Tag: Arbitral Award

Arbitrator’s Power on Interest Rates: Supreme Court Explains Key Legal Limits
6Feb By The Legal ChamberNo Comments
Supreme Court

Arbitrator’s Power on Interest Rates: Supreme Court Explains Key Legal Limits

This Supreme Court judgment clarifies the limited scope of judicial interference with arbitral awards under the Arbitration and Conciliation Act, 1996. The Supreme Court held that an arbitrator's discretion to award a contractual interest rate of 24% is not per se usurious or against public policy. It reaffirmed that courts cannot reappreciate evidence and may only set aside an award on the narrow, specified grounds under Section 34 of the Act, which were not met in this case. Facts Of The Case: The appellants, M/s Sri Lakshmi Hotels Pvt. Limited and its Managing Director, availed two loans totaling ₹1.57 Crore from the respondent Non-Banking Financial Company (NBFC) in 2006. The loan agreements stipulated an interest rate of 24% per annum. After making partial repayments until April 200...
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Supreme Court: Arbitrator Cannot Rewrite Contracts, Upholds IRCTC’s Catering Policy
28Jan By The Legal ChamberNo Comments
Supreme Court

Supreme Court: Arbitrator Cannot Rewrite Contracts, Upholds IRCTC’s Catering Policy

The Supreme Court held that an arbitral award which contravenes binding government policy circulars—incorporated into the parties' contracts—is patently illegal and in conflict with the public policy of India under Section 34(2A) of the Arbitration and Conciliation Act, 1996. An arbitrator cannot rewrite contractual terms that reflect such policy. Facts Of The Case: The case arose from contracts for catering services on premium Indian Railways trains (Rajdhani, Shatabdi, Duronto). The Railway Board initially increased meal tariffs in 2013 but simultaneously introduced a cheaper "combo meal" to replace the second regular meal on long journeys. This combo meal was swiftly discontinued days later, and caterers were directed to serve a second regular meal instead, but were to be reimbu...
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Clarity on Post-Award Interest: Supreme Court Explains When Hyder Consulting Judgment Applies
15Nov By The Legal ChamberNo Comments
Supreme Court

Clarity on Post-Award Interest: Supreme Court Explains When Hyder Consulting Judgment Applies

This Supreme Court judgment clarifies that an arbitral award granting a composite interest rate from the cause of action until the date of repayment, based on a contract between the parties, excludes the default application of separate post-award interest under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. Party autonomy governs, and a decree-holder cannot claim compound interest at the execution stage if it was not stipulated in the contract or awarded by the tribunal, as this would amount to impermissibly modifying the award. Facts Of The Case: The dispute originated from a Memorandum of Understanding (MoU) dated 09.04.2014 between HLV Limited and PBSAMP Projects Pvt. Ltd. for the sale of land in Hyderabad. PBSAMP paid an advance of Rs. 15.5 crores to HLV. After...
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No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits
9Oct By The Legal ChamberNo Comments
Supreme Court

No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits

This Supreme Court judgment clarifies that a contractual clause merely barring interest on delayed or disputed payments does not, by itself, expressly or by necessary implication prohibit an arbitral tribunal from awarding pendente lite interest. The power to award such interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, is only denuded if the agreement contains a clear and comprehensive bar. Facts Of The Case: The dispute arose from an arbitral award dated 21.11.2004, which directed the appellant, Oil and Natural Gas Corporation Ltd. (ONGC), to pay a total sum of USD 6,56,272.34 to the respondent, M/s G & T Beckfield Drilling Services Pvt. Ltd., for outstanding invoices and other claims. The arbitral tribunal rejected ONGC's preliminary objection to the ma...
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Supreme Court Rules: Consent Decree Based on Arbitration Must Be Honored, Estoppel Applies
18Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Rules: Consent Decree Based on Arbitration Must Be Honored, Estoppel Applies

