can arbitrator award interest for pre-reference period

This query is : Resolved 

11 July 2009

whether the Arbitrator can award interest for pre-reference period and pendente lite, when the contract prohibits the employer from entertaining any claim for interest? would any friend kindly sum up the ratio of m/s sayeed ahmad v. state of UP decided by the supreme court on 09.07/2009?

Murali Krishna (Expert)
11 July 2009

Many government departments have been waiting for this judgement since long. They could not wriggle out ratio in cases of G.C.Roy, N.C.Budhiraja and Bhagawati Oxygen.

One of the main postulates of new A&C Act,1996 was that agreement between parties has to be recognised for all purposes. Despite this, interest for pre reference period used to be granted by arbitrators which is being upheld basing on ratio in the above case.

In this case, Supreme Court finally clarified the position that arbitrator cannot grant interest for pre-reference period. By this, Supreme Court recognised that agreement between the parties is supreme and if agreement bars interest, arbitrator could not have granted the same contrary to agreement. This in fact would now be another ground for assailing the award under S.34.

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