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21 October 2021 |Overseas Drilling Ltd. v. Directorate General of Hydrocarbons of India | EFA(OS) (COMM) 2 of 2021 and CM No. 10663 of 2021|Manmohan and Navin Chawla JJ | Delhi High Court |2021 SCC OnLine Del 4824
A 2-judge bench of the Delhi High Court has ruled that when the arbitrator granted post-award interest only on the principal sum, there was no scope for adding the pre-award interest into the principal amount for calculating the post-award interest by applying Section 31 (7) (b) ACA.
To recall, under Section 31 (7) (a) ACA, unless otherwise agreed by the parties, where an arbitral award is for the payment of money, the tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable. Then, under sub-clause (b) a sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest.
For the law on the subject, please see the 3-judge bench decision of the Supreme Court in Hyder Consulting (UK) Ltd. v. State of Orissa, (2015) 2 SCC 189. Bobde and Sapre JJ constituted the majority and Dattu CJ the minority view. On the issue if post-award interest was mandatory, Sapre J expressed no opinion, Bobde J ruled that it was mandatory, but the rate discretionary, and Dattu CJ had ruled that it was not mandatory.
Read the judgment here.