In Brief
The Union of India challenged an arbitral award that granted pendente lite and future interest to a contractor despite a contractual clause (clause 16(2) of the GCC) barring interest on amounts payable under the contract. The Court held that when parties expressly prohibit interest payment in their contract, the arbitrator cannot award pendente lite or future interest on amounts due under that contract. The clause's bar applies to all amounts payable to the contractor, not merely earnest money and security deposits. The arbitrator, being bound by the contract's terms, has no power to award interest contrary to the parties' express agreement. The Court quashed the arbitral award and the High Court's orders upholding it.",
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