Supreme Court: Arbitrators Can Award Post Award Interest On Interest Pendente Lite

The Supreme Court has:

• Held that post-award interest under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 would also be awarded on the amount of interest pendent lite, if any, and not merely on the principal sum
• Interpreted the word 'sum' used in Section 31(7), sub-clauses (a) and (b) of the Act to be an amount of money that could include principal or interest or both.
• The Supreme Court's judgment in State of Haryana and Others vs S.L. Arora & Co. was pronounced as incorrect and overruled

INTRODUCTION

In its recent judgment of M/s Hyder Consulting (UK) Ltd v. Governor State Of Orissa through Chief Engineer, the Supreme Court has considered the much debated question of whether post-award interest can be awarded by an arbitral tribunal on pendite lite interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 (" Act"). The majority decision has held in the affirmative.