Supreme Court of India
NORTH DELHI MUNICIPAL CORPORATIONversusM/S S.A. BUILDERS LTD.
- Citation
- 2024 INSC 988
- Decided
- 17 December 2024
- Disposal
- Dismissed
Holding
A clarification issued by the arbitrator after the award is valid if the court permits the party to seek it beyond the statutory 30‑day period, and the arbitrator was not functus officio.
Summary
The North Delhi Municipal Corporation (appellant) contracted with M/s S.A. Builders Ltd. (respondent) for construction work, which was not completed and led to a dispute. An arbitrator awarded Rs. 1,70,70,720.80 with simple interest and later issued a clarification on 15 March 2005 regarding post‑award interest, after the award had been passed in 1997. The appellant argued that the arbitrator had become functus officio and thus lacked jurisdiction to issue the clarification, contending that the clarification altered the award beyond the 30‑day period allowed under Section 33(1) of the Arbitration and Conciliation Act, 1996. The Supreme Court examined the scope of Section 33(1) and the jurisprudence on interest under Section 31(7), concluding that the clarification was permissible because the parties had been allowed by the High Court to seek it beyond the statutory period. Consequently, the Court rejected the appellant's claim of lack of jurisdiction and dismissed the appeal.
Issues considered
- Whether the arbitrator became functus officio after passing the award dated 16‑12‑1997 and therefore lacked jurisdiction to issue a clarification on 15‑03‑2005.
- Whether a clarification issued beyond the 30‑day period prescribed in Section 33(1) of the Arbitration and Conciliation Act, 1996 is valid when the court permits the party to seek it.
- Interpretation of Section 31(7)(a) and (b) of the Arbitration and Conciliation Act, 1996 with respect to pre‑award and post‑award interest.
Legislation cited
- Arbitration Act, 1940
- Arbitration and Conciliation Act, 1996s. 31, s. 31(7)(a), s. 31(7)(b), s. 33(1), s. 33(2), s. 33(6), s. 33(7)
- Interest Act, 1978
Headnote
Issue for Consideration Whether the Arbitrator had become functus officio after passing of the award dated 16.12.1997 and had no jurisdiction to issue the clarification dated 15.03.2005. Headnotes† Arbitration and Conciliation Act, 1996 – s.31 and s.33(1) (a) – Appellant functus officio and therefore lacked jurisdiction to issue the clarification: Held: The interpretation given to Section 33(1) of the 1996 Act and on a cumulative assessment of the attendant facts and circumstances of the case, this Court is of the view that the clarification sought for and
Subjects
Section 33 of the Arbitration and Conciliation Act, 1996Correction of awardInterpretation of awardArbitral awardClerical errorTypographical errorArbitral TribunalFunctus OfficioClarificationClarificatory proceedingsLack of jurisdictionInterest portionInterest awardedDate of awardDate of payment
Judgment
[2024] 12 S.C.R. 1581 : 2024 INSC 988
North Delhi Municipal Corporation
v.
M/s S.A. Builders Ltd.
(Civil Appeal No. 1878 of 2024)
17 December 2024
[Abhay S. Oka and Ujjal Bhuyan,* JJ.]
Issue for Consideration
Whether the Arbitrator had become functus officio after passing of
the award dated 16.12.1997 and had no jurisdiction to issue the
clarification dated 15.03.2005.
Headnotes†
Arbitration and Conciliation Act, 1996 – s.31 and s.33(1)
(a) – Appellant contended that the Arbitrator had become
functus officio and therefore lacked jurisdiction to issue the
clarification:
Held: The interpretation given to Section 33(1) of the 1996 Act
and on a cumulative assessment of the attendant facts and
circumstances of the case, this Court is of the view that the
clarification sought for and issued by the Arbitrator would be
covered by the expression unless another period of time has been
agreed upon by the parties appearing in Section 33 (1) of the 1996
Act – This is a case where court had permitted the respondent to
seek clarification from the Arbitrator beyond the initial period of 30
days whereafter the appellant fully participated in the clarificatory
proceeding – Therefore, the present case would be covered
by the above expression – In the circumstances, contention of
the appellant that the Arbitrator had become functus officio and
therefore lacked jurisdiction to issue the clarification cannot be
accepted and is thus rejected – 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
upto the date of the award – Thereafter, as per Section 31(7)(b) of
the 1996 Act, the sum (principal plus interest) would carry interest
* Author
1582 [2024] 11 S.C.R.
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@ 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 M/s.
Hyder Consulting (UK) Ltd. [Paras 59, 60]
Arbitration and Conciliation Act, 1996 – s.33(1) – Correction
and interpretation of award; additional award:
Held: As per sub-Section (1), within 30 days from the date of
receipt of the arbitral award, a party with notice to the other party,
may request the arbitral tribunal to correct any computation errors,
any clerical or typographical errors or any other errors of a similar
nature occurring in the award – Further, if the parties agree, a party
with notice to the other party, may request the arbitral tribunal to
give an interpretation of a specific point or part of the award –
The period of 30 days contemplated under sub-Section (1) may
stand extended to another period of time if agreed upon by the
parties – Therefore, ordinarily the time limit for correction of errors
or for interpretation of a specific point or part of the award is 30
days from the date of receipt of the arbitral award – However, the
limitation of 30 days can be waived for another period of time, if
agreed upon by the parties – Question for consideration is what
would be the contours of the expression unless another period of
time has been agreed upon by the parties, as appearing in sub-
Section (1) of Section 33. [Para 45.1]
Case Law Cited
M/s. Hyder Consulting (UK) Ltd. v. Governor, State of Orissa [2014]
14 SCR 1029 : (2015) 2 SCC 189 – relied on.
State of Haryana v. S.L. Arora [2010] 2 SCR 297 : (2010) 3 SCC
690; Gyan Prakash Arya v. Titan Industries Ltd. [2021] 11 SCR
1 : (2023) 1 SCC 153; Harshad Chiman Lal Modi v. DLF Universal
Ltd. [2005] Supp. 3 SCR 495 : (2005) 7 SCC 791; Mohanlal
Goenka v. Benoy Kishna Mukherjee [1953] 1 SCR 377 : (1952)
2 SCC 648; Gas Authority of India Limited v. Keti Construction (I)
Limited [2007] 6 SCR 439 : (2007) 5 SCC 38; Delhi Airport Metro
Express Private Limited v. Delhi Metro Rail Corporation [2022]
3 SCR 716 : (2022) 9 SCC 286; UHL Power Company Limited
v. State of Himachal Pradesh [2022] 1 SCR 1 : (2022) 4 SCC
116; Delhi Airport Metro Express Private Limited v. Delhi Metro
Rail Corporation [2022] 3 SCR 716 : (2022) 9 SCC 286; Morgan
Securities & Credits (P) Ltd. v. Videocon Industries Ltd. [2022] 9
SCR 819 : (2023) 1 SCC 602 – referred to.
[2024] 11 S.C.R. 1583
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
Ircon International Ltd. v. Budhiraja Mining & Construction Ltd.,
2007(4) Arb. LR 159 (Delhi) – referred to.
List of Acts
Arbitration and Conciliation Act, 1996; Arbitration Act, 1940; Interest
Act, 1978.
List of Keywords
Section 33 of the Arbitration and Conciliation Act, 1996; Correction
of award; Interpretation of award; Arbitral award; Clerical error;
Typographical error; Arbitral Tribunal; Functus Officio; Clarification;
Clarificatory proceedings; Lack of jurisdiction; Interest portion;
Interest awarded; Date of award; Date of payment.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1878 of 2024
From the Judgment and Order dated 01.07.2019 of the High Court
of Delhi at New Delhi in EFAOS No. 17 of 2017
Appearances for Parties
Ms. Madhavi Divan, Sr. Adv., Amol Chitale, Nirnimesh Dube,
Sunil Goel, Ankur S. Kulkarni, Susheel Joseph Cyriac, Ms. Uditha
Chakravarthy, Ms. Aiashani Narayan, Ms. Priya S. Bhalerao, Varun
Kanwal, M/s. Lex Regis Law Offices, Advs. for the Appellant.
C Aryama Sundaram, Sr. Adv., Tarun Gupta, Abhishek Gupta,
Ms. Rohini Musa, Zafar Wayat, Raj Sudhakar Yadav, Atul Kumar,
Yatinder Chaudhary, Davinder Singh Khurana, Manish Bansal,
Advs. for the Respondent.
