Supreme Court: Arbitral Tribunal cannot award pre-reference interest if contract bars it

The case concerns a dispute between North Eastern Electric Power Corporation Limited (NEEPCO) and Astra Construction Private Limited regarding whether Clause 54 of their contract bars an Arbitral Tribunal from awarding pre-reference interest under the Arbitration and Conciliation Act, 1996.

Who it concerns: Appellant: North Eastern Electric Power Corporation Limited (NEEPCO); Respondent: Astra Construction Private Limited; Bench: Justice Alok Aradhe.

What the court decided

• The Court granted leave to appeal.
• The Court analyzed the legal distinction between the Arbitration Act, 1940, and the 1996 Act regarding the power to award interest.
• The Court noted that under the 1996 Act, Section 31(7)(a) subordinates the arbitrator's power to award interest to the parties' agreement, meaning an express bar in the contract excludes this power.
• The Court reviewed the trajectory of law in cases such as State of U.P. v. Harish Chandra and Sayeed Ahmed & Company v. State of U.P.

Also in the document

• The judgment is marked as 'NON-REPORTABLE'.
• The Court observed that the 1996 Act marks a departure from the 1940 Act by explicitly sanctifying party autonomy and restricting the power to grant interest if the agreement bars it, even if the bar is not specifically directed at the arbitrator's jurisdiction.