Parties are entitled to interest on delayed payments unless explicitly prohibited in the contract, as held in the context of arbitration awards.

JUDGMENT (Oral)

1. Appellant claims that the respondent applied for setting up a Greenfield PFT served by Chawalpail Railway Station on Ambala-Ludhiana Section of Northern Railway (hereinafter referred as "PFT Project") and deposited fee of Rs.1 Crore in terms of Clause 9 of the Policy. Pursuant thereto, appellant granted final approval for the PFT Project on 17.02.2014, which was to be completed within 3 years i.e., by 16.02.2017. As per Clause 10.02 of the Policy, appellant was to refund 99% of Security Deposit upon successful completion of the PFT Project within 30 days from the date of issuance of the commercial notification.

2. The respondent completed the PFT Project within one and a half years, much before the scheduled time. Same led to execution of a Concession Agreement inter-se parties followed by issuance of a Commercial Notification on 25.08.2015 itself. Upon successful completion of PFT Project, respondent sought refund of 99% of the Security Deposit in terms of Clause 10.2 of the Policy and followed it up with repeated reminders. Hearing nothing from appellant, respondent approached the Court under Section 11 of The Arbitration and Conciliation Act, 1996 (hereinafter referred as "Act"). Before the Arbitral Tribunal, respondent, vide its Statement of Claim sought refund of the Security Deposit of Rs.99,00,000/- alongwith interest @ 18% per annum with costs and appellant, vide its Counter Claim sought an amount Rs.58,26,261/- along with interest. The Arbitral Tribunal vide its Award dated 25.02.2020 (hereinafter referred as "Arbitral Award") allowed the claim of Rs.99,00,000/- of the respondent albeit without interest and rejected the Counter Claim of Rs.58,26,261/- of the appellant.

3. Being aggrieved, respondent filed objections under Section 34 of the Act before the learned trial court primarily challenging the non-grant of interest upon the delayed refund of Security Deposit of Rs.99,00,000/- and the appellant never challenged the release of refund of said Security Deposit of Rs.99,00,000/- therein (hereinafter referred as "refund amount"). Learned trial court vide impugned judgment dated 13.10.2021 (hereinafter referred as "Impugned Judgment"), granting interest to respondent, modified the Arbitral Award and held as under:

(i) The claim of the respondents for release of Rs.99,00,000/- is justified and awarded.

(ii) An interest @ 9% is payable to the respondent on the sum of Rs.99,00,000/- w.e.f. 25.09.2015, the date on which the payment became due till the date of award.

(iii) The parties shall bear their own costs.

(iv) The counter claim of the petitioner is rejected.

(v) The petitioner is directed to pay future interest @ 12% per annum from the date of award till the date of actual realization.

4. The aforesaid has led to filing of the present appeal wherein learned counsel for appellant has challenged the wrongful grant of interest on the refund amount by the learned trial court vide the impugned judgment, even though the same was made interest free by the Arbitral Tribunal. Further contended that the impugned judgment is in conflict with the fundamental policy of Indian Law and contrary to the terms of the Policy which prohibits award of interest and the Arbitral Tribunal rightly relied upon Clause 5.1 read with Clause 10.2 of the Policy and refused to award interest to responden