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CS Professional · Arbitration, Mediation and Conciliation · Preparation and Execution of Arbitral Award

An award between Deccan Steel Ltd and Omkar Traders directs payment of Rs 40 lakh but says nothing about interest after the date of the award. The parties had not agreed otherwise. Which statement is correct?

The sum carries interest at two per cent above the current rate of interest prevalent on the date of award, running from the award date to payment. Under section 31(7)(b) this applies unless the award otherwise directs, so silence does not remove interest.

  1. AThe sum carries no interest after the award date because the award is silent
  2. BThe sum carries interest at two per cent higher than the current rate of interest prevalent on the date of award, from award date to paymentCorrect
  3. CThe sum carries interest at the rate prevailing on the date the cause of action arose
  4. DThe sum carries interest only if the Court later orders it

Explanation

Under section 31(7)(b), unless the award otherwise directs, a sum directed to be paid carries interest at two per cent higher than the current rate prevalent on the date of award, from the date of award to payment. Silence therefore triggers this default. Interest before the award is the separate matter under 31(7)(a).

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