Case:- OIL AND NATURAL GAS CORPORATION LTD. vs M/S G & T BECKFIELD DRILLING SERVICES PVT. LTD
Citation:- 2025 INSC 1066
Date:- 02.09.2025
Supreme Court Bench:- Justice P.S. Narasimha and Justice Manoj Mishra
The Hon’ble Supreme Court observed that an Arbitral Tribunal can grant pendente lite interest (interest during arbitration proceeding), unless expressly or impliedly barred in the contract. It added that a contractual clause barring interest on delayed payments does not prevent an arbitral tribunal from awarding pendente lite interest, i.e., the interest for the period during which the arbitration is pending.
Key Takeaways:
- The Hon’ble Supreme Court ruled that an arbitral tribunal can grant pendente lite interest (interest during arbitration proceedings) unless it is prohibited in the contract.
- The Appellant claimed that its contract clause barred such interest, but the Hon’ble Court held it only restricts contractual interest on delayed payments, not the tribunal’s power to grant pendente lite interest.
- The Hon’ble Court clarified that tribunals lose this power only if the contract explicitly or by necessary implication bars pendente lite interest.
- Referring to Section 31(7)(a) of the Arbitration & Conciliation Act, 1996, the Court said tribunals have statutory discretion to award such interest.
- The Hon’ble Supreme Court upheld the Hon’ble Gauhati High Court’s decision allowing the said such interest and dismissed the appeal.
