Arbitration Act1940 Act: Arbitrator has inherent power to award pendente lite interest unless expressly barred by contract (Para 8, 10). Strict Construction: Clauses must clearly exclude interest for disputes/delays (Para 9, 15).

Arbitration and Conciliation Act 1996 Act Contrast: Section 31(7)(a) enforces party autonomy; any contractual bar suffices (Para 10).

Precedents Clarified: First Ambica Construction and Reliance Cellulose harmonized: Express ouster required under 1940 Act (Para 13–14).

Reasoning: Clause 22 did not expressly bar interest for disputes/delays (Para 15). 1940 Act Precedents: G.C. Roy and N.C. Budharaj mandated express ouster (Para 8–10). Distinction from 1996 Act: Section 31(7)(a) sanctifies party autonomy; stricter standard under 1940 Act (Para 9–10).

Allowed the appeal, restoring arbitrator’s award but reducing interest from 15% to 9% pendente lite (18.12.1991–07.03.1995). (Para 16)

Major Acts:

• Arbitration Act, 1940 (Hereinafter “1940 Act”) – Governed the dispute.

• Arbitration and Conciliation Act, 1996 (Hereinafter “1996 Act”) – Referred for comparative analysis.

• Interest Act, 1978 – Cited for pre-reference interest claims.

Key Provisions:

• Section 31(7) of the 1996 Act – Statutory power of arbitrator to grant interest, sanctifying party autonomy.

• Para 45 of G.C. Roy (1992) and Para 23 of Pam Developments (2024) – Recognized arbitrator’s inherent power to award interest under the 1940 Act unless expressly barred.

Facts:

1. Nature of Litigation: Civil appeal challenging the denial of pendente lite interest by the High Court, arising from an arbitral award under the 1940 Act.

2. Parties:

   • Appellant: M/s Ferro Concrete Construction (India) Pvt. Ltd. (Contractor).

   • Respondent: State of Rajasthan (Government).

3. Contractual Clause: Clause 22 barred the contractor from claiming interest on "any payment, arrears, or balance due at any time."

4. Arbitral Award: Arbitrator granted 15% pendente lite interest (from reference date 18.12.1991 till award date 07.03.1995), which was set aside by lower courts.

5. Litigation Timeline:

   • Award: 07.03.1995.

   • District Court: Upheld award but denied interest (16.08.2005).

   • High Court: Affirmed denial (06.01.2023).

Issues:

Question of Law:

• Whether Clause 22 of the contract constituted an express bar on the arbitrator’s power to award pendente lite interest under the 1940 Act?

Submissions/Arguments:

Appellant (Para 7.1)

• Relied on Reliance Cellulose (2018) and Pam Developments (2024):

  • Clause 22 did not expressly exclude arbitrator’s jurisdiction.

  • Under the 1940 Act, strict construction required for ouster clauses.

Respondent (Para 7.2)

1. Interpretation Uniformity: Ouster clauses similarly construed under 1940 and 1996 Acts.

2. Precedent Conflict: Reliance Cellulose relied on Engineers-De-Space-Age, which was diluted in First Ambica Construction (2016).

3. Payment Already Made: Rs. 4.65 crores (including Rs. 2.83 crores interest) paid; further interest unwarranted.

Subjects:

• Pendente lite interest, Express bar, Strict construction, Party autonomy, Arbitrator’s jurisdiction, Compensatory interest.