Arbitration and Conciliation Act 1996

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...

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...

Supreme Court Clarifies Power of Arbitral Tribunals to Join Non-Signatories: Key Ruling on Arbitration and Corporate Group Doctrine

The Supreme Court held that an arbitral tribunal has the authority to implead non-signatories to an arbitration agreement under the Group of Companies doctrine. It affirmed that such power is not confined to referral courts under Section 11 of the Arbitration and Conciliation Act, 1996, upholding the tribunal's jurisdiction. Facts Of The Case: The case arises from a dispute involving Shapoorji Pallonji and Company Private Limited (SPCPL), which entered into a Works Contract dated 21.11.2016 with ASF Insignia SEZ Pvt. Ltd. (AISPL), part of the ASF Group. The contract was later novated to Black Canyon SEZ Pvt. Ltd. (BCSPL), another ASF Group entity, through a Novation Agreement dated 17.04.2018. A Settlement Agreement was executed in 2020 due to performance issues. BCSPL initiated arbitrat...