Pendente lite interest in arbitration is barred where the contract expressly excludes it; silence may permit discretionary award.

Under the Arbitration Act, 1940, an arbitrator may award pendente lite interest only if the contract does not expressly prohibit it. Where the agreement is silent, interest may be treated as an implied term and awarded on a discretion analogous to Section 34 CPC. But an express contractual bar on interest during the pendency of the reference prevails and curtails the arbitrator's authority. A clause barring interest on delayed payment does not automatically amount to a separate and express bar on pendente lite interest; the wording of the ouster clause must be examined in each case.

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Issues: Whether, under the Arbitration Act, 1940, an arbitrator can award pendente lite interest when the contract expressly bars grant of interest.

Analysis: The governing principle is that an arbitrator derives authority from the arbitration agreement and the contract. Where the agreement is silent, pendente lite interest may be awarded on the footing that interest is an implied term and the arbitrator may exercise discretion akin to the principle underlying Section 34 of the Code of Civil Procedure, 1908. However, where the contract contains an express stipulation prohibiting interest during the pendency of the reference, that contractual bar prevails and the arbitrator cannot override it. The earlier line of cases allowing pendente lite interest was read as depending on the absence of an express prohibition, and the nature and wording of the ouster clause must be examined in each case.

Conclusion: An arbitrator has no power to award pendente lite interest where the contract expressly bars such interest; a mere bar on interest for delayed payment does not by itself automatically amount to an express bar on pendente lite interest in every case.

Ratio Decidendi: The arbitrator may award pendente lite interest only where the contract does not expressly prohibit it; an express contractual exclusion of such interest is binding and curtails the arbitrator's jurisdiction.

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