Supreme Court of India
HLV LIMITED (FORMERLY KNOWN AS HOTEL LEELAVENTURE PVT. LTD.)versusPBSAMP PROJECTS PVT. LTD.
- Citation
- 2025 INSC 1148
- Decided
- 24 September 2025
- Disposal
- Appeal(s) allowed
- Bench
- MANOJ MISRA
Holding
The arbitral award, which incorporated the parties’ agreed 21% simple interest and made no provision for compounding, fulfills the requirements of Sections 31(7)(a) and (b), thereby barring any claim for interest upon interest.
Summary
The parties entered into a memorandum of understanding in 2014 for the sale of land, with the respondent paying an advance of Rs.15.5 crore. The MoU was terminated in 2024 and the dispute was referred to arbitration, where the tribunal awarded the advance amount with simple interest at 21% per annum from the date of disbursement until repayment. The appellant paid Rs.44.42 crore in installments, claiming full satisfaction of the award, while the respondent sought additional compound interest under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. The High Court set aside the executing court’s order and remanded the matter, leading to a special leave appeal. The Supreme Court held that the award, which incorporated the parties’ agreed simple interest and made no provision for compounding, fulfills the requirements of Sections 31(7)(a) and (b), precluding any claim for interest upon interest. Consequently, the Supreme Court restored the executing court’s order and allowed the appeal.
Issues considered
- Whether the decree holder is entitled to interest upon interest (compound interest) under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996.
- Whether the interest awarded in the arbitral award pursuant to the MoU satisfies the requirements of Sections 31(7)(a) and (b) of the Act.
- Whether the High Court was justified in setting aside the executing court’s order and remanding the execution proceedings.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 31(7)(a), s. 31(7)(b)
Headnote
Issue for Consideration Whether in the facts and circumstances of the case, the decree holder (respondent) would be entitled to interest upon interest in terms of s.31(7)(b), Arbitration and Conciliation Act, 1996 or the interest awarded by the arbitral tribunal in of the memorandum of understanding (MoU) entered into between the parties i.e. between the appellant and the respondent fulfil the requirement of s.31(7)(a) and (b) of the said Act. Headnotes† Arbitration and Conciliation Act, 1996 – s.31(7)(a), (b) – High Court set aside the
Subjects
Section 31(7)(a)Section 31(7)(b)Arbitration and Conciliation Act, 1996Interest upon interestCompound interestStage of executionMemorandum of understanding (MoU)Interest in terms of MoUTermination of MoUArbitral tribunal bound by MoUInterest till the date of repaymentAdditional or compound interestPost-award interestParty autonomyExecuting Court
Judgment
[2025] 9 S.C.R. 1378 : 2025 INSC 1148
HLV Limited
(Formerly Known as Hotel Leelaventure Pvt. Ltd.)
v.
PBSAMP Projects Pvt. Ltd.
(Civil Appeal No. 12234 of 2025)
24 September 2025
[Manoj Misra and Ujjal Bhuyan,* JJ.]
Issue for Consideration
Whether in the facts and circumstances of the case, the decree
holder (respondent) would be entitled to interest upon interest in
terms of s.31(7)(b), Arbitration and Conciliation Act, 1996 or the
interest awarded by the arbitral tribunal in the award in terms of
the memorandum of understanding (MoU) entered into between
the parties i.e. between the appellant and the respondent fulfil the
requirement of s.31(7)(a) and (b) of the said Act.
Headnotes†
Arbitration and Conciliation Act, 1996 – s.31(7)(a), (b) – High
Court set aside the order of the Executing Court rejecting the
petition filed by the respondent-decree holder for enforcement
of the arbitral award on the ground that respondent is not
entitled to compound interest and that the amount paid by
the appellant-judgment debtor to the respondent was in full
satisfaction of the award – Respondent, if entitled to interest
upon interest in terms of s.31(7)(b) or the interest awarded by
the arbitral tribunal in the award in terms of the MoU entered
into between the parties fulfil the requirement of s.31(7)(a)
and (b):
Held: 1.1 Clause 6(b) of the MoU expressly provided that in the
event of termination of the MoU, the appellant must refund all
advances with interest at the rate of 21% per annum from the
respective dates of disbursement till repayment – Thus, in the light
of the express provision contained in clause (a) of sub-section (7)
of s.31, the arbitral tribunal awarded interest in terms of the MoU
from the date of the cause of action till the date of repayment –
As the arbitral tribunal had expressly provided interest till the date
* Author
[2025] 9 S.C.R. 1379
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
of repayment, question of additional or compound interest under
clause (b) of sub-section (7) of s.31 would not arise. [Para 29]
1.2 Arbitral tribunal in its award complied with the MoU agreed by
and between the parties – Thus, it exercised its discretion within
the overall framework of s.31(7) aligning with the legislative intent
that the award, rather than the statutory default, should govern the
parties, more so in a case as in the present one where the parties
themselves made provision for interest throughout. [Para 29]
1.3 Reliance placed by the respondent on Hyder Consulting case
to claim post-award interest is misplaced – That principle would
apply only when the arbitral tribunal leaves a matter unqualified
or is silent – In the present case, the arbitral tribunal bound by the
MoU and exercising its statutory discretion had already specified the
interest rate (21% per annum) and the duration (until repayment).
[Para 30]
1.4 The MoU did not stipulate compounding of interest; the arbitral
tribunal did not award compound interest; therefore, respondent
cannot at the stage of execution seek to introduce claim of
compound interest by drawing on general principles. [Para 31]
1.5 High Court not justified in setting aside the order of the executing
court and remanding the matter for fresh determination – Impugned
judgment set aside – Order of the executing court restored.
