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

Ananya Textiles and Bharat Dyes referred a payment dispute to a sole arbitrator. The arbitration agreement is silent on interest. The tribunal awards Rs 10 lakh as the principal sum. The award says nothing about interest after the date of the award. Which statement is correct about the sum directed to be paid?

The sum carries post-award interest by default. Unless the award otherwise directs, section 31(7)(b) gives interest from the date of award to the date of payment at two per cent higher than the current rate of interest prevalent on the date of award.

  1. AIt carries no interest after the award date because the award is silent
  2. BIt carries interest from the date of award to the date of payment at 2% higher than the current rate of interest prevalent on the date of awardCorrect
  3. CIt carries interest only if the parties apply to the Court within 30 days
  4. DIt carries interest at 2% per annum fixed by the Act irrespective of the current rate

Explanation

Under section 31(7)(b), a sum directed to be paid by an award carries interest at 2% higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment, unless the award otherwise directs. Silence therefore triggers the default rate, so the first option is wrong.

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