Contractual bar on interest and statutory arbitral interest rates: ejusdem generis does not narrow a broad exclusion clause.

A contractual interest-exclusion clause was interpreted as widely worded, covering any amount due to the contractor, so ejusdem generis did not limit the clause to earnest money and security deposit. The commentary also explains that where Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 prescribes interest at 18% per annum, the rate cannot be reduced by reference to earlier decisions awarding a lower rate. The combined effect is that a broad contractual bar may exclude pre-award interest, while the statutory rate governs post-award interest unless the statute itself permits otherwise.

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Issues: (i) Whether the contractual bar on interest could be restricted by applying ejusdem generis so as to deny interest on amounts due to the contractor beyond earnest money and security deposit. (ii) Whether the rate of interest could be reduced below the statutory rate prescribed under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996.

Issue (i): Whether the contractual bar on interest could be restricted by applying ejusdem generis so as to deny interest on amounts due to the contractor beyond earnest money and security deposit.

Analysis: The interest-exclusion clause was held to be widely worded and to extend to any amount due to the contractor by the employer. The earlier expressions did not constitute a single genus so as to attract ejusdem generis. The general words were therefore not to be cut down by reference to the preceding specific expressions.

Conclusion: The clause could not be confined by ejusdem generis, and interest was not payable for the period before the award.

Issue (ii): Whether the rate of interest could be reduced below the statutory rate prescribed under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996.

Analysis: The statute expressly prescribed interest at 18% per annum, and the arbitrator had awarded interest at that rate. A lower rate could not be substituted merely on the basis of earlier decisions awarding lesser interest, as that would amount to judicial alteration of the statutory mandate.

Conclusion: The statutory rate of 18% per annum was upheld and could not be reduced.

Final Conclusion: The award was modified to confine interest to the period after the award at the statutory rate, with the appeal succeeding only to that limited extent.

Ratio Decidendi: Ejusdem generis applies only where the preceding words constitute a distinct genus, and a court cannot reduce a statutorily fixed rate of interest by invoking earlier contrary decisions.

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