Section 31(7) of The Arbitration Act VI

What would constitute ‘patent illegality’ has been elaborated in Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49.

Union of India v. Bright Power Projects (India) (P) Ltd., (2015) 9 SCC 695 highlighted, the position of law on grant of interest under Section 31(7) of 1996 Act. Though Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, (1992) 1 SCC 508 was delivered in a dispute to which 1940 Act was applicable, Constitution Bench has laid down certain general propositions on the aspect of grant of interest. The underlying principle guiding award of interest is, interest payment is essentially compensatory in nature. The said principle is applicable in a proceeding under 1996 Act as well. This principle has been broadly incorporated in Section 31(7)(a) of 1996 Act.

Hon’ble Justice Aniruddha Bose, M/s. Oriental Structural Engineers Pvt. Ltd. v. State of Kerala, [Civil Appeal No. 3454 of 2011].