Arbitration and Conciliation Act, 1996: s.31(7)(a) and (b) – Interest – Entitlement of Decree-holders to the statutory benefits under ss.31(7)(a) and (b) – Held: Decree-holders-respondents are entitled to post award interest in terms of s.31(7)(b) of the Act. Code of Civil Procedure, 1908: Execution of award – Interest awarded in the arbitration award – In the award, it was not specifically stated that the interest @ 7% p.a. was to be awarded with quarterly rests – In fact, the award did not specify anything; whether it was quarterly rests or yearly rests – It simply awarded interest @ 7% p.a. – Executing Court put it with yearly rests which the High Court in revisions preferred by the appellants modified to quarterly rests – On appeal, held: Both the Executing Court and the High Court completely erred and awarded compound interest in favour of the respondents when the award had stipulated it to be 7% p.a. simplicitor – The award did not even remotely suggest that such award of interest would be with a direction that interest be capitalized on yearly or quarterly basis – It was pure and simple award of interest @ 7% and could not be taken to be a direction to award compound interest – Consequently, the pre-award interest on the amounts in question shall be calculated @ 7% p.a. simple interest – Arbitration and Conciliation Act, 1996 – s.31(7)(a) and (b).
Partly allowing the appeals, the Court
HELD: 1. The first issue that whether the decree-holders were entitled to the statutory benefits under Section 31(7)(a) and (b) of the Act was rightly answered in favour of the decree-holders/respondents. The question is no longer res integra and stands answered in clear terms in Hyder Consulting case. [Paras 5.2, 7][833-F; 834-B-C]
Hyder Consulting (UK) Ltd. v. Governor, State of Orissa through Chief Engineer (2015) 2 SCC 189 – relied on
2. As regards the second issue, the Executing Court correctly appreciated that the Award did not specifically state that the interest @ 7% per annum was to be awarded with quarterly rests. The Executing Court found that it was doubtful whether the award of interest was @ 7% with quarterly rests or yearly rests. The Executing Court put it with yearly rests which the High Court in Revisions preferred by the appellants modified to quarterly rests. Both the Executing Court and the High Court completely erred and awarded compound interest in favour of the respondents when the award had stipulated it to be 7% per annum simplicitor. The Award did not even remotely suggest that such award of interest would be with a direction that interest be capitalized on yearly or quarterly basis. It was pure and simple award of interest @ 7% and could not be taken to be a direction to award compound interest. Consequently, the pre-award interest on the amounts in question shall be calculated @ 7% per annum simple interest. The respondents shall be entitled to the benefit under Section 31(7)(b) of the Act and post award interest shall also be @ 7% per annum simple interest. [Paras 8-12][834-C-D; 835-F-G; 835-A-B]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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