Holding

Clause 18.1 does not expressly or by necessary implication prohibit the award of pendente‑lite interest, so the arbitral tribunal’s award of such interest is valid.

Summary

The dispute arose from an arbitral award dated 21 November 2004 in favour of G & T Beckfield Drilling Services, directing ONGC (the respondent) to pay a sum of US$6,56,272.34 together with interest at 12% per annum from 12 December 1998, the date the claim was affirmed. ONGC challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, contending that Clause 18.1 of the underlying contract barred any pendente‑lite interest. The High Court set aside the award, but the Supreme Court was asked to consider whether the contractual clause indeed prohibited the arbitral tribunal from awarding interest for the period between the cause of action and the award. The Court examined the language of Clause 18.1, held that it merely barred interest on delayed or disputed payments and did not expressly or by necessary implication preclude pendente‑lite interest. Relying on earlier decisions, the Court affirmed that an arbitral tribunal’s power to award such interest is retained unless the contract unambiguously removes it. Consequently, the award of pendente‑lite interest was upheld and the appeal dismissed.

Issues considered

Whether Clause 18.1 of the contract between ONGC and the contractor expressly or by necessary implication bars the arbitral tribunal from awarding pendente‑lite interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996.
Whether the arbitral award of interest at 12% per annum from the date the claim was affirmed is valid in view of the contractual clause and the statutory provisions.

Legislation cited

Arbitration and Conciliation Act, 1996s. 16(2), s. 31(3), s. 31(7), s. 34, s. 37(1)
Contract Act, 1872s. 28

Headnote

Issue for Consideration Whether Clause 18.1 of the agreement proscribed payment of pendente lite interest on the sum awarded. Headnotes† Arbitration and Conciliation Act, 1996 – s.31(7)(b) – Award of interest pendente lite on the sum awarded – Court – Challenge to – Clause 18.1 of the agreement relied upon by the appellant to contend that the agreement between the parties proscribed grant of pendente-lite interest: Held: Arbitral tribunal can be denuded of its power to award pendente lite interest only if the

Subjects

pendente lite interestArbitration ActSection 31(7)contractual clause interpretationinterest awardONGCOil and Natural Gas Corporationarbitral awardSection 34Section 37

Judgment

[2025] 9 S.C.R. 507 : 2025 INSC 1066

Oil and Natural Gas Corporation Ltd.
v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.
(Civil Appeal No. 11324 of 2025)
02 September 2025
[Pamidighantam Sri Narasimha and Manoj Misra,* JJ.]

Issue for Consideration
Whether Clause 18.1 of the agreement proscribed payment of
pendente lite interest on the sum awarded.

Headnotes†
Arbitration and Conciliation Act, 1996 – s.31(7)(b) – Award of
interest pendente lite on the sum awarded – Award affirmed
by High Court – Challenge to – Clause 18.1 of the agreement
relied upon by the appellant to contend that the agreement
between the parties proscribed grant of pendente-lite interest:
Held: Arbitral tribunal can be denuded of its power to award
pendente lite interest only if the agreement/contract between
the parties is so worded that the award of pendente lite interest
is either explicitly or by necessary implication barred – A clause
merely barring award of interest on delayed payment by itself will
not be readily inferred as a bar to award pendente-lite interest by
the arbitral tribunal – Clause 18.1 when read as a whole, does not
expressly or by necessary implication proscribes grant of pendente
lite interest by the arbitral tribunal – It merely says that there
would be no interest payable by the Corporation on any delayed
payment/disputed claim – Neither it bars the arbitral tribunal from
awarding pen dente lite interest nor it says that interest would
not be payable in any respect whatsoever – Thus, clause 18.1
would not limit the statutory power of the arbitral tribunal to award
pendente-lite interest – No error in the award of pendente lite
interest warranting any interference with the award – Post-award
interest is in line with s.31(7)(b) as it then existed – No merit in
the appeal. [Paras 25, 26]
Arbitration and Conciliation Act, 1996 – s.37(1) – Payment of
interest by arbitral tribunal – Position of law, stated. [Para 12]

* Author
508 [2025] 9 S.C.R.

