Arbitrator Can Award Interest Anytime After The Award Is Passed Till Actual Payment Is Made: Uttarakhand High Court

These observations were made in an appeal filed by the State questioning whether the amount of interest awarded by the Arbitrator is covered under Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996.

Hearing the matter, the bench comprising Chief Justice Ritu Bahri and Justice Rakesh Thapliyal directed the state to pay additional interest as awarded by the arbitrator on the total amount due from the date of award, till the date of actual payment of the amount.

The case originated from an arbitration award, wherein an amount of Rs. 58,55,493.00 was awarded to be paid as cost. The key contention revolved around the interest component, with the Arbitrator directing interest at 8% per annum on the total sum from the date of the cause of action until the date of the award. Additionally, the appellants were instructed to pay additional interest at the same rate on the total amount due from the date of the award until the actual payment.

The court observed that Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996 delineates the parameters for calculating interest on arbitral awards, allowing for interest to be included in the sum awarded and stipulating a default rate of two percent higher than the prevailing rate of interest.

The court explained,

“A perusal of the above-said section shows that apart from calculating interest on the amount due from the date of payment till the award is made, the Arbitrator can also award interest after the award is given till the actual payment is made as per sub-clause (b) of Section 31(7) of the Act”.

In light of these observations, the court affirmed the interest awarded by the Arbitrator and consequently, the appeal filed by the State was dismissed.

Case Title: State of Uttarakhand Vs M/s Bharat Bhoomi Builders

Citation: 2024 LiveLaw (Utt) 12

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