Arbitral interest rate reduced where 18% was found excessive, with the award otherwise left intact.

Section 31(7)(a) of the Arbitration and Conciliation Act permits an arbitral tribunal to award interest at a reasonable rate where there is no agreement to the contrary. Although the parties had agreed to 18% per annum, the Supreme Court considered the 1999 award date and surrounding circumstances sufficient to revisit the rate and, in exercise of Article 142, modified the award only on interest. The interest component was reduced to 10% per annum simple interest, while the remainder of the award was left undisturbed.

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Issues: Whether the interest awarded by the Arbitral Tribunal at 18% per annum was liable to be reduced.

Analysis: Section 31(7)(a) of the Arbitration and Conciliation Act empowers the Arbitral Tribunal to award interest at a reasonable rate where there is no agreement to the contrary. The parties had agreed to 18% per annum, but the award dated 1999 and the surrounding circumstances justified reconsideration of the rate. In exercise of power under Article 142 of the Constitution of India, the Court modified the award only to the extent of interest.

Conclusion: The interest rate was reduced from 18% to 10% per annum simple interest, and the award was otherwise left undisturbed.

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