Waiver of contractual objection to interest bars new challenge in appeal; arbitral interest remains permissible under the Act.

A contractual objection to interest in arbitration, if not raised before the tribunal or pursued in the Section 34 challenge and intra-court appeal, is treated as waived and cannot be introduced for the first time in an appeal under Article 136. The material also states that interest on arbitrable claims is not inherently illegal or contrary to public policy, because Section 31(7) of the Arbitration and Conciliation Act, 1996 empowers the arbitral tribunal to award interest subject to the parties' agreement. On that reasoning, interference with the award on the interest issue was unwarranted.

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Issues: (i) whether a contractual objection to award of interest, not raised before the arbitral tribunal or pursued in the proceedings below, could be entertained for the first time in appeal; and (ii) whether award of interest on arbitrable claims was impermissible in the light of the contractual and statutory framework.

Issue (i): whether a contractual objection to award of interest, not raised before the arbitral tribunal or pursued in the proceedings below, could be entertained for the first time in appeal.

Analysis: The objection founded on the contractual clause was not raised at the stage of reference, was not pressed before the arbitral tribunal, and was neither pursued effectively in the challenge under Section 34 nor in the intra-court appeal. The Court treated this omission as a waiver and abandonment of the plea, and held that a party cannot be permitted to raise such a new ground for the first time in an appeal under Article 136 when no factual foundation or finding exists on the issue.

Conclusion: The objection was held not to be entertainable and was rejected as waived.

Issue (ii): whether award of interest on arbitrable claims was impermissible in the light of the contractual and statutory framework.

Analysis: The Court held that grant of interest on arbitrable claims is not inherently illegal or contrary to public policy. Section 31(7) of the Arbitration and Conciliation Act, 1996 empowers the arbitral tribunal to award interest, subject to the agreement between the parties. In the absence of a properly raised and pursued contractual challenge, interference with the award on this ground was unwarranted.

Conclusion: The award of interest was upheld as legally permissible.

Final Conclusion: The challenge to the arbitral award failed because the new contractual objection was barred by waiver and the award of interest did not suffer from any legal infirmity warranting interference.

Ratio Decidendi: A contractual objection to interest, if not raised at the proper stage and not pursued in the proceedings below, is waived and cannot be introduced for the first time in an appeal, and an arbitral tribunal may award interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 subject to the parties' agreement.

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