In Brief
ONGC invited tenders for supplying 1,200 tonnes of CMC at Rs.14,999 per MT. When Reliance demanded a higher price, the dispute went to arbitration. The arbitrator awarded Rs.18,500 per MT (for 1,200 MT) and Rs.20,500 per MT (for 600 MT), plus 18% interest on the differential. Lower courts reduced interest to 10% on the ground that ONGC is a public sector undertaking. The Supreme Court held that under the Arbitration Act, 1940, an arbitrator can award pre-reference and pendente lite interest unless the contract expressly bars it. The clause merely barring interest for 'delay in payment' was insufficient; no delay occurred—the initial price was paid on time, and the differential was payable only from the award date. The Court restored 18% interest and partially allowed Reliance's appeal."
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