The Supreme Court recently held that an arbitrator has the power to award interest unless barred from awarding it, and the exclusion must be clear and specific.
In M/s Ravechee and Co v Union of India, the appellant, Ravechee and Co, was awarded a contract in 1981 with respect to mining work for Western Railways. In 1988, the parties sought arbitration when disputes arose out of the contract. The arbitrators allowed the claim in 2001 and awarded interest at the rate of 12% per year on the claim for the period between the date of claim and the date of award. The award was challenged in Gujarat High Court. The high court set aside the award in so far as it ordered interest pendente lite (pending litigation).
The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
