M/S. HYDER CONSULTING (UK) LTD. v. GOVERNOR, STATE OF ORISSA THROUGH CHIEF ENGINEER

5. Section 31(7)(a) of the Act deals with grant of pre- award interest while sub-clause (b) of Section 31 (7) of the Act deals