LexM/S D. KHOSLA AND COMPANY versus THE UNION OF INDIA
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[2024] 8 S.C.R. 113 : 2024 INSC 587 M/s D. Khosla and Company v. The Union of India (Special Leave Petition (Civil) No. 812 of 2014) 07 August 2024 [Pamidighantam Sri Narasimha and Pankaj Mithal,* JJ.] Issue for Consideration Arbitrator passed award granting interest for two periods-(i) Pre- award period, from the date of completion of the work up to the date of the award @ 12% per annum (simple interest); and (ii) Post- award, from the date of the award till the date of its payment or the date of the court decree @ 15% per annum. Whether interest was payable on interest or whether 15% interest per annum awarded would be on the principal sum award plus 12% per annum interest on it for the pre-award period. Headnotes† Arbitration Act, 1940 – ss.29, 17 – Interest Act, 1978 – s.3 – Code of Civil Procedure, 1908 – s.34 – Court /Arbitrator if can award compound interest or interest upon interest unless specifically provided under the statute or the terms and conditions of the contract: Held: No – Though, there is no dispute as to the power of the courts to award interest on interest or compound interest in a given case subject to the power conferred under the statutes or under the terms and conditions of the contract but, where no such power is conferred ordinarily, the courts do not award interest on interest – Neither the Act specifically empowers the Arbitrator or the Court to award interest upon interest or compound interest nor there is any other provision which provides for grant of compound interest or interest upon interest – s.34, CPC is also silent in this regard whereas s.3(3) of the Interest Act specifically prohibits the same – In the present case, the award and the decree nowhere awarded 15% interest per annum on the amount awarded including the interest component i.e. the pre-award interest – This could not have been done even otherwise as there is no provision to that effect under the relevant statutes or the contract – The interest awarded under the award in the first part, was simple interest @ 12% per annum * Author 114 [2024] 8 S.C.R. Digital Supreme Court Reports on the ‘amount awarded’ whereas in the second part, interest @ 15% per annum was awarded referring to the ‘amount awarded’ – The amount awarded in both the situations referred to the principal amount of compensation awarded i.e. Rs.21,56,745/- and was same and cannot be two distinct amounts – Concurrent judgments of the courts below not interfered with. [Paras 23, 24, 27, 28] Case Law Cited Oil and Natural Gas Commission v. M.C. Clelland Engineers S.A. [1999] 2 SCR 830 : (1999) 4 SCC 327; State of Haryana and Others v. S.L. Arora and Company [2010] 2 SCR 297 : (2010) 3 SCC 690; Hyder Consulting (UK) Limited v. Governor, State of Orissa [2014] 14 SCR 1029 : (2015) 2 SCC 189; UHL Power Company Limited v. State of Himachal Pradesh [2022] 1 SCR 1 : (2022) 4 SCC 116 – referred to. List of Acts Arbitration Act, 1940; Interest Act, 1978; Code of Civil Procedure, 1908. List of Keywords Award of interest; Interest upon interest; Compound interest; Interest on the amount awarded; Interest awarded in two parts; Pre-award interest and post-award interest on the principal amount; Simple interest; Simple interest on the amount awarded; Amount awarded; Principal amount; Principal amount awarded; Principal amount of compensation awarded; Principal sum. Case Arising From CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) No.812 of 2014 From the Judgment and Order dated 06.09.2013 of the High Court of Gujarat at Ahmedabad in SCA No.3036 of 2009 Appearances for Parties Ms. Jyoti Mendiratta, Sourabh Malhotra, Ms. Ananya Basudha, Advs. for the Petitioners. Ms. Aishwarya Bhati, A.S.G., Ms. Sthavi Asthana, Akshaja Singh, Nitesh Shrivastav, Dr. N. Visakamurthy, Chitrangada Rastravara, Mukul Singh, Amit Sharma Ll, Kartikeya Asthana, Mukesh Kumar Maroria, Advs. for the Respondent. [2024] 8 S.C.R. 115 M/s D. Khosla and Company v. The Union of India Judgment / Order of the Supreme Court Judgment Pankaj Mithal, J. 1. Heard Smt. Jyoti Mendiratta, learned counsel for the petitioner and Smt. Aishwarya Bhati, learned A.S.G. for the Union of India. 2. In connection with a contract of 1984-85 between the petitioner and the respondent, an award came to be passed by the Arbitrator on 17.09.1997 under the Indian Arbitration Act, 1940.1 It was made the rule of the court under Section 14 read with Section 17 of
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