Judgment / Order of the Supreme Court
Judgment
Ujjal Bhuyan, J.
Heard learned counsel for the parties.
2. This civil appeal by special leave is directed against the impugned
order dated 01.07.2019 passed by a Division Bench of the High Court
1584 [2024] 11 S.C.R.
Supreme Court Reports
of Delhi at New Delhi (‘High Court’) disposing of EFA(OS) No. 17/2017
and C.M. No. 20662/2017 (North Delhi Municipal Corporation Vs.
M/s. S A Builders Ltd).
3. By the impugned order dated 01.07.2019, the Division Bench held
that this Court vide the order dated 12.03.2015 had directed the
High Court to decide the issue of interest component payable to
the respondent in accordance with the law laid down in M/s. Hyder
Consulting (UK) Ltd. Vs. Governor, State of Orissa 1 and not in
accordance with the law laid down in State of Haryana Vs. S.L.
Arora,2 declaring that the matter relating to amount payable to the
respondent had attained finality and could not be interfered with.
The Division Bench set aside that part of the order of the learned
Single Judge dated 19.04.2017 passed in E.A. (OS) No. 34/2016
pertaining only to the calculations and permitted both the parties
(appellant and respondent) to make submissions before the learned
Single Judge restricted to the quantum of the amount payable to
the respondent. The appeal and the miscellaneous application were
disposed of with the observation that learned Single Judge would
decide the amount payable by the appellant to the respondent after
hearing both the sides.
4. At the outset, it would be appropriate to advert to the relevant facts
having a material bearing on the lis.
Facts
5. Respondent was awarded a contract work relating to construction
of approaches to flyover at the level crossing on New Rohtak Road
with clover-leaf slip road and service road etc. by the appellant. A
contract agreement was entered into between the parties in this
regard on 11.11.1983. The work however could not be completed
even beyond the stipulated date of completion till March, 1990 and,
therefore, the work had to be closed in an incomplete form. The main
reason for closing the work was non-availability of site.
5.1. The last payment to the tune of Rs. 4,71,48,122.00 was made
to the respondent on 09.02.1988. Thereafter, no payments were
1 (2015) 2 SCC 189
2 (2010) 3 SCC 690
[2024] 11 S.C.R. 1585
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
made to the respondent for the work done upto March, 1990
when the contract was closed. Respondent submitted its final
bill which the appellant failed to pay. As a result, dispute arose
between the parties.
6. Thereafter, respondent filed an application under Section 20 of the
Arbitration Act, 1940 before the High Court seeking appointment of
an arbitrator to arbitrate the dispute between the parties. High Court
appointed Sh. S.P. Rai, Ex-Member(Personnel), Postal Services
Board and Additional Secretary to the Government of India, Ministry
of Communications, as the sole Arbitrator. It may be mentioned that
on the consent of both the parties, the arbitration proceedings were
carried out in terms of the Arbitration and Conciliation Act, 1996
whereafter award was passed by the sole Arbitrator on 16.12.1997.
Learned Arbitrator awarded various sums under different heads
out of the 26 claims, while rejecting a few of the claims of the
respondent. Counter claim of the appellant was also allowed to a
limited extent under three heads. After adjusting the two, an amount
of Rs. 1,70,70,720.80 was awarded to the respondent with simple
interest @ 18% per annum on the award amount w.e.f. 01.04.1990
upto the date of actual payment except on claim No. 23(b) which
related to expenses incurred by the respondent on account of bank
guarantee commission, margin money etc. for keeping the bank
guarantee alive.
6.1. Thereafter, the sole Arbitrator issued a corrigendum dated
18.12.1997 pointing out certain typographical errors in the
award, whereafter it was mentioned that the net amount payable
to the respondent would be Rs. 1,70,40,720.80 instead of Rs.
1,70,70,720.80, further clarifying that the above correction would
form part of the award dated 16.12.1997.
7. Respondent filed an execution petition being Ex.P. No. 99/1998 under
Section 36 of the Arbitration and Conciliation Act, 1996 (briefly ‘the
1996 Act’ hereinafter) before the Single Bench of the High Court
for execution of the arbitral award. Learned Single Judge vide the
order dated 26.08.2004 framed the following issue for consideration:
Whether post award interest under Section 31(7) of the
Arbitration and Conciliation Act, 1996 would be calculated
on the principal sum adjudged or would it be calculated on
1586 [2024] 11 S.C.R.
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the principal sum plus interest on the principal sum which
has accrued from the date of cause of action to date of
passing of award, as under the new 1996 Act, award is
enforced as a decree of the court.
8. Simultaneously, appellant also filed before the Single Bench a
petition under Section 34 of the 1996 Act challenging the award
dated 16.12.1997. By order dated 08.01.2002, the petition of the
appellant under Section 34 of the 1996 Act was dismissed.
9. Appellant then preferred an appeal under Section 37 of the 1996 Act
before the Division Bench assailing the order dated 08.01.2002 being
FAO(OS) No. 89/2002. The said appeal was, however, dismissed
by the Division Bench of the High Court by the judgment and order
dated 14.03.2002.
10. Being aggrieved by the order dated 14.03.2002, appellant filed a
special leave petition before this Court being SLP(C) No. 7474/2002.
Though this Court had initially issued notice and granted limited stay
qua execution of the award vis-à-vis claim Nos. 22, 25 and 26, the
said special leave petition was subsequently dismissed by this Court
on 03.02.2010.
11. Reverting back to the execution petition filed by the respondent,
learned Single Judge vide the order dated 26.08.2004 after framing
the issue as above expressed the view that post-award interest under
Section 31(7) of the 1996 Act affects a large volume of litigation
before the court. Therefore, in order to avoid proliferation of litigation
and unnecessary appeals, learned Single Judge referred the matter
to the Division Bench to clarify the position in this regard.
12. When the matter was placed before the Division Bench, respondent
sought leave to approach the learned Arbitrator for seeking the
clarification as to whether the interest awarded in the award was
under Section 31(7)(a) of the 1996 Act or not? Division Bench vide the
order dated 03.01.2005 granted such permission to the respondent
with the clarification that the permission so granted should not be
understood to contain any expression of opinion of the Division
Bench about payment of interest under Section 31(7)(a) or Section
31(7)(b) of the 1996 Act.
13. Pursuant thereto, an application was filed by the respondent before
the learned Arbitrator seeking clarification in terms of the order dated
[2024] 11 S.C.R. 1587
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
03.01.2005. It was contended on behalf of the respondent that though
under sub-Section (7) of Section 31 of the 1996 Act interest can be
awarded, Arbitral Tribunal, however, had not clarified as to whether
the said interest was awarded under clause (a) of sub-Section (7) of
Section 31 of the 1996 Act or not. Appellant filed objection to such
application primarily contending on merit that no such clarification
was warranted in the facts and circumstances of the case.
14. Learned Arbitrator after hearing the parties issued a clarification on
15.03.2005 vis-à-vis payment of interest. After analysing the provisions
of both Section 31(7)(a) and Section 31(7)(b) of the 1996 Act, learned
Arbitrator clarified that post-award interest shall be payable on the
awarded sum i.e. on the amount of claim awarded plus the interest
for the pre-reference period as well as interest pendente lite from
the date of the award till it is paid @ 18% per annum.
15. It may be mentioned that against the order of the Division Bench
of the High Court dated 03.01.2005 whereby the Division Bench
had granted permission to the respondent to approach the Arbitral
Tribunal for clarification, appellant had filed special leave petition
before this Court being SLP(C) CC No. 5011/2007 and by order
dated 09.07.2007, the said special leave petition was dismissed.
16. Against the clarification of the learned Arbitrator dated 15.03.2005,
an application was filed by the appellant before the Single Bench
being EA(OS) No. 270/2005 in the pending Ex.P. No. 99/1998 for
setting aside the said clarification. By the order dated 19.02.2008,
learned Single Judge, after referring to Section 32 of the 1996 Act
and a decision of the Delhi High Court in Ircon International Ltd. Vs.
