Contractual bar on interest controls arbitral power to award pendente lite interest under arbitration law.

An arbitral tribunal cannot award pendente lite interest where the contract expressly excludes interest on earnest money, security deposit, or other amounts payable to the contractor. Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 permits interest only unless the parties agree otherwise, so the contractual prohibition prevails over earlier principles developed under a different statutory regime. On that basis, the text states that the award of pendente lite interest was unsustainable and was set aside in favour of the appellant.

---

---

Issues: Whether the arbitral tribunal could award pendente lite interest when the contract expressly provided that no interest would be payable on amounts payable to the contractor.

Analysis: The contract contained an express stipulation that no interest would be payable on the earnest money, security deposit, or amounts payable to the contractor. Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 permits the tribunal to award interest only unless otherwise agreed by the parties. The agreement therefore controlled the tribunal's power, and the tribunal could not rely on earlier principles developed under a different statutory regime to override the contractual prohibition.

Conclusion: The award of interest pendente lite was unsustainable and was set aside in favour of the appellant.

---