R.P. GARG versus THE CHIEF GENERAL MANAGER, TELECOM DEPARTMENT & ORS.

Citation: [2024] 9 S.C.R. 763 · Decided: 10-09-2024 · Supreme Court of India · Bench: PAMIDIGHANTAM SRI NARASIMHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2024] 9 S.C.R. 763 : 2024 INSC 743
R.P. Garg  
v. 
The Chief General Manager, Telecom Department & Ors.
(Civil Appeal No. 10472 of 2024)
10 September 2024
[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]
Issue for Consideration
Whether the appellant is entitled to post-award interest on the sum 
awarded by the Arbitrator.
Headnotes†
Arbitration and Conciliation Act, 1996 – s.31(7)(b) – Grant of 
post-award interest, not subject to the contract between the 
parties – Appellant claimed payment of post-award interest, 
denied on the ground that the contract between the parties 
did not permit it – Correctness:
Held: Not correct – By virtue of s.31(7)(b), a sum directed to be 
paid by an Arbitral Award shall carry interest – s.31(7)(b) deals 
with grant of interest for post award period i.e., from the date of 
the award till its realization – The statutory scheme relating to 
grant of interest provided in s.31(7) creates a distinction between 
post-award and pre-award interest – s.31(7)(a) regulates pre-award 
interest and provides that the grant of interest shall be subject to the 
agreement between the parties as is evident from the expression 
at the commencement of the sub-section “unless otherwise 
agreed by the parties” – Whereas, so far as the entitlement of 
the post-award interest is concerned, s.31(7)(b) provides that 
the sum directed to be paid by the Arbitral Tribunal shall carry 
interest – The rate of interest can be provided by the Arbitrator and 
in default the statutory prescription will apply – Thus, s.31(7)(b) is 
not subject to party autonomy and is in contrast with s.31(7)(a) as 
it does not give the parties the right to “contract out” interest for 
the post-award period – Further, the expression ‘unless the award  
otherwise directs’ in s.31(7)(b) relates to rate of interest and not 
entitlement of interest – The only distinction made by s.31(7)(b) is 
that the rate of interest granted under the Award is to be given 
precedence over the statutorily prescribed rate – Impugned 
judgment of the High Court set aside – Judgment of the First 
* Author
764
[2024] 9 S.C.R.
Digital Supreme Court Reports
Appellate Court-District Court granting 18% interest from the date 
of the award to its realization, restored. [Paras 9, 11, 13]
Case Law Cited
Jaiprakash Associates Ltd. v. Tehri Hydro Development Corporation 
(India) Ltd. [2019] 2 SCR 41 : (2019) 17 SCC 786 – held 
inapplicable.
Morgan Securities & Credits (P) Ltd. v. Videocon Industries Ltd.
[2022] 9 SCR 819 : (2023) 1 SCC 602 – relied on.
List of Acts
Arbitration and Conciliation Act, 1996.
List of Keywords
Post-award interest; Pre-award interest; Contract/agreement 
between the parties; Telecom Department; Arbitration Agreement; 
Party autonomy.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10472 of 2024
From the Judgment and Order dated 14.05.2019 of the High Court 
of Punjab & Haryana at Chandigarh in CR No. 2561 of 2003 (O&M)
Appearances for Parties
Parikshit Mahipal, Vaibhav Kumar Garg, Ms. Savita Garg,  
Ms. Shivani Mahipal, Ms. Bushra Parveen, Advs. for the Appellant.
Pradeep Kumar Mathur, Chiranjeev Johri, M.K. Tiwari, Gurmeet 
Singh Makker, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Pamidighantam Sri Narasimha, J.
1.	
Leave granted.
2.	
The short question before us is whether the appellant is entitled to post 
award interest on the sum awarded by the Arbitrator. The Arbitrator 
[2024] 9 S.C.R. 
765
R.P. Garg v. The Chief General Manager, Telecom Department & Ors.
denied payment of such interest under a misplaced impression that 
the contract between the parties prohibited it. The executing Court1 
affirmed the finding of the Arbitrator and rejected the prayer. However, 
allowing the appeal, the District Court2 held that the appellant will 
be entitled to post award interest. By the order impugned before 
us, the High Court3 allowed the revision and set aside the District 
Court order while holding that the contract between the parties did 
not permit grant of post award interest. 
2.1	 For the reasons to follow, while allowing the appeal we have 
held that as this is a case arising out of the Arbitration and 
Conciliation Act, 1996,4 by operation of Section 31(7)(b), the 
sum directed to be paid under the Arbitral Award shall carry 
interest. This is a first principle. A sum directed to be paid by 
an Arbitral Award must carry interest. In this view of the matter, 
we have restored the ju

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