Interest Act, 1978

The Supreme Court examined whether the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (the 1993 Act) applies retrospectively to supply orders placed before its commencement on 23‑09‑1992. The Court held that the Act is prospective, its liability arising only after the buyer …

Smita Conductors Ltd. (appellant) and Euro Alloys Ltd. (respondent) entered into contracts for the supply of aluminium rods that contained an arbitration clause but were never signed by the appellant. The appellant opened irrevocable letters of credit and made shipments, but later invoked a force‑majeure clause after R…

The contractor Dandasi Sahu claimed payment for work and interest before an arbitrator, later filing a supplemental claim and a consolidated abstract totalling Rs.31.44 million. The arbitrator awarded a lump sum of Rs.25.00 million with 9% interest, which the State of Orissa challenged. The High Court set aside the awa…

The appellant, an unregistered partnership firm, entered into a construction contract with the respondent and later contested the respondent's claim in arbitration. The respondent argued that Section 69(3) of the Partnership Act, 1932 barred the firm from participating in arbitral proceedings because "other proceedings…

The State of Haryana awarded a construction contract to S.L. Arora & Co., which was completed late, leading to arbitration. The arbitrator awarded Rs 14.94 lakh with 12% simple interest from 19‑Dec‑1990 to the award date and future interest of 18% per annum on the "total amount of award" if not paid within 30 days. The…

The Supreme Court examined whether an arbitrator under the Arbitration Act, 1940 could award interest for three distinct periods – pre‑reference, pendente lite, and post‑award – in light of the Interest Act, 1978 and contractual terms. It held that an arbitrator may award pre‑reference interest only when the dispute ar…

The petitioners, including Living Media India Ltd., challenged Notification No. 49/89 Customs which imposed a 30% ad valorem duty on glazed newsprint imported for news magazines between 1 March 1989 and 24 January 1990. The Union later offered to levy only 15% and to refund any excess, subject to the Customs Act. The p…

The State of Jammu & Kashmir terminated a measurable‑item rate contract with contractor Dev Dutt Pandit after less than 50% of the work was completed and the contractor filed a petition under Section 20 of the Arbitration Act. An arbitrator awarded Rs. 20,08,000 based on a final bill prepared from measurements taken by…

The appellant (Superintending Engineer) and respondent (B. Subba Reddy) entered into four contracts which were later arbitrated, resulting in awards that granted damages for delay and interest at 18% per annum on the total award, EM Deposit, Bank Guarantee and damages. The Principal Subordinate Judge, applying the rule…

The lands of Parmal Singh and others were requisitioned by the Central Government in 1963 under the Defence of India Act, 1962 and subsequently acquired in 1965. The Special Land Acquisition Officer fixed compensation, which the owners contested, leading to arbitration awards that included interest. The Allahabad High …

The State of Orissa contracted B.N. Agarwala to construct an irrigation project. After completion, Agarwala claimed extra work payments, and the dispute was referred to the Superintending Engineer, who acted as sole arbitrator and awarded Rs.1,59,298, including Rs.61,086.61 as interest for the period from 10‑Oct‑1969 t…

Dr. Kunal Saha filed a consumer complaint after his wife died while being treated for toxic epidermal necrolysis at AMRI Hospital. The National Consumer Disputes Redressal Commission held the hospital and four doctors negligent but reduced the claim, deducted 10% for alleged contributory negligence and awarded only Rs.…

Uttar Haryana Bijli Vitran Nigam Ltd. (UHBVNL) and another distribution licensee appealed against the Appellate Tribunal's order granting Adani Power (Mundra) Ltd. carrying cost with compound interest arising from a Change in Law event that required installation of a Flue Gas Desulfurization (FGD) unit. The appellants …

The contractors (Hind Builders) were awarded Rs.57,47,198 by two arbitrators for work on the Metro Railway Project, including Rs.6,76,540 as interest. The Calcutta High Court reduced the award on two grounds: the amount for earth consolidation (item c(xii)) and the period for pendente lite interest. The Supreme Court h…