Budhiraja Mining & Construction Ltd.,3 held that learned Arbitrator had
become functus officio and, therefore, had no authority to entertain
the application for clarification. After 30 days of the award, learned
Arbitrator had no authority to make any change in the award. The
earlier order of the learned Arbitrator awarding simple interest @
18% per annum on the awarded amount from 01.04.1990 till the date
of actual payment takes care of the interest part. Learned Single
Judge, therefore, set aside the clarification issued by the learned
3 2007(4) Arb. LR 159 (Delhi)
1588 [2024] 11 S.C.R.
Supreme Court Reports
Arbitrator, declaring that the award dated 16.12.1997 passed earlier
and the interest granted thereunder would hold the field and would
be payable by the judgment debtor (appellant) to the judgment
holder (respondent).
17. According to the appellant, it paid the interest component and
submitted before the executing court that the decree stood satisfied.
Learned Single Judge vide the order dated 08.10.2010 disposed
of the execution petition being Ex.P. No. 99/1998 holding that the
decree stood satisfied.
18. Against the order dated 19.02.2008, respondent preferred an appeal
before the Division Bench being EFA(OS) No. 16/2008. Division
Bench vide the order dated 23.02.2012 referred to the decision
of this Court in S.L. Arora (supra) and held that the settled legal
position that prevailed was that compound interest under the 1996
Act could not be granted in view of the decision in S.L. Arora (supra).
Resultantly, the amount covered by the compound interest was not
payable. It was observed that in view of the settled legal position that
respondent was not entitled to compound interest as per the decision
in S.L. Arora (supra), the appeal had become an academic exercise.
Division Bench therefore declined to examine the reasoning of the
learned Single Judge while passing the order dated 19.02.2008. The
appeal of the appellant was dismissed in the aforesaid manner and
not on the basis of the reasons given by the learned Single Judge.
19. Assailing the order dated 23.02.2012 of the Division Bench,
respondent preferred SLP(C) No. 18614/2012. This Court passed
an order on 13.07.2012 to tag the aforesaid SLP with Civil Appeal
No. 3148 of 2012 (M/s. Hyder Consulting (UK) Ltd. Vs. Governor,
State of Orissa Thr. Chief Engineer).
20. On leave being granted, SLP(C) No. 18614/2012 came to be
registered as Civil Appeal No. 2841 of 2015. Civil Appeal No. 3148
of 2012 (M/s. Hyder Consulting (UK) Ltd. Vs. Governor, State of
Orissa) came to be disposed of alongwith Civil Appeal No. 2841
of 2015 (M/s. S.A. Builders Vs. North Delhi Municipal Corporation)
and other connected appeals vide the order dated 12.03.2015. This
Court referred to its earlier decision in M/s. Hyder Consulting (UK)
Ltd. (supra) and held that the decision in S.L. Arora (supra) does
not lay down the correct law. Computation of the amount has to be
done by the executing court on the basis of the principles stated in
[2024] 11 S.C.R. 1589
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
M/s. Hyder Consulting (UK) Ltd. (supra). In M/s. Hyder Consulting
(UK) Ltd. (supra), it has been held that the sum directed to be paid
by the award would mean a sum inclusive of the principal amount
adjudged and the interest thereon. Therefore, the post-award interest
that may be awarded would be on the principal amount as well as on
the interest on the principal amount which together would constitute
the sum awarded.
21. Civil Appeal No. 2841 of 2015 i.e. the civil appeal of the respondent
was allowed by directing that the interest component payable to the
respondent shall be computed in accordance with the law laid down
in M/s. Hyder Consulting (UK) Ltd. (supra) and not in accordance
with S.L. Arora (supra) since S.L. Arora (supra) has been overruled
in M/s. Hyder Consulting (UK) Ltd. (supra). Resultantly, the decisions
of the Single Bench as affirmed by the Division Bench were set
aside; respondent was given liberty to seek execution of the award
in terms of M/s. Hyder Consulting (UK) Ltd. (supra).
22. It is stated by the appellant that in the course of an audit, it transpired
that it had made excess payment to the respondent due to an error
in calculation of interest. Therefore, appellant filed an application
being EA(OS) No. 364/2013 in the disposed of execution petition
being Ex. P. No. 99/1998 praying for a direction for refund of the
excess payment which was quantified at Rs. 1,54,19,281.00 alongwith
interest @ 18% from 09.09.2010 till the date of payment. Thereafter,
appellant filed another application being EA(OS) No. 25/2015 for
amending the earlier application being EA(OS) No. 364/2013. It
was stated that the refund claim amount was Rs. 5,45,41,756.00
as on 09.09.2010. In the proceedings held on 10.03.2017, learned
Single Judge prima facie held that respondent would be entitled to
interest on the pre-award interest. Appellant was directed to verify
the calculation of interest and to deposit the said amount before
the High Court which would be without prejudice to the rights and
contentions of the appellant.
23. Respondent filed a fresh application before the Single Bench being
EA(OS) No. 34/2016 claiming a sum of Rs. 9,10,43,399.53 as on
31.12.2015 from the appellant in view of the order of this Court dated
12.03.2015 passed in C.A. No. 2841 of 2015.
24. Appellant also filed an application being EA(OS) No. 166/2017
before the executing court for recall of the direction for deposit of
1590 [2024] 11 S.C.R.
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the additional interest. Learned Single Judge vide the judgment and
order dated 19.04.2017 held that the arbitral award dated 16.12.1997
has to be considered in the light of the decision of this Court in
M/s. Hyder Consulting (UK) Ltd. (supra). On the contention of the
appellant that the learned Arbitrator had no jurisdiction to issue such
clarification as the Arbitral Tribunal had become functus officio, the
same was rejected by the learned Single Judge on the ground that
such clarification was obtained in terms of the leave granted by
the Division Bench; the special leave petition filed by the appellant
against the order of the Division Bench was dismissed by this Court;
further, the decision of the Single Bench dated 19.02.2008 setting
aside the clarification issued by the learned Arbitrator as upheld by
the Division Bench was expressly set aside by this Court. Therefore,
learned Single Judge held that respondent would be entitled to
post-award interest not only on the claims as awarded [except claim
No. 23(b)] but also on the pre-award interest. The quantum of pre-
award interest would be included in the amount awarded and that
the post-award interest would run on the said composite amount.
Thus, the amount payable by the appellant to the respondent would
have to be computed on the said basis. Accordingly, the appellant
was directed to verify the calculations and to pay the amount to the
respondent within four weeks.
25. The aforesaid judgment and order of the learned Single Judge
dated 19.04.2017 was assailed by the appellant in appeal before the
Division Bench being EFA(OS) No.17/2017. Division Bench vide the
order dated 26.07.2017 noted that an amount of Rs. 5,14,44,393.00
was outstanding, due to be paid by the appellant to the respondent.
Accordingly, without prejudice to the respective rights and contentions
of the parties, a direction was issued to the appellant to deposit
a sum of Rs. 5,14,44,393.00 before the High Court on or before
06.09.2017 to be released in favour of the respondent, subject to
offering of solvent security.
26. In terms of the aforesaid direction, appellant deposited on 04.09.2017
a sum of Rs. 5,14,44,393.00 before the High Court by way of a
demand draft dated 30.08.2017.
27. Thereafter, an application was filed before this Court by the appellant
for seeking clarification of the order dated 12.03.2015 passed in C.A.
No. 2541 of 2015. It was contended therein that the civil appeal of
[2024] 11 S.C.R. 1591
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
the respondent was decided on the principles of law laid down in
M/s. Hyder Consulting (UK) Ltd. (supra) but the main issue that
learned Arbitrator lacked jurisdiction to entertain the application for
clarification and then to pass a clarificatory order was not gone into.
28. However, the aforesaid application being M.A. No. 927 of 2018 was
withdrawn by the appellant and was disposed of as such vide the
order dated 13.04.2018.
29. Division Bench thereafter passed the impugned order dated
01.07.2019 rejecting the contention of the appellant that the learned
Arbitrator had no jurisdiction because by the order dated 12.03.2015,
this Court had directed that the High Court would decide the issue of
interest component payable to the respondent in accordance with the
law laid down in M/s. Hyder Consulting (UK) Ltd. (supra) and not in
accordance with S.L. Arora (supra). That apart, such a contention was
not available to the appellant at the stage of execution proceeding.
The matter had attained finality upto the level of this Court and, thus,
cannot be interfered with on merit. Therefore, with the consent of
the parties, Division Bench set aside the operative part of the order
dated 19.04.2017 pertaining only to the calculations and permitted
both the parties to make submissions restricted to the quantum of
the amount payable to the respondent. Learned Single Judge was
requested to decide the amount payable to the respondent after
hearing both the sides.
