Section 31(7) of The Arbitration Act X

Posted on by Rudrajyoti Nath Ray

Sub-Section 7 of Section 31 deals with pre-award and post-award interest.  

Hyder Consulting (UK) Limited v. Governor, State of Orissa (2015) 2 SCC 189 overruled State of Haryana v. S.L. Arora, (2010) 3 SCC 690. Justice Sapre was of view, Arbitrator only has discretion to determine rate of post-award interest. Justice Bobde did not expressly discuss ambit of discretion of Arbitrator while granting post-award interest. Therefore, issue was not conclusively decided.

When a discretion has been conferred on Arbitrators in regard to grant of pre-award interest, it would be against grain of statutory interpretation to presuppose legislative intent was to reduce discretionary power of Arbitrators for grant of post-award interest.   

Arbitrator must exercise discretionary power to grant post-award interest reasonably and in good faith, taking into account all relevant circumstances.

– Hon’ble Justice Dr. D.Y. Chandrachud, Morgan Securities And Credits Pvt. Ltd. v. Videocon Industries Ltd., [Civil Appeal No. 5437 of 2022].

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Also see, Executive Engineer v. Gokul Chandra Kanungo, [Civil Appeal No. 8990 of 2017] decided on 30.09.2022.

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