The Gujarat Water Supply & Sewerage Board entered into contracts with Unique Erectors for a water‑supply scheme and later referred disputes arising under clause 30 of the contract to arbitration. A sole arbitrator was appointed, decided the arbitrability of the claims, and issued a lump‑sum award on 8 July 1985, which …

The appellant, a contractor, entered into a contract to construct a food‑grains godown for the Government of Andhra Pradesh. The engineer withheld part of the payment alleging that the work was not executed as per the contract. The dispute was referred to an arbitrator who awarded the contractor the withheld sum togeth…

Pam Developments Private Ltd entered into a work contract with the State of West Bengal for road widening, which was completed after a five‑month delay. The contractor claimed several sums, including labour charges for uneconomical stoppage, interest on delayed payment of running‑account bills, and pre‑reference intere…

The Oil and Natural Gas Commission (ONGC) appealed a decree based on an arbitral award that required M.C. Clelland Engineers to pay the principal amount plus interest at 12% and an additional interest on that interest. The appellant argued that the arbitrators had no power to award interest on interest under Section 3 …

The Supreme Court examined whether an arbitrator, appointed without court intervention, could award interest for the period before the reference and for the pendente lite period of the arbitration. It held that an arbitrator is not a court within the meaning of CPC s.34 and therefore cannot award pendente lite interest…

The State of Rajasthan entered into a contract with Ferro Concrete for a water‑pipeline project. After the contractor failed to complete the work, arbitration was instituted and the arbitrator awarded various sums, including loss of profit (claim 1), idle‑machinery compensation (claim 37A), and interest at 18% per annu…

The Supreme Court considered a dispute arising from a BOT concession agreement for the Bharatpur bypass road, where the contractor claimed entitlement to tolls and compensation for delay in the State's issuance of a traffic‑restriction notification and for the Bharatpur‑Deeg patch of road. The arbitral tribunal had awa…

Reliance Cellulose Products Ltd. and ONGC entered into a contract for supply of CMC. A dispute arose over the price, which was referred to arbitration. The arbitrator fixed a higher price and awarded pre‑reference, pendente‑lite and future interest at 18% per annum. The Civil Judge reduced the interest to 10% and the G…

M/s Shanti Conductors (P) Ltd. filed a money suit against Assam State Electricity Board for interest on delayed payments. The Supreme Court had earlier held the suit barred by limitation, rejecting the plaintiff’s claim of benefit under Section 19 of the Limitation Act, 1963 and Section 14, and also held that the 1993 …

The North Delhi Municipal Corporation (appellant) contracted with M/s S.A. Builders Ltd. (respondent) for construction work, which was not completed and led to a dispute. An arbitrator awarded Rs. 1,70,70,720.80 with simple interest and later issued a clarification on 15 March 2005 regarding post‑award interest, after …

Vijay Industries, a small‑scale supplier of castor oil, sued Natl Technologies for non‑payment of invoices and for interest on delayed payments, filing a winding‑up petition under Sections 433(e), 433(f) and 434 of the Companies Act, 1956. The respondent argued that interest was not a debt because there was no explicit…

Renusagar Power Co. entered into a contract with General Electric for the supply of equipment for a power plant, which later gave rise to disputes and an ICC arbitration. The arbitral tribunal awarded US$12,215,622.14, including regular interest, delinquent interest, compensatory damages, and costs. Renusagar challenge…

The Supreme Court examined a batch of appeals arising from orders of the National Consumer Disputes Redressal Commission (NCDRC) that uniformly awarded interest at 18% per annum in cases of deficiency of service by development authorities. The Court held that the Consumer Protection Act, 1986 has a wide reach and cover…

The appellant Sudhir Brothers were awarded a construction contract by the Delhi Development Authority. Disputes led to a reference to arbitration on 1 April 1984; the arbitrator entered the reference on 8 February 1985 and rendered an award on 15 July 1987, granting the appellant the contract sum together with 12 % sim…

