In Brief
A contractor and the Union of India entered into a quarrying contract. Disputes arising from the contract were referred to arbitration. The arbitrators awarded the contractor interest pendente lite (interest from the date the dispute commenced until the date of award) at 12% on determined damages. The Union of India challenged this, arguing a contractual clause prohibiting interest on security deposits and amounts payable under the contract also barred interest pendente lite. The Supreme Court held that arbitrators have inherent power to award interest pendente lite on unascertained damages determined during arbitration unless expressly barred. The contractual clause did not expressly bar such interest. The Court restored the arbitral award.
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