Arbitral Award – SC says No compound interest without contract
judgment dated 24.9.2025 of the Supreme Court in SLP (Civil) No.10732 of 2024 of HLV Limited (formerly known as Hotel Leela Venture Pvt Ltd) Vs. PBSAMP Projects Pvt Ltd.
In fact, the crux of the judgment hinges around clause (6)(b) of MoU in the matter of interest.
The Arbitral Award dated 8.9.2019 granted Rs.15.5 crores to the claimant with 21% p.a. interest from the date it was given to the date it is repaid, applying Clause (6)(b) of the MoU dated 9.4.2014.
The Executing Court rejected the petition of the respondent for enforcement of award on the ground that it is not entitled to compound interest and the amount paid by the debtor to the respondent was in full satisfaction.
The question was whether, in the facts of the case, the respondent no.1 is entitled to interest on interest as per Section 31(7)(b) AA or whether the interest given by the AT in terms of MoU dated 9.4.2014, fulfil the requirements of Section 31(7)(a) and (b) of the AA.
In that context, it was HELD that the AT is bound by the MoU and its role is confined to enforcing it. The Courts would not re-write or enlarge the award by introducing further interest at the executing further interest at the execution stage. The MoU did not stipulate compounding of interest, the AT did not award compound interest and therefore, the respondent cannot introduce compound interest at execution.
