In Brief
The Supreme Court decided whether interest payable under an arbitral award in a hire purchase dispute should follow the agreed contractual rate or a statutory alternative. The parties had voluntarily agreed to 3% per month (36% per annum) in the hire purchase agreement dated 15.04.1997. The Court held that under Section 31(7) of the Arbitration and Conciliation Act, 1996, when parties have agreed upon an interest rate in their contract, that agreed rate governs the pre-award period. The arbitral award of 36% per annum for the pre-award period was thus justified and upheld. For the post-award period, the Court imposed interest at 18% per annum in accordance with statutory provisions.
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