Post-award interest can be granted by an Arbitrator on the interest amount awarded, rules SC

The Supreme Court in the case of UHL Power Company Ltd. v/s State of Himachal Pradesh ruled that Post-award interest can be granted by an Arbitrator on the interest amount awarded.

In terms of the award, the Sole Arbitrator had awarded a sum in favour of UHL towards expenses claimed along with pre-claim interest capitalized annually, on the expenses so incurred. Further, compound interest was awarded in favour of UHL at the rate 9% per annum till the date of claim and in the event the awarded amount is not realized within a period of six months from the date of making the award, future interest was awarded at the rate 18% per annum on the principal claim with interest.

Dissatisfied with the award, when the State of H.P. filed a petition under Section 34 of the Arbitration Act, the Single Judge disallowed the entire claim of UHL. The said judgment was challenged by UHL in a petition filed under Section 37 of the Arbitration Act that has been decided by the impugned judgment whereunder, the Division Bench of the High Court has awarded a sum in favour of UHL, being the actual principal amount along with simple interest at the rate of 6% per annum from the date of filing of the claim, till the date of realization of the awarded amount.

Mr. Abhinav Mukerji, Additional Advocate General for the State assailed the impugned judgment, and contended that the Division Bench has gravely erred in upsetting the findings returned by the Single Judge and has failed to appreciate that the Memorandum of Undertaking, did not merge into the Implementation Agreement, as both were distinct documents and that the MoU contained a separate Arbitration clause numbered as Clause 18, whereas the Implementation Agreement contained Clause 20.

The three judge bench of Chief Justice of India N.V. Ramana, Justice Hima Kohli and Justice A.S. Bopanna noted that the post-award interest can be granted by an Arbitrator on the interest amount awarded.

The court upheld the decision of the Appellate Court that has restored the findings returned in the arbitral award to the effect that the State of Himachal Pradesh had proceeded to terminate the Implementation Agreement before expiry of the prescribed period which could have been extended up to 24 months, reckoned from the “effective date”.

Click Here To Read Original Order / Judgement

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