Supreme Court Reports

Case Law Cited
Union of India v. Bright Power Projects (India) Private Limited [2015]
6 SCR 488 : (2015) 9 SCC 695; Sayeed Ahmed and Company v.
State of Uttar Pradesh and Others [2009] 10 SCR 841 : (2009) 12
SCC 26; Sree Kamatchi Amman Constructions v. Divisional Railway
Manager (Works), Palaghat and Others [2010] 10 SCR 487 : (2010)
8 SCC 767; Garg Builders v. Bharat Heavy Electricals Limited [2021]
10 SCR 82 : (2022) 11 SCC 697; Jaiprakash Associates Ltd. v. Tehri
Hydro Development Corporation (India) Ltd. [2019] 2 SCR 41 :
(2019) 17 SCC 786; Pam Developments Private Limited v. State
of West Bengal and Another [2024] 8 SCR 615 : (2024) 10 SCC
715; R.P. Garg v. Chief General Manager, Telecom Department and
Others [2024] 9 SCR 763 : 2024 SCC OnLine SC 2928; Irrigation
Deptt., State of Orissa v. G.C. Roy [1991] Supp. 3 SCR 417 :
(1992) 1 SCC 508; Union of India v. Ambica Construction [2016] 2
SCR 810 : (2016) 6 SCC 36; Dhenkanal Minor Irrigation Division
v. N.C. Budharaj [2001] 1 SCR 264 : (2001) 2 SCC 721; Ambica
Construction v. Union of India (2017) 14 SCC 323; Reliance Cellulose
Products Limited v. Oil And Natural Gas Corporation [2018] 6 SCR
618 : (2018) 9 SCC 266; Tehri Hydro Development Corpn. Ltd. v.
Jai Prakash Associates Ltd. [2012] 8 SCR 813 : (2012) 12 SCC 10;
Ferro Concrete Construction (India) Pvt. Ltd. v. State of Rajasthan
[2025] 4 SCR 529 : 2025 SCC OnLine SC 708 – referred to.

List of Acts
Arbitration and Conciliation Act, 1996.

List of Keywords
Section 31(7) of Arbitration and Conciliation Act, 1996; Pendente
lite interest; Power of Arbitral tribunal to award pendente lite
interest; Payment of interest by arbitral tribunal; Agreement did not
proscribe payment of pendente lite interest; Clause barred award
of interest on delayed payment; No bar to award pendente-lite
interest by the arbitral tribunal; Interest awarded not from the date
of the award; Interest awarded from the date when the statement
of claim was affirmed.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11324 of 2025
From the Judgment and Order dated 08.03.2019 of the Gauhati
High Court in ARBA No. 03 of 2007
[2025] 9 S.C.R. 509

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

Appearances for Parties
Advs. for the Appellant:
Tushar Mehta, Solicitor General, Akshay Amritanshu, Ms. Drishti
Saraf, Ms. Pragya Upadhyay, Ms. Swati Mishra.
Advs. for the Respondent:
Ms. Bhargavi Kannan, Ms. Shivani Karmakar, Ms. Kavya Sarin,
Ms. S. Ambica, Hardeep Singh Anand.

Judgment / Order of the Supreme Court

Judgment

Manoj Misra, J.

1. Leave granted. This appeal arises from a judgment and order of the
Gauhati High Court1 dated 08.03.2019, whereby the appeal (i.e.,
Arb. A 3/2007) of the respondent, under Section 37 of the Arbitration
and Conciliation Act, 19962, was allowed, the judgment and order of
the District Judge, Sivasagar, dated 15.11.2007, in Misc. Arb Case
No.26 of 2005, under Section 34 of 1996 Act, was set aside and the
arbitral award dated 21.11.2004 was affirmed.

FACTS
2. Facts relevant for deciding this appeal are that the appellant suffered
an arbitral award, dated 21.11.2004, passed by a three member
arbitral tribunal, which directed as follows:
“1. Preliminary objection as to maintainability of the present
arbitration proceeding raised on behalf of the respondent
ONGC, is rejected.
2(i) Claim No.2 relating to the 2 nd invoice for dollar
20,729.17 being the outstanding balance is allowed
rejecting the claim for interest thereon.

