Mridul, J.

1. These two appeals, preferred by the Union of India, Original Defendants, are directed against the Judgments and Orders dated 31st December, 1974, passed by the Civil Judge, Sr. Dn., Nasik, in Special Civil Suit Nos. 222 and 223 of 1974. By the said judgments and orders the learned trial Judge was pleased to repel the challenges made by the original Defendants as to the invalidity of the awards of the arbitrator B.S. Sekhon, in respect of the disputes and differences between the Union of India and the Respondents, viz., M/s. D.P. Wadia and Sons, being the Plaintiffs in the said suits.

2. As a common question of law arises in both the appeals, they are heard together and disposed of by this common judgment.

3. The facts in Special Civil Suit No. 222 of 1974, may be summarised as follows:- The plaintiffs M/s. D.P. Wadia and Sons (hereinafter referred to a "the Contractors"), entered into a contract with the Union of India for the construction of certain buildings or quarters for the Government of India Printing Press at Nasik Road in or about 1956. The said construction was completed but in regard to the claims of the contractors against the Union of India and the counter claims of the Union of India, disputes and differences arose by and between the parties. It appears that in the correspondence antecedent to making of the reference, the Contractors claimed from the Union of India amounts which were payable to them under the said works contract together with interest thereon. The Union of India also in their turn counter-claimed certain amounts from the Contractors together with interest thereon. Having regard to the provisions of Cl. 25 of the said works contract, which was the arbitration clause therein, the parties referred their disputes and differences to the said arbitrator. In fact, the said arbitrator was appointed by the Chief Engineer (SWZ), C.P.W.D., Bombay, by his letter dated 6th September, 1972, as arbitrator to decide and make award regarding disputes between the parties, "which disputes fall within the purview of Clause 25 of the agreement".

4. The pleadings were filed on behalf of the Contractors and the Union of India before the learned arbitrator in the said reference. It is not disputed by the parties that in the said pleadings the question as to the payment of interest was raised by the parties. Upon the basis of the pleadings filed before the arbitrator issues in regard to the payment of interest by the Contractors to the Union of India and vice versa were raised. After hearing the parties, the arbitrator made and published his award on 17th October, 1973. The intimation relating thereto was given to the Contractors and the Union of India.

5. The award as filed in the Court, was challenged by the Union of India by an application dated 31st December, 1973. One of the contentions related to the direction in the award for payment of interest. It was contended that the awarding of interest to the Contractors was illegal as, "the said issue was never referred to the arbitrator". The learned trial Judge raised 4 issues. They related to the plea of limitation, in respect of the application dated 31st December, 1973, by which the award was sought to be challenged; as to whether the award was not legal and disclosed error apparent on the face of the award; as to whether the award was liable to he set aside or remitted and lastly, as to whether the direction as to interest was legal. The learned trial Judge made findings in favour of the Contractors, dismissed the application challenging the award and confirmed the award.

6. The facts in the Special Suit No. 223 of 1974, are similar. In fact, they appear to be identical save and except with regard to the quantum of claims involved. Identical issues were raised by the learned trial Judge in the said suit. The facts of the said suit, therefore, need not be reproduced here.

7. In both the suits, the challenge to the direction for payment of interest was two-fold. The contention of the Union of India was that the issue of interest was not referred to the arbitrator by the parties. It was further contended that in any event, the award of interest was ex facie contrary to law and therefore, constituted an error apparent on the face of the award. The learned trial Judge found on facts that the contention that the issue as to interest was not referred to the arbitrator was not tenable. The learned trial Judge observed, the award that has been produced in this Court and the finding of the arbitrator show that both the parties claimed interest on their respective claims and the arbitrator was requested to decide the point of interest and the issue was specifically framed regarding the claim of interest by the respective parties". In regard to the question of error apparent on the face of the award, the learned trial Judge noticed several judgments cited at the Bar before him and came to the conclusion that, "I do not find that the arbitrator committed any error which is apparent on the face of the award passed by him when he granted the interest pendent elite to the Plaintiff". In these circumstances, the learned trial Judge repelled the challenge to the award based on the ground of interest and as noticed above, the awards in both the suits were confirmed and were made rules of the Court.