The Haryana Urban Development Authority (HUDA) allotted a residential plot to Raj Singh Rana under an allotment letter that stipulated a 7% simple interest rate on instalments of the tentative sale price. After the plot’s acquisition cost was enhanced, HUDA demanded additional payment with interest rates of 10% and 15%…

The case concerned whether an arbitrator could award pendente lite interest when the underlying contract expressly barred interest on delayed payments. The dispute arose from a construction contract between the Union of India and M/s. Ambica Construction, which had undergone multiple arbitrations and court intervention…

The appellants, promoter‑directors of a listed finance company, were found to have purchased shares in violation of SEBI's insider‑trading regulations and were penalised by an SEBI Adjudicating Officer on 28‑08‑2014. The penalty orders required payment within 45 days and were affirmed by the Supreme Court in 2019, afte…

The Supreme Court considered multiple writ petitions filed by industrial consumers, including Ferro Alloys Corp., challenging the terms of electricity supply imposed by various State Electricity Boards. The issues revolved around the validity of Section 49 of the Electricity (Supply) Act, 1948, the reasonableness of a …

The appellants' husband was robbed and thrown from a moving train in 1998, resulting in his death. The appellants filed a claim for compensation before the Railway Claims Tribunal, which awarded Rs.4 lakh in 2007 but granted interest only in case of default. The appellants appealed, arguing that interest should accrue …

The Government of Orissa entered into a construction contract with G.C. Roy, which contained an arbitration clause. After the work was completed, a dispute arose and the arbitrator awarded the contractor the claimed sum plus 9% interest pendente lite from the date the amount became due. The Sub‑ordinate Judge set aside…

The appellants, owners of agricultural land and houses in Panipat, filed a writ petition alleging that effluent discharge from National Fertilizer Ltd's plant damaged their crops, mango orchards, residential buildings and rendered the land unfit for cultivation. The High Court dismissed the petition and the appellants …

The State of Orissa appealed an arbitral award that granted interest for the pre‑reference period of 31‑Mar‑1977 to 20‑Mar‑1980, a period that preceded the commencement of the Interest Act, 1978. The award was made on 12‑Oct‑1982, after the Act had come into force, raising the question whether the arbitrator could awar…

The State of U.P. entered into a contract with Harish Chandra & Co. for excavation and construction work, which the contractor failed to complete, leading the State to finish the work through other agencies and incur extra costs. The dispute over payment was referred to arbitration, where the arbitrator awarded interes…

Vedanta Ltd entered into four EPC contracts with Shenzen Shandong Nuclear Power Construction Co. Ltd for a 210‑MW co‑generation plant. After termination of the contracts, the Chinese company invoked the arbitration clause and obtained an award granting sums in INR and EUR, with interest at 9% for the first 120 days and…

The U.P. Cooperative Federation Ltd. entered into a contract with M/s Three Circles for constructing a cold storage. Disputes arose over balance steel, alleged bad workmanship, and interest on the award. An arbitrator awarded Rs.32,68,805.80 with interest at 15% and allowed various claims, which the appellant sought to…

The State of Orissa contracted Niranjan Swain for construction of an earth dam and a dispute over the balance payment, security deposit and interest was referred to an arbitrator under the contract’s arbitration clause. The arbitrator awarded a lump‑sum of Rs 21,11,835 inclusive of interest, which the trial court made …

The Supreme Court considered two appeals by suppliers of aluminium conductors against the Assam State Electricity Board concerning claims for interest on delayed payments under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The Court held that a suit seeking only intere…

The case concerned whether an arbitrator appointed, with or without court intervention, could award interest on sums due for the period before the arbitration reference (pre‑reference period) in disputes that arose before the Interest Act, 1978. The contractor’s award included interest from the due date to the date of …

The appellant, a contractor, completed a construction project for the State of Uttar Pradesh in 1996, after which disputes over payment led to arbitration in 1997. The arbitrator awarded the respondents to pay the contractor Rs.24,18,586 with interest at 18% per annum from April 1996, and also specified interest rates …

