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

Under a supply contract, Bhatia Agro Ltd obtains an award against Orient Mills for Rs 50 lakh. The contract is silent on interest, and the award neither grants nor excludes post-award interest. Which statement is correct under Section 31(7)?

Interest runs automatically from the date of award to the date of payment at 2 per cent above the current rate of interest prevalent on the date of award. This default under section 31(7)(b) applies because the award does not direct otherwise.

  1. ANo interest runs after the award unless the tribunal expressly grants it
  2. BInterest runs from the date of award to payment at the rate of 2 per cent higher than the current rate of interest prevalent on the date of awardCorrect
  3. CInterest runs from the date of award at the current rate of interest, without any addition
  4. DInterest runs from the date of cause of action at 2 per cent higher than the current rate

Explanation

Section 31(7)(b) provides that a sum directed to be paid carries interest at 2 per cent 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. The award is silent, so the default applies. Pre-award interest under clause (a) is a separate matter.

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