8. Shri Gumaste, the learned counsel, for the Union of India, assails the judgments and orders of the learned trial Judge on the following two grounds: (1) that the direction as to the payment of interest made in the said awards was beyond the ambit of the arbitrators authority. In other words, the claim relating to interest fell outside the scope of the reference; (2) the direction as to payment of interest was ex facie illegal and disclosed error of law apparent on the face of the award. The learned trial Judge held that the claim as to interest was a question of law, and such a question of law was not referred to the arbitrator and that being so, the mistake of the arbitrator in awarding interest was rot binding on the Union of India and could be assailed before the Court.

9. The question whether the disputes and differences relating to the claim of interest by the Contractor or by the Union of India were referred to the arbitrator encompasses a very narrow factual controversy. The controversy will have to be resolved with reference to CI. 25, which Is the arbitration clause in the contract and the facts antecedent to and surrounding the reference and the proceedings before arbitrator.

10. Material portion of Clause 25 reads as follows:

Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings, and instructions hereinbefore mentioned and as to the quality of workmanship, or materials used in the work, or as to any other question, claim, right, matter or materials used on the work, or as to any other question claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions orders or these conditions or "otherwise concerning the works, or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof shall he referred to the sole arbitration of the Chief/Additional Chief Engineer, Central Public Works Department, and if the Additional Chief Engineer is unable or unwilling to act, to the sole arbitration of some other person appointed by the Additional Chief Engineer willing to act as such arbitrator.

11. It is not disputed before us that prior to the reference the parties had formulated their claims in the correspondence exchanged by and between them. In the said correspondence the claim for interest was made both by the Union of India and the Contractors. The reference has not been produced before us, nor was the reference produced before the learned trial Judge. It is also not disputed before us that the claims made before the learned arbitrator by the parties included claims for interest made by the Contractors in respect of the amounts which according to the Contractors were payable to them, for execution of the works or amounts payable under the said works contract. The Union of India also claimed interest in respect of its claim which was based on the alleged breaches committed by the Contractors. It is also not disputed that before the arbitrator the issues as to interest were framed and the parties invited the arbitrator to decide the said issues.

12. The arbitration clause abstracted above, is very widely worded. The clause in regard to the subject-matter of the claim within its ambit, is in the widest possible terms. It takes within its sweep any claim, right or matter in any way arising out of or relating to the contract. The words of such wide imports have been held by the Courts to take in all claims which arise out of or pertain to the contract. The Courts have interpreted these words to include claims based on a quantum meruit, frustration of contracts as also non-payment under a promissory note given collaterally in respect of an agreement containing the arbitration clause (see illustration given by Russel on Arbitration, 18th Edn. page 70).

13. In our opinion, having regard fit, the sweep of the arbitration clause it must be held that the claim of payment of interest respecting the amounts payable under the works contract was a claim or a question or a matter which arose out of the said works-contract or related to the said works-contract. Not only that, the parties themselves by making a claim for interest prior to the reference proceeded upon the footing that such a claim was claim which arose out of or related to the works-contract. The disputes and differences relating to interest were thus enumerated and set out in the correspondence end were referred amongst other disputes And differences, to the arbitration of the said arbitrator. The reference was made by a letter dated 6th September, 1972, written by the Chief Engineer (SWZ), C.P.W.D., Bombay. The said letter was not produced before us nor was it produced before the learned trial Judge. However, a copy of the award was produced before the learned trial Judge. We have gone through the said award and we find a reference to the said letter in the said award itself. The award recited that by the said letter the arbitrator was required "to decide and make award regarding the disputes between the above-named parties which disputes fall within the purview of Clause 25 of the agreement, referred to above". In other words, all disputes or claims which fall within the wide sweep of Clause 25, were referred to the arbitration. This circumstance clearly indicates that the claim as to interest was one of the claims and was In point of fact referred to the arbitration. We have no hesitation therefore, in rejecting the contention of the learned counsel for the Union of India that the dispute as to interest was not referred to the arbitrator.

