pass the following order:- “Learned Additional Advocate General submits that as per Award, DH/petitioner is entitled for simple interest @8% per annum on amount of Rs.35,24,253/- for the period of three years from the date of Reference to the date of Award and simple interest @ 18% per annum for the period of three months after the date of Award to the actual date of realization. Further that, according to instructions imparted to him, interest as granted, has been calculated by the JD on principal amount in terms of the Award, but the DH/petitioner is claiming interest @18% per annum on the principal amount as well as interest component of pre- pendentelite and pendentelite period. To justify the calculations made on behalf of the DH/petitioner, learned counsel for the DH/petitioner has referred pronouncement of Hon’ble Supreme Court, Hyder Construction vs. State of Orissa, reported in (2015) 2 SCC 189. Learned Additional Advocate General seeks time to go through the same before further addressing the issue. On his request, matter is adjourned. List during next week.” 4. Learned Senior Counsel for the petitioner submitted that a three Judge Bench of the Hon’ble Supreme Court in Hyder Consulting (UK) Limited versus Governor State of Orissa, (2015) 2 Supreme Cases 189, has been pleased to hold that Clause (a) of sub-section (7) of Section 31 of the Arbitration and Conciliation Act, 1996 provides that where an award is made for the payment of money, the Arbitral Tribunal may include interest in the “sum” for which the Award is made. Learned Senior Counsel further submitted that in the present case in terms of the award passed by the learned 3 Arbitrator, the petitioner is entitled for interest on the award amount as well as pre-pendente lite and pendente lite period, as awarded by the learned Arbitrator, by treating both these components to be “sum” and the interest i.e. payable i.e. interest for the post pendente lite period has to be paid on both the amounts. 5. On the other hand, learned Advocate General while drawing the attention of the Court to the judgment of the Hon’ble Supreme Court in Morgan Securities and Credits Private Limited versus Videocon Industries Limited (2023) 1 Supreme Court Cases 602, argued that though no doubt in terms of the judgment of the Hon’ble Supreme Court being relied upon by the petitioner the “sum” is to include the award amount as well as interest but that is only if the same is expressly ordered in the award by the learned Arbitrator. Learned Advocate General while drawing the attention of the Court to the award in issue submitted that in this case there was no order passed by the learned Arbitrator that the award amount + pre- pendente lite and pendente lite interest shall form the “sum” and, therefore, post pendente lite interest is only payable on the principal award amount and not on pre-pendente lite and post pendente lite interest. 6. I have heard learned Senior Counsel for the petitioner as well as learned Advocate General and have also carefully gone 4 through the award as well as the judgments passed by the Hon’ble Supreme Court relied upon by the parties. 7. Section 31 (7)(a) of the Arbitration and Conciliation Act, 1996 provides that 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 the period between the date on which the cause of action arose and the date on which the award is made. In the present case, the award made in favour of the execution petitioner by the learned Arbitrator was as under:- Sr. No. Description of Claim Amount claimed Amount awarded Remarks 1. Claim No.1: Amount of final bill Rs.7,32,290/- Rs.7,21,270/- 2. Claim No.4: Release of withheld amount from R/bills Rs.4,16913/- 3. Counter claim No.1: Recovery of material Rs.4,96,674/- 4. Claim No.2: Price escalation Rs.10,13,181/- Rs.9,74,612 5. Claim No.3: Security deposit (In shape of FDR & Cash). Rs.5,00,000/- Rs.52,708/- FDR amounting to Rs.3,96,800/- stand already released 6. Claim No.5: Extra carriage of aggregate from Panchkula Rs.25,00,000/- Rs.17,75,663 7. Claim No.6: Idle Machinery Rs.54,00,000/- Nil Withdrawn 8. Claim No.7: Interest 18% Pre- 5 pendentelite and pendentelite period:- Simple interest @ 8% P.A. on account of Rs.35,24,253/- from the period of 3 years from date of reference to date of award. Post pendentelite period:- Simple interest @ 18% P.A. for the period three months after the date of award to the actual date of its realization. 