Summary
The contractual prohibition on interest bound the arbitral tribunal in an arbitration governed by the 1996 Act. Clauses 50 and 51 comprehensively barred the contractor’s interest claims, and reliance on decisions under the 1940 Act did not authorize pendente lite interest despite that bar. Earlier construction of materially identical clauses between the same parties supported the High Court. The asserted conflict in precedents and proposed restrictive construction were rejected.
Issues
- Whether the arbitral tribunal could award interest despite Clauses 50 and 51 of the contract.
- Whether earlier decisions justified a different construction or reference to a larger Bench.
Provisions considered
- Section 31(7)(a), Arbitration and Conciliation Act, 1996Contractual agreement controlled pre-award interest; an express prohibition could not be overridden by relying on decisions under the former Act. (¶¶ 10, 12–16)
- Clauses 50 and 51, General Conditions of ContractThe broad prohibition encompassed interest on the disputed dues and precluded the tribunal’s grant of pendente lite interest. (¶¶ 4–5, 16–21)
Held
- An arbitrator must act within the agreement. Under the 1996 Act, an express contractual bar prevents pre-award interest; decisions allowing interest under the 1940 Act cannot be applied without accounting for the changed statutory scheme and actual wording. (¶ 12–16)
- The tribunal itself recognized the contractual bar but nevertheless granted interest using a 1940 Act precedent. The High Court correctly rejected that approach; materially identical clauses had already been construed between the same parties as barring interest on delayed payments. (¶ 16–17)
- Harish Chandra arose under the former Act and concerned restrictive wording, as explained in later decisions. It did not require departure from the established construction here or a larger-Bench reference. (¶ 18–20)
- Ejusdem generis requires a distinct genus or category. It could not be used here to cut down the comprehensive contractual words governing interest. (¶ 21–22)
Result
Appeal dismissed; High Court’s interference with the arbitral interest award upheld.