Judgment:
Mahinder Narain, J.
(1) There are objections to the Award dt. 14.01.85. Arbitrator has awarded a sum of of Rs. 1,34,899.64 p. to Food Corporation of India (FCI) against the respondent.
(2) The basis of objections is that claim for interest on delayed realisations is time-barred.
(3) The Fci had agreed to supply wheat to the respondent. Payment was to be ensured on the basis of Letters of Credit which had specific duration. After the expiry of Letters of Credit, the Fci realised that bills which had to be presented for encashment, on the Letters of Credit issued in favor of Pci, had not been submitted, and moneys were outstanding. The bills worth Rs. 5,52,687.00 had not been presented for encashment. When the bills were presented, the bank did not honour them as the period of Letters of Credit had expired.
(4) Apparently because Fci was having continuous dealings with the respondent it started making adjustments against the bills of the respondent. It is stated by the counsel for the plaintiff that some payments received, were adjusted towards principal amount of Rs. 5,52,687.00 due, & some were by payment by cheque. The payments/adjustments were made on various dates. The first one was made on 30.17.72, followed by adjustments/payments made on 8. 7. 74, 20.10.74, 11.12.74, 1.2.75, 31.3.75, 2411.75, 11.9.78 and 17.10.78, on which date last payment/adjustment was made.
(5) It is not disputed that these payments/ adjustments were all towards satisfaction of the afore-said principal amount of Rs. 5,52,687.00. It is apparent that no claim for any interest on overdue adjustments/payments was raised till notice dt. 6.12.78, where after arbitration was resorted, and claim filed before the Arbitrator.
(6) The Arbitrator has dealt with the matter as if parties were having a running account, and he has come to the conclusion that in view of the fact that it was a running account, the claim for interest is not barred as the limitation would get extended in case of a running account till the date of last payment.
(7) I think the Arbitrator is wrong in law. In the facts and circumstances of this case, there was no claim for interest at all at any stage prior to the notice dated 6.12.78. No payment was made towards interest. All payments were towards liquidation of the principal amount due. As such, the claim for interest on money due on transactions which had taken place in two months of the year 1971, was hopelessly barred when the matter went before the Arbitrator, or when the claim for interest was raised for the first time by notice dated 6.12.78. The Payment of the principal amount cannot have any bearing, in my view, on the claim for interest, which is allegedly due. Interest, if any, which was due, was due in 1971. The claim was made in 1978. Obviously the claim was barred by time.