Contractual bar on interest in arbitration prevailed over Section 31(7), defeating claims for pendente lite and future interest.

Contractual clauses expressly barring interest on delayed payments and on sums retained because of disputes or omissions were held wide enough to exclude both pendente lite and future interest on arbitral awards. The court applied the wording of the clauses as broad prohibitions against interest claims on withheld amounts, and found that Section 31(7) of the Arbitration and Conciliation Act, 1996 did not override that contractual bar. The distinctions drawn from earlier authorities and the canons of ejusdem generis and noscitur a sociis did not assist because the contract language disclosed a sufficiently broad category covering the interest claimed. The award of interest was therefore set aside.

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Issues: Whether the contractual clauses barred award of interest on the sums awarded under the arbitral claim, including pendente lite and future interest, in view of Section 31(7) of the Arbitration and Conciliation Act, 1996.

Analysis: The contract contained two separate stipulations, one barring interest on delayed payment connected with measurement or omission, and the other barring any claim for interest or damages on amounts lying with the corporation owing to disputes, differences, misunderstandings, or delay in payment. Read together, the clauses were wide enough to exclude interest on both ascertainable sums and amounts withheld on account of contractual disputes. The distinction drawn from an earlier decision was found not to alter the legal position because the governing clause language here was materially closer to the later Supreme Court precedent where similar clauses were held to prohibit interest. The principles of ejusdem generis and noscitur a sociis did not assist the appellant because the contractual wording disclosed a sufficiently broad genus covering interest claims of the kind involved.

Conclusion: The contractual bar on interest applied, and the award of interest was correctly set aside.

Final Conclusion: The appeal failed on the question of interest, and the contractual clauses were held to exclude such award under the governing arbitration law.

Ratio Decidendi: Where contractual clauses expressly prohibit interest on delayed payments and on amounts retained or withheld due to disputes or omissions, arbitral interest cannot be awarded contrary to that prohibition notwithstanding Section 31(7) of the Arbitration and Conciliation Act, 1996.

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