Pleadings
30. According to the appellant, learned Arbitrator had become functus
officio after passing of the award dated 16.12.1997. Therefore, he
had no jurisdiction to issue the clarification dated 15.03.2005.
30.1. In the garb of the clarification dated 15.03.2005, learned
Arbitrator had substantially modified the award dated
16.12.1997. Appellant’s challenge to the same on the ground
that learned Arbitrator had no jurisdiction to issue the clarification
since he had become functus officio was upheld by the learned
Single Judge vide the order dated 19.02.2008. Challenge to the
aforesaid order by the respondent was rejected by the Division
Bench vide the order dated 23.02.2012. However, Division
Bench did not examine the question of jurisdiction but applied
the ratio of S.L. Arora (supra) while dismissing the appeal of
1592 [2024] 11 S.C.R.
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the respondent though this was the issue before the Division
Bench. When the aforesaid order of the Division Bench was
questioned before this Court by the respondent in C.A. No.
2841 of 2015, the same was allowed vide the order dated
12.03.2015 relying on the decision of this Court in M/s. Hyder
Consulting (UK) Ltd. (supra) which had overruled the earlier
decision in S.L. Arora (supra). This Court also did not examine
the primary question as to whether the learned Arbitrator had
become functus officio while issuing the clarification.
30.2. When the appellant had earlier questioned the award under
Section 34 of the 1996 Act and thereafter under Section 37
of the 1996 Act, the clarification dated 15.03.2005 was not
in existence. Therefore, appellant could challenge the same
only in the execution proceeding. Though the learned Single
Judge had upheld the objection of the appellant and had set
aside the clarification, Division Bench of the High Court while
upholding the decision of the learned Single Judge and this
Court while setting aside both the orders of the learned Single
Judge and the Division Bench, did not examine this aspect
of the matter.
30.3. It is also contended that learned Arbitrator had terminated the
arbitral proceedings vide the award dated 16.12.1997 followed
by the corrigendum dated 18.12.1997. No application having
been moved for rectification of any clerical or calculation error
within 30 days in terms of Section 33 of the 1996 Act and the
respondent having not challenged the award under Section 34
of the said Act, learned Arbitrator could not have introduced
any correction to the award, that too, in the manner in which it
has been done. In the award, he had granted simple interest
whereas by way of clarification, the same was changed to
compound interest.
30.4. It is settled law that Section 33 is the only provision in the
1996 Act which allows correction of clerical errors. In the garb
of clarification or correcting clerical errors, learned Arbitrator
introduced substantial change in the award. In any view of
the matter, the power under Section 33 of the 1996 Act could
not have been exercised by the learned Arbitrator more than
6 years after passing of the award.
[2024] 11 S.C.R. 1593
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
31. Respondent in its counter affidavit has stated that the special
leave petition out of which the present civil appeal arises is totally
misconceived and is an abuse of the process of law.
31.1. Learned Arbitrator vide the award dated 16.12.1997 had
awarded a sum of Rs. 1,70,70,720.80 (corrected to Rs.
1,70,40,720.80) alongwith interest @ 18% per annum in favour
of the respondent. In the course of the execution proceeding,
the executing court i.e. the learned Single Judge referred the
matter to the Division Bench on the question as to whether under
Section 31(7) of the 1996 Act, post-award interest would be on
the principal sum adjudged or would be on the principal sum plus
interest on the principal sum which had accrued from the date of
the cause of action to the date of passing of the award. Division
Bench permitted the respondent to seek clarification from the
learned Arbitrator. This order was challenged by the appellant
before this Court by way of a special leave petition. However, the
said special leave petition was dismissed. It was, thereafter, that
the clarification was issued by the learned Arbitrator. Appellant
never challenged the clarified award under Section 34 of the
1996 Act; instead approached the executing court. The executing
court i.e. learned Single Judge had erroneously set aside the
clarification. Appeal filed by the respondent against such order
was dismissed by the Division Bench. When the respondent
had approached this Court by filing special leave petition, a
three-Judge Bench of this Court had already decided the issue
in M/s. Hyder Consulting (UK) Ltd. (supra). In the said decision,
this Court held that an arbitrator has the power to grant post-
award interest under Section 31(7) of the 1996 Act on the sum
comprising of the principal plus interest on the principal which
has accrued from the date of cause of action to the date of
passing of the award. Leave was granted whereafter the civil
appeal of the respondent was allowed by this Court. Following
the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra),
the orders of Single Bench and Division Bench were set aside.
Liberty was granted to the respondent to seek execution as per
the law in M/s. Hyder Consulting (UK) Ltd. (supra).
31.2. In the above context, it is contended on behalf of the respondent
that the clarification issued by the learned Arbitrator stood
affirmed by this Court. Therefore, post the decision of this
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Court, it is not open to the appellant to again question the
clarification on the ground that learned Arbitrator had no
jurisdiction to issue such clarification.
31.3. Notwithstanding the same, appellant had filed M.A.
No. 927/2018 before this Court seeking clarification of the order
dated 12.03.2015 passed in the disposed of civil appeal which
was decided in favour of the respondent. Same grounds qua
lack of jurisdiction on the part of the learned Arbitrator were
raised in the miscellaneous application as are being raised
now. The miscellaneous application was extensively argued
before this Court. It was orally observed by this Court during
the hearing that the clarification was in consonance with the
law laid down by the three-Judge Bench of this Court in M/s.
Hyder Consulting (UK) Ltd. (supra) and was on the verge of
dismissing the miscellaneous application. It was at that stage
that learned counsel for the appellant sought leave of this Court
to withdraw the miscellaneous application and accordingly,
the same was disposed of as withdrawn. However, no liberty
was granted to the appellant to reagitate the said issue again
in any other proceeding. That being the position, appellant is
estopped from raking up the said issue again before this Court.
31.4. It is contended that learned Arbitrator was well within his powers
under Section 33 of the 1996 Act to issue the clarification
which has now attained finality.
31.5. In that view of the matter, the civil appeal being devoid of any
merit should be dismissed.
Submissions
32. Ms. Madhavi Divan, learned senior counsel for the appellant, at
the outset, submitted that the clarification of the learned Arbitrator
dated 15.03.2005 is a nullity in the eyes of law. Referring to the final
award dated 16.12.1997, learned senior counsel submits that learned
Arbitrator had awarded simple interest @ 18% per annum from the
date of the cause of action i.e. 01.04.1990 till the date of actual
payment which includes the post-award period as well. She submits
that since the award provided for post-award interest, provisions of
Section 31(7)(b) of the 1996 Act would not come into play.
[2024] 11 S.C.R. 1595
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
32.1. This position is clear and unambiguous. Notwithstanding the
same, after a period of about 8 years, respondent, at the stage
of execution proceeding, made a request before the Division
Bench of the High Court for clarification from the learned
Arbitrator as to whether the interest was awarded under
Section 31(7) of the 1996 Act or not. Without expressing any
opinion on the said issue, Division Bench vide the order dated
03.01.2005 permitted the respondent to approach the learned
Arbitrator for clarification. Though this decision of the Division
Bench was challenged before this Court by the appellant by
way of special leave petition, the same was dismissed.
32.2. Learned senior counsel submits that the clarification sought
for by the respondent from the learned Arbitrator was that in
the award it was not specifically mentioned that interest was
granted under sub-Section(7) of Section 31 of the 1996 Act.
Highlighting this aspect, learned senior counsel submits that
learned Arbitrator was requested only to specifically mention
whether the interest was awarded under Section 31(7) of the
1996 Act or not.
32.3. She further submits that in the clarificatory proceedings before
the learned Arbitrator, it was specifically urged on behalf of
the appellant that the learned Arbitrator had awarded past,
pendente lite and future interest in terms of Section 31(7) of
the 1996 Act. However, in the garb of issuing a clarification,
learned Arbitrator fundamentally altered the award resulting
in heavy financial burden on the appellant.
32.4. Therefore, learned Arbitrator had transgressed the scope of
clarification sought for by the respondent, much beyond the
scope of Section 33(1)(a) of the 1996 Act.
32.5. Learned senior counsel in support of her above contention
has placed reliance on the decision of this Court in Gyan
Prakash Arya Vs. Titan Industries Ltd.,4 more particularly on
paragraph 13 thereof.
