UNION OF INDIA versus M/S BRIGHT POWER PROJECTS (I) P. LTD.

Citation: [2015] 6 S.C.R. 488 · Decided: 02-07-2015 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Appeal(s) allowed

Cited by 8 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
8 
(2015] 6 S.C.R. 488 
UNION OF INDIA 
v. 
M/S BRIGHT POWER PROJECTS (I) P. LTD. 
(Criminal Appeal No. 2404 OF 2008) 
JULY 02, 2015 
[ANIL R. DAVE, VIKRAMAJIT SEN AND 
PINAKI CHANDRA GHOSE, JJ.] 
c Arbitration and Conciliation Act, 1996 - s. 31 (7) - Award of 
pendentelite interest on the amount of arbitral award- When 
the contract between the parties contained an express bar 
regarding award of interest - Propriety of - Held: s. 31 (7) 
specifically provides that arbitrator is bound by the terms of 
D the contract so far as award of interest is concerned- Once 
the parties agreed that no interest would be paid, they were 
bound by that understanding - Thus, neither the party was 
entitled to claim interest nor the arbitral tribunal could have 
awarded the interest. 
E 
Allowing the appeal, the Court 
HELD: 1. When parties to the contract had agreed 
to the fact that interest would not be awarded on the 
F amount payable to the contractor under the contract, 
they were bound by their understanding. Having once 
agreed that the contractor would not claim any interest 
on the amount to be paid under the contract, he could 
not have claimed interest either before a civil court or 
G before an Arbitral Tribunal. [Para 12] [492-E-F] 
2. Section 31(7) of the Act, by using the words 
"unless otherwise agreed by the parties", categorically 
specifies that the arbitrator is bound by the terms of the 
H contract so far as award of interest from the date of 
488 
UNION OF INDIA v. MIS BRIGHT POWER 
489 
PROJECTS (I) P. LTD. 
cause of action to date of the award is concerned. A 
Therefore, where the parties had agreed that no interest 
shall b.e payable, the Arbitral Tribunal cannot award 
interest. The Tribunal, failed to consider the provisions 
of Section 31 (7)_ofthe Act and clause 13(3) of the contract 
before awarding interest in the present case. 
[Paras B 
14 and 17] [493-C; 494-F] 
Union of India v. Saraswat Trading Agency and Ors. 
(2009)16 sec 504: 2009 (10) SCR 1063- relied on. 
Secretary, Irrigation Department, Government of Orissa 
and Ors. v. G.C. Roy (1992) 1 SCC 508: 1991 (3) Suppl. 
SCR 417 - distinguished. 
Case Law Reference 
2009 (10) SCR 1063 
relied on. 
Para 15 
1991 (3) Suppl. SCR 417 distinguished. 
Para 16 
c 
D 
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 
E 
2404 Of 2008 
From the Judgment and Order dated 07.08.2006 in 
Appeal (L) No. 124 of 2006 of the High Court of Judicature 
at Bombay 
F 
J. S. Attri, Manita Verma, S. N. Terdal, D. S. Mahra 
for the appellant. 
Prashant Kumar, Triveni Potekar, Rajan Singh,Amarjit 
Singh Bedi for the respondent. 
G 
The Judgment of the Court was delivered by 
ANIL R. DAVE, J. - 1. Being aggrieved by the 
judgment delivered in Appeal (Lodging) No.124 of 2006 in H 
490 
SUPREME COURT REPORTS 
(2015] 6 S.C.R. 
A Arbitration Petition No.321 of 2005 dated 7'h August, 2006, 
delivered by the High Court of Judicature at Bombay, this 
appeal has been filed wherein the issue is whether the 
appellant is liable to pay interest to the respondent though 
there was a provision in the contract that n~ interest should 
B be paid on the amount payable to the contractor. The facts 
which are relevant for the purpose of deciding the issue, in a 
nutshell, are as under. 
2. The appellant and the respondent had entered into 
C a contract whereby the respondent had to construct certain 
structures, which had been more particularly described in 
the agreement entered into by the parties on 20th January, 
1997. 
o 
3. In the course of execution of the contract, a dis-
pute had arisen between the appellant and the respondent 
contractor and as agreed by the parties, the dispute had 
been referred to the Arbitral Tribunal. After hearing the con-
cerned parties, the Arbitral Tribunal declared an award on 
E 
17th May, 2005, whereby it also awarded interest to the re-
spondent contractor on the amount awarded, from the date 
of the reference till the date of the award. 
4. Relying upon the judgment delivered in the case of 
F Secretary, Irrigation Department. Government of Orissa 
and Ors. v. GC. Roy (1992) 1 SCC 508, the Arbitral Tribu-
nal awarded interest on the amount of the award. In the 
said case, this Court had considered the provisions of Sec-
tion 29 of the Arbitration Act, 1940, which dealt with pay-
G ment of interest pendente lite. After analyzing the scheme 
of the said Act, various earlier decisions and after consider-
ing the very same issue, namely, whether an arbitr

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