1 The High Court
2 1996 Act
510 [2025] 9 S.C.R.

Supreme Court Reports

2(ii) Claim No.3 in respect of invoice No.3 for dollar
1,26,536.44 being unpaid balance is allowed without interest.
2(iii) Claim No.4 in respect of invoice No.4 for dollar
30,1401.05 being outstanding balance is allowed. Claim
for interest is, however, rejected.
2(iv) Claim No.5 in respect of invoice No.5 for dollar
14,321.68 being the outstanding balance is allowed without
interest.
2(v) Claim No.6 in respect of invoice No.6 of dollar
1,67,960.43 being outstanding balance is allowed but no
interest is allowed.
2(vi) Claim No.7 in relation to invoice No.7 for dollar
87,523.37 being the unpaid balance is allowed and the
claim for interest on the said amount is disallowed.
2(vii) Claim No.8 refers to invoice No.8 for dollar 60,000
is allowed without interest.
2(viii) Claim No.9 in respect of invoice No.9 for dollar
78,750 being 75% of the tools lost in hole is allowed
without any interest.
2(ix) Claim No.10 vide invoice No.10 for dollar 15,000 in
respect of charges for demobilization is allowed without
any interest.
2(x) Claim for performance-bond amount of dollar 55,050 is
allowed as the said sum was deducted improperly without
any justification.
3. Accordingly, an award for the total amount of dollar
6,56,272.34 is passed in favour of the Claimant G & T
BecField Drilling Services (P) Ltd against the Respondent,
Oil & Natural Gas Corporation Ltd..
4. The said sum will carry interest at the rate of 12%
per annum on and from 12/12/1998, the date when the
statement of claim was affirmed, till recovery of the said
amount and an Award for interest on the said amount is
made accordingly.
[2025] 9 S.C.R. 511

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

5. The claimant will be entitled to Costs of the Proceeding
assessed at Rs.5 (five) lakhs only from the Respondent,
ONGC, and an Award for Rs.5 (five) lakhs for Costs is
accordingly passed. Counter-Claims are dismissed.
Sd/- 1. …. ; 2. ….; 3. …. Dt/- 21.11.2004”

3. Aggrieved by the award, the appellant filed an application (i.e.,
Misc. (Arbitration) Case no.26 of 2005), under Section 34 of 1996
Act, for setting aside the award by taking various pleas including
the one that clause 18.1 of the agreement does not allow payment
of interest on the claim.
4. The District Judge allowed the application and set aside the award,
vide order dated 15.11.2007, inter alia, on two grounds: (a) the award
is non-reasoned, therefore, violates the mandate of Section 31(3) of
1996 Act; and (b) objection under Section 16(2) was neither rejected
prior to proceeding further, nor considered by the arbitral tribunal at
the time of making final award.
5. Aggrieved therewith, respondent filed an appeal before the High
Court under Section 37(1)(c) of 1996 Act, which was allowed by the
impugned judgment and order thereby affirming the arbitral award
in toto.
6. When notices were issued on the Special Leave Petition, seeking
leave to appeal against the impugned order, it was limited to the
extent as to whether interest on the total amount at the rate of 12 per
cent could be awarded or not. The order dated 25.11.2019, issuing
notice, is reproduced below:
“Issue notice limited to the extent whether the interest on
total awarded amount dated 12.12.1998 at the rate of 12
per cent can be awarded or not. So far as the rest of the
amount is concerned, the petitioner is willing to pay back
to the respondent within a period of four weeks.
Subject to payment of the aforesaid amount, the execution
proceedings shall remain stayed.”
7. In view of the limited notice learned counsel for the parties have
confined their submissions to the award of interest.
512 [2025] 9 S.C.R.

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SUBMISSIONS
8. The learned counsel for the appellant relied on clause 18.1 of the
agreement and submitted that Section 31 (7)3 of 1996 Act, clearly
provides that power of arbitral tribunal to award interest for the period
between the date the cause of action arose up to the date of the
award is subject to the agreement between the parties, therefore, in
view of clause 18.1 no interest could have been awarded. Hence,
the arbitral award is liable to be set aside to the extent it awards
interest on the amount awarded from the date of the claim up to
the date of the award.
9. Per contra, the learned counsel for the respondent submitted that
clause 18.1, if read as a whole, would indicate that payment is not
to be withheld if the amount is not in dispute. It is only when there
is a dispute, interest is not payable on delayed payment. However,
here, the arbitral tribunal has not awarded interest on pre-reference
period. It awarded interest not from the date the cause of action arose,
but from the date the claim was affirmed before the arbitral tribunal.
In such circumstances, once it was found that balance amount on
the invoices was unjustifiably withheld, payment of interest is lawful.