[Paras 32, 33]
Arbitration and Conciliation Act, 1996 – s.31(7)(a), (b) – ‘sum’;
‘unless the award otherwise directs’:
Held: 1.1 From a conjoint analysis of s.31(7)(a) and s.31(7)(b), it
is discernible that insofar award of interest from the date on which
the cause of action arose till the date of the award is concerned,
the legislative intent is that the parties possess the autonomy to
determine the interest and the rate of interest for the aforesaid
period – Clause (a) i.e. discretion of the arbitral tribunal to award
interest is subject to agreement by and between the parties –
Therefore, party autonomy takes precedence over the discretion
of the arbitral tribunal. [Para 20]
1.2 However, clause (b) is subject to award of interest by the
arbitral tribunal – As per clause (b), the ‘sum’ directed to be paid
under an arbitral award shall carry interest at the rate of 18% per
annum from the date of the award to the date of payment ‘unless
the award otherwise directs’ – Therefore, this provision is subject
1380 [2025] 9 S.C.R.
Supreme Court Reports
to award of interest by the arbitral tribunal – If it awards interest,
then the same shall be applicable from the date of the award till the
date of payment; if not, then the ‘sum’ as adjudged under clause
(a) shall carry interest at the rate of 18%. [Para 20]
Case Law Cited
Hyder Consulting (UK) Limited v. Governor, State of Orissa [2014]
14 SCR 1029 : (2015) 2 SCC 189 – held inapplicable.
Morgan Securities and Credits Private Limited v. Videocon Industries
Limited [2022] 9 SCR 819 : (2023) 1 SCC 602; Delhi Airport Metro
Express Private Limited v. Delhi Metro Rail Corporation [2022] 3
SCR 716 : (2022) 9 SCC 286 – relied on.
North Delhi Municipal Corporation v. S.A. Builders Limited [2024]
12 SCR 1581 : (2025) 7 SCC 132; State of Haryana v. S.L. Arora,
[2010] 2 SCR 297 : (2010) 3 SCC 690 – referred to.
List of Acts
Arbitration and Conciliation Act, 1996.
List of Keywords
Section 31(7)(a), (b), Arbitration and Conciliation Act, 1996;
Interest upon interest; Compound interest; Stage of execution;
Memorandum of understanding (MoU); Interest in terms of MoU;
Termination of MoU; Arbitral tribunal bound by MoU; Interest till the
date of repayment; Additional or compound interest; Post-award
interest; Party autonomy; Executing Court.
Case Arising From
CIVIL ORIGINAL JURISDICTION: Civil Appeal No. 12234 of 2025
From the Judgment and Order dated 22.04.2024 of the High Court
for The State of Telangana at Hyderabad in CRP No. 60 of 2024
Appearances for Parties
Advs. for the Appellant:
Dama Seshadri Naidu, Hemandranath Reddy, Sr. Advs., M Srinivas
R Rao, M.V. Mukunda, Abid Ali Beeran P, Sarath S Janardanan,
Saswat Adhyapak, Ms. Namita Kumari.
[2025] 9 S.C.R. 1381
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
Advs. for the Respondent:
P.b. Suresh, Sr. Adv., Mayank Jain, Madhur Jain, Ms. Aakriti
Dhawan, Arpit Goel, Deepak Jain, Parmatma Singh.
Judgment / Order of the Supreme Court
Judgment
Ujjal Bhuyan, J.
Leave granted.
2. This appeal by special leave is directed against the judgment and
order dated 22.04.2024 passed by the High Court for the State of
Telangana at Hyderabad (High Court) in Civil Revision Petition No.
60 of 2024 (PBSAMP Projects Private Limited Vs. HLV Limited). By
the impugned judgment and order, the Division Bench of the High
Court set aside the order dated 02.11.2023 passed by the Principal
Special Court in the cadre of District Judge for trial and disposal
of commercial disputes at Hyderabad (referred to hereinafter as
‘the Executing Court’) in CEP No. 05 of 2021 rejecting the petition
filed by the respondent for enforcement of the arbitral award dated
08.09.2019 on the ground that respondent is not entitled to compound
interest and that the amount paid by the judgment debtor (appellant)
to the decree holder (respondent) i.e. Rs. 44,42,05,254.00 was in
full satisfaction of the award.
3. Question for consideration in this appeal is whether in the facts and
circumstances of the case, the decree holder (respondent) would
be entitled to interest upon interest in terms of Section 31(7)(b) of
the Arbitration and Conciliation Act, 1996 or the interest awarded
by the arbitral tribunal in the award dated 08.09.2019 in terms of
the memorandum of understanding dated 09.04.2014 entered into
between the parties i.e. between the appellant and the respondent
fulfil the requirement of Section 31(7)(a) and (b) of the said Act?
4. The above question arises in the following factual backdrop.
5. The two parties had entered into a memorandum of understanding
(MoU) on 09.04.2014. The MoU was with regard to sale and transfer of
land situated at Road No. 10, Banjara Hills, Hyderabad admeasuring
approximately 3 acres and 28 guntas. The details of the land are
mentioned in the schedule to the MoU.
1382 [2025] 9 S.C.R.
Supreme Court Reports
5.1. It may be mentioned that appellant as the vendor had acquired
absolute ownership of the schedule land under different sale
deeds which was to be used for construction of a five star hotel
but for various reasons did not go ahead with the project and
instead decided to sell the land to the respondent. Under the
aforesaid MoU, respondent paid a sum of Rs. 15.5 crores as
advance to the appellant. As differences arose between the
parties, the MoU was terminated on 09.10.2024 whereafter
the dispute was referred to arbitration. The arbitral tribunal
comprised of three arbitrators: Mr. Justice TNC Rangarajan
being nominated by the claimant i.e. the respondent and Mr.
Justice A Kulasekaran being nominated by the appellant. The
two arbitrators in turn nominated Justice Arijit Pasayat as the
presiding arbitrator.
