Arbitrator's Power To Award Pendente Lite Interest: A Myth Or A Reality

On 03 July 2018, the Supreme Court of India (Supreme Court) in the matter of M/s Raveechee & Co v Union of India¹ has held that the bar to award interest on the amounts payable under the contract would not be sufficient to deny the payment of interest pendente lite by the Arbitrator. It has been further held that as a matter of general rule the Arbitrator does have the power to award interest pendente lite unless there is a clear and specific bar which prohibits grant of interest.

This view appears to be contrary to the recent judgment of a coordinate Bench of the Supreme Court of India in the matter of Chittaranjan Maity v Union of India² which held that under the provisions of Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 (1996 Act) when parties have agreed under the terms of the agreement that interest shall not be payable, the Arbitrator cannot award pendente lite interest i.e. interest between the date on which the cause of action arose till