Section 31(7) of The Arbitration Act II

A 3-Judge Bench of this Court in Union of India v. Bright Power Projects (India) Pvt. Ltd., (2015) 9 SCC 695 has considered the provisions contained in Section 31(7)(a) of The Arbitration and Conciliation Act, 1996 and considered the words “unless otherwise agreed by parties” in the said section and held that the Arbitrator is bound by the terms of the contract so far as award of interest from the date of execution to the date of award is concerned.

It is clear from the provisions contained in Section 31(7)(a) that the contract between the parties has been given importance and is binding on the Arbitrator. Arbitration Clause is also required to be looked into while deciding the power of the Arbitrator and in case there is any bar contained in the contract on award of interest, it operates on which items and in the Arbitration Clause what are the powers conferred on Arbitrator and whether bar on award of interest has been confined to certain period or it relates to pendency of proceedings before the Arbitrator.

– Hon’ble Justice Arun MishraUnion of India v. Ambica Construction, [Special Leave Petition (Civil) 11114 of 2009].