9. Counter Claim No.2: Liquidated damages under clause-2 Rs.9,80,050/- Nil 10. Counter Claim No.3: Cost of Arbitration Rs.1,50,000/- Nil 11 Counter Claim No.4: Interest - 8. Hon’ble Supreme Court in Hyder Consulting (UK) Limited (supra) has been pleased to hold as under:- “Clause (a) of sub-section (7) provides that where an Award is made for the payment of money, the Arbitral Tribunal may include interest in the sum for which the Award is made. In plain terms, this provision confers a power upon the Arbitral Tribunal while making an Award for payment of money, to include interest in the sum for which the Award is made on either the whole or any part of the money and for the whole or any part of the period for the entire pre-award 6 period between the date on which the cause of action arose and the date on which the Award is made. To put it differently, sub-section (7)(a) contemplates that an Award, inclusive of interest for the pre-award period on the entire amount directed to be paid or part thereof, may be passed. The "sum" awarded may be principal amount and such interest as the Arbitral Tribunal deems fit. If no interest is awarded, the "sum" comprises only the principal. The significant words occurring in clause (a) of sub-section (7) of Section 31 of the Act are "the sum for which the award is made." On a plain reading, this expression refers to the total amount or sum for the payment for which the Award is made. Parliament has not added a qualification like "principal" to the word "sum," and therefore, the word "sum" here simply means "a particular amount of money." In Section 31 (7), this particular amount of money may include interest from the date of cause of action to the date of the award. 5. The Oxford Dictionary gives the following meaning to the word "sum": Sum, 'if noun':- A particular amount of money. Sum, 'if verb':- The total amount resulting from the addition of two or more numbers, amounts, or items. 6. In Black's Law Dictionary, the word "sum" is given the following meaning:- "SUM. In English law- A summary or abstract; a compendium; a collection. Several of the old law treatises are called "sum." Lord Hale applies the term to summaries of statute law. Burrill. The sense in which the term is most commonly used is "money"; a quantity of money or currency; any amount indefinitely, a sum of money, a small sum, or a large sum. U.S. v. Van Auken, 96 U.S. 368, 24 L.Ed. 852; Donovan v. Jenkins, 52 Mont. 124, 155 P. 972, 973." 7. Thus, when used as a noun, as it seems to have been used in this provision, the word "sum" simply means "an amount of money"; whatever it may include - "principal" and "interest" or one of the two. Once the meaning of the word "sum" is clear, the same meaning must be ascribed to the word in clause (b) of sub-section (7) of Section 31 of the Act, where it provides that a sum directed to be paid by an Arbitral Award "shall carry interest ........" from the date of the Award to the date of the payment i.e. post-award. In other 7 words, what clause (b) of sub-section (7) of Section 31 of the Act directs is that the "sum," which is directed to be paid by the Award, whether inclusive or exclusive of interest, shall carry interest at the rate of eighteen per cent per annum for the post- award period, unless otherwise ordered.” 9. Thereafter, Hon’ble Supreme Court in Morgan Securities and Credits Private Limited (supra) has been pleased to hold as under:- 28.1 The judgment of the two-Judge Bench in SL Arora (supra) was referred to a three-Judge Bench in Hyder Consulting (supra) on the question of whether post-award interest could be granted on the aggregate of the principal and the pre-award interest arrived at under Section 31(7)(a) of the Act; 28.2 Justice Bobde’s opinion in Hyder Consulting (supra) held that the arbitrator may grant post-award interest on the aggregate of the principal and the pre-award interest. The opinion did not discuss the issue of whether the arbitrator could use their discretion to award post-award interest on a part of the ‘sum’ awarded under Section 31(7)(a); 28.3 The phrase ‘unless the award otherwise directs’ in Section 31(7)(b) only qualifies the rate of interest; 28.4 According to Section 31(7)(b), if the arbitrator does not grant post-award interest, the award holder is entitled to post-award interest at eighteen percent; 28.5 Section 31(7)(b) does not fetter or restrict the discretion that the arbitrator holds in granting post-award interest. The arbitrator has the discretion to award post- award interest on a part of the sum; 28.6 The arbitrator must exercise the discretionary power to grant post-award interest reasonably and in good faith, taking into account all relevant circumstances; and 28.7 By the arbitral award dated 29 April 2013, a post- award interest of eighteen percent was awarded on the principal amount in view of the judgment of this Court in SL Arora (supra). In view of the above discussion, the arbitrator 8 has the discretion to award post-award interest on a part of the ‘sum’; the ‘sum’ as interpreted in Hyder Consulting (supra). Thus, the award of the arbitrator granting post award interest on the principal amount does not suffer from an error apparent.” 