Delhi HC Cuts Amarsons’ Post-Award Interest From 11.71% To 7.16%, Applying Private-Bank Deposit Rates Under Arbitration Act

The appellant sought review of the order dated 21 September 2026, which had specified post-award interest at 11.71%. It submitted that counsel had inadvertently referred to the prevailing lending rate of private-sector banks rather than the applicable deposit rate. The appellant argued that, under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996, the correct rate was 2% above the relevant deposit rate—7.16% in this case.

The respondent opposed review, contending that the order had adopted the rate suggested by the appellant’s counsel and that the alleged error did not warrant review.

Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 provides that, unless the arbitral award directs otherwise, a sum payable under the award carries interest from the date of the award to the date of payment at 2% above the “current rate of interest.” The Explanation to that provision adopts the meaning of “current rate of interest” in Section 2(b) of the Interest Act, 1978, which refers to the highest maximum rate at which interest may be paid on specified classes of deposits by scheduled banks in accordance with Reserve Bank of India directions.

The Court also applied the principle that counsel’s inadvertence should not result in injustice where the error in the order is apparent.

Reading Section 31(7)(b) together with Section 2(b) of the Interest Act, the Court concluded that the statutory benchmark for post-award interest was the applicable rate paid on deposits, not the lending rate previously relied upon. The deposit rate for private-sector banks at the relevant time was 5.16%; adding the statutory 2% produced an applicable rate of 7.16%.

Although the earlier rate reflected counsel’s submission, the Court held that the resulting error was apparent and that counsel’s inadvertence should not cause the appellant to pay interest exceeding the rate provided by law.

It also corrected the reference to “order dated 31.03.2026” to “order dated 31.01.2026”.

The stay application was disposed of as infructuous.