6. The arbitral tribunal passed an award dated 08th September, 2019,
the operative portion of which reads as under:
The claimant is entitled to Rs. 15.5 crores with interest
at 21% p.a. from the date it was given to the date it is
repaid. The respondent has kept the documents of title
in escrow for security purposes The respondent has
admitted liability for Rs. 10 crores and disputed only the
sum of Rs. 5.5 crores. Hence we direct that the respondent
pay immediately the sum of Rs. 10 crores with interest
The escrow arrangement will be limited to the disputed
amount of Rs. 5.5 crores only. The claimant shall give the
consent letter for release of the balance of Rs. 5.5 crores
simultaneously with the tender of the amount by way of DD
or certified cheque, NEFT/RTGS to a designated account
by the respondent within 3 months from the date of the
award. The amount will carry interest at 21% p.a. from the
date it was received till the date of exchange of the DD,
certified cheque, NEFT/RTGS with the consent letter. The
respondent’s counterclaim stands rejected. In the peculiar
facts of the case, it is directed that the parties shall bear
their respective costs.
7. Thus, the arbitral tribunal awarded Rs. 15.5 crores to the claimant
(respondent) with interest at the rate of 21 percent per annum from
the date it was given to the date it is repaid. Appellant filed a petition
[2025] 9 S.C.R. 1383
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
under Section 34 of the Arbitration and Conciliation Act, 1996 (briefly,
‘the 1996 Act’ hereinafter) before the learned Special Court for trial
and disposal of commercial disputes at Hyderabad (Special Court)
for setting aside of the award which was registered as COP No. 118
of 2019. Learned Special Court vide the judgment and order dated
19.03.2021 dismissed COP No. 118 of 2019.
8. It appears that there was no further challenge to the award. Thus,
the arbitral award dated 08.09.2019 attained finality.
9. Thereafter, respondent filed execution petition CEP No. 05 of 2021
before the executing court for execution of the arbitral award dated
08.09.2019.
10. In the course of hearing, the judgment debtor (appellant) paid a total
of Rs. 44,42,05,254.00 on various dates and in various amounts
starting from 22.07.2022 to 31.07.2023 which according to it was in
full compliance to the award including interest.
11. Decree holder i.e. the respondent filed a calculation sheet before
the executing court claiming compound interest over and above the
rate of interest i.e. 21 percent as awarded by the arbitral tribunal.
The executing court referred to Section 31(7) of the 1996 Act as well
as to the decision of this Court in Hyder Consulting (UK) Limited
Vs. Governor, State of Orissa1, and thereafter held that claim of the
decree holder for compound interest on the awarded amount was
not sustainable. The executing court cannot go beyond the award
passed by the arbitral tribunal. The decree holder is not entitled for
compound interest as claimed. The amount paid by the judgment
debtor to the decree holder i.e. Rs. 44,42,05,254.00 was in full
satisfaction of the arbitral award. Accordingly, by the order dated
02.11.2023 executing court closed CEP No. 05 of 2021.
12. This order came to be assailed by the respondent before the High
Court in a proceeding under Article 227 of the Constitution of India
which was registered as Civil Revision Petition No. 60 of 2024.
By the impugned judgment and order dated 22.04.2024, the High
Court was of the view that the executing court had reached the
conclusion in a cryptic and cavalier manner. Therefore, the order
dated 02.11.2023 was set aside and the matter was remitted back
1 (2015) 2 SCC 189
1384 [2025] 9 S.C.R.
Supreme Court Reports
to the executing court to reconsider the issue of interest under the
award dated 08.09.2019 to the respondent though clarifying that it
had not expressed any opinion on the merit of the claim.
13. Aggrieved, the related special leave petition came to be filed. This
Court by order dated 14.05.2024 had issued notice and in the
meanwhile, had stayed the order of remand.
14. Mr. Hemendranath Reddy, learned senior counsel for the appellant,
at the outset, submits that the award neither granted compound
interest nor granted post-award interest. Arbitral tribunal had awarded
composite interest i.e. simple interest of 21% per annum from the
dates payment became due to the date of repayment. Respondent
did not challenge this part of the award. The award has since attained
finality. Therefore, it is not open to the respondent now to claim either
compound interest or post-award interest on the principal amount.
14.1. Mr. Reddy, learned senior counsel, submits that the executing
court had specifically reasoned that the award had only granted
21% simple interest from the date when the cause of action
arose till payment. For this entire period, the arbitral tribunal
awarded simple interest at the rate of 21%. Neither any
compound interest was granted nor any post-award interest.
Therefore, respondent is not entitled to compound interest. This
aspect of the matter was overlooked by the High Court which
also did not consider the fact that the calculation submitted by
the appellant was accepted by the executing court after due
consideration of all the facts and circumstances of the case.
14.2. According to him, the reasoning given by the executing court
cannot be faulted. Calculation offered by the appellant having
been accepted by the executing court with sufficient reasons,
the High Court was not justified in setting aside the order
passed by the executing court and remanding the matter back
for fresh consideration.
14.3. Learned senior counsel submits that by 31.07.2023, the entire
amount of Rs. 44,42,05,254.00 was paid by the appellant to
the respondent in full compliance to the award which included
the interest quotient as well. No further amount remains to
be paid. Therefore, the executing court rightly closed the
execution case.
[2025] 9 S.C.R. 1385
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
14.4. It is submitted that respondent in its claim before the arbitral
tribunal had itself calculated the interest portion at the rate
of 21% simple interest from the date the payment became
due till actual payment. As such, it is impermissible for the
respondent to now turn around and claim compound interest
i.e. post-award interest over and above the 21% interest agreed
upon by the parties and awarded by the arbitral tribunal. Such
claim virtually amounts to modification of the award which is
impermissible at the stage of execution.
