Case Note & Summary
The Supreme Court disposed of an appeal by the Post Graduate Institute of Medical Education and Research, Chandigarh, against a High Court judgment affirming an arbitral award in favor of M/s Kalsi Construction Company. The dispute arose from a contract for construction of the Advanced Pediatrics Centre. The Arbitral Tribunal awarded Rs. 1,17,00,000/- against a claim of Rs. 10,63,00,000/-, with interest at 18% per annum under Section 31(7) of the Arbitration and Conciliation Act, 1996. The appellant challenged the award under Section 34, which was dismissed, and the appeal under Section 37 was also dismissed by the High Court. In the Supreme Court, the appellant pressed only the reduction of the interest rate, and the respondent left the matter to the Court's discretion. The Court, noting the absence of an agreement to the contrary and the power under Article 142 of the Constitution, reduced the interest rate from 18% to 10% simple interest, payable within eight weeks, failing which the original 18% rate would revive. The appeal was disposed of with no order as to costs.
Headnote
A) Arbitration Law - Interest Rate - Section 31(7)(a) Arbitration and Conciliation Act, 1996 - Reduction of Interest - The Arbitral Tribunal awarded interest at 18% per annum on the award amount. The Supreme Court, in exercise of its power under Article 142 of the Constitution of India, reduced the interest rate to 10% per annum simple interest, considering the nature of the contract (construction of a medical centre) and the fact that the award was passed in 1999. The Court directed payment within eight weeks, failing which the original 18% rate would apply. (Paras 7-8)
Issue of Consideration
Whether the rate of interest awarded by the Arbitral Tribunal at 18% per annum should be reduced in the absence of any challenge to other grounds.
Final Decision
The Supreme Court reduced the interest rate from 18% to 10% per annum simple interest. The award amount with accrued interest at 10% shall be payable within eight weeks, failing which the entire award amount will carry interest at 18% as originally awarded. The appeal is disposed of with no order as to costs.
Law Points
- Arbitration
- Interest Rate
- Section 31(7) Arbitration and Conciliation Act
- 1996
- Article 142 Constitution of India
- Reduction of Interest