14. This takes us to the second contention canvassed on behalf of the Union of India. The said contention will have to be decided upon the basis of the legal frame-work which governs the duties and the powers of the arbitrator as also the principles which, he has to adopt in the matter of proceedings before him. An arbitrator, undoubtedly, is a domestic forum. It is a forum, other than a Court of Law constituted by the parties, or by the provisions of law far determination of disputes and differences, after hearing both the sides, in a Judicial manner. The arbitrator has to conform broadly to judicial trappings. It has been held by the several judgments of the Courts that an arbitrator is bound by the legal principles and has to adhere to the provisions of law applicable to the adjudication of matters before him. Having regard to the functions and position of the arbitrator, it is implicit that an arbitrator must have the powers of the judicial nature so as to facilitate determination of disputes and differences between the parties relating to an award which when made a rule of the court, acquires legal sanctity, and becomes final, binding and conclusive. In Crighton v. Law Car and General Insurance Corporation Ltd., reported in (1910) 2 KB 738. Scrutton, J., at page 745, attributed to the arbitrator "inherent powers as a judicial officer". It has been held by the several judgments, both in England and India that an arbitrator has powers analogous to the powers conferred upon the Civil Court in regard to the proceedings before on for arbitration of disputes referred to him. These judgments relate to power and authority of the arbitrator to grant adjournments, permit amendments of the pleadings, compel evidence and production of documents and several other matters which are normal features of a civil litigation before a court of law. This principle is statutorily recognised by the Arbitration Act 1940. Section 13 of the Arbitration Act enumerates powers of arbitrators subject to a contrary intention expressed in the agreement. First Schedule of the said Act sets out the implied conditions of the arbitration agreement. The recent judicial trends also show that the courts read into the scope of the power of an arbitrator, the powers which are accorded to the Civil Courts. A graphic illustration of the rule is found in the dicta of Kantawala, J. (as the learned Chief Justice then was) in Erach F.D. Mehta v. Minoo F. D. Mehta. decided on 28th August/1st September, 1969, (unreported). In that case a question arose as to whether an arbitrator is authorised to grant specific performance of a contract. It was argued on behalf of the counsel that power of the specific performance by the provisions of Specific Relief Act, 1963, was conferred upon a Court and therefore, such a power must be said to be negative in cases of arbitration. In dealing with the said contention, the learned Judge upon an infra-analysis of law came to the conclusion that, "it is, therefore, not possible to take the view-that a relief by way of specific performance cannot be granted by an arbitrator". This was the conclusion arrived at by the learned Judge after a comprehensive review of the case law bearing on the subject The dicta of the learned Judge in Erach F.D. Mehtas case was approved by a Division Bench of this Court in the Fertilizer Corporation of India v. Chemical Construction Corporation, reported in (1973) 75 Bom. LR 335. The Fertilizer Corporation case (supra) was a case where the contention was that an arbitrator was not entitled to grant a declaratory relief or an injunctive relief. At page 350, the Division Bench dealt with the said contention by making the following observations:

The next contention of Mr. Bhabha was that by prayers (a) and (b) the plaintiffs are seeking a declaratory relief and injunction; that such relief can only be granted by the Court having regard to the provisions of the Specific Relief Act and they cannot be granted by the arbitrators - The question whether an arbitrator acting within the provisions of the Arbitration Act, 1940 can grant relief by way of specific performance was considered by me sitting as a single Judge in Erach F.D. Mehta v. Minoo F.D. Mehta. Mr. Bhabha appeared for one of the parties in that matter and advanced the same arguments which are advanced by him before us. In short the view taken in that decision is that all matters of a civil nature, which can form the subject-matter of a suit within the meaning of Section 9 of the Code of Civil Procedure can be referred to arbitration; that the arbitrator will have jurisdiction even to grant a relief which can normally be granted by the Court under the Specific Relief Act. As pointed out in Halsburys Laws of England, third Ed. Vol. 2, page 6:

The dispute or difference which the parties to an arbitration agreement agree to refer must be of a justifiable issue triable civilly. A fair test of this is whether the difference can be compromised lawfully by way of accord and satisfaction.

Applying this test there can be no doubt that a dispute relating to a declaratory relief and injunction can be compromised lawfully by way of accord and satisfaction, A reference was made in my decision to the observation of Tucker, L.J., in Chandris v. Isbrandtsen Moller Co., Inc., (1951 1 KB 240). It is there stated (page 262):

............ To that there are, of course, certain well-known exceptions, such as the right to grant an injunction, which stand on a different footing; one of the reasons why an arbitrator cannot give an injunction is, of course, that he has no power to enforce it; but such an objection does not apply to the award of interest.