14.5. It is also submitted that Section 31(7)(a) and Section 31(7)(b)
of the 1996 Act has no application to the facts of the present
case as the arbitral tribunal itself awarded composite interest
covering the entire period from the time the cause of action
arose till payment. Arbitral tribunal did not award any post-
award interest. Therefore, the decision of this Court in Hyder
Consulting (UK) Limited (supra) would have no application.
14.6. Placing reliance on a subsequent decision of this Court in
Morgan Securities and Credits Private Limited Vs. Videocon
Industries Limited2, learned senior counsel submits that this
judgment has clarified the proposition laid down in Hyder
Consulting (supra) by holding that an arbitral tribunal has the
discretion to grant post-award interest either on the whole ‘sum’
or part of it. The decision in Hyder Consulting (supra) would
only be applicable when the award is silent about payment
of interest and not when the award clearly spells the method
of paying interest including future interest. In fact, Morgan
Securities (supra) has clarified the law laid down in Hyder
Consulting (supra) by holding that when the award specifies
the method of paying future interest, then Hyder Consulting
(supra) would have no application. Therefore, the High Court
clearly fell in error when it held that Morgan Securities (supra)
would not apply to the facts of the case and remanding the
matter back to the executing court for fresh decision placing
reliance on Hyder Consulting (supra).
14.7. Learned senior counsel finally submits that High Court was
not justified in summarily dismissing the order of the executing
court as passed in a cryptic and cavalier manner.
2 (2023) 1 SCC 602
1386 [2025] 9 S.C.R.
Supreme Court Reports
14.8. He, therefore, submits that view taken by the High Court is not
correct. The same is required to be set aside and quashed.
Consequently, the appeal should be allowed by restoring the
order of the executing court.
15. Per contra, Mr. P.B. Suresh, learned senior counsel for the respondent
submits that the impugned order does not determine any inter se rights
of the parties. It is only an order of remand with the observation that
the High Court has not expressed any opinion on merit. Therefore,
such an order calls for no interference, that too, under Article 136
of the Constitution of India.
15.1. As and when the executing court decides the issue finally,
parties to the lis would have the right to take recourse to the
remedy as provided under the law. In such circumstances,
filing of the special leave petition by the appellant is clearly
an abuse of the process of the court.
15.2. As per the interest calculation sheet as on 31.07.2023 filed by
the respondent before the executing court, appellant was liable
to pay Rs. 57,74,68,490.00. As against this, appellant has only
paid to the respondent Rs. 44,42,05,254.00 till 31.07.2023.
Therefore, an amount of more than Rs. 13 crores still remains
outstanding. It is required to be paid by the appellant to the
respondent.
15.3. Learned senior counsel for the respondent submits that the
interest for the prior period till the date of the award has to
be capitalized which will then be the ‘sum’ in terms of Section
31(7)(a) of the 1996 Act. On that basis, the judgment debtor
is entitled to 21% post-award interest on the above ‘sum’ till
the date of payment. In addition to placing reliance on the
decision of this Court in Hyder Consulting (supra), learned
senior counsel submits that the issue raised by the respondent
is no longer res integra. The decision in Hyder Consulting has
since been explained and reiterated by this Court in North
Delhi Municipal Corporation Vs. S.A. Builders Limited3. As
per the said judgment, respondent is entitled to compound
interest under Section 31(7)(b) of the 1996 Act on the ‘sum’
determined in terms of Section 31(7)(a) of the said Act.
3 (2025) 7 SCC 132
[2025] 9 S.C.R. 1387
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
15.4. He finally submits that the civil appeal is devoid of any merit
and is, as such, liable to be dismissed.
16. Submissions made by learned counsel for the parties have received
the due consideration of the Court.
17. At the outset, let us examine Section 31(7) of the 1996 Act which
at the relevant point of time read thus:
31. Form and contents of arbitral award.
(7)(a) Unless otherwise agreed by the parties, where
and insofar as an arbitral award is for the payment
of money, the Arbitral Tribunal may include in the
sum for which the award is made interest, at such
rate as it deems reasonable, on the whole or any
part of the money, for the whole or any part of the
period between the date on which the cause of action
arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award
shall, unless the award otherwise directs, carry
interest at the rate of eighteen per centum per annum
from the date of the award to the date of payment.
17.1. From a perusal of the aforesaid provision, it is seen that
Section 31(7) has got two clauses: clause (a) and clause (b).
Clause (a) starts with the expression ‘unless otherwise agreed
by the parties’. Thereafter, it says that where an award is for
payment of money, the arbitral tribunal may include in the sum
for which the award is made interest at such rate as it deems
reasonable on the whole or any part of the money and for the
whole or any part of the period from the date when the cause
of action arose to the date when the award is made. In other
words, clause (a) empowers the tribunal to include interest in
the ‘sum’ for which the award is made. The arbitral tribunal
is further conferred the discretion to award interest on the
principal sum awarded at such rate as it deems reasonable.
However, this discretion of the arbitral tribunal is subject to
any decision which is agreed upon by the parties.
18. Clause (a) of Section 31(7) of the 1996 Act was examined by this
Court in S.A. Builders (supra) whereafter it was held as under:
1388 [2025] 9 S.C.R.
Supreme Court Reports
36.1. From a minute reading of sub-section (7), it is
seen that it has got two parts: the first part i.e. clause
(a) deals with passing of award which would include
interest up to the date on which the award is made. The
second part i.e. clause (b) deals with grant of interest on
the “sum” awarded by the Arbitral Tribunal.
36.2. Let us now discuss in detail the contours of the
two clauses. As per clause (a), when an award is made
by the Arbitral Tribunal for payment of money, the “sum”
which is awarded may include interest at such rate as the
Arbitral Tribunal deems appropriate, on the whole or any
part of the money and for the whole or any part of the
period. The period for which the interest may be granted
would be between the date on which the cause of action
arose and the date on which the award is made. The
expression which needs to be noticed in this part is the
following: the Arbitral Tribunal may include in the sum
for which the award is made interest at such rate as
it deems reasonable.
