An express contractual bar on interest precludes pendente lite interest under Section 31(7)(a).

The Corporation appointed Fairdeal as its agent to collect octroi for a one-year period beginning 1 November 1995.

After the Corporation terminated the agreement on 23 April 1996, Fairdeal challenged the termination and sought arbitration.

The arbitral award upheld the termination but awarded Fairdeal Rs. 24,06,50,119.03, interest at 18% per annum from 1 January 1997 through payment, and Rs. 1.5 crore in costs.

The Corporation’s Section 34 petition challenged the monetary award, both components of interest, and costs; it principally argued that the sums were unsupported or inconsistent with the Arbitrator’s findings, and that Clause 24 barred interest.

1. Whether the monetary award of Rs. 24,06,50,119.03 was perverse or patently illegal, including because it allegedly relied on collections outside the contractual period and speculative estimates.

2. Whether Clause 24 of the agreement barred the Arbitrator from awarding pendente lite interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996.

3. Whether the award of post-award interest at 18% per annum could stand under Section 31(7)(b), as applicable to the award dated 1 April 2019.

4. Whether the award of Rs. 1.5 crore in costs was contrary to Section 31A or otherwise warranted interference under Section 34.

Section 34(2A) permits a court to set aside a domestic award for patent illegality appearing on its face, but not merely to reappreciate evidence or substitute its view for a plausible arbitral finding; perversity may arise where a finding rests on no evidence, ignores vital evidence, or is one no reasonable decision-maker could reach (Ssangyong Engineering & Construction Co. Ltd. v. NHAI; Associate Builders v. DDA).

Under Section 31(7)(a), the tribunal’s power to award pre-award interest is subject to the parties’ agreement; an express contractual bar must be given effect (Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat; Union of India v. Bright Power Projects (India) Pvt. Ltd.; Garg Builders v. Bharat Heavy Electricals Ltd.).

Section 31(7)(b) provides for post-award interest at two percentage points above the current rate unless the award directs otherwise.

Section 31A empowers the tribunal to award reasonable costs, having regard to the circumstances specified in that section.

A court may sever or modify an award where the relevant portions are separable, including modifying post-award interest, within the limits explained in Gayatri Balasamy v. ISG Novasoft Technologies Ltd.

The Court declined to revisit the monetary calculation because the Arbitrator had assessed the parties’ records and an expert accountant’s report, and the Corporation’s objections would require reappreciation of evidence; the Court also treated the bid amount as distinct from actual octroi collections.

By contrast, Clause 24 expressly barred the agent from claiming “any kind of interest” on its claims under the Interest Act or any other provision. Applying Section 31(7)(a), the Court held that the Arbitrator could not override that agreement by relying on alleged misconduct or public policy, and set aside the pendente lite interest.

For post-award interest, the Court held that the amended Section 31(7)(b) governed the 2019 award and substituted 9% per annum for the awarded 18%.

It upheld the costs award, finding that the Arbitrator had considered both parties’ cost statements, the lengthy proceedings, and the Corporation’s conduct under Section 31A.

The petition was disposed of in part.

The Court directed that any amount deposited in Court be released one month after the judgment was uploaded and granted a three-week stay of the judgment’s operation following pronouncement.