In Brief
Garg Builders contracted with Bharat Heavy Electricals Limited (BHEL) for construction work, with a contract clause expressly barring payment of interest on any moneys due to the contractor. A dispute arose and went to arbitration. The arbitrator awarded pendente lite interest at 10% p.a., reasoning that the clause did not expressly bar such interest. BHEL challenged the award. The Supreme Court held that under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, when parties expressly agree to bar interest, the arbitrator cannot award pre-award interest, including pendente lite interest. The clause was valid and did not violate the Indian Contract Act, 1872. The appeal was dismissed.
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