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TMI Blog2015 (7) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... terest shall be payable, the Arbitral Tribunal cannot award interest. - if there is a bar against payment of interest in the contract, the arbitrator cannot award any interest for such period. In view of the specific bar under Clause 13(3) of the contract entered into between the parties, we are of the view that the Arbitral Tribunal was not justified in awarding interest from the date of entering upon the reference to the Arbitral Tribunal till the date of the award. - We set aside the impugned judgment and the award so far as it pertains to payment of interest pendente lite and direct that no interest would be paid on the amount payable under the contract to the respondent from the date of the reference till the date of the award. - Impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered in the case of Secretary, Irrigation Department, Government of Orissa and Ors. v. G.C. Roy (1992) 1 SCC 508, the Arbitral Tribunal awarded interest on the amount of the award. In the said case, this Court had considered the provisions of Section 29 of the Arbitration Act, 1940, which dealt with payment of interest pendente lite. After analyzing the scheme of the said Act, various earlier decisions and after considering the very same issue, namely, whether an arbitrator has power to award interest pendente lite and, if so, on what principles, this Court had observed that the Arbitral Tribunal had power to award interest. 5. Being aggrieved by the Award and especially because of interest being awarded by the Arbitral Tribunal, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 13 (3) of the contract entered into between the parties reads as under: 13(3). No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but Government Securities deposited in terms of sub-clause(1) of this clause will be repayable with interest accrued thereon. 11. Thus, it had been specifically understood between the parties that no interest was to be paid on the earnest money, security deposit and the amount payable to the contractor under the contract. So far as payment of interest on Government Securities, which had been deposited by the respondent contractor with the appellant is concerned, it was specifically stated that the said amount was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words unless otherwise agreed by the parties , categorically specifies that the arbitrator is bound by the terms of the contract so far as award of interest from the date of cause of action to date of the award is concerned. Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest. 15. We may also refer to the decision of this Court in Union of India v. Saraswat Trading Agency and others (2009)16 SCC 504. This Court has observed in the said case that if there is a bar against payment of interest in the contract, the arbitrator cannot award any interest for such period. In view of the specific bar under Clause 13(3) of the contract entered into between the parties, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforestated judgment delivered by this Court, the Arbitral Tribunal thought it proper to award interest on the amount payable to the contractor for the period commencing from the date on which the reference was entered upon till the date of the award. The Tribunal, however, failed to consider the provisions of Section 31(7) of the Act and clause 13(3) of the contract before awarding interest in the present case. 18. It is also pertinent to note that G.C. Roy s case (supra) had been decided on December 12, 1991 on the basis of the provisions of the Arbitration Act, 1940, which was not operative at the time when the dispute on hand was decided by the Arbitral Tribunal. 19. Section 31(7)(a) of the Act ought to have been read and interpr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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