In Brief
UHL Power Company claimed reimbursement of project expenses along with compound interest from the State of Himachal Pradesh under an implementation agreement. The Arbitral Tribunal awarded compound interest and post-award interest, but the High Court's single judge set aside the award entirely. The Division Bench partly restored it, allowing only simple interest. The Supreme Court held that Arbitrators can award interest on interest (post-award interest) as the statutory language permits it, overruling prior precedent. The Court also upheld the Arbitrator's interpretation that the State had prematurely terminated the agreement before the extended period expired, finding that the Single Judge had exceeded jurisdiction by re-examining contract interpretation. The appeal was partly allowed, restoring the compound interest award.
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