32.6. Ms. Divan vehemently argued that under the 1996 Act the
arbitration proceedings came to be terminated upon making
4 (2023) 1 SCC 153
1596 [2024] 11 S.C.R.
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of the award under Section 32 thereof. Any fresh award
beyond the four corners of Section 33 of the said Act is barred
and would be a nullity. It is a case of lack of subject-matter
jurisdiction and, therefore, the clarification is non est in the
eyes of law. In this connection, she has referred to a decision
of this Court in Harshad Chiman Lal Modi Vs. DLF Universal
Ltd.,5 more particularly to paragraphs 30 to 33 thereof. Any
order passed by a tribunal lacking inherent jurisdiction would
be coram non judice. Such an order would be a nullity and is
non est. The same can be questioned at any stage i.e. at the
stage of execution or even in a collateral proceeding.
32.7. Proceeding further, learned senior counsel submits that this
Court never had the opportunity in the earlier proceedings to
examine the issue as to whether learned Arbitrator had acted
without jurisdiction while issuing the clarification which resulted
in modifying the original award. Therefore, the said issue may
be examined and the civil appeal should be allowed.
32.8. Finally, learned senior counsel referred to the decision of this
Court in M/s. Hyder Consulting (UK) Ltd. (supra) and submits
that in that case this Court had clarified the expression ‘the
arbitral tribunal may include in the sum, for which the award is
made’, occurring in Section 31(7)(a) of the 1996 Act, holding
that the sum may include the principal amount and the interest
accrued thereon and, therefore, grant of interest on interest
or compound interest is permissible under Section 31(7)(b) of
the said Act. She asserts that M/s. Hyder Consulting (UK) Ltd.
(supra) is not an authority for the proposition that where the
arbitrator had exercised his jurisdiction not to grant compound
interest, even then such compound interest ought to be granted
or is mandated to be granted. On the contrary, M/s. Hyder
Consulting (UK) Ltd. (supra) recognises that such interest may
be contained in the ‘sum’ or may not be contained in the said
‘sum’. According to her, it would be a complete absurdity if M/s.
Hyder Consulting (UK) Ltd. (supra) is interpreted to mean that
where interest on interest has not been granted or interest is
not contained in the sum, it should be superimposed on an
5 (2005) 7 SCC 791
[2024] 11 S.C.R. 1597
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
existing award. Seen in the above backdrop, the direction of
this Court to compute the interest amount, in accordance with
the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra),
cannot be interpreted to mean that compound interest must
be granted where it has not been granted in the first place.
32.9. She, therefore, submits that the impugned order of the Division
Bench of the High Court is required to be set aside and the
entire controversy is required to be given a quietus.
33. Mr. C. Aryama Sundaram, learned senior counsel representing the
respondent at the outset submits that the primary issue raised by
the appellant in the present proceeding i.e. whether the Arbitrator
had become functus officio and thus had no jurisdiction to issue the
clarification dated 15.03.2005, was expressly raised by the appellant
and decided in favour of the respondent by this Court on three earlier
occasions. Firstly, the Division Bench of the High Court vide the order
dated 03.01.2005 had permitted the respondent to approach the
Arbitral Tribunal for seeking clarification. In the special leave petition
filed by the appellant before this Court assailing the aforesaid order of
the Division Bench, appellant had specifically challenged not only the
power of the High Court to refer the matter to the learned Arbitrator
for clarification but also the very jurisdiction of the learned Arbitrator
to issue such clarification. The said SLP was dismissed by this Court
vide the order dated 09.07.2007. Secondly, the clarification dated
15.03.2005 of the learned Arbitrator was challenged by the appellant
by filing objection in the pending execution proceeding. The challenge
was made on the ground that the learned Arbitrator had become
functus officio and thus had no authority to issue any clarification.
Learned Single Judge had set aside the clarification of the learned
Arbitrator by accepting the contention of the appellant which order
was upheld by the Division Bench. Special leave petition filed by the
respondent against the aforesaid order of the Division Bench was
allowed by this Court vide the order dated 12.03.2015; judgments
of the learned Single Judge as well as of the Division Bench of the
High Court whereby the clarification issued by the learned Arbitrator
was set aside were reversed by this Court vide the order dated
12.03.2015. Thirdly, appellant had filed a miscellaneous application
before this Court seeking clarification of the aforesaid order dated
12.03.2015. In the said application, it was specifically pleaded that
the order dated 12.03.2015 only considered the issue of interest:
1598 [2024] 11 S.C.R.
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whether governed by S.L. Arora (supra) or by M/s. Hyder Consulting
(UK) Ltd. (supra) and that other issues contained in the order of the
learned Single Judge dated 19.02.2008 were not considered by this
Court. After arguing the miscellaneous application at considerable
length, appellant unconditionally withdrew the same when it was
about to be dismissed. Mr. Sundaram submits that when an objection
is raised but not pressed, it must be taken to have been impliedly
overruled. Therefore, the party that had raised objection earlier would
be precluded from raising the same again in view of the bar of res
judicata. Thus, appellant is debarred from raising the same issue
again and again (in this case for the fourth time).
33.1. Learned senior counsel submits that the principle of constructive
res judicata is applicable to execution proceeding as well and
in this connection, relies upon a decision of this Court in
Mohanlal Goenka Vs. Benoy Kishna Mukherjee.6
33.2. He also submits that when the respondent had filed application
before the learned Arbitrator for clarification on the question
of interest upon permission being granted by the Division
Bench of the High Court, appellant did not raise any objection
before the learned Arbitrator as to its jurisdiction to issue
such clarification or that the learned Arbitrator had become
functus officio. Referring to the decision of this court in Gas
Authority of India Limited Vs. Keti Construction (I) Limited,7 he
submits that if objection as to jurisdiction is not raised before
the Arbitral Tribunal, the same cannot be allowed to be raised
later in subsequent proceedings.
33.3. Proceeding further, Mr. Sundaram, learned senior counsel
submits that after the learned Arbitrator had issued the
clarification dated 15.03.2005, no petition was filed by the
appellant under Section 34 of the 1996 Act. Therefore, appellant
had consciously waived off its right to challenge the said
clarification which has thus become final.
33.4. Referring to the decision of this Court in M/s. Hyder Consulting
(UK) Ltd. (supra), learned senior counsel submits that this
6 (1952) 2 SCC 648
7 (2007) 5 SCC 38
[2024] 11 S.C.R. 1599
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
Court in the aforesaid decision has held that the moment the
arbitrator awards pendente lite interest under Section 31(7)
(a) of the 1996 Act, the same automatically merges with the
principal amount and becomes part of the ‘sum’ awarded. This
means that there is no requirement of the arbitrator specifically
mentioning in the award that the pendente lite interest would
merge with the principal or that it would bear future interest;
rather, in view of the language used in Section 31(7)(b) of the
1996 Act, the pendente lite interest automatically merges with
the principal so as to arrive at the ‘sum’ for the purpose of
calculation of future interest. Clarification given by the learned
Arbitrator is completely in consonance with the law laid down
by this Court in M/s. Hyder Consulting (UK) Ltd. (supra). A bare
reading of the original award dated 16.12.1997 conveys the
same meaning. Therefore, it cannot be said that the learned
Arbitrator had made any modification of the award or had
passed a completely new award. It was purely and simply a
clarification of what was awarded.
33.5. Learned senior counsel for the respondent submits that this
Court vide the order dated 12.03.2015 held that the interest
component shall be calculated in accordance with the law
laid down in M/s. Hyder Consulting (UK) Ltd. (supra). In the
execution proceeding, respondent had lodged claim strictly in
accordance with the law laid down in M/s. Hyder Consulting
(UK) Ltd. (supra). This decision has been explained and
reiterated by this Court in the case of Delhi Airport Metro
Express Private Limited Vs. Delhi Metro Rail Corporation.8 This
Court categorically held that in view of M/s. Hyder Consulting
(UK) Ltd. (supra), the amount awarded under Section 31(7)
(a) would include the principal amount plus the interest
amount pendente lite. It was further held that the interest
calculated as per Section 31(7)(b) of the 1996 Act would be
on the sum arrived at under Section 31(7)(a) of the 1996
Act. Learned senior counsel asserts that it would be wrong
to say that learned Arbitrator had no jurisdiction to issue the
clarification. A plain reading of Section 33(2) of the 1996 Act
would show that the learned Arbitrator had the jurisdiction to
issue the clarification. He submits that even learned Single
8 (2022) 9 SCC 286
1600 [2024] 11 S.C.R.
