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Issues: (i) Whether the sum directed to be paid by an arbitral award under Section 31(7) of the Arbitration and Conciliation Act, 1996 includes interest so as to permit interest on that composite sum. (ii) Whether the High Court was justified in modifying the rate of interest awarded by the arbitrator and whether the executing court must compute the amount in accordance with the later enunciation of law.
Issue (i): Whether the sum directed to be paid by an arbitral award under Section 31(7) of the Arbitration and Conciliation Act, 1996 includes interest so as to permit interest on that composite sum.
Analysis: The governing interpretation treats the amount awarded under Section 31(7)(a), whether with or without interest, as a single "sum" for which the award is made. Under Section 31(7)(b), interest is payable on the "sum directed to be paid by the award", and that sum is the composite amount fixed under clause (a). On that construction, grant of interest on the awarded sum does not amount to impermissible interest on interest. The earlier contrary view was held not to state the law correctly.
Conclusion: The award may carry interest on the composite sum, and the contrary view was rejected.
Issue (ii): Whether the High Court was justified in modifying the rate of interest awarded by the arbitrator and whether the executing court must compute the amount in accordance with the later enunciation of law.
Analysis: Where the arbitral award itself is consistent with the correct interpretation of Section 31(7), the High Court should not reduce or alter the interest component on equitable considerations. The amount payable has to be worked out by applying the principle later declared by the Court, and not by reliance on the earlier overruled view. Consequently, directions restricting or modifying the interest component on the basis of the earlier precedent were unsustainable.
Conclusion: The interference with the interest component was set aside and computation was directed to be made in accordance with the later law declared by the Court.
Final Conclusion: The decision affirmed the broader construction of arbitral interest under Section 31(7) and restored or sustained relief in some matters while leaving others undisturbed, resulting in a partly successful challenge overall.
Ratio Decidendi: Interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 is payable on the sum awarded by the arbitral tribunal as a composite amount, and a court should not modify that interest component by applying an overruled interpretation or equitable reduction.
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