36.3. The word “may” appearing in the above
expression is quite significant. It implies that the
Arbitral Tribunal has the discretion to grant interest at
a reasonable rate. In other words, it may grant interest
or it may not grant interest; but if it grants interest, it
would be included in the “sum” which is awarded by
the Arbitral Tribunal.
19. Insofar clause (b), as it stood at the relevant time is concerned, it
provides for award of interest by the arbitral tribunal on the ‘sum’
adjudged under clause (a). It says that ‘unless the award otherwise
directs’, a sum directed to be paid by an award shall carry interest
at the rate of 18% per annum from the date of the award to the date
of payment. In other words, clause (b) is subject to the interest that
may be awarded by the arbitral tribunal. This provision was explained
in S.A. Builders (supra) in the following manner:
36.4. This brings us to the second part i.e. clause (b)
which deals with post-award interest. The “sum” directed
to be paid by the Arbitral Tribunal shall, unless the award
otherwise directs, carry interest @ 18% p.a. from the date
[2025] 9 S.C.R. 1389
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
of the award to the date of payment. Thus, what clause (b)
provides for is that the Arbitral Tribunal may award interest
on the “sum” adjudged under clause (a). But if no such
interest is awarded, then there shall be interest @ 18% on
the “sum” awarded by the Arbitral Tribunal from the date of
the award to the date of payment. The two crucial words
in this part are sum and shall. As seen from clause (a),
the “sum” awarded by the Arbitral Tribunal would include
interest if it is granted by the Arbitral Tribunal. Therefore, the
“sum” as awarded by the Arbitral Tribunal may or may not
include interest. Whether the “sum” so awarded includes
or does not include interest, it would carry further interest
@ 18% from the date of the award to the date of payment
unless another rate of interest is granted by the Arbitral
Tribunal. While granting of interest under clauses (a) and
(b) by the Arbitral Tribunal is discretionary, the interest
contemplated under clause (b) in the event of failure of the
Arbitral Tribunal to award interest is mandatory. Therefore,
the legislature has consciously used the word shall.
20. Thus, from a conjoint analysis of Section 31(7)(a) and Section 31(7)
(b) of the 1996 Act, what is discernible is that insofar award of interest
from the date on which the cause of action arose till the date of the
award is concerned, the legislative intent is that the parties possess
the autonomy to determine the interest and the rate of interest for the
aforesaid period. Clause (a) i.e. discretion of the arbitral tribunal to
award interest is subject to agreement by and between the parties.
Therefore, party autonomy takes precedence over the discretion
of the arbitral tribunal. However, clause (b) is subject to award of
interest by the arbitral tribunal. In other words, as per clause (b), the
‘sum’ directed to be paid under an arbitral award shall carry interest
at the rate of 18% per annum from the date of the award to the date
of payment ‘unless the award otherwise directs’. Therefore, this
provision is subject to award of interest by the arbitral tribunal. If it
awards interest, then the same shall be applicable from the date of
the award till the date of payment; if not, then the ‘sum’ as adjudged
under clause (a) shall carry interest at the rate of 18%.
21. The parties here are governed by the MOU dated 09.04.2014.
Clause (6)(b) of the MoU is relevant and reads as under:
1390 [2025] 9 S.C.R.
Supreme Court Reports
(b) The proposed purchaser may at its option
terminate this MOU by sending to the proposed
vendor an intimation of termination of MOU and
demand for refund of advance paid together with
21% interest per annum from the respective dates
of disbursement of the advances till actual date of
payment of the same. The proposed vendor shall
tender the advances together with 21% interest
per annum within 30 days of receipt of intimation
of termination from the proposed purchaser. It is
clarified that the termination of the MOU will take
effect only from the date of receipt of all advances
together with 21% interest per annum up to date
of receipt by the proposed purchaser. If for any
reason the proposed vendor is unable to tender all
advances with 21% interest per annum within 30
days of the receipt of intimation of termination of the
MOU from the proposed purchaser, the proposed
purchaser will have the option to call upon the
proposed vendor to execute the sale deed in respect
of the schedule property on as is where is basis
for a total consideration of Rs. 65 crores (Rupees
sixty five crores) and pay the balance amount after
adjusting advances paid.
21.1. The aforesaid clause in the MoU gave discretion to the
respondent to terminate the MOU in which event it would
be entitled to refund of the advance paid together with
interest at the rate of 21% per annum from the respective
dates of disbursement of the advances till the actual date
of repayment.
22. The arbitral tribunal in the award dated 08.09.2019 applied the
aforesaid clause of the MOU while declaring that the claimant was
entitled to Rs. 15.5 crores with interest at the rate of 21% per annum
from the date it was given to the date it is paid. Therefore, it is evident
that the arbitral tribunal was guided by the rate of interest provided
in the MOU and it clarified while passing the award that this rate
of interest would be available to the respondent from the dates of
disbursement till the actual date of repayment.
[2025] 9 S.C.R. 1391
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
23. A two-Judge Bench of this Court in State of Haryana Vs. S.L. Arora4
considered the question as to whether Section 31(7) of the 1996 Act
authorises and enables arbitral tribunals to award interest on interest
from the date of the award? In the facts of that case, the consequential
question formulated was as to whether the arbitral award granted
future interest from the date of award, only on the principal amount
found due to the respondent or on the aggregate of the principal
and interest up to the date of the award? After an analysis of the
aforesaid provision, the Bench observed that Section 31(7) makes
no reference to payment of compound interest or payment of interest
upon interest. It was held that in the absence of any provision for
interest upon interest in the contract, arbitral tribunals do not have the
power to award interest upon interest or compound interest either for
the pre-award period or for the post-award period. It was held thus:
18. Section 31(7) makes no reference to payment
of compound interest or payment of interest
upon interest. Nor does it require the interest
which accrues till the date of the award, to be
treated as part of the principal from the date of
award for calculating the post-award interest.
