In Brief

IRCON awarded NBCC the contract to construct a railway station complex at Vashi. When NBCC failed to complete the work and abandoned it, IRCON terminated the contract and forfeited NBCC's security deposits. NBCC claimed arbitration; the tribunal rejected NBCC's claims for deposit refunds but awarded 18% interest on advances. The High Court set aside the tribunal's decisions. The Supreme Court held that rescission was justified under the contract's terms, so security deposit forfeiture was valid. It also held that arbitrators can award pendente lite interest unless expressly barred, but reduced the rate from 18% to 12% as reasonable. The appeal was allowed with partial modification.

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