Contractual bar on interest binds arbitrator, and pendente lite interest cannot be awarded when the agreement expressly forbids it.

An express contractual clause barring interest on earnest money, security deposit and sums payable to the contractor binds the arbitrator under the Arbitration Act, 1940. Where the parties have agreed that no interest shall be payable, the arbitrator cannot disregard that prohibition or rewrite the contract to confer power to award pendente lite interest. The contrary authorities were distinguished as cases where the contract was silent on interest. The award of interest was therefore without jurisdiction and liable to be set aside.

---

---

Issues: Whether an arbitrator can award pendente lite interest when the contract expressly prohibits payment of interest on amounts payable to the contractor under the contract.

Analysis: The agreement contained a clear clause stating that no interest would be payable on earnest money, security deposit, or amounts payable to the contractor. The governing law was the Arbitration Act, 1940. The Court distinguished authorities which applied where the contract was silent on interest, and accepted the later view that an express contractual bar is binding on the arbitrator. It held that where the parties have agreed that no interest shall be payable, the prohibition cannot be ignored by the arbitrator, and the contract cannot be rewritten to confer such power.

Conclusion: The arbitrator had no jurisdiction to award pendente lite interest in the face of the express bar in the contract, and the award of interest was liable to be set aside.

Ratio Decidendi: Where the contract expressly prohibits payment of interest, the arbitrator cannot award interest, including pendente lite interest, because the arbitrator is bound by the parties' agreement.

---