DISCUSSION
10. We have considered the submissions and have perused the materials
on record.

ISSUE
11. Upon consideration of the submissions, in our view, the short issue
which falls for our consideration is whether clause 18.1 proscribes
payment of even pendente lite interest on the sum awarded. This we
say so, because, admittedly, arbitral tribunal has declined interest on
the balance amount payable under the invoices from the date the

3 Section 31. Form and contents of arbitral award. ---
(1) to (6) …
(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 rate of 18% per centum per annum from the date of the award to the date of payment.
[2025] 9 S.C.R. 513

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

cause of action arose up to the date when the statement of claim
was affirmed before the arbitral tribunal.

Law regarding payment of interest by arbitral tribunal
12. Sub-section (7) of Section 31 of 1996 Act deals with award of
interest when the arbitral award is for the payment of money. Sub-
section (7) has two clauses. Clause (a) deals with interest for the
period between the date on which the cause of action arose and
the date on which the award is made. Clause (a) says that when
the 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. However, arbitral tribunal’s power to award interest for the
aforesaid period is subject to the agreement between the parties.
Therefore, if the agreement stipulates that no interest is payable, the
arbitral tribunal cannot award interest for the aforesaid period and
an award contrary to the terms of the contract would be vulnerable
to a challenge under Section 34 of 1996 Act.4 Moreover, such an
agreement to waive interest is not ultra vires in terms of Section 28
of the Contract Act, 18725. However, if the agreement is silent on
award of interest, the arbitral tribunal can award interest in terms of
clause (a) of sub-section (7) of Section 316. As far as clause (b) of
sub-section (7) of Section 31 is concerned, it deals with post-award
interest. Prior to 2015 amendment, clause (b) mandated payment of
interest on the sum awarded at the rate of 18% per annum from the
date of the award to the date of payment, unless the award directed
otherwise. Interestingly, clause (b) is not subject to an agreement
between the parties and, therefore, if the arbitral award is with
regard to payment of money, it would carry interest at such rate as
the arbitral award directs and if it is not so directed, it would carry

4 See: Union of India v. Bright Power Projects (India) Private Limited, (2015) 9 SCC 695, paragraph 13;
Sayeed Ahmed and Company v. State of Uttar Pradesh and others, (2009) 12 SCC 26, paragraphs
15 and 16; Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat and
others, (2010) 8 SCC 767, paragraph 19
5 See: Garg Builders v. Bharat Heavy Electricals Limited, (2022) 11 SCC 697, paragraphs 20 to 23.
6 See: Jaiprakash Associates Limited (JAL) through its Director v. Tehri Hydro Development Corporation
(India) Ltd. (THDC), (2019) 17 SCC 786, paragraph 13.2; Pam Developments Private Limited v. State of
West Bengal and another, (2024) 10 SCC 715.
514 [2025] 9 S.C.R.

Supreme Court Reports

statutorily prescribed rate of interest from the date of the award till
the date of payment. In a nutshell, the arbitral tribunal has jurisdiction
to award interest for three distinct periods, namely, pre-reference,
pendente lite, and future i.e., post-award. Award of pre-reference
and pendente-lite interest is subject to the agreement between the
parties whereas post award interest is statutorily governed and is
not subject to the agreement between the parties. In other words,
clause (b) does not give the parties the right to ‘contract out’ interest
for the post award period.7

Rate of interest is reasonable
13. In the instant case, the rate of interest awarded is 12% per annum.
This appears reasonable being lower than the statutorily prescribed
rate then prevalent under clause (b) of sub-section (7) of Section 31.

