Section 31(7) of The Arbitration Act VII

Posted on by Rudrajyoti Nath Ray

It is clear, if contract prohibits pre-­reference and pendente lite interest, Arbitrator cannot award interest for said period. Clause 17, barring interest, is very clear and categorical.

See, Sayeed Ahmed, (2009) 12 SCC 26; Kamatchi Amman Constructions, (2010) 8 SCC 767; Bharat Heavy Electricals Limited, (2015) 5 SCC 718; Chittaranjan Maity, (2017) 9 SCC 611.

If contract contains a specific clause which expressly bars payment of interest, then it is not open for Arbitrator to grant pendente lite interest.

Ambica Construction, (2017) 14 SCC 323 has no application because Ambica Construction was decided under Arbitration Act, 1940. This has been clarified in Chittaranjan Maity. M/s. Raveechee, (2018) 7 SCC 664 is again under Arbitration Act, 1940 which has no application.

Section 3(3) of The Interest Act, 1978 explicitly allows parties to waive their claim to an interest. Clause 17 is not ultra vires in terms of Section 28 of The Indian Contract Act, 1872.

– Hon’ble Justice S. Abdul Nazeer, Garg Builders v. Bharat Heavy Electricals Limited, [Civil Appeal No. 6216 of 2021].

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Also see, Union of India v. Manraj Enterprises, [Civil Appeal No. 6592 of 2021] decided on 18.11.2021.

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