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Court ruled interest only on principal sum, not on interest. Interest Act, 1978 prohibits compound interest.
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....The case dealt with the interpretation of interest clauses in an arbitration award, specifically whether interest could be payable on interest or if the awarded 15% per annum interest would apply only to the principal sum, with an additional 12% per annum interest for the preaward period. The court held that interest is generally payable on the principal sum adjudged and not on interest. The Interest Act, 1978 prohibits courts from awarding interest upon interest unless specifically provided by statute or contract terms. The court noted that neither the Act nor Section 34 of the CPC empower the court to award compound interest. The Supreme Court declined to interfere with the lower courts' decision, dismissing the Special Leave Petition.....