So far as the award granting an injunction is concerned, in this country there is no difficulty in enforcing it because no award simpliciter is enforceable unless a decree in terms of the award has been passed under the provisions of the Arbitration Act, 1940. Once a decree in terms of the award has been passed, the award granting injunction is merged in the decree and the decree granting injunction can always be enforced. In fact in Lakshmi Narain v. Raghbir Singh, (: AIR 1956 P&H 249 [LQ/PunjHC/1956/16] ; Harnam Singh, J., rejected the contention that suits in which granting of relief is entirely within the discretion of the Court cannot be referred to arbitration. The learned Judge there even went to the extent of saying that a suit for mandatory injunction can be referred to arbitration. There, is nothing in the provisions of the Arbitration Act, 1940, which goes to suggest that a relief which may be granted by the Court under the Specific Relief Act cannot be granted by the arbitrator if the parties decide to have the dispute relating to such relief referred to arbitration. In our opinion, if a proper case is made out it will be permissible to an arbitrator acting within the provisions of paragraph 12.2 of the agreement to grant the relief in terms of prayers (a) and/or (b) or such part thereof as may be admissible.

15. The Fertilizer Corporations case (1973 75 Bom LR 335) (supra) in our opinion, is an authority for the proposition, that it is an implied incident of all arbitrations that all disputes of civil nature can be referred to the arbitration and that in deciding the said disputes the arbitrator shall have all powers which normally the Court has in matters of such determination. In other words, the arbitrator can grant such reliefs as are normally granted by the Courts of law in that behalf.

16. Application of this principle to the question of competence of the arbitrator to award interest does not present any conceptual or other difficulty. The statement of law relating to this branch has been very accurately stated by Russel on Arbitration 18th Edn. at page 292, in the following words:

An arbitrator may award interest, by virtue of his implied authority to follow the ordinary rules of law.

17. It may also be noticed that this statement of law is inter alia based upon the ratio of the decision in Chandris v. Isbrandtsen Moller Co., Inc., reported in (1951) 1 KB 240, and that the ratio of the decision in Chandris case was approved by Kantawala, J., in Erach F.D. Mehtas case. This approval also received imprimatur of the Division Bench in the Fertilizer Corporations case (supra).

18. Halsbury expounds the law to the same effect. The statement given by Halsbury, 4th Edn. Vol. 2, in paragraph 580, is in the following words:

Interest.- An arbitrator or umpire has power to award interest on the amount of any debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the award.

19. In Seksaria Industries (Pvt.) Ltd. v. Tolaram Jalan, (unreported, Award No. 5 of 1959, S. M. Shah, J. decided on 25th March, 1960), the learned single Judge of this Court repelled the challenge to the validity of the award on the ground that the direction as to the payment of interest by the award disclosed an error apparent on the face of the award. The learned Judge discussed several judgments including the judgments of the Calcutta High Court in Bhowanidas Ramgovind v. Harsukhdas Balkishendas, reported in (: 27 Cal WN 933 : AIR 1924 Cal 524 [LQ/CalHC/1923/116] ) and of English Court in Re Badger, (1819) 2 B & A 691, and observed (at page 104) as follows:

In my opinion, it is not necessary to provide for the power to award interest in the reference itself. It is entirely a matter of discretion with the arbitrator whether to award any interest on the amount awarded by him. In this case, the arbitrator thought it proper to award interest at the rate of 4% per annum on the amount found due by him as payable by the petitioners to the respondent, and in my opinion, he was perfectly entitled to do so in law. He cannot, therefore, be said to be guilty of misconduct on the ground alleged by Mr. Parpia.

