{"id":1977,"date":"2022-01-28T18:42:29","date_gmt":"2022-01-28T18:42:29","guid":{"rendered":"https:\/\/ahujalawoffices.com\/alo\/?p=1977"},"modified":"2022-01-28T18:42:29","modified_gmt":"2022-01-28T18:42:29","slug":"award-of-interest-in-arbitration-award-in-india","status":"publish","type":"post","link":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/2022\/01\/28\/award-of-interest-in-arbitration-award-in-india\/","title":{"rendered":"Award of Interest in Arbitration award in India"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1977\" class=\"elementor elementor-1977\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-507d51b elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"507d51b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b53520e\" data-id=\"b53520e\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-54e6ad6 elementor-widget elementor-widget-text-editor\" data-id=\"54e6ad6\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p style=\"text-align: justify;\">The judgment in the matter of Hyder Consulting was delivered by a three Judge bench and was a majority judgment.<\/p>\n<p style=\"text-align: justify;\">\nThe majority decision disagreed with the judgment in S.L. Arora case. The majority held that the interest given under Section 31(7) of the Act will also apply to the interest pendente lite. They argued that the \u2018sum\u2019 under Section 31 (7) (a)(b) includes the interest on the principal amount in the preaward period. Basically the entire calculated amount in the pre-award period becomes the \u2018sum\u2019 and only if no interest is awarded on the principal amount by the court the \u2018sum\u2019 would comprise of principal amount (only).<\/p>\n<p style=\"text-align: justify;\">\nIt was held by Sapre J in concurring judgment as under:\n\n\u201c31. Coming not to post award interest, Section 31(7)(b) of the\nAct employs the words, \u201cA sum directed to be paid by an arbitral award..\u201d. Clause (b) used the word \u201carbitral award\u201d and not the \u201cArbitral Tribunal\u201d. The arbitral award, as held above, is made in respect of a \u201csum\u201d which includes interest. It is therefore obvious that what carries under Section 31(7)(b) of the Act is the \u201csum directed to be paid by an arbitral award\u201d and not any other amount much less by or under the name \u201cinterest\u201d in such situation it cannot be said that what is being granted under Section 31(7)(b) of the Act is \u201cinterest on interest\u201d.\nInterest under clause(b) is granted on the \u201csum\u201d directed to be\npaid by an arbitral award wherein the \u201csum\u201d is nothing more\nthan what is arrived at under clause(a)\u201d.<\/p>\n<p style=\"text-align: justify;\">\nOn comparison of the language of Section 31(7) of 1996 Act\nand Section 34 of CPC it was found that they both have two\ndifferent interpretations. It was held that since Section 34 of\nCPC empowers the Court to award interest \u201con the principal\nsum\u201d and not merely the \u201csum\u201d as provided under Section\n31(7) of the Act, they both are evidently different.<\/p>\n<p style=\"text-align: justify;\">\nTo conclude the majority view stated that the total amount\nawarded on the date of award i.e. principal amount plus the\ninterest becomes the \u2018sum\u2019 and in the post-award period\ninterest is awarded on the said sum. Thus, the usage of the\nterm \u2018interest on interest\u2019 seems inaccurate. To clarify what it\nmeans is that if the award gives interest @ 12% pa from the\ndate of cause of action till date of award then the amount\nawarded of the claim of dues with interest @ 12% till the date\nof award will become the principal sum and on this principal\nsum the post award interest is to be awarded in accordance\nwith Section 31(7)(b). The reason behind post award interest is\nthe speedy repayment of the awarded sum under the\nprovision of Section 31 (7) of 1996 Act. In such a situation, what\nis being granted under Section 31(7) (b) is not compound\ninterest; instead, interest is granted on the sum directed to be\npaid by an arbitral award.<\/p>\n<p style=\"text-align: justify;\">\nThe Supreme Court recently in the matter of Punjab State\nCivil Supplies Corporation Limited (Punsup) vs. Ganpati Rice\nMills observed that an Arbitrator has substantial discretion in\nawarding interest under Section 31(7)(c) of the Arbitration and\nConciliation Act, 1996. Where the contract between the\nparties provided for payment of interest @ 21% pa and the\narbitrator had awarded interest @ 18% pa which was reduced\nto 12% pa by District Judge and further reduced to 9% pa by\nHigh Court while making the above mentioned observation\nthe Court restored the interest @ 12% pa since that amount\nhad been accepted by the claimant.<\/p>\nDrafted and Settled by<br\/>\nVarun S. Ahuja (Partner)<br\/>\nOf Ahuja Law Offices<br\/>\nEmail: alo@ahujalawoffices.com<br\/>\nPhone Nos:\n011-49096435,9810781997,\n9971673660\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>The judgment in the matter of Hyder Consulting was delivered by a three Judge bench and was a majority judgment. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"disabled","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[6],"tags":[],"class_list":["post-1977","post","type-post","status-publish","format-standard","hentry","category-arbitration-award-in-india"],"_links":{"self":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/posts\/1977","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/comments?post=1977"}],"version-history":[{"count":0,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/posts\/1977\/revisions"}],"wp:attachment":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/media?parent=1977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/categories?post=1977"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/tags?post=1977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}