The use of the words “where and insofar as an
arbitral award is for the payment of money” and use
of the words “the Arbitral Tribunal may include in
the sum for which the award is made, interest …
on the whole or any part of the money” in clause
(a) and use of the words “a sum directed to be
paid by an arbitral award shall … carry interest” in
clause (b) of sub-section (7) of Section 31 clearly
indicate that the section contemplates award of
only simple interest and not compound interest or
interest upon interest. “A sum directed to be paid
by an arbitral award” refers to the award of sums
on the substantive claims and does not refer to
interest awarded on the “sum directed to be paid
by the award”. In the absence of any provision for
interest upon interest in the contract, the Arbitral
4 (2010) 3 SCC 690
1392 [2025] 9 S.C.R.
Supreme Court Reports
Tribunals do not have the power to award interest
upon interest, or compound interest, either for the
pre-award period or for the post-award period.
23.1. Thereafter the Bench upon a threadbare analysis concluded
that Section 31(7) merely authorizes the arbitral tribunal to
award interest in accordance with the contract and in the
absence of any prohibition in the contract and in the absence
of specific provision relating to interest in the contract, to award
simple interest at such rates as it deems fit from the date on
which the cause of action arose till the date of payment. The
Bench further clarified that if the award is silent about interest
from the date of award till the date of payment, the person
in whose favour the award is made will be entitled to interest
at 18% per annum on the principal amount awarded from
the date of award till the date of payment. In the facts of that
case, the Bench declared that the calculation that was made
in the execution petition as originally filed was correct and
that the modification sought for by the respondent increasing
the amount due under the award was contrary to the award.
It was concluded as under:
34. Thus it is clear that Section 31(7) merely
authorises the Arbitral Tribunal to award interest in
accordance with the contract and in the absence of
any prohibition in the contract and in the absence of
specific provision relating to interest in the contract,
to award simple interest at such rates as it deems
fit from the date on which the cause of action arose
till the date of payment. It also provides that if the
award is silent about interest from the date of award
till the date of payment, the person in whose favour
the award is made will be entitled to interest at
18% per annum on the principal amount awarded,
from the date of award till the date of payment. The
calculation that was made in the execution petition
as originally filed was correct and the modification
by the respondent increasing the amount due under
the award was contrary to the award.
24. The correctness of the view taken in S.L. Arora (supra) came up
for consideration before a three-Judge Bench of this Court in Hyder
[2025] 9 S.C.R. 1393
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
Consulting (supra). The majority held that the conclusion reached in
S.L. Arora (supra) was not in consonance with the clear language of
Section 31(7) of the Act. After extracting Section 31(7) of the 1996
Act, the Bench explained clause (a) of sub-section (7) of Section 31
in the following manner:
4. Clause (a) of sub-section (7) provides that where
an award is made for the payment of money, the
Arbitral Tribunal may include interest in the sum
for which the award is made. In plain terms, this
provision confers a power upon the Arbitral Tribunal
while making an award for payment of money, to
include interest in the sum for which the award
is made on either the whole or any part of the
money and for the whole or any part of the period
for the entire pre-award period between the date
on which the cause of action arose and the date
on which the award is made. To put it differently,
sub-section (7)(a) contemplates that an award,
inclusive of interest for the pre-award period on the
entire amount directed to be paid or part thereof,
may be passed. The “sum” awarded may be the
principal amount and such interest as the Arbitral
Tribunal deems fit. If no interest is awarded, the
“sum” comprises only the principal. The significant
words occurring in clause (a) of sub-section (7) of
Section 31 of the Act are “the sum for which the
award is made”. On a plain reading, this expression
refers to the total amount or sum for the payment
for which the award is made. Parliament has
not added a qualification like “principal” to the
word “sum”, and therefore, the word “sum” here
simply means “a particular amount of money”.
In Section 31(7), this particular amount of money
may include interest from the date of cause of
action to the date of the award.
24.1. On the above analysis, the Bench explained clause (b) of
sub-section (7) of Section 31 of the 1996 Act to mean that
the ‘sum’ which is directed to be paid by the award, whether
1394 [2025] 9 S.C.R.
Supreme Court Reports
inclusive or exclusive of interest, shall carry interest at the rate
of 18% per annum for the post-award period unless otherwise
ordered. The above provision was explained as under:
7. Thus, when used as a noun, as it seems to
have been used in this provision, the word “sum”
simply means “an amount of money”; whatever
it may include — “principal” and “interest” or
one of the two. Once the meaning of the word
“sum” is clear, the same meaning must be
ascribed to the word in clause (b) of sub-section
(7) of Section 31 of the Act, where it provides that
a sum directed to be paid by an arbitral award
“shall … carry interest …” from the date of the
award to the date of the payment i.e. post-award.
In other words, what clause (b) of sub-section (7)
of Section 31 of the Act directs is that the “sum”,
which is directed to be paid by the award, whether
inclusive or exclusive of interest, shall carry interest
at the rate of eighteen per cent per annum for the
post-award period, unless otherwise ordered.
24.2. Finally, Hyder Consulting (supra) arrived at the following
conclusion:
13. Thus, it is apparent that vide clause (a) of
sub-section (7) of Section 31 of the Act, Parliament
intended that an award for payment of money may
be inclusive of interest, and the “sum” of the principal
amount plus interest may be directed to be paid
by the Arbitral Tribunal for the pre-award period.
Thereupon, the Arbitral Tribunal may direct interest
to be paid on such “sum” for the post-award period
vide clause (b) of sub-section (7) of Section 31 of
the Act, at which stage the amount would be the
sum arrived at after the merging of interest with
the principal; the two components having lost their
separate identities.