Madnani Construction Corporation entered into a contract with the North Eastern Railway for bridge work. Disputes arose over alleged manipulations in measurement books, leading the contractor to seek arbitration. The arbitrator, after examining the level book, graph sheets and log books, found that the railway had alte…

The petitioner, M/s D. Khosla & Co., obtained an arbitration award in 1997 that granted simple interest of 12% for the pre‑award period and 15% for the post‑award period, both described as payable on the "amount awarded" (the principal compensation of Rs.21,56,745). The petitioner later claimed that the 15% post‑award …

The developer Experion Developers failed to deliver possession of an apartment to the consumer, Sushma Ashok Shiroor, within the 42‑month period stipulated in the Apartment Buyer’s Agreement. The consumer filed a complaint before the National Consumer Disputes Redressal Commission, which ordered the developer to refund…

The appellant, M.B.L. Gupta Construction, entered into a contract with the respondent, Bharat Cooperative Group Housing Society, to construct 308 dwelling units, which included an arbitration clause for dispute resolution. After completing the work, a dispute arose and the matter was referred to a sole arbitrator, who …

Bharat Heavy Electricals Ltd. (appellant) challenged an execution petition filed by R.S. Avtar Singh & Co. (respondent) on the ground that the arbitral award, made a rule of court on 31‑05‑1985, had been fully satisfied by part payments made in 1985 and 2000, and that no further interest could be claimed. The Supreme C…

Garg Builders entered into a construction contract with Bharat Heavy Electricals Ltd (BHEL) that contained Clause 17 expressly barring any interest on monies due to the contractor. A dispute was referred to arbitration, and the arbitrator awarded pendente lite and future interest despite the clause. BHEL challenged the…

The petitioners, Dushyant N. Dalal and his wife, were ordered by SEBI to disgorge unlawful gains of Rs.4.05 crore and pay a penalty of Rs.6 crore, with a debarment of seven years if unpaid. They challenged the SEBI order, arguing that interest could not be levied retrospectively under Section 28A of the SEBI Act and th…

The Secretary to the Government of Orissa entered into a contract for works with S. Rout, which later gave rise to a dispute referred to arbitration. The arbitrator awarded interest, which the appellant challenged under Section 39 of the Arbitration Act, 1940. The Supreme Court examined whether the arbitrator could awa…

The Supreme Court examined an arbitral award granting Buildworth Pvt. Ltd. price‑escalation, idling‑charges and interest against Assam State Electricity Board. The Board argued that the award exceeded the contractual ceiling for escalation, ignored the claimant’s contributory delay, and that interest could not be award…

The Life Insurance Corporation of India (LIC) issued a 20‑year life insurance policy to K, who paid premiums for three years before the policy lapsed and later died. LIC paid the statutory paid‑up value of Rs 1,13,750 as per the policy’s non‑forfeiture clause, but the claimant, Smt. S. Sindhu, sought the full sum assur…

The appellant contracted to transport waste and finished products for the respondent. A dispute arose and the appellant invoked Section 20 of the Arbitration Act, 1940, leading to a sole arbitrator’s award of Rs 5,29,864.55 with 18% interest from 1 April 1983. The City Civil Court confirmed the award, but the High Cour…

M/s Raveechee & Co. entered into a quarrying contract with the Union of India, which later gave rise to a dispute that was referred to arbitration on 26 September 1988. The Arbitral Tribunal awarded damages and, on the basis of being deprived of those sums during the pendency of the arbitration, granted interest penden…

The Steel Authority of India Ltd. (appellant) challenged an arbitral award that granted damages for delay in handing over a work site, which the contract expressly prohibited. The appellant also argued that the claim was barred by the three‑year limitation period under the Limitation Act, 1963. The Supreme Court held t…

The appellants, legal heirs of a deceased road‑accident victim, were awarded Rs.98.40 million with 12% interest by the Motor Accident Claims Tribunal. The insurer appealed, reduced the principal to Rs.56.40 million but retained the interest rate, and made several partial payments. The Executing Court adjusted those pay…