Crux of the issue
14. However, the arbitral tribunal has awarded interest not from the date
of the award (i.e., 21.11.2004), but from 12.12.1998 (i.e., the date
when the statement of claim was affirmed before the arbitral tribunal).
Thus, what is in issue is the award of interest pendente lite on the
sum awarded. We would therefore consider whether the agreement
proscribed payment of interest on the sum awarded between the
date on which the cause of action arose and the date on which the
award is made. In this context, the appellant has relied on clause
18.1 of the agreement.
Clause 18.1 of the agreement reads thus:
“Corporation agrees to arrange remittance of payment
under this contract within 30 days from the date of receipt
of invoice from contractor duly certified by the authorized
representative of the Corporation subject always to
Corporation’s right to require contractor to furnish it with
satisfactory evidence of the validity and prior payment by
Contractor of all labor and material incurred by Contractor
and charged to Corporation. Should corporation question

7 R.P. Garg v. Chief General Manager, Telecom Department and Others, 2024 SCC OnLine SC 2928,
paragraph 11.
[2025] 9 S.C.R. 515

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

any item or items of an invoice, it may withhold payment
of the amount in dispute until such matter is resolved
between the parties, but the amount not in dispute is to
be paid within above period. No interest shall be payable
by ONGC on any delayed payment /disputed claim.”
(Emphasis supplied)

15. Relying on the underscored portion of clause 18.1 reproduced above,
the learned counsel for the appellant contended that the agreement
proscribed payment of interest on any delayed payment including
disputed claim, therefore, the award of interest for any period before
making of the award is illegal. On the contrary, submission on behalf
of the respondent is that the clause does not proscribe payment of
pendente lite interest, therefore, the arbitral tribunal has discretion
to award interest from the date the statement of claim is affirmed
before it.

Clause 18.1 does not bar award of interest pendente lite
16. To properly appreciate the import of clause 18.1 (supra) in the
agreement, particularly, in the context of submissions made, it would
be useful to consider few decisions of this Court on the issue as to
when the bar on award of interest can be inferred from the terms of
the agreement between the parties.
17. In Irrigation Deptt., State of Orissa v. G.C. Roy8 in the context of
Arbitration Act 1940 (for short 1940 Act), a Constitution Bench of
this Court observed that if the arbitration agreement or the contract
itself provides for award of interest on the amount found due
from one party to the other, no question regarding the absence of
arbitrator’s jurisdiction to award the interest could arise as in that
case the arbitrator has power to award interest pendente lite as well.
Similarly, where the agreement expressly provides that no interest
pendente lite shall be payable on the amount due, the arbitrator
has no power to award pendente lite interest. However, where the
agreement between the parties does not prohibit grant of interest and
where a party claims interest and that dispute along with the claim
for principal amount or independently is referred to the arbitrator,

8 (1992) 1 SCC 508
516 [2025] 9 S.C.R.

Supreme Court Reports

he shall have the power to award interest pendente lite. This is so,
because it must be presumed that interest was an implied term of
the agreement between the parties and therefore when the parties
refer all the disputes - or refer the dispute as to interest as such -
to the arbitrator, he shall have the power to award interest. This
does not mean that in every case the arbitrator should necessarily
award interest pendente lite. It is a matter within his discretion to be
exercised in the light of all the facts and circumstances of the case,
keeping the ends of justice in view.
18. In Union of India v. Ambica Construction9 (for short Ambica First),
a three-Judge Bench of this Court was called upon to consider, in the
context of the provisions of Arbitration Act, 1940, the power of the
arbitrator to award pendente lite interest when contract contains a
bar for grant of interest. After considering several decisions including
Constitution Bench decisions of this Court in G.C. Roy (supra) and
Dhenkanal Minor Irrigation Division v. N.C. Budharaj10, it was, inter
alia, held: (i) the arbitrator is not a court; (ii) the arbitrator decides
the disputes as per the agreement entered into between parties;
(iii) arbitration is an alternative forum for resolution of disputes but
an arbitrator ipso facto does not enjoy or possess all the powers
conferred on the courts of law; (iv) where the agreement expressly
provides that no interest pendente lite shall be payable on the amount
due, the arbitrator has no power to award pendente lite interest; (v)
the bar to award interest on delayed payment by itself will not be
readily inferred as express bar to award pendente-lite interest by
the arbitral tribunal, as ouster of power of the arbitrator has to be
considered on various relevant aspects; (vi) grant of pendente lite
interest may depend upon several factors such as phraseology used
in the agreement, clauses conferring power relating to arbitration,
nature of claim and dispute referred to arbitrator and on what items
power to award interest been taken away and for which period.
19. In Ambica Construction v. Union of India11 (for short Ambica
Second), a question arose before a two-Judge Bench of this Court
whether clause (2) in the agreement barred award of pendente lite

