R.P. Garg vs The Chief General Manager, Telecom Department & Ors.

Court

Supreme Court of India

Date

10 September 2024

Case No.

Civil Appeal No. 10472 of 2024

Result

Allowed

Bench

Pamidighantam Sri Narasimha, Sandeep Mehta

Citation

[2024] 9 S.C.R. 763 : 2024 INSC 743

Acts & Sections

Arbitration and Conciliation Act, 1996

Issue for consideration

Whether the appellant is entitled to post-award interest on the sum awarded by the Arbitrator.

Headnote

Arbitration and Conciliation Act, 1996 – s.31(7)(b) – Grant of post-award interest, not subject to the contract between the parties – Appellant claimed payment of post-award interest, denied on the ground that the contract between the parties did not permit it – Correctness:

Held: Not correct – By virtue of s.31(7)(b), a sum directed to be paid by an Arbitral Award shall carry interest – s.31(7)(b) deals with grant of interest for post award period i.e., from the date of the award till its realization – The statutory scheme relating to grant of interest provided in s.31(7) creates a distinction between post-award and pre-award interest – s.31(7)(a) regulates pre-award interest and provides that the grant of interest shall be subject to the agreement between the parties as is evident from the expression at the commencement of the sub-section “unless otherwise agreed by the parties” – Whereas, so far as the entitlement of the post-award interest is concerned, s.31(7)(b) provides that the sum directed to be paid by the Arbitral Tribunal shall carry interest – The rate of interest can be provided by the Arbitrator and in default the statutory prescription will apply – Thus, s.31(7)(b) is not subject to party autonomy and is in contrast with s.31(7)(a) as it does not give the parties the right to “contract out” interest for the post-award period – Further, the expression ‘unless the award otherwise directs’ in s.31(7)(b) relates to rate of interest and not entitlement of interest – The only distinction made by s.31(7)(b) is that the rate of interest granted under the Award is to be given precedence over the statutorily prescribed rate – Impugned judgment of the High Court set aside – Judgment of the First Appellate Court-District Court granting 18% interest from the date of the award to its realization, restored. [Paras 9, 11, 13]

Judgment Pamidighantam Sri Narasimha, J. 1. Leave granted. 2. The short question before us is whether the appellant is entitled to post award interest on the sum awarded by the Arbitrator. The Arbitrator denied payment of such interest under a misplaced impression that the contract between the parties prohibited it. The executing Court1 affirmed the finding of the Arbitrator and rejected the prayer. However, allowing the appeal, the District Court2 held that the appellant will be entitled to post award interest. By the order impugned before us, the High Court3 allowed the revision and set a

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