In Brief
In a contract dispute between a private contractor and the Indian Railways over quarrying operations, arbitrators awarded interest pendente lite (during pendency of proceedings) on damages found due to the contractor. The Union of India challenged this, arguing a contract clause barring interest on amounts payable under the contract also barred interest awards by the arbitrator. The Supreme Court held that an arbitrator's power to award interest pendente lite is inherent unless expressly and specifically barred by agreement. A clause restricting interest between the parties cannot bind the arbitrator, who is not a party to the agreement. The Court restored the arbitrators' award of 12% interest on Rs. 30 lacs in damages.
The lawyer headnote and full judgment text are available to registered users.