25. The question as to whether the ‘sum’ awarded under clause (a) of
sub-section (7) of Section 31 of the 1996 Act would include interest
[2025] 9 S.C.R. 1395
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
pendente lite or not again came up for consideration before a two-
Judge Bench of this Court in Delhi Airport Metro Express Private
Limited Vs. Delhi Metro Rail Corporation5. The Bench analyzed Hyder
Consulting (supra) in the following manner:
15. It could thus be seen that the majority view
of this Court in Hyder Consulting (UK) is that
the sum awarded may include the principal
amount and such interest as the Arbitral Tribunal
deems fit. It is further held that, if no interest
is awarded, the “sum” comprises only the
principal amount. The majority judgment held
that clause (a) of sub-section (7) of Section 31 of
the 1996 Act refers to the total amount or sum for
the payment for which the award is made. As such,
the amount awarded under clause (a) of sub-section
(7) of Section 31 of the 1996 Act would include the
principal amount plus the interest amount pendente
lite. It was held that the interest to be calculated
as per clause (b) of sub-section (7) of Section 31
of the 1996 Act would be on the total sum arrived
as aforesaid under clause (a) of sub-section (7) of
Section 31 of the 1996 Act. S.A. Bobde, J. in his
judgment, has referred to various authorities of this
Court as well as Maxwell on the Interpretation of
Statutes. He emphasised that the Court must give
effect to the plain, clear and unambiguous words
of the legislature and it is not for the courts to add
or subtract the words, even though the construction
may lead to strange or surprising, unreasonable or
unjust or oppressive results.
25.1. Thereafter, the Bench made an analysis of clause (a) of
sub-section (7) of Section 31 of the 1996 Act and noted that
it begins with the expression ‘unless otherwise agreed by
the parties’. This expression was explained by the Bench by
holding as under:
17. It could thus be seen that the part which
deals with the power of the Arbitral Tribunal
5 (2022) 9 SCC 286
1396 [2025] 9 S.C.R.
Supreme Court Reports
to award interest, would operate if it is not
otherwise agreed by the parties. If there is an
agreement between the parties to the contrary,
the Arbitral Tribunal would lose its discretion to
award interest and will have to be guided by the
agreement between the parties. The provision
is clear that the Arbitral Tribunal is not bound
to award interest. It has a discretion to award
the interest or not to award. It further has a
discretion to award interest at such rate as it
deems reasonable. It further has a discretion to
award interest on the whole or any part of the
money. It is also not necessary for the Arbitral
Tribunal to award interest for the entire period
between the date on which the cause of action
arose and the date on which the award is made.
It can grant interest for the entire period or any
part thereof or no interest at all.
25.2. Thus, this Court was of the view that power of the tribunal to
award interest would operate if it is not otherwise agreed by
the parties. If there is an agreement between the parties to
the contrary, the arbitral tribunal would lose its discretion to
award interest and will have to be guided by the agreement
between the parties. Thus, the expression ‘unless otherwise
agreed by the parties’ assumes significance and concluded
as under:
20. If clause (a) of sub-section (7) of Section 31 of
the 1996 Act is given a plain and literal meaning, the
legislative intent would be clear that the discretion
with regard to grant of interest would be available to
the Arbitral Tribunal only when there is no agreement
to the contrary between the parties. The phrase
“unless otherwise agreed by the parties” clearly
emphasises that when the parties have agreed
with regard to any of the aspects covered under
clause (a) of sub-section (7) of Section 31 of the
1996 Act, the Arbitral Tribunal would cease to have
any discretion with regard to the aspects mentioned
in the said provision. Only in the absence of such
[2025] 9 S.C.R. 1397
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
an agreement, the Arbitral Tribunal would have a
discretion to exercise its powers under clause (a) of
sub-section (7) of Section 31 of the 1996 Act. The
discretion is wide enough. It may grant or may not
grant interest. It may grant interest for the entire
period or any part thereof. It may also grant interest
on the whole or any part of the money.
25.3. From the above, the view of the court is clearly discernible
in that the discretion to grant interest would be available to
the arbitral tribunal under clause (a) of sub-section (7) of
Section 31 only when there is no agreement to the contrary
between the parties. When the parties agree with regard to
any of the aspects covered under clause (a) of sub-section
(7) of Section 31, the arbitral tribunal would cease to have
any discretion with regard to the aspects mentioned in the
said provision. Only in the absence of such an agreement,
the arbitral tribunal would have the discretion to exercise its
powers under clause (a) of sub-section (7) of Section 31 of
the 1996 Act.
25.4. In the facts of that case it was held that in view of the specific
agreement between the parties, the interest quotient prior to
the date of the award so also after the date of the award will
be governed by article 29.8 of the concession agreement
which was also directed by the arbitral tribunal. This view was
accordingly affirmed by this Court.
26. In Morgan Securities and Credits Private Limited Vs. Videocon
Industries Limited6, a two-Judge Bench of this Court again examined
the decision in Hyder Consulting (supra). After an extensive analysis,
the Bench was of the view that the decision in Hyder Consulting
(supra) was on the limited issue of whether post-award interest
could be granted on the aggregate of the principal and the pre-
award interest. The opinion authored by Bobde, J. was limited to this
aspect of post-award interest. Thereafter, the Bench noted that the
issue before it was whether the phrase ‘unless the award otherwise
directs’ in Section 31(7)(b) of the 1996 Act only provides the arbitrator
the discretion to determine the rate of interest or both the rate of
6 (2023) 1 SCC 602
1398 [2025] 9 S.C.R.
Supreme Court Reports
interest and the ‘sum’ it must be paid against. Thereafter it was noted
that both clauses (a) and (b) of sub-section (7) of Section 31 are
qualified. While clause (a) is qualified by the arbitration agreement
between the parties, clause (b) is qualified by the arbitration award.
