In Brief
The Union of India challenged an arbitral award that granted interest to a contractor on delayed payments. The appellant relied on two Supreme Court judgments to argue that a contractual clause limiting interest on earnest money and security deposits barred all interest payments. The Supreme Court held that contractual clauses restricting interest must be interpreted precisely according to their language and scope. Since the relevant clause applied only to earnest money and security deposits and not to other contractual obligations, the arbitrator properly awarded interest on delayed payments for work performed. The appeal was dismissed, and the Court directed the appellant to release the awarded amount immediately, with the amount earning 12% interest per annum from the award date until payment.", <parameter name="cited_cases">[ { "raw_citation": "Union of India v. Bright Power Projects (India) Private Limited, 2016(3) R.C.R.(Civil) 696 : 2016(4) Recent Apex Judgments (R.A.J.) 148 : (2015) 9 SCC 695", "case_name": "Union of India v. Bright Power Projects (India) Private Limited", "cited_year": "2015", "paragraph": "3", "treatment": "distinguished", "treatment_by": "this_court", "treatment_quote": "While interpreting the aforestated clause, this Court arrived at the conclusion, that no interest was payable under the above clause to the contractor, even on account of delayed payment under the contract, namely payments other than earnest money and security deposit would also not earn any interest." }, { "raw_citation": "Union of India v. Ambica Construction, 2016(2) R.C.R.(Civil) 638 : 2016(2) Recent Apex Judgments (R.A.J.) 526 : (2016) 6 SCC 36", "case_name": "Union of India v. Ambica Construction", "cited_year": "2016", "paragraph": "4", "treatment": "referred", "treatment_by": "this_court" }, { "raw_citation": "Port of Calcutta v. Engineers-De-Space-Age (1996) 1 SCC 516", "case_name": "Port of Calcutta v. Engineers-De-Space-Age", "cited_year": "1996", "paragraph": "4", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "Madnani Construction Corporation (P) Ltd. v. Union of India (2010) 1 SCC 549", "case_name": "Madnani Construction Corporation (P) Ltd. v. Union of India", "cited_year": "2010", "paragraph": "4", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "Irrigation Department, State of Orissa v. G.C. Roy (1992) 1 SCC 508", "case_name": "Irrigation Department, State of Orissa v. G.C. Roy", "cited_year": "1992", "paragraph": "4", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "Dhenkanal Minor Irrigation Division v. N.C. Budharaj 2001(1) R.C.R.(Civil) 613 : (2001) 2 SCC 721", "case_name": "Dhenkanal Minor Irrigation Division v. N.C. Budharaj", "cited_year": "2001", "paragraph": "4", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "Sayeed Ahmed & Co. v. State of U.P. (2009) 12 SCC 26", "case_name": "Sayeed Ahmed & Co. v. State of U.P.", "cited_year": "2009", "paragraph": "4", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "Sree Kamatchi Amman Constructions v. Railways 2011(2) Recent Apex Judgments (R.A.J.) 92 : (2010) 8 SCC 767", "case_name": "Sree Kamatchi Amman Constructions v. Railways", "cited_year": "2010", "paragraph": "4", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "Tehri Hydro Development Corpn.Ltd. v. Jai Prakash Associates Ltd., 2013(1) R.C.R.(Civil) 262 : 2012(5) Recent Apex Judgments (R.A.J.) 504 : (2012) 12 SCC 10", "case_name": "Tehri Hydro Development Corpn.Ltd. v. Jai Prakash Associates Ltd.", "cited_year": "2012", "paragraph": "4", "treatment": "distinguished", "treatment_by": "this_court", "treatment_quote": "Even though, there can be no dispute whatsoever, that Clause 16(2) is in pari materia with the clause taken into consideration in Tehri Hydro Development Corpn.Ltd.' case (supra), yet in the case before us, having read the clause in its entirety, we are satisfied, that the parties had agreed, that payment of interest would not be due, only with reference to earnest money and security deposit." } ]
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