1. The respondent entered into a contract for carrying out certain works which had to commence from 4-2-1975 and conclude on 15-3-1975. The actual date of completion was however, 31-10-1975. He was paid Rs. 2,49,660 as per final bill. It appears that after a lapse of almost 5 years on 18-8-1979 he gave notice for appointment of an Arbitrator and followed it up by an application dated 3-9-1979 under Section 8 of the Arbitration Act, 1940 on the basis whereof the Arbitration Tribunal was appointed as an Arbitrator on 14-12-1979. However, later on the application of the respondent, the Arbitration Tribunal was divested of the arbitration proceedings and a retired Judge was appointed as the sole Arbitrator. Before the Arbitrator, certain documents were called for from the appellant. The Arbitrator ultimately gave his award and filed it in the Court of Sub-Judge, Bhubaneswar, but the same was challenged before him on the ground that the documents called for were in fact not produced and the Arbitrator proceeded to give his award without waiting for the production of those documents. The award was, therefore, based on no evidence according to the appellant and was, therefore, liable to be set aside. The trial court accepted this contention and set aside the award but the High Court reversed the same and directed the award to be converted into the decree of the Court. It is against that order of the High Court that the present appeal has been preferred.
2. The learned counsel for the appellant raised three contentions: (i) that the claim was time-barred; (ii) the Arbitrator could not have awarded interest; and (iii) that the award was based on no evidence. On the first and the last questions, we see no merit for the simple reason that the question of limitation was not raised before the Arbitrator and the Arbitrator was not required to go into it. On the question of non-production of documents, we can only say that the documents were in the power, possession and custody of the appellants and they should have produced the said documents and even if the documents were not produced despite the respondent being called upon to do so and having given an undertaking in that behalf, we fail to see how it can be contended that the Arbitrator was not entitled to proceed because at best, the Arbitrator can raise an adverse inference if necessary and proceed to finalise the award. So that contention has no substance. On the question of interest, our attention was drawn to the decision of this Court in the State of Orissa v. Nirajan Swain, . The Arbitrator has not awarded interest separately but it is a lump-sum award. We must, therefore, follow the procedure that was followed in the aforesaid case of reducing the award by the amount of interest claimed. So what remains is the principal amount only. We so direct. Therefore, the award will be reduced by Rs. 4,08,934, the claim of interest prior to reference.
3. In the result, this appeal succeeds partially, in that, out of the amount of Rs. 8,08,769.69 awarded by the Arbitrator inclusive of interest, the amount of interest, i.e., Rs. 4,08,934 shall be deducted and there will be a decree for the balance money together with interest from the date of the award till payment or realisation. Except for this modification in the award, nothing further requires to be done. There will be a decree accordingly with no order as to costs.