In Brief
Reliance Cellulose Products Ltd supplied Sodium Carboxyl Methyl Cellulose to ONGC at Rs 14,999 per MT initially, but the parties disputed the correct contract price and referred the issue to arbitration. The arbitrator determined the price should be Rs 18,500–Rs 20,500 per MT and awarded pre-reference, pendente lite and future interest at 18% per annum. Both the Civil Judge and High Court reduced the interest to 10%, citing that ONGC is a public sector undertaking. The Supreme Court held that arbitrators under the 1940 Act have power to award pre-reference and pendente lite interest unless expressly barred by contract. The contractual clause merely barred interest for delayed payments, not for disputes; since no delay occurred (the higher price only became payable after the award), the clause did not apply. The 18% interest awarded by the arbitrator was justified, and ONGC was ordered to pay the differential interest of 8% per annum.
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