Interest is payable on admitted contractual sums withheld by the State from the date of completion.

Two contract agreements (Nos. 24/RC-4/CGRRDA and 25-RC/4/CGRRDA) were executed between the State of Chhattisgarh and Gilcon Project Service Ltd. on October 23, 2007

Disputes regarding payments and escalations led to the appointment of a sole Arbitrator, who passed a common arbitral award on August 31, 2018

Both parties challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, before the Commercial Court

On February 29, 2020, the Commercial Court dismissed the State’s applications but partially allowed Gilcon’s applications, setting aside the Arbitrator’s rejection of "Claim No. 1" concerning admitted amounts withheld by the State (Rs. 44.06 lakhs, Rs. 64,99,051, and Rs. 4,08,441)

The State appealed the Commercial Court's order, alleging perversity and violation of contract Clause 6.5

Gilcon appealed seeking interest on the awarded sums, which the Commercial Court had omitted

1. Whether the Arbitral Award and the Commercial Court’s order were patently illegal or contrary to the public policy of India under Section 34/37 of the Act

2. Whether Gilcon Project Service Ltd. is entitled to interest (ante-lite, pendente-lite, and post-lite) on the admitted claims allowed by the Commercial Court

The court primarily applied Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, which restrict judicial interference to specific grounds such as patent illegality or conflict with public policy

It relied on Haryana Tourism Limited v. Kandhari Beverages Limited, establishing that courts cannot decide Section 37 appeals as regular first appeals on merits

The court also cited Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited, which defined "patent illegality" as an error that goes to the root of the matter, excluding mere erroneous applications of law

Finally, it applied Gayatri Balasamy v. ISG Novasoft Technologies Limited, confirming the court's limited power to modify awards, specifically regarding post-award interest

The High Court observed that the Arbitrator had conducted an elaborate factual and documentary analysis, including the interpretation of contract clauses and limitation issues

The State failed to establish any specific grounds for interference under Section 37, as the lower court’s refusal to set aside the findings was based on a reasonable appreciation of the Arbitrator’s logic

Regarding Gilcon’s appeal, the Court noted that the Commercial Court had correctly identified that the Arbitrator erred in rejecting Claim No. 1, which comprised admitted amounts illegally withheld by the State

However, because the Commercial Court’s order was silent on the component of interest for these withheld sums, the High Court determined that granting interest was essential for justice

The Court found no reason to disturb the findings of fact or the interpretation of the contract, adhering to the principle of minimal judicial interference

It allowed Gilcon’s appeals (ARBA Nos. 41 and 42 of 2020) specifically regarding the claim for interest

The Court held that Gilcon is entitled to interest at the rate of 6% per annum on the admitted sums (Rs. 44.06 lakhs, Rs. 64,99,051, and Rs. 4,08,441), payable from the date of completion of the contract until actual realization