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Judge while setting aside the clarification acknowledged the
fact that the learned Arbitrator had the jurisdiction to issue the
clarification but the same had to be issued within 30 days.
Once the Division Bench had given liberty to the respondent
to seek clarification after 30 days even that issue i.e. seeking
of clarification beyond 30 days would be of no consequence.
33.6. Learned senior counsel submits that undue hardship and
serious prejudice would be caused to the respondent if the
concurrent findings of two courts which are based on order(s)
of this Court are set aside. Contending that there is no merit
in the civil appeal, respondent seeks dismissal of the same.
34. After the arguments were closed and judgment was reserved, we had
permitted the parties to file brief summary of submissions actually
canvassed before the Court. Pursuant to such permission, both the
sides have filed brief summary of submissions.
35. Submissions made by learned counsel for the parties have received
the due consideration of the Court. We have also considered the
summary of submissions as well as the judgments cited at the bar.
Analysis
36. Let us at the outset refer to and analyse the relevant provisions of
the 1996 Act. Section 31 of the 1996 Act deals with the form and
contents of arbitral award. Section 31 has eight sub-Sections. Sub-
Section (7) is relevant to the debate. Sub-Section (7) as it stood at
the relevant point of time reads as under:
31. Form and contents of arbitral award –
* * * * *
(7)(a) Unless otherwise agreed by the parties, where and in
so far 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
[2024] 11 S.C.R. 1601
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
rate of eighteen per centum per annum from the date of
award to the date of payment.
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.
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 at the rate of 18 percent per annum from the date
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 at the rate of 18 percent
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
1602 [2024] 11 S.C.R.
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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 at the rate of
18 percent 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.
37. Thus from an analysis of Section 31(7)(a) of the 1996 Act, which
provides for pre-award interest, it is seen that the provision begins
with the expression unless otherwise agreed by the parties, thereby
highlighting the legislative stance that parties possess the autonomy
to determine pre-award interest on the payment of money awarded
by the arbitral tribunal. However, no such discretion is available
to the parties under Section 31(7)(b) of the 1996 Act though such
discretion is available to the arbitral tribunal.
38. Natural corollary to the above analysis would be that the ‘sum’ so
awarded by the arbitral tribunal which may include interest from the
date when the cause of action arose to the date of the award, would
carry further interest of 18 percent from the date of the award to the
date of payment unless the arbitral award otherwise directs. Thus,
the legislative intent is that the awarded sum whether inclusive of
interest or not, in case included, then from the date of cause of action
to the date of award, would carry further interest from the date of
the award to the date of payment.
39. Generally, going by the provisions contained in Section 31(7) of
the 1996 Act, it is evident that an arbitral tribunal has the power to
grant (i) pre-award (ii) pendente lite (iii) post-award interest. Intention
behind awarding pre-award interest is primarily to compensate the
claimant for the pecuniary loss suffered from the time the cause of
action arose till passing of the arbitral award. Further, this is also to
ensure that the arbitral proceeding is concluded within a reasonable
period to minimise the impact of the pre-award interest as well as
interest pendente lite; thereby promoting efficiency in the arbitration
process. Similarly, grant of post-award interest also serves a salutary
[2024] 11 S.C.R. 1603
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
purpose. It primarily acts as a disincentive to the award debtor not
to delay payment of the arbitral amount to the award holder.
40. In S.L. Arora (supra), a two-Judge Bench of this Court considered
amongst others 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 till payment. After referring
to the old Arbitration Act, 1940 as well as to the provisions of the
Interest Act, 1978, the Bench observed that unlike the old Act the
1996 Act contains specific provision dealing with power of the arbitral
tribunal to award interest. Analysing the aforesaid provision, the
Bench further observed that 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 the award for
calculating the post-award interest. Examining the difference between
clauses (a) and (b) of Section 31 (7) of the 1996 Act, the Bench
observed that clause (a) relates to pre-award period interest whereas
clause (b) relates to post-award period interest. The contract binds
and prevails in regard to interest during the pre-award period. The
contract has no application in regard to interest during the post-award
period. Clause (a) gives discretion to the arbitral tribunal in regard to
the rate, the period, the quantum (principal) when awarding interest.
But such discretion is always subject to the contract between the
parties. Clause (b) also gives discretion to the arbitral tribunal to
award interest for the post-award period but that discretion is not
subject to any contract; moreover, if that discretion is not exercised
by the arbitral tribunal, then the statute steps in and mandates
payment of interest at the specified rate of 18% per annum for the
post-award period. While clause (a) gives the parties an option to
contract out of interest, no such option is available in regard to the
post-award period.
40.1. Summing up, the Bench observed that in regard to pre-award
period, interest has to be awarded as specified in the contract
and in the absence of any contract, as per the discretion of the
arbitral tribunal. On the other hand, in regard to the post-award
period, interest is payable as per the discretion of the arbitral
tribunal and in the absence of exercise of such discretion, at
the mandatory statutory rate of 18% per annum. According
to the Bench, the award of interest under sub-Section (7) of
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Section 31, like award of cost under sub-Section (8) of Section
31 of the 1996 Act, are ancillary matters when the arbitral
tribunal decides the substantive dispute(s) between the parties.
Therefore, the expressions sum for which the award is made
and a sum directed to be paid by an arbitral award contextually
refers to the award on the substantive claims and not ancillary
or consequential directions relating to interest and costs. The
Bench explained that clause (b) of Section 31(7) is intended to
ensure prompt payment by the award debtor once the award
is made. The higher rate of interest is provided in clause (b)
with the deliberate intent of discouraging award debtors from
adopting dilatory tactics and to persuade them to comply with
the award. Holding 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, the Bench 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.
41. The correctness of the view taken in S.L. Arora (supra) was gone
into by a three-Judge Bench of this Court in M/s. Hyder Consulting
(UK) Ltd (supra). The majority opined that it was not possible to
agree with the conclusion in S.L. Arora (supra) that Section 31(7)
of the 1996 Act does not require that interest which accrues till the
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North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
date of the award be included in the sum from the date of the award
for calculating the post-award interest. Justice Bobde in his majority
opinion was of the view that the conclusion reached in S.L. Arora
(supra) does not seem to be in consonance with the clear language
of Section 31(7) of the 1996 Act. After extracting sub-Section (7) of
Section 31 of the 1996 Act, the majority analysed clause (a) of sub-
Section (7) 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.
41.1. Insofar clause (b) is concerned, the majority opined as under:
7. ……..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
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or exclusive of interest, shall carry interest at the rate of
eighteen per cent per annum for the post-award period,
unless otherwise ordered.
41.2. Thus, clause (a) of sub-Section (7) of Section 31 provides
that the arbitral tribunal may include interest while making
an award for payment of money in the sum for which the
award is made and as per clause (b), the sum so directed to
be made by the award shall carry interest at a certain rate
for the post-award period. The purpose for enacting such a
provision is to encourage early payment of the awarded sum
and to discourage delay. Therefore, the ‘sum’ directed to be
paid by the arbitral award under clause (b) of sub-Section (7)
of Section 31 of the 1996 Act is inclusive of interest pendente
lite. In M/s. Hyder Consulting (UK) Ltd (supra), the majority
referred to Section 34 of the Civil Procedure Code, 1908 and
after making a comparison of the said provision with Section
31(7) of the 1996 Act observed that while enacting Section
34 of the Civil Procedure Code, Parliament conferred power
on a court to award interest on the principal sum adjudged
and not merely on the ‘sum’ as provided in the 1996 Act.
Observing that the departure from the language of Section
34 of the Civil Procedure Code in Section 31(7) of the 1996
Act is significant and shows the intention of the Parliament,
it has been held as follows:
12. It is settled law that where different language is
used by Parliament, it is intended to have a different
effect. In the Arbitration Act, the word “sum” has
deliberately not been qualified by using the word
“principal” before it. If it had been so used, there
would have been no scope for the contention that the
word “sum” may include “interest.” In Section 31(7)
of the Act, Parliament has deliberately used the word
“sum” to refer to the aggregate of the amounts that
may be directed to be paid by the Arbitral Tribunal
and not merely the “principal” sum without interest.