The Supreme Court held that a party cannot raise a plea of estoppel against law after its own conduct induced the other party to alter its position to its detriment. The doctrine of election and estoppel by conduct precludes a party from approbating and reprobating, thereby preventing it from challenging the validity of a compromise decree it had previously accepted. Facts Of The Case: The respondents, claiming the appellants had been removed as trustees, filed a suit for a perpetual injunction to restrain them from entering a school run by Guru Tegh Bahadur Charitable Trust. The Trial Court rejected the plaint under Order VII Rule 11 CPC, holding the suit was barred by Section 92 CPC. During the pendency of the respondents' appeal against this order, the parties mutually appointed a sol...
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Supreme Court Reins In Judicial Intervention in Arbitration After Appointment
17Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Reins In Judicial Intervention in Arbitration After Appointment

This Supreme Court judgment holds that a non-signatory to an arbitration agreement has no legal right to be present in the arbitral proceedings as the award would not bind them, violating the confidentiality mandate under Section 42A. Furthermore, a court becomes functus officio after appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, and cannot entertain subsequent applications for intervention or issue ancillary directions. Facts Of The Case: The case originated from an oral family settlement between Pawan Gupta (PG) and Kamal Gupta (KG), later recorded in a Memorandum of Understanding/Family Settlement Deed (MoU/FSD) dated 09.07.2019, which was not signed by KG’s son, Rahul Gupta (RG). PG initiated proceedings under Section 11(6) of the Arbitra...
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Supreme Court Ruling: Courts Must Appoint Arbitrator Even If Serious Fraud is Alleged
5Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Ruling: Courts Must Appoint Arbitrator Even If Serious Fraud is Alleged

The Supreme Court reaffirmed that under Section 11(6A) of the Arbitration Act, a court's role is prima facie confined to examining the existence of an arbitration agreement. All other contentious issues, including allegations of serious fraud and non-arbitrability, are jurisdictional matters that must be decided by the arbitral tribunal under Section 16. Facts Of The Case: The appellant, Bihar State Food and Civil Supplies Corporation, entered into agreements with various rice millers for the custom milling of paddy procured from farmers. The agreements contained an arbitration clause. When the millers allegedly failed to deliver the stipulated quantity of rice, the Corporation initiated recovery proceedings under the Bihar and Orissa Public Demands Recovery Act, 1914. The millers challe...
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Supreme Court Backs Arbitrator’s Power to Award Compound Interest :Rules on Interest Calculation in Award Enforcement
25May By The Legal ChamberNo Comments
Supreme Court

Supreme Court Backs Arbitrator’s Power to Award Compound Interest :Rules on Interest Calculation in Award Enforcement

The Supreme Court ruled that arbitral tribunals have the power to award compound interest (interest on interest) under Section 31(7) of the Arbitration Act, 1996. It clarified that the "sum awarded" includes both principal and pre-award interest, and post-award interest can be calculated on this total amount. The judgment overruled earlier contrary interpretations, affirming arbitrators' discretion in interest calculations unless expressly barred by contract. The Court emphasized this aligns with the compensatory purpose of arbitration awards for delayed payments. Facts Of The Case: The case involved a contractual dispute between M/s Interstate Construction (appellant) and National Projects Construction Corporation Ltd. (respondent) regarding construction work for Ramagundam Super Therma...
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Supreme Court Clarifies: When Can an Arbitral Award Be Challenged for Lack of Jurisdiction?
22May By The Legal ChamberNo Comments
Supreme Court

Supreme Court Clarifies: When Can an Arbitral Award Be Challenged for Lack of Jurisdiction?

The Supreme Court ruled that an arbitral award under the Arbitration and Conciliation Act 1996, cannot be annulled solely for lack of jurisdiction if no plea was raised before the tribunal under Section 16(2). It harmonized conflicting precedents, holding that objections under Section 34 must show strong grounds, and upheld the finality of awards where jurisdictional challenges were untimely. The judgment clarifies that the Madhya Pradesh Arbitration Act 1983, does not automatically override arbitration agreements unless jurisdictional objections are raised at the appropriate stage. Facts Of The Case: The case involved a contractual dispute between M/s Gayatri Projects Limited and Madhya Pradesh Road Development Corporation regarding road construction works in Madhya Pradesh. The parties...
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