20 December 2021 | Union of India v. Om Vajrakaya Construction Company | OMP 299 of 2021 | Vibhu Bakhru J | Delhi High Court
Considering a challenge to an arbitral award, the Delhi High Court set aside the grant of interest pendente lite because it was contrary to a term of the GCC that stated, “where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which the award is made.” The court noted:
[Editor's Note: Subject to the parties’ agreement, Section 31 (7) (a) ACA provides for the grant of interest between the date on which the cause of action arises, and the date of the award is made. Broken further, this involves two components: interest pre-reference (i.e., from the date of cause of action till the date of reference to the arbitrator) and pendente lite (from reference till the award). For convenience, the period covered by Section 31 (7) (a) ACA may also be termed pre-award interest. Bright concerned pendente lite interest and Jaiprakash both pre-reference and pendente lite.
For a discussion and survey of case laws under the 1940 Act and the changes brought in the 1996 ACA, also see Reliance Cellulose (2018) 9 SCC 266.
For post-award interest, see Hyder Consulting (2015) 2 SCC 189 and also our Biweekly Highlight here.]
However, the court rejected the other ground of challenge that the tribunal granted costs contrary to the contract terms. The court ruled that because the argument was raised for the first time in the set-aside proceedings, the argument “is liable to be rejected on this ground alone.” Nonetheless, the argument was without merit because:
Read the decision here.
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