Arbitral Tribunal Not Restricted To Grant Pendente Lite Interest If Agreement Or Contract Is Silent About It: Supreme Court

(MENAFN- KNN India) New Delhi, Sep 5 (KNN) The Supreme Court recently stated that if a contract says no interest on late payments and doesn't mention pendente lite interest during the ongoing case, the arbitral tribunal can still grant such an interest.

However, the apex court emphasized that if an agreement or contractual clause has categorically mentioned that there would be no provision for pendente lite, i.e., interest during the pendency of the matter, either expressly or impliedly, such a term or clause would deprive the arbitral tribunal of the ability to allow such an award of pendente lite.

Hearing the matter ONGC Ltd. v. M/S G&T Beckfiled Drilling Services Pvt Ltd., the apex court held that Clause 18.1 of the underlying contract did not bar the arbitral tribunal from granting interest on the awarded sum from the date of filing of the claim until the date of award. The dispute arose out of a contractual relationship between a public sector corporation and a private drilling services company engaged in providing equipment and services in the oil and natural gas sector.

While upholding the decision of the Guwahati High Court, the court declined the appeal of ONGC. The bench of Justice Manoj Mishra and Justice PS Narasimha explained the grant of pendente lite interest in the absence of such a clause in contract between the parties.

The agreement in the matter of ONGC Ltd. v. M/S G&T Beckfiled Drilling Services Pvt Ltd. only barred contractual interest on delayed payments, which cannot restrict the tribunal from granting the award for pendente lite under section 31(7)(a) of the Arbitration and Conciliation Act, 1996.

Setting aside the appeal, the ONGC court held that there was no error in the grant of such an award of pendente lite interest.

(KNN Bureau)

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