In Brief
M/s Shahi and Associates entered into a contract with Uttar Pradesh in 1993 and sought arbitration in 1999 under the Arbitration and Conciliation Act, 1996. The arbitrator awarded ₹17,86,339 with 18% annual interest per the 1996 Act. Lower courts reduced the interest to 6% based on a repealed state amendment (para 7-A of the U.P. Amendment Act, 1976). The Supreme Court allowed the appeal, holding that since proceedings commenced after the 1996 Act came into force, repealed legislation could not apply. The statutory rate of 18% p.a. under Section 31(7)(b) of the 1996 Act was the correct rate, and the arbitrator's award was restored.
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