Interstate Construction vs National Projects Construction Corporation Ltd. 2025 INSC 699 - S. 31(7) Arbitration Act - Pre Reference & Pendente Lite Interest

Arbitration and Conciliation Act - Section 31(7)(a) - There is now a statutory recognition of the power of the arbitral tribunal to grant pre-reference interest from the date on which the cause of action arose till the date on which the award is made (Para 34) - The arbitral tribunal has the discretion to include in the sum awarded : firstly, interest at such rate as it deems reasonable; and secondly, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. This would mean that the arbitral tribunal can exclude a period from the date on which the cause of action arose till the date on which the award is made for the purpose of grant of interest - It would also mean that the arbitral tribunal can grant interest for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. It can be a composite period or the said period can be further sub-divided, as done in the present case i.e. from the date of cause of action to filing of the claim and from the date of filing of the claim till the date of the award excluding the period when the appellant was found to be remiss. It would also mean that there can be one rate of interest for the whole period or one or more rates of interest for the sub-divided periods.- Referred to North Delhi Municipal Corporation Vs. S.A. Builders Ltd and Pam Developments Private Limited Vs. State of West Bengal (Para 35) [Context: SC set aside HC judgment which had held that the arbitral tribunal had no jurisdiction to award interest for two periods i.e. pre-reference and pendente lite]

Arbitration and Conciliation Act - Section 31(7) - Post-award interest can be granted by an arbitrator on the interest amount awarded.- The sum awarded would mean the principal amount plus the interest awarded from the date of cause of action upto the date of the award. The sum awarded in Section 31(7)(a) would mean principal amount plus the interest awarded. Thereafter, as per Section 31(7)(b) of the 1996 Act, the sum (principal amount + interest) would carry further interest at the rate of 2 per cent higher than the current rate of interest prevalent on the date of the award to the date of payment- Referred to North Delhi Municipal Corporation Vs. S.A. Builders Ltd. (Para 43)