LexM/S. HYDER CONSULTING (UK) LTD. versus GOVERNOR, STATE OF ORISSA THROUGH CHIEF ENGINEER
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[2014] 14 S.C.R 1029 M/S. HYDER CONSULTING (UK) LTD. v. GOVERNOR, STATE OF ORISSA THROUGH CHIEF ENGINEER A (Civil Appeal No. 3148 of 2012) B NOVEMBER 25, 2014 [H. L. DATTU, CJI, S. A. BOBDE AND .. ABHAY MANOHAR SAPRE, JJ.] Arbitration and Conciliation Act, 1996 - s.31(7) - c Interpretation of- Grant ofinterest byarbitral tribunal under - Whether amounts to granting interest on interest- Held: s. 31 (7) can be interpreted to mean that interest which accrues till the date of the Award," be included in the "sum" from the date of Award for calculating the post-award interest- Word D sum means 'an amount of money' which may include principal and interest or one of the two - Thus, clause (a) of s.31(7) 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 clause (b) states that the sum so E directed to be made by the Award shall carry interest at a certain rate for the post award period - In view thereof, it is clear that interest, the sum directed to be paid by the Arbitral Award under clause (b) of sub-section (7) of Section 31 is inclusive of interest pendent lite. F Answering the referred question, the Court HELD : PER S. A. BOBDE, J. (MAJORITY) 1.1 The conclusion in S,L. Arora's case that Section 31 (7) of the Arbitration and Conciliation Act, 1996 does G not require that interest, which accrues till the date of the Award, be included in the "sum" from the date of Award for calculating the post-award interest cannot be accepted. This conclusion does not seem to be in · consooance with the clear language of Section 31(7) of H . 1029 1030 SUPREME COURT REPORTS [2014] 14 S.C.R. A the Act. S.L. Arora's case is 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" B and that in the absence of any provision of interest upon interest in the contract, the Arbitral Tribunal does riot )lave the power to award interest upon interest, or, compound interest either for the pre-award period or for the post-award period. Parliament has the undoubted c power to legislate on the subject and provide that the Arbitral Tribunal may award interest on the sum directed . to be paid by the Award, meaning a sum inclusive ·of principal slim adjudged and the interest, and this has been done by Parliament· in plain language. D [Paras 2, 15][1072-D-E; 1078-C-F] . 1.2 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 · E 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 F 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 fortlie · pre-award period on the entire amount directed to be paid or part thereof, may be passed. The" sum" awarded G may be principal amount and such interest as theArbitral 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 H M/S. HYDER CONSULTING (UK) LTD. v. GOV., STATE OF 1031 ORISSA THR. CHIEF ENGR. a plain reading, this expression refers to the total amount A or sum for the payment for which the Award is made. Parliament has not added a qualification like "principal" to the word "sum," and thus, the word "sum" simply means "a particular amount of money". In Section 31 (7), particular amount of money may include interest B from the date of cause of action to the date of the award. [Para 4][1073-B-F] 1.3 Once the meaning of the word "sum" is clear, the same meaning must be ascribed to the word in clause (b) of sub-section (7) of Section 31 of the Act, where it C provides that a sum directed to be paid by an Arbitral Award "shall carry interest ........ " from the date of the Award to the da
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