9 (2016) 6 SCC 36
10 (2001) 2 SCC 721
11 (2017) 14 SCC 323
[2025] 9 S.C.R. 517

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

interest. Clause (2) under consideration there was in the following
terms: “(2) Interest on amounts.- No interest will be payable upon
the earnest money or the security deposit or amounts payable to the
contractor under the contract, but government securities deposited in
terms of sub-clause (1) of this clause will be repayable with interest
accrued thereon.” Following three-Judge Bench decision of this Court
in First Ambica (supra), where it was held that the bar to award
interest on the amounts payable under the contract, would not be
sufficient to deny payment of pendente lite interest, this Court held
that the said clause did not bar award of pendente lite interest.
20. In Reliance Cellulose Products Limited v. Oil And Natural Gas
Corporation12 a two-Judge Bench of this Court, in the context of
an award under the 1940 Act, was called upon to consider whether
pendente lite interest was barred in view of clause 16 in the contract
between the parties. Clause 16 was in the following terms: “16. Our
standard terms of payment are within 30 days of receipt of stores
and inspection at site. But any delay in payment will not make the
Commission liable for any interest.” Construing the said clause, it
was held:
“15. …Clause 16 of the General Conditions of Contract
only speaks of any delay in payment not making ONGC
liable for interest. There is nothing in this clause which
refers even obliquely to the arbitrator’s power to grant
interest. …”
While holding so, decisions of this Court, inter alia, in Ambica
First (supra) and Ambica Second (supra) were considered and
relied, and the interest proscribing clauses in Sayeed Ahmed &
Co. (supra)13 and Tehri Hydro Development Corpn. Ltd. v. Jai
Prakash Associates Ltd.14 (for short THDC first) were contrasted
with Clause 15 reproduced above.
21. In Sayeed Ahmed & Co. (supra), the interest proscribing clause
was in following terms:
“Clause G. I.09. No claim for interest or damages will be

12 (2018) 9 SCC 266
13 See Footnote 6
14 (2012) 12 SCC 10
518 [2025] 9 S.C.R.

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entertained by the Government with respect to any money
or balance which may be lying with the Government or
any becoming due owing to any dispute, difference or
misunderstanding between the Engineer-in-Charge on
the one hand and the contractor on the other hand or
with respect to any delay on the part of the Engineer-in-
Charge in making periodical or final payment or any other
respect whatsoever.”
(Emphasis supplied)

Construing the said clause, this Court held:
“15. Clause G 1.09 makes it clear that no interest or
damages will be paid by the government, in regard to:
(i) any money or balance which may be lying with the
Government;
(ii) any money which may become due owing to any
dispute, difference or misunderstanding between
the Engineer-in-Charge on the one hand and the
contractor on the other hand;
(iii) any delay on the part of the Engineer-in- Charge in
making periodical or final payment; or
(iv) any other respect whatsoever.
The clause is comprehensive and bars interest under any
head in clear and categorical terms.
16. In view of clause (a) of sub-section (7) of Section 31 of
the Act, it is clear that the arbitrator could not have awarded
interest up to the date of the award, as the agreement
between the parties barred payment of interest. The bar
against award of interest would operate not only during the
pre- reference period, that is, up to 13.3.1997 but also during
the pendente lite, that is, from 14.3.1997 to 31.7.2001.”
22. In THDC First (supra), the interest proscribing clauses in the contract
were in the following terms:
“1.2.14. No claim for delayed payment due to dispute,
etc.-- The contractor agrees that no claim for interest on
[2025] 9 S.C.R. 519

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

damages will be entertained or payable by the Government
in respect of any money or balances which may be lying
with the Government owing to any disputes, differences
or misunderstandings between the parties or in respect
of any delay or omission on the part of the Engineer-in-
Charge in making immediate or final payments or in any
respect whatsoever.
1.2.15. Interest on money due to the contractor.-- No
omission on the part of the engineer in charge to pay
the amount due upon measurement or otherwise shall
vitiate or make void the contract, nor shall the contractor
be entitled to interest upon any guarantee or payments
in arrears nor upon any balance which may on the final
settlement of his accounts be due to him.”
(Emphasis supplied)

