The Supreme Court on September 2, 2025 presided by Justice P.S. Narasimha and Justice J. Manoj dismissed the Appellant’s (ONGC) appeal and upheld the Gauhati High Court’s judgment affirming an arbitral award in favour of the Respondent.
The case in dispute arose out of unpaid invoices under a drilling contract, where the arbitral tribunal in 2004 awarded a total of USD 6,56,272.34 along with costs of ?5 lakhs and interest at 12% per annum from 12 December 1998 (the date the statement of claim was affirmed) till recovery. The Appellant’s application was allowed by the District Judge, Sivasagar, who set aside the award on the grounds of lack of reasons and improper handling of objections.. However, the Gauhati High Court in 2019 restored the award in toto, prompting the Appellant to approach the Supreme Court. At the SLP stage, notice was confined to the limited question of whether the arbitral tribunal could award pendente lite interest at 12% despite clause 18.1 of the contract, which provided that no interest would be payable by the Appellant on any delayed payment/disputed claim.
The Court held that under Section 31(7) of the 1996 Act, arbitral tribunals have power to award interest for pre-reference, pendente lite, and post-award periods, subject only to express contractual stipulations. Citing G.C. Roy (1992)1 SCC 508 , Budharaj(2001) 2 SCC 721, Ambica Construction (2016) 6 SCC 36, Reliance Cellulose (2018), and Ferro Concrete (2025) SCC SC 708, the Court reiterated that exclusion of interest on delayed payments cannot, by itself should be read as a bar on pendente lite interest. Since clause 18.1 merely excluded interest on delayed/disputed payments and did not restrict pendente lite interest, the tribunal’s award was valid. The Court also found the 12% rate reasonable as it was lower than the statutory rate of 18%. Accordingly the appeal was dismissed, and the High Court’s affirmation of the award was upheld.
Appearances:
For the Appellant- SG Tushar Mehta with Adv.Drishti Saraf Adv.Pragya Upadhyay, Adv.Swati Mishra, and AOR Mr. Akshay Amritanshu.
For the Respondent- Advs- Bhargavi Kannan, Shivani Karmakar, Kavya Sarin, S. Ambica, and AOR Hardeep Singh Anand
