The court clarified that contractual clauses prohibiting interest payment limit arbitrators' discretion, and previous case law interpretations did not provide binding precedents for the specific contractual obligations at issue.

JUDGMENT

Vipin Sanghi, J. (ORAL)--The present appeal is directed against the order dated 20.09.2017 passed by the learned Single Judge disposing of the objections preferred under Section 34 of the Arbitration & Conciliation Act to the award made on claim No.5 vide Award dated 17.01.2011. Claim No.5 pertained to pre- suit, pendente lite and future interest awarded on the balance due payment, from the due date of payment. The learned Arbitral Tribunal had awarded interest @ 12% per annum from 01.01.1997 till the date of publication of the award on the awarded amount, except on the amount of security deposit and earnest money.

2. The impugned order shows that both the parties stated before the learned Single Judge that Section/Clause 16(2)of the General Conditions of Contract (GCC) had been interpreted by the Supreme Court in Union of India Vs. M/s Pradeep Vinod Construction Co., Civil Appeal No.2099/2017 decided on 03.08.2017. In view of the said statement made before the learned Single Judge, the challenge to the impugned award made on Claim No.5 granting pendente lite and future interest to the respondent, was negated and the objections were dismissed.

3. The Union of India has submitted in this appeal that reliance placed by the learned Single Judge on M/s Pradeep Vinod Construction Co. (supra) is misplaced, and the said decision is per incuriam as it has not taken into consideration the earlier larger bench decisions rendered by the Supreme Court, particularly the decision in Union of India Vs. Bright Power Projects (India) Private Limited, 2015(9) SCC 695. Learned counsel for the appellant has submitted that Clause 16(2) - which was considered in the present case, was pari materia to Clause 13(3) considered by the Supreme Court in Bright Power Projects (India) Private Limited (supra).

4. Clause 16(2) of the contract in question, which was also considered by the Supreme Court in M/s Pradeep Vinod Construction Co. (supra), reads as follows:

"16 (2) No interest will be payable upon the earnest money or the security deposit or amounts payable to the Contractor under the Contract, but Government Securities deposited in terms of Sub-Clause (1) of this clause will be repayable with interest accrued thereon."

5. Clause 13(3) of the contract considered by the Supreme court in Bright Power Projects (India) Private Limited (supra) reads as follows:

"13. (3) No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but government securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon."

6. The submission of learned counsel for the appellant is that in Bright Power Projects (India) Private Limited (supra), the Supreme Court held that in the light of the Clause 13(3), the Arbitral Tribunal was powerless to grant pendente lite or future interest, since Section 31 (7) of the Arbitration & Conciliation Act is clear to the effect that unless otherwise agreed by the parties, the Arbitral Tribunal can award interest at reasonable rate for the period commencing from the date when the cause of action arises till the date of the award. The Supreme Court laid emphasis on "unless otherwise agreed by the parties" and, therefore, held that since the parties agreed that no interest would be payable either on earnest money, or security deposit, or amounts payable to the contractor under the contract, the Arbitral Tribunal could not award interest even on the amount found payable under the contract.

7. Learned counsel has also sought to place reliance on o