Construing the aforesaid clause, this Court held:
“14. … A reading of the aforesaid two clauses of the contract
agreement between the parties clearly reveal that despite
some overlapping of the circumstances contemplated by
the two clauses, no interest is payable to the contractor
for delay in payment, either, interim or final, for the
works done or on any amount lying in deposit by way
of guarantee. The aforesaid contemplated consequence
would be applicable both to a situation where withholding
of payment is on account of some dispute or difference
between the parties or even otherwise.
19. Clauses 1.2.14 and 1.2.15 already extracted and
analyzed, imposed a clear bar on either entertainment
or payment of interest in any situation of non-payment
or delayed payment of either the amounts due for work
done or lying in security deposit. On the basis of the
discussions that have preceded we, therefore, take the
view that the grant of pendente lite interest on the claim
of Rs.10,17,461 lakhs is not justified. The award as well
as the orders of the courts below are accordingly modified
to the aforesaid extent.”
520 [2025] 9 S.C.R.

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23. In Jaiprakash Associates Ltd. v. Tehri Hydro Development
Corporation (India) Ltd.15 (for short THDC Second), interpreting
identical interest proscribing clauses, the Court held that interest
cannot be awarded by the arbitrator.
24. In Ferro Concrete Construction (India) Pvt. Ltd. v. State of
Rajasthan16 , a two-Judge Bench of this Court, of which one of
us (P.S. Narasimha, J) was a member, after considering several
decisions held:
“13. From the above extracted paragraphs, the decision
of the three-Judge Bench in the First Ambika case (supra)
can be stated as follows. The arbitrator’s power to grant
interest would depend on contractual clause in each case,
and whether it expressly takes away the arbitrator’s power
to grant pendente lite interest. This would have to be
determined based on the phraseology of the agreement,
clauses conferring powers relating to arbitration, nature of
claim and dispute referred to the arbitrator, and on what
items the power to award interest is contractually barred
and for which period. Further, a bar on award of interest
for delayed payment would not be readily inferred as an
express bar to the award of pendente lite interest by the
arbitrator.”
25. On a careful analysis of the decisions discussed above, we are of
the view that arbitral tribunal can be denuded of its power to award
pendente lite interest only if the agreement/ contract between the
parties is so worded that the award of pendente lite interest is
either explicitly or by necessary implication (such as in the case of
Sayeed & Co. (supra) and THDC First (supra)) barred. A clause
merely barring award of interest on delayed payment by itself will
not be readily inferred as a bar to award pendente-lite interest by
the arbitral tribunal.
26. Seen in light of the discussion above, Clause 18.1, which appellant
relies upon to canvass that the agreement between the parties
proscribes grant of pendente-lite interest, when read as a whole,

15 See Footnote 6
16 2025 SCC OnLine SC 708
[2025] 9 S.C.R. 521

Oil and Natural Gas Corporation Ltd. v.
M/s G & T Beckfield Drilling Services Pvt. Ltd.

does not expressly or by necessary implication proscribes grant of
pendente lite interest by the arbitral tribunal. The clause merely says
that there would be no interest payable by the Corporation on any
delayed payment / disputed claim. Neither it bars the arbitral tribunal
from awarding pendente lite interest nor it says that interest would
not be payable in any respect whatsoever as was the phraseology of
the interest proscribing clause in Sayeed Ahmed & Co. (supra) and
THDC First (supra). In our view, therefore, Clause 18.1 would not
limit the statutory power of the arbitral tribunal to award pendente-
lite interest. Consequently, we find no such error in the award of
pendente lite interest as may warrant interference with the award.
Since post-award interest is in line with the statutory provision of
clause (b) of sub-section (7) of Section 31 as was in vogue then, we
find no merit in the appeal, and the same is, accordingly, dismissed.
27. Pending applications, if any, stand disposed of.

Result of the case: Appeal dismissed.

†
Headnotes prepared by: Divya Pandey