Contractual bar on interest prevents arbitral award of pendente lite and future interest on contractor dues.

A contractual clause barring interest on earnest money, security deposit, and amounts payable to the contractor under the contract was held to exclude arbitral awards of pre-reference, pendente lite, and future interest. The phrase "amounts payable to the contractor under the contract" was treated as wide and independent, and not limited by ejusdem generis. Reading the clause with section 31(7)(a) of the Arbitration and Conciliation Act, 1996 and the governing line of authority, the Court held that an arbitrator cannot award interest contrary to an express contractual bar. The award of pendente lite and future interest was therefore unsustainable.

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Issues: Whether, in the presence of clause 16(2) of the GCC barring interest on earnest money, security deposit, and amounts payable to the contractor under the contract, the arbitral tribunal could award pendente lite and future interest on the amounts found due to the contractor.

Analysis: Clause 16(2) expressly provided that no interest would be payable upon the earnest money, the security deposit, or amounts payable to the contractor under the contract. The Court held that the expression "amounts payable to the contractor under the contract" was wide and operated independently, and could not be confined by ejusdem generis. Relying on Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 and the binding line of authority, the Court concluded that where the contract contains a clear bar on payment of interest, the arbitrator has no power to award pre-reference, pendente lite, or future interest contrary to that bargain.

Conclusion: The contractor was not entitled to pendente lite or future interest, and the arbitral award of such interest was unsustainable.

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