Executing Court Empowered To Grant Statutory Interest Not Mentioned In Award U/S 36 Of Arbitration Act: Allahabad High Court

Following the judgment of the Delhi High Court in Union of India and Anr. v. Sudhir Tyagi, the Allahabad High Court has held that under Section 36 of the Arbitration and Conciliation Act, 1996, the Executing Court is empowered to grant statutory interest which may not have been mentioned in the arbitral award.

In Union of India and Anr. v. Sudhir Tyagi, it was held that

“..the interpretation of Clause (b) of Section 31(7) of the Act is no more res-integra. The grant of post-award interest under Section 31(7)(b) is mandatory. The only discretion which the Arbitral Tribunal has is to decide the rate of interest to be awarded. Where the Arbitrator does not fix any rate of interest, then statutory rate, as provided in Section 31(7)(b), shall apply…”

State of UP approached the Allahabad High Court against Commercial Court, Agra order directing it to pay 18% per annum simple interest for a period of 12 years starting from 17.12.2010 and attaching the bank accounts of the Executive Engineer and Superintendent Engineer. It was argued that in the arbitral award interest was provided from 31.03.2000 to 26.08.2007, executing court cannot impose interest beyond the award.

The Court observed that the award had become final as challenge to the same had been rejected at all levels of judiciary.

Relying on the decision of the Delhi High Court, Justice Piyush Agrawal held

“Keeping in the view the above-mentioned judgement, the executing court under Section 36 is empowered to carry out the award with full effect, including grant of interest constituting a component of the award. The Tribunal's determination of interest for 2000 to 2007 did not foreclose the statutory entitlement to interest for the balance period; the executing court correctly calculated interest for the period 17.12.2010 to 17.12.2022 at 18% p.a., and ordered recovery thereof.”

Accordingly, State's petition was dismissed.

Case Title: State Of U.P. and 2 Others v. M/S Satish Chandra Shiv Hare-Brothers [MATTERS UNDER ARTICLE 227 No. - 11680 of 2023]

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