The words ‘unless otherwise agreed by the parties’ occurring at the
beginning of clause (a) qualifies the entire provision. However, the
words ‘unless the award otherwise directs’ occurring in clause (b)
only qualifies the rate of post-award interest. Thereafter, this Court
summarized the findings and we extract only those portions which
are relevant for our present purpose:
28.3. The phrase “unless the award otherwise directs”
in Section 31(7)(b) only qualifies the rate of interest.
28.4. According to Section 31(7)(b), if the arbitrator does
not grant post-award interest, the award holder is entitled
to post-award interest at eighteen per cent.
28.5. Section 31(7)(b) does not fetter or restrict the
discretion that the arbitrator holds in granting post-award
interest. The arbitrator has the discretion to award post-
award interest on a part of the sum.
28.6. The arbitrator must exercise the discretionary
power to grant post-award interest reasonably
and in good faith, taking into account all relevant
circumstances.
27. Though learned senior counsel for the respondent placed heavy
reliance on S.A. Builders Limited (supra), we are of the view that
S.A. Builders Limited (supra) is a continuum of what was held by
this Court in Delhi Airport Metro Express Private Limited (supra)
and in Morgan Securities and Credits Private Limited (supra). We
have already noted as to how a two-Judge Bench of this Court in
S.A. Builders Limited (supra) (of which I was also a member) had
analyzed clauses (a) and (b) of sub-section (7) of Section 31 of the
1996 Act. We have also noted that this Court had observed that the
provision in Section 31(7)(a) of the 1996 Act begins with the expression
‘unless otherwise agreed by the parties’, thereby highlighting the
legislative stance that the parties possess the autonomy to determine
pre-award interest on the payment of money that may be awarded
by the arbitral tribunal. However, no such discretion is available
[2025] 9 S.C.R. 1399
HLV Limited (Formerly Known as Hotel Leelaventure
Pvt. Ltd.) v. PBSAMP Projects Pvt. Ltd.
to the parties under Section 31(7)(b) of the 1996 Act though such
discretion is available to the arbitral tribunal. It was in that context
this Court in the facts of that case noted that it was not the case
of the appellant that the interest portion is covered by the contract
agreement between the parties. In the absence thereof, Section 31(7)
(a) as well as Section 31(7)(b) of the 1996 Act would have their full
effect. Therefore, it was concluded as under:
70. That apart, it is not the case of the appellant
that the interest portion is covered by the contract
agreement between the parties. In the absence thereof,
Section 31(7)(a) as well as Section 31(7)(b) of the 1996
Act would have their full effect. The sum awarded would
mean the principal amount plus the interest awarded from
the date of cause of action up to the date of the award.
Thereafter, as per Section 31(7)(b) of the 1996 Act, the
sum (principal plus interest) would carry interest @ 18%
from the date of the award to the date of payment. This
would be consistent with the law laid down by this Court
in Hyder Consulting.
28. Therefore, even S.A. Builders Limited (supra) lays down the
proposition that the discretion of the arbitral tribunal to award interest
under Section 31(7)(a) of the 1996 Act is subservient to the agreement
between the parties. In other words, party autonomy, so crucial to
arbitration, reigns supreme.
29. Reverting back to the facts of the present case, we have already
adverted to clause 6(b) of the MoU dated 09.04.2014 which expressly
provided that in the event of termination of the MoU, the appellant
must refund all advances with interest at the rate of 21% per annum
from the respective dates of disbursement till repayment. Thus, in the
light of the express provision contained in clause (a) of sub-section
(7) of Section 31, the arbitral tribunal awarded interest in terms of the
MoU from the date of the cause of action till the date of repayment.
As the arbitral tribunal had expressly provided interest till the date
of repayment, question of additional or compound interest under
clause (b) of sub-section (7) of Section 31 of 1996 Act would not
arise. The arbitral tribunal in its award dated 08.09.2019 has faithfully
complied with the MoU agreed by and between the parties. Thus, the
arbitral tribunal exercised its discretion within the overall framework
1400 [2025] 9 S.C.R.
Supreme Court Reports
of Section 31(7) of the 1996 Act aligning with the legislative intent
that the award, rather than the statutory default, should govern the
parties, more so in a case as in the present one where the parties
have themselves made provision for interest throughout.
30. Therefore, reliance placed by the respondent on Hyder Consulting
(supra) to claim post-award interest is misplaced. That principle would
apply only when the arbitral tribunal leaves a matter unqualified or is
silent. In the present case the arbitral tribunal bound by the MoU and
exercising its statutory discretion had already specified the interest
rate (21% per annum) and the duration (until repayment). As held
in Morgan Securities and Credits Private Limited (supra), reaffirmed
in Delhi Airport Metro Express Private Limited (supra) and explained
in S.A. Builders Limited (supra), once parties agree on the interest
regime, the arbitrator’s role is confined to enforcing it and the courts
would not rewrite or enlarge the award by introducing further interest
at the execution stage.
31. The MoU did not stipulate compounding of interest; the arbitral tribunal
did not award compound interest; therefore, respondent cannot at the
stage of execution seek to introduce claim of compound interest by
drawing on general principles. Allowing such a claim would amount to
rewriting the award at the stage of execution which is impermissible.
32. In the circumstances, we are of the view that the High Court was
not justified in setting aside the order of the executing court and
remanding the matter for fresh determination.
33. For the reasons aforementioned, the impugned judgment and order of
the High Court dated 22.04.2024 is hereby set aside. Consequently,
order of the executing court dated 02.11.2023 is restored.
34. Civil appeal is accordingly allowed. However, there shall be no order
as to cost.
Result of the case: Appeal allowed.
†
Headnotes prepared by: Divya Pandey
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