10. A perusal of these two judgments by the Hon’ble Supreme Court demonstrates that there is no dispute that the Arbitrator may award post award interest on the aggregate of the principal award amount and the pre award interest. This Court is also not disputing this power vested in the Arbitrator. What this Court has to see is as to whether in the present case, learned Arbitrator has exercised the discretion of awarding post award interest on the “sum” as interpreted by Hyder Consulting (UK) Limited (supra) or not. 11. In terms of the judgment of the Hon’ble Supreme Court in Hyder Consulting (UK) Limited (supra) Sub-section 7(a) of Section 31 of the Arbitration and Conciliation Act contemplates that an award, inclusive of interest for the pre-award period on the entire sum directed to be paid or part thereof, may be passed and the "sum" awarded may be the principal amount and such interest as the Arbitral Tribunal deems fit. Hon’ble Supreme Court has further held that Parliament has not added a qualification like “principal” to the word “sum” and, therefore, the word “sum” simply means “a particular amount of money”. 9 12. In Morgan Securities and Credits Private Limited (supra), Hon’ble Supreme Court went on to hold that the judgment of the two Judge Bench of Hon’ble Supreme Court in State of Haryana versus S.L. Arora and Company (2010) 3 SCC 690 was referred to a three Judge Bench in Hyder Consulting (UK) Limited (supra) on the question of whether post-award interest could be granted on the aggregate of the principal and the pre-award interest arrived at under Section 31(7)(a) of the Act. Hon’ble Supreme Court further held that Hon’ble Bobde, J.’s in Hyder Consulting (supra) held that the arbitrator may grant post-award interest on the aggregate of the principal and the pre-award interest and the opinion did not discuss the issue of whether the Arbitrator could use their discretion to award post-award interest on a part of the ‘sum’ awarded under Section 31(7)(a). Thereafter, Hon’ble Supreme Court went on to hold that according to Section 31(7)(b), if the Arbitrator does not grant post-award interest, the award holder is entitled to post-award interest at eighteen percent and Section 31(7)(b) does not fetter or restrict the discretion that the Arbitrator holds in granting post-award interest. Hon’ble Supreme Court also held that the Arbitrator has the discretion to award post award interest on a part of the sum. 10 However, the Arbitrator must exercise the discretionary power to grant the post award interest reasonable and in good faith taking into account all relevant circumstances. It thereafter, went on to hold that the Arbitrator has the discretion to award post award interest on the part of the sum, the sum as interpreted in Hyder Consulting and award of an Arbitrator granting post award interest on the principal amount does not suffer from any error. 13. Thus, it is evident from the above two judgments of the Hon’ble Supreme Court that the discretion vests with the learned Arbitrator as to whether post pendente lite interest is to be awarded on the principal amount or the principal amount and the pre- pendente lite and pendente interest so as to constitute the “sum”. In the present case, a perusal of the award passed by the learned Arbitrator demonstrates that the learned Arbitrator in his wisdom did not award the post pendente lite interest both on the principal award amount as well as pre-pendente lite and pendente lite period. That being the case, the execution petitioner is entitled for post pendente lite interest only on the principal amount and the component of interest i.e. pre-pendente lite and pendente lite cannot be added to the principal award amount so as to constitute the “sum” for the purpose of the granted of the post pendente lite interest. 11 14. Accordingly, in the light of the findings returned hereinabove, this Court holds that the execution petitioner is entitled for post pendente lite interest only on the principal amount and not on the interest awarded for pre-pendente lite and pendente lite period. 15. Petition stands disposed of, so also pending miscellaneous applications, if any. (Ajay Mohan Goel) Judge May 15, 2025 (Vinod)