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
[2024] 11 S.C.R. 1607
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
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.
14. In fact this is a case where the language of
sub-section (7) clauses (a) and (b) is so plain and
unambiguous that no question of construction of a
statutory provision arises. The language itself provides
that in the sum for which an award is made, interest
may be included for the pre-award period and that
for the post-award period interest up to the rate of
eighteen per cent per annum may be awarded on
such sum directed to be paid by the arbitral award.
41.3. The majority declared that S.L. Arora (supra) was wrongly
decided in that it holds that a sum directed to be paid by
an arbitral tribunal and the reference to the award on the
substantive claim does not refer to interest pendente lite
awarded on the sum directed to be paid upon award and
that in the absence of any provision of interest upon interest
in the contract, the arbitral tribunal does 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 has
been clarified that the ‘sum’ includes the principal as adjudged
together with the interest granted.
42. A three-Judge Bench of this Court in UHL Power Company Limited
Vs. State of Himachal Pradesh,9 declared that the judgment in S.L.
Arora (supra) has since been overruled by a three-Judge Bench of this
Court in M/s. Hyder Consulting (UK) Ltd. (supra). The majority view
in M/s. Hyder Consulting (UK) Ltd. (supra) is that post-award interest
can be granted by an arbitrator on the interest amount awarded.
9 (2022) 4 SCC 116
1608 [2024] 11 S.C.R.
Supreme Court Reports
43. The question as to whether the sum awarded under clause (a) of
sub-Section (7) of Section 31 of the 1996 Act will include interest
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 Corporation.10 The Bench referred to
the decision of this Court in M/s. Hyder Consulting (UK) Ltd (supra)
and held as follows:
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.
43.1. Since in that case interest was governed by Article 29.8 of
the concession agreement between the parties, the Bench
explained the power of the arbitral tribunal to award interest
qua the agreement and held as follows:
17. It could thus be seen that the part which deals
with the power of the Arbitral Tribunal to award
10 (2022) 9 SCC 286
[2024] 11 S.C.R. 1609
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
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.
44. Again in the case of Morgan Securities & Credits (P) Ltd. Vs.
Videocon Industries Ltd.,11 the issue before this Court was whether
the expression unless the award otherwise directs appearing 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 interest
and the ‘sum’ which must be paid. After an exhaustive examination,
this Court summarized the findings as under:
28.1. The judgment of the two-Judge Bench in S.L.
Arora was referred to a three-Judge Bench in Hyder
Consulting on the question of whether post-award interest
could be granted on the aggregate of the principal and
the pre-award interest arrived at under Section 31(7)(a)
of the Act.
28.2. Bobde, J.›s opinion in Hyder Consulting held that the
arbitrator may grant post-award interest on the aggregate
of the principal and the pre-award interest. The opinion did
not discuss the issue of whether the arbitrator could use
their discretion to award post-award interest on a part of
the “sum” awarded under Section 31(7)(a).
11 (2023) 1 SCC 602
1610 [2024] 11 S.C.R.
Supreme Court Reports
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.
28.7 * * * * *
45. Let us now turn to Section 33 of the 1996 Act which provides for
correction and interpretation of award; additional award. Section 33
reads as under:
33. Correction and interpretation of award; additional
award.—(1) Within thirty days from the receipt of the
arbitral award, unless another period of time has been
agreed upon by the parties—
(a) a party, with notice to the other party, may request
the arbitral tribunal to correct any computation errors, any
clerical or typographical errors or any other errors of a
similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to
the other party, may request the arbitral tribunal to give
an interpretation of a specific point or part of the award.
(2) If the arbitral tribunal considers the request made under
sub-section (1) to be justified, it shall make the correction
or give the interpretation within thirty days from the receipt
of the request and the interpretation shall form part of the
arbitral award.
(3) The arbitral tribunal may correct any error of the type
referred to in clause (a) of sub-section (1), on its own
initiative, within thirty days from the date of the arbitral award.
[2024] 11 S.C.R. 1611
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
(4) Unless otherwise agreed by the parties, a party with
notice to the other party, may request, within thirty days
from the receipt of the arbitral award, the arbitral tribunal to
make an additional arbitral award as to claims presented in
the arbitral proceedings but omitted from the arbitral award.
(5) If the arbitral tribunal considers the request made under
sub-section (4) to be justified, it shall make the additional
arbitral award within sixty days from the receipt of such
request.
(6) The arbitral tribunal may extend, if necessary, the period
of time within which it shall make a correction, give an
interpretation or make an additional arbitral award under
sub-section (2) or sub-section (5).
(7) Section 31 shall apply to a correction or interpretation
of the arbitral award or to an additional arbitral award
made under this section.
45.1. As per sub-Section (1), within 30 days from the date of receipt
of the arbitral award, a party with notice to the other party, may
request the arbitral tribunal to correct any computation errors,
any clerical or typographical errors or any other errors of a
similar nature occurring in the award. Further, if the parties
agree, a party with notice to the other party, may request the
arbitral tribunal to give an interpretation of a specific point or
part of the award. The period of 30 days contemplated under
sub-Section (1) may stand extended to another period of time
if agreed upon by the parties. Therefore, ordinarily the time
limit for correction of errors or for interpretation of a specific
point or part of the award is 30 days from the date of receipt
of the arbitral award. However, the limitation of 30 days can
be waived for another period of time, if agreed upon by the
parties. Question for consideration is what would be the
contours of the expression unless another period of time has
been agreed upon by the parties, as appearing in sub-Section
(1) of Section 33.
45.2. Sub-Section (7) of Section 33 clarifies that correction or
interpretation of arbitral award or passing of additional arbitral
award would attract Section 31 of the 1996 Act as discussed
1612 [2024] 11 S.C.R.
Supreme Court Reports
supra. Therefore, the language of sub-Section (1) of Section
33 makes it abundantly clear that the period of 30 days as
provided in Section 33(1) is not an inflexible period. If the
parties agree, the said period can be extended.
45.3. There is no dispute to the proposition of law laid down in
Harshad Chiman Lal Modi (supra), relied upon by the appellant,
that where a court has no jurisdiction over the subject matter
of the suit by reason of any limitation imposed by the statute,
charter or commission, it cannot take up the cause or matter;
an order passed by the court having no such jurisdiction is
a nullity. Question is whether such a proposition would have
any application to the facts and circumstances of the present
case. As we have seen, there was no embargo on the Arbitral
Tribunal to exercise jurisdiction over the subject matter. The
only limitation was that the correction and/or interpretation of
the award should be done within 30 days from the date of
receipt of the arbitral award unless another period of time has
been agreed upon by the parties. Therefore, the expression
unless another period of time has been agreed upon by the
parties assumes critical significance.
46. Reverting back to the facts of the present case, learned Arbitrator
passed the award on 16.12.1997. After adjusting the claims and
counter claims, learned Arbitrator granted principal amount of
Rs. 1,70,70,720.80 (corrected to Rs. 1,70,40,720.80 as per the
corrigendum dated 18.12.1997). On the question of interest, learned
Arbitrator awarded simple interest @ 18% per annum on the award
amount from 01.04.1990 i.e. the date of cause of action to the date
of actual payment except on claim No. 23(b).
47. In the execution proceeding before the learned Single Judge, an order
was passed on 26.08.2004. Learned Single Judge framed an issue
for consideration as to whether post-award interest under Section
31(7) of the 1996 Act would be calculated on the principal amount
adjudged or on the principal amount plus interest on the principal
amount which has accrued from the date of cause of action to the
date of passing of the award as under the 1996 Act, award is to be
enforced as a decree of the court. According to the learned Single
Judge, it was an important issue affecting a large volume of litigation.
[2024] 11 S.C.R. 1613
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
Therefore, to avoid proliferation of litigation and unnecessary appeals,
learned Single Judge was of the view that the aforesaid question
should be decided by a Division Bench.
48. From a perusal of the Division Bench order dated 03.01.2005, it is
seen that respondent had contended that there was no clarity as
to whether the interest awarded by the Arbitral Tribunal was under
Section 31(7)(a) of the 1996 Act or not. Respondent then made a
submission that he may be permitted to approach the Arbitral Tribunal
for a clarification on this issue. In view of such submission, Division
Bench granted permission to the respondent to approach the Arbitral
Tribunal for clarification. While granting such permission, Division
Bench did not answer the above question clarifying that it had not
expressed any opinion about payment of interest either under Section
31(7)(a) or under Section 31(7)(b) of the 1996 Act.
