Indian Ruling Regarding Interest Applicable During The Litigation Period

Application of interest on security deposits generally is forbidden under Indian law; this is stated and confirmed in the General Conditions of Contracts (GCC) regulations. Article 16 (3) of this regulation clearly says that:

There shall be no interest payable upon security deposits, earnest money or any amounts owed to the contractors under a contract;

However, government securities will have interest payable so long as they fall under Clause (1) of Article 16.

A recent case in India that appeared before the Supreme Court revolved around this very matter. It involved this clause in the case of arbitration awards.

The Case

This case was between the parties M/s Ravechee (appellant) and co v Union of India. The appellant obtained a mining contract with Western Union, and it was during this job that the disagreeing matter arose.