Court cannot order payment of interest against the contract

If an arbitration agreement says that no interest would be payable for an award amount from the date when the cause of action arose and the date of the award, the court cannot order a party to pay interest, the Supreme Court clarified in the case, Sree Kamatchi Amman Constructions vs Divisional Railway Manager. In this case, the contract stated that no interest would be payable on amounts payable to the contractor.

Based on this clause, the arbitral tribunal refused to order interest from the date of the cause of action to the date of the award. This was upheld by the Madras high court. The Supreme Court dismissed the appeal of the contractor.

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