49. In terms of the permission granted, respondent filed an application
before the learned Arbitrator seeking clarification of the interest
awarded by the learned Arbitrator qua Section 31(7) of the 1996 Act.
In its response to the application of the respondent filed before the
learned Arbitrator, appellant contended that the learned Arbitrator had
awarded simple interest @ 18% per annum on the awarded amount
from 01.04.1990 to the date of actual payment except on claim No.
23(b). Referring to the interest portion of the award, it stated that
interest was required to be paid on Rs. 1,70,70,720.80 minus Rs.
5,61,208.00 [for claim No. 23(b)] equal to Rs. 1,65,09,512.80, which
is the principal amount. Therefore, it was contended that interest
was to be paid on the amount of Rs. 1,65,09,512.80 till the date
of payment. According to the appellant, respondent was entitled to
interest on Rs. 1,65,09,512.80 from 01.04.1990 to 22.04.2002 @
18% per annum. This comes to Rs. 3,56,60,547.64. Appellant had
paid Rs. 1,65,09,512.80 on 22.04.2002 and another amount of Rs.
2,11,29,475.20 was paid towards interest also on 22.04.2002. It
was submitted that learned Arbitrator had awarded interest for the
past period, pendente lite and also future interest. Thus, learned
Arbitrator had exercised his jurisdiction under Section 31(7)(a) as
well as under Section 31(7)(b) of the 1996 Act. Therefore, there was
no need for clarification.
50. What is therefore discernible from the above is that appellant had
participated in the clarificatory proceeding before the learned Arbitrator
1614 [2024] 11 S.C.R.
Supreme Court Reports
taking the stand that no clarification as sought for was required on
merit.
51. Learned Arbitrator issued the clarification on 15.03.2005. It was
clarified that the amount awarded alongwith interest for the pre-
reference and pendente lite periods become the decretal amount.
As per Section 31(7)(b), this amount would carry further interest @
18% per annum. Thus, learned Arbitrator clarified that post-award
interest shall be payable on the awarded sum i.e. the amount of claim
awarded (principal amount) plus interest for the pre-reference period
and pendente lite upto the date of the award at the rate mentioned
thereunder.
52. Appellant did not challenge the clarification dated 15.03.2005 under
Section 34 of the 1996 Act; instead appellant questioned the same in
the execution proceeding before the learned Single Judge. Learned
Single Judge in his order dated 19.02.2008 held that learned Arbitrator
had become functus officio and thus had no authority to entertain
the application for clarification. Learned Arbitrator, in his award, had
granted simple interest @ 18% per annum on the awarded amount i.e.
the principal amount from 01.04.1990 to the date of actual payment
which takes care of the interest part. The decree holder (respondent
herein) neither challenged the award nor sought clarification within
30 days. It is also not a case where the award debtor (appellant
herein) had agreed for extension of time limit. Holding that learned
Arbitrator had no authority to make any change in the award, learned
Single Judge set aside the clarification.
53. When the respondent approached the Division Bench assailing the
above decision of the learned Single Judge, the Division Bench
held vide the order dated 23.02.2012 that in view of the judgment
in S.L. Arora (supra), compound interest under the 1996 Act cannot
be granted. Accordingly, challenge to the decision of the learned
Single Judge was rejected.
54. When the matter came up before this Court in Civil Appeal No. 2841
of 2015 at the instance of the revenue, this Court observed that the
decision in S.L. Arora (supra) has been overruled in M/s. Hyder
Consulting (UK) Ltd. (supra) declaring that the interest component
payable to the respondent shall be computed in accordance with
the law laid down in M/s. Hyder Consulting (UK) Ltd. (supra). Both
the orders of the learned Single Judge and the Division Bench were
[2024] 11 S.C.R. 1615
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
set aside, further clarifying that it would be open to the respondent
to seek execution as per the law pronounced by this Court in M/s.
Hyder Consulting (UK) Ltd. (supra).
55. Thereafter, the executing court i.e. learned Single Judge passed
the order dated 19.04.2017. Learned Single Judge, firstly, held
that it was no longer open to examine the question as to whether
the respondent had any right to approach the learned Arbitrator
to seek clarification or whether the learned Arbitrator had become
functus officio since the Division Bench had expressly permitted the
respondent to seek clarification from the learned Arbitrator which
decision was not interfered with by this Court. Thereafter, the decision
of the Single Bench setting aside the clarification of the learned
Arbitrator which was affirmed by the Division Bench were set aside
by this Court in the civil appeal of the respondent with liberty to the
respondent to seek execution as per the law laid down in M/s. Hyder
Consulting (UK) Ltd. Secondly, learned Single Judge clarified that
the respondent would be entitled to post-award interest not only on
the claims as awarded but also on the pre-award interest as well
as on the interest pendente lite. The quantum of pre-award interest
and the interest pendente lite would be calculated and included in
the amount awarded i.e. the ‘sum’ and the post-award interest would
run on the said ‘sum’ i.e. principal amount plus interest (pre-award
interest plus interest pendente lite).
56. When the appellant assailed this order before the Division Bench,
vide the impugned order dated 01.07.2019, the Division Bench held
as follows:
17. We, thus, reject the contentions of the learned counsel
for the appellant for the reason that in the order dated
12.03.2015, the Supreme Court has directed that the
High Court would decide the issue of interest component
payable to the respondent in accordance with law laid
down in M/s Hyder Consulting (UK) Ltd. (supra) and not in
accordance with law laid down in S.L. Arora (supra). The
other reason for rejecting the contentions of the appellant
is that the grounds, which are sought to be urged before
us, are not available to the appellant at this stage in these
proceedings, which are execution proceedings. The matter
had attained finality upto the Apex Court and we cannot
interfere on the merits of the case at this stage.
1616 [2024] 11 S.C.R.
Supreme Court Reports
18. However, in view of the submissions of the parties with
respect to the quantity, with the consent of the parties, we
set aside the operative part of the order dated 19.04.2017
pertaining only to the calculations and permit both the
parties to make submissions restricted to the quantum of
the amount payable to the respondent.
57. Thus, as can be seen, the impugned order is a consent order. Division
Bench of the High Court after taking the consent of the parties had
remitted the matter back to the High Court only as to the calculations
permitting both the parties to make submissions before the learned
Single Judge on the quantum payable to the respondent. If that be the
position, it is not open to the appellant to assail the aforesaid order.
58. The issue raised by the appellant in the present proceeding i.e.
learned Arbitrator had become functus officio and therefore had
no jurisdiction to issue the clarification, was also raised in the
miscellaneous application filed by the appellant before this Court
seeking clarification of the order dated 12.03.2015. While dismissing
the miscellaneous application, no leave was granted by this Court
to agitate the aforesaid issue in any other proceeding. Therefore,
viewed from this perspective also, it is not open to the appellant to
raise the aforesaid issue again in the present proceeding.
Conclusion
59. In view of what we have discussed above, the interpretation given by
us to Section 33(1) of the 1996 Act and on a cumulative assessment
of the attendant facts and circumstances of the case, we are of
the view that the clarification sought for and issued by the learned
Arbitrator would be covered by the expression unless another period
of time has been agreed upon by the parties appearing in Section
33 (1) of the 1996 Act. This is a case where court had permitted the
respondent to seek clarification from the learned Arbitrator beyond
the initial period of 30 days whereafter the appellant fully participated
in the clarificatory proceeding. Therefore, the present case would be
covered by the above expression. In the circumstances, contention of
the appellant that the learned Arbitrator had become functus officio
and therefore lacked jurisdiction to issue the clarification cannot be
accepted and is thus rejected.
[2024] 11 S.C.R. 1617
North Delhi Municipal Corporation v. M/s. S.A. Builders Ltd.
60. 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 upto 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 M/s. Hyder Consulting (UK) Ltd (supra).
61. We thus see no error or infirmity in the impugned order passed
by the Division Bench of the High Court. Consequently, we are of
the view that the appeal lacks merit and is, accordingly, dismissed.
However, there shall be no order as to costs.
Result of the case: Appeal dismissed.
†
Headnotes prepared by: Ankit Gyan
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