Section 31(7)(b) of the Arbitration Act – Interest @18%
Section 31(7)(b) of Arbitration Act – Rate of interest at 18%
On 22.4.1997, the disputes arising out of the contract work was referred to the arbitration and the proceedings were closed on 24.10.1998.
On 21.01.1999, the Arbitral Tribunal awarded interest 18% pendente lite as against 24% claimed by the appellant and future compound interest on the award in respect of Claim Nos.1-8.
The appeal under Section 34 of the AA was dismissed by the District Court.
The High Court, however, held that the sum of Rs.3 lakhs compensation awarded for loss caused due to non-issue of tender document and paralysing business could not have been granted. It was held that the proceedings were not under the Arbitration Act, 1940 and therefore, interest @ 18% could not be granted. The High Court reduced interest from 18% to 9%.
HELD that the proceedings had commenced after the amendment of the Arbitration Act, 1996, came into force on 22.8.1996. Section 31(7)(b) provides for statutory interest at 18% per annum unless the award otherwise directs. The rate of interest at 18% as awarded by the Arbitrator on 21.1.1999 on claim no.9 was re-instated.
Judgment dated 11.8.2023 of the Supreme Court of India – Civil Appeal No.3798 of 2023 – M/s. Larsen Air Conditioning and Refrigration Company Vs. Union of India and others