20. A view similar to the one taken by Shah, J.; in Seksaria Industries (Pvt.) Ltd., (Award No. 5 of 1959, D/- 25-3-1960 (Bom)) (supra), was taken by another single Judge of this Court (unreported decision of S. K. Desai, J., dated 27th June, 1974, in O.D.C.J. Award No. 113 of 1973). This was a case relating to disputes between a contractor and the Union of India. The works contract appears to be in pari materia with the works contract in the present appeal. Incidentally the arbitrator whose award was sought to be assailed is the same arbitrator whose award is impeached before us. In regard to the direction for payment of interest made in the award the learned single Judge repelled the said contention on the view that the arbitrator had jurisdiction to award interest pendent elite. The learned Judge observed (at page 15) that:

On a consideration of the several authorities cited at the bar I am of opinion that the learned arbitrator had jurisdiction in this case to award interest pendent lite and that there is no error of law apparent on the face of the award as alleged.

21. In our opinion, the position in law appears to be clear. A dispute as to payment of interest is a dispute which is capable of reference to arbitration under the provisions of the Arbitration Act. Such a dispute, if referred to the arbitrator, brings it within his competence to make an award in respect of payment of interest by one party to the other. The perimeters governing the exercise of his jurisdiction, however, will be the same as obtain to a court of law, in the matter of awarding interest. The Supreme Court authentically laid down the law relating to the awarding of interest in Mahabir Prasad Rungta v. Durga Datta, reported in : AIR 1961 SC 990 [LQ/SC/1961/39] . It was laid down by the Supreme Court at page 993, that:

interest for a period prior to the commencement of suit is claimable either, under an agreement, or usage of trade or under a statutory provision or under the Interest Act, for a sum certain where notice is given. Interest is also awarded in some cases by Courts of equity.

22. The Supreme Court further observed at the same page that:

As regards interest pendente lite until the date of realisation, such interest was within the discretion of the Court.

23. Upon the authority of the Supreme Court it can be therefore observed that pendente lite interest can be granted by a Court in cases where there is an agreement between the parties or there exists a usage of trade or a statutory provision providing for the grant of interest. Such interest also can be granted upon equitable grounds. There are several statutes which make provision;; for the payment of interest, such as. Sale of Goods Act, Negotiable Instruments Act and the Interest Act. The question as to whether a person is entitled to the direction for interest would depend on the facts of each case or the provisions of law or of equity or of the contract in question upon which such a claim of interest is founded.

24. The learned counsel for the Union of India draws our attention to the judgment of the Supreme Court in Thawardas Pherumal v. Union of India, reported in : AIR 1955 SC 468 [LQ/SC/1955/30] . According to him the said decision is an authority for the proposition that the arbitrator has no jurisdiction to award any interest. The learned counsel further submits that the same is the view taken by the Supreme Court in Union of India v. A.L. Rallia Ram, reported in : AIR 1963 SC 1685 [LQ/SC/1963/119] .

25. Thawardass case (: AIR 1955 SC 468 [LQ/SC/1955/30] ) is a case where the disputes and differences between a contractor and the Union of India were referred to arbitration. The claim before the arbitrator related to the payment of compensation for breaches allegedly committed by the Union of India. In the award made by the arbitrator certain amounts were awarded to the contractor as and by way of damages. The arbitrator also granted interest in respect of the amounts which were found to be payable to the contractor under the works-contract in question. In regard to the claim for damages, upon the contention of the Union of India, that the contractor was bound to mitigate damages under the provisions of Section 73 of: the Contract Act, the Supreme Court dealt with the same and noticed the fact that not all legal errors can vitiate the award but such legal errors which are apparent on the face of the award alone can be said to vitiate the award. In regard Jo the interest, the Supreme Court made an assumption that the arbitrator was a Court within the meaning of the Arbitration Act, which the Supreme Court characterized as "a fact that by no means appears to be the case and observed at page 478 as follows:

The following among other conditions must be fulfilled before interest can be awarded under the Act.

(1) there must be a debt or a sum certain;

(2) it must be payable at a certain time or otherwise;

(3) these debts or sums must be payable by virtue of some written contract at a certain time;

(4) there must have been a demand in writing stating that interest will be demanded from the date of the demand. Not one of these elements is present, so the arbitrator erred in law in thinking that he had the power to allow interest simply because he thought the demand was reasonable.

26. It may, therefore, be observed that the Supreme Court upheld the challenge to the award of the interest upon the factual foundation that none of the elements or ingredients expounded by the Supreme Court, was available in the case before the Court. In our opinion, it is clear from the judgment of the Supreme Court that the Supreme Court did not lay down any proposition to the effect that in no circumstances can interest be awarded by an. arbitrator. Moreover, as will be observed later, the ratio of the decision of the Supreme Court in Thawardass case (AIR 1955 SC 568) was subsequently explained by the Supreme Court itself and which explanation militates against the reading of the judgment of the Supreme Court in Thawardass case as laying down any rigorous rule of law denying competence to the arbitrator to award interest.

27. In Rallia Rams case (: AIR 1963 SC 1685 [LQ/SC/1963/119] ) the facts were different from those which are before us in the present appeal. In Rallia Rams case interest was awarded against the Union of India by the arbitrator by giving reasoning in that behalf. The reason for awarding the interest was mentioned in the award in paragraph (ix) thereof. The Supreme Court reproduced the said reasoning in paragraph 20 of the judgment at page 1694. In paragraph 23 at page 1695, the Supreme Court dealt with the said reason for awarding the interest and observed as follows:

The umpire has awarded interest to the respondent on the footing that for the purpose of carrying out his contract with the Government of India, the respondent was required to make arrangements by borrowing monies from his bankers and he had to pay interest in that behalf, and when the contract was abandoned after it was partially performed, the Government of India became liable to make good the loss of interest which the respondent suffered. We know of no principle on which the Government of India could be rendered liable for payment of interest in the circumstances relied upon.

28. We are unable to appreciate as to how the decision in Rallia Rams case (: AIR 1963 SC 1685 [LQ/SC/1963/119] ) helps the learned counsel for the Union of India.

29. In our opinion, the dicta of the Supreme Court in Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore, reported in : AIR 1967 SC 1030 [LQ/SC/1966/150] and in Union of India v. Bungo Steel Furniture Private Ltd., reported in the same volume at page 1032, are more apposite. In Firm Madanlal Roshanlals case a reference arose out of a suit. In the said reference the arbitrator was invited to make an award in regard to interest. The arbitrator having awarded the interest, the award was challenged on the ground of want of authority in the arbitrator to award interest pendente lite. In support of the objection, reliance was placed on the decision of the Supreme Court in Thawardas case (: AIR 1955 SC 468 [LQ/SC/1955/30] ) (supra). The said contention was repelled by the Supreme Court. The Supreme Court observed at page 1032 as follows:

It will be noticed that the judgment of this Court in Thawardas case, (: 1955 2 SCR 48 [LQ/SC/1955/30] : AIR 1955 SC 468 [LQ/SC/1955/30] ), is silent on the question whether the arbitrator can award interest during the pendency of arbitration proceedings if the claim regarding interest is referred to arbitration. In the present case, all the disputes in the suit were referred to the arbitrator for his decision. One of the disputes in the suit was whether the respondent was entitled to pendente lite interest. The arbitrator could decide the dispute and he could award pendente lite interest just as a Court could do so under Section 34 of the Code of Civil Procedure. Though in terms, Section 34 of the Code of Civil Procedure does not apply to arbitrations, it was an implied term of the reference In the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente lite interest as the Court could give if it decided the dispute. This power of the arbitrator was not fettered either by the arbitration agreement or by the Arbitration Act, 1940.

30. It is true that Firm Madanlal Roshanlals case (: AIR 1967 SC 1030 [LQ/SC/1966/150] ) was a case of reference out of a suit but the same principles were applied by the Supreme Court in the Bungo Steel Furniture case (: AIR 1967 SC 1032 [LQ/SC/1966/182] ) (supra). That was a case of a reference under Chapter II of the Arbitration Act. The award in that reference provided a direction for payment of interest. The provision in regard to the direction relating to interest was challenged, before the Calcutta High Court. The said challenge was repelled by Mallick, J. and a decree was granted on the basis of the award. Before the Supreme Court a similar contention was raised and was sought to be buttressed upon the basis of the decision in Thawardass case (: AIR 1955 SC 468 [LQ/SC/1955/30] ) (supra). The Supreme Court expressed the view that the Thawardass case did not deal with the question. The Supreme Court then observed at page 1032 as follows:

In our opinion, the arbitrator had jurisdiction, in the present case, to grant interest on the amount of the award from the date of the award till the date of the decree granted by Mallick, J. The reason is that it is an implied term of the reference that the arbitrator will decide the dispute according to existing law and give such relief with regard to interest as a Court could give if it decided the dispute. Though, in terms Section 34 of the Code of Civil Procedure does not apply to arbitration proceedings, the principle of that section will be applied by the arbitrator for awarding interest in cases where a Court of law in a suit having jurisdiction of the subject-matter covered by Section 34 could grant a decree for interest.

31. The learned counsel calls attention to another judgment of the Supreme Court in the State of Madhya Pradesh v. M/s. Saith and Skelton (P) Ltd., reported in : (1972) 1 SCC 702 [LQ/SC/1972/66] = (AIR 1972 SC 1507 [LQ/SC/1972/66] ). We are unable to appreciate as to how the said decision helps the Union of India. It is observed by the Supreme Court in that case at p. 712 (of SCC) = (at p. 1514 of AIR) that:

If the contention of Mr. Shroff that under no circumstances an arbitrator can award interest prior to the date of the Award, or prior to the date of reference, is accepted, then the position will be very anomalous.

32. The Supreme Court further observes on the same page that:

Therefore, the question ultimately will be whether the dispute referred to the arbitrator included the claim for interest from any particular period or whether the party is entitled by contract or usage or by a provision of law for interest from a particular date.

33. The Supreme Court rejected the challenge to the award of interest by the arbitrator. This authority, in our opinion, supports the view that the arbitrator has competence to award interest provided the claim for such interest is based either on the agreement between the parties or substantive provision of law applicable thereto or upon an equitable principle impinging thereon.

34. We are, therefore, of the view that it is within the competence of an arbitrator to award interest. This is upon the principle that it is an implied incident of a reference that an arbitrator can give such relief with regard to interest as a Court could give if it decided the dispute. In all cases, it would be a question of fact as to whether a particular award for interest made by the arbitrator, is justified under the provisions of law, invoked by the parties and the material on record before the arbitrator.

35. In the present case, there is nothing on the record to substantiate the claim made on behalf of the Union of India that the dispute as to the interest was not referred to the arbitrator. On the contrary, there is an intrinsic evidence to support the case that such a dispute was in fact the subject-matter of the arbitration before the arbitrator. In the award itself it has been recorded that the issues were framed in the course of the proceedings before the arbitrator. The award sets out the issues which were raised by and between the parties. One of the issues mentioned in the award (being issue No. 7) relates to the payment of interest at 9 per cent, per annum, raised on behalf of the Contractors. Similarly, additional issue No. 3 relates to the claim of the Union of India for interest. We are, therefore, satisfied that the dispute as to the claim for interest was referred to the arbitrator. The award is not a speaking award. It gives no reason for awarding interest. There is nothing on the record to show as to how and upon what basis the award as to the payment of interest could be assailed by the Union of India. The Union of India did not produce any document while the proceedings were going on before the learned trial Judge so as to enable him to make a finding that the direction as to the payment of interest is erroneous much-less that the same amounted to an error apparent on the face of the record.

36. Even assuming that the grievance of the Union of India is justified, yet in our opinion, it is not entitled to raise any dispute upon the simple ground that the Courts do not permit parties to approbate and reprobate. It is admitted before us and is otherwise amply supported by the evidence on record that the Union of India claimed interest and invited the arbitrator to decide the aforesaid claim. In the circumstances, we are of the opinion, that it is not open to the Union of India to raise any contention relating to the award of interest.

37. In the circumstances, both the appeals fail and are dismissed with costs.

38. The orders of the learned trial Judge in both the suits are confirmed.

39. We have been informed at the Bar that the Union of India deposited amounts which were payable- under the awards by way of interest in the Court. The amounts so deposited in the Court have been invested in fixed Deposits with the State Bank of India at its branch at Nasik. We are further informed that these amounts are to mature sometime in the year 1977. The Respondents are however, willing that these amounts may be recalled and paid to them. The Respondents are willing to forgo interest by reason of earlier recall of these amounts. We, therefore, order that the Respondents be at liberty to withdraw the amounts on their risk as to the loss of interest.

40. The Court shall accordingly take appropriate steps to have the amounts recalled from the Bank with liberty to the Respondents to receive the same.