“Section 31(7) of The Arbitration and Conciliation Act, 1996 by using the words ‘unless otherwise agreed by the parties’, categorically specifies that the Arbitrator is bound by the terms of the contract so far as award of interest from the date of cause of action to the date of the award is concerned. Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest. We may also refer to the decision of this Court in Union of India v. Saraswat Trading Agency, (2009) 16 SCC 504. This Court has observed in the said case that if there is a bar against payment of interest in the contract, the Arbitrator cannot award any interest for such period.”
– Hon’ble Justice A.K. Dave, Union of India v. Bright Power Projects, [Civil Appeal 2404 of 2008].