Overview:
Supreme Court upholds party autonomy and the discretion of the Arbitrator to grant pre-reference interest. The power of the Arbitrator to award pre-reference and pendente lite interest cannot be restricted when the agreement is silent on whether interest can be awarded or does not contain a specific term that prohibits the same.
Technical Details:
Arbitration and Conciliation Act, 1996 (“Act”) sanctifies party autonomy and restricts the power to grant pre-reference and pendente lite interest the moment the agreement bars payment of interest. However, in absence of any specific bar, award for interest is within the domain of the Arbitrator under Section 31(7) of the Act. The Supreme Court thus ousted the jurisdiction of the Court under Sections 34 or 37 of the Act to interfere with the power of the Arbitrator to grant pre reference interest.
JC takeaway:
Arbitrators have discretion to grant pre reference interest unless specifically prohibited by the parties under the Agreement.
For further details, please see:
Pam Developments Private Limited vs The State of West Bengal & Anr.pdf
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