IN THE HIGH COURT OF DELHI AT NEW DELHI
RAVINDER DUDEJA
Union Of India – Appellant
Versus
Sudhir Tyagi – Respondent
JUDGMENT :
RAVINDER DUDEJA, J.
1. This petition under Article 227 of the Constitution of India impugns the order dated 25.10.2024, passed by the learned District Judge in Ex. 55/2017, titled “ Sudhir Tyagi Vs. Union of India .”
2. At the core, the issue is whether the expression “unless the award otherwise directs” in Section 31 (7)(b) of the Arbitration & Conciliation Act, 1996 [“the Act”], relates to rate of interest and not entitlement of interest.
3. Shorn of all the unnecessary details, the relevant facts are that petitioner No. 1 i.e., Northern Railway, awarded contractual work to the respondent, but due to certain disputes, respondent invoked the arbitration clause of the agreement. The High Court, vide order dated 16.11.2012, appointed a sole arbitrator.
4. Following three issues were raised and considered by the learned Arbitrator:-
i) Is the time essence of the contract between the parties or not?
ii) Whether the respondent imposed any penalty/liquidated damages upon the complainant till the completion of work?
iii) Whether the complainant is entitled to claim amounts as per the claim petition?
5. Issues No. 1 & 2 were decided in favour of the respondent and against the petitione
Arbitral awards inherently carry a statutory interest rate of 18% for post-award periods, ensuring prompt compliance regardless of parties' prior decisions.
Arbitrator has discretion to grant post-award interest – If Arbitrator does not grant post-award interest, award holder is entitled to post-award interest at eighteen percent.
Post award interest – Granting post-award interest is not subject to contract between parties – Rate of interest can be provided by Arbitrator and in default statutory prescription will apply.
The Arbitral Award holds primacy in determining post-award interest, and interest on costs is to be granted by the Arbitral Tribunal.
Arbitral Tribunal's power to grant interest for the period post award till realization is subject to the discretion only in respect to the rate as it is the mandate of the law to grant such interest ....
An arbitral award's stipulations on interest must be strictly enforced as per the parties' agreement, disallowing claims for compound interest unless explicitly provided, reinforcing party autonomy i....
Arbitral Awards prevail over statutory default provisions regarding interest unless explicitly stated otherwise in the Award.
The Arbitral Tribunal's authority to award interest is governed by the arbitration agreement, with specific provisions for pre-award and post-award interest under the Arbitration Act.
(1) Interest has to be awarded as specified in contract and in absence of any contract, as per discretion of Arbitral Tribunal - Arbitral Tribunal can grant pre-reference interest from date on which ....
The court clarified that post-award interest includes both principal and pre-award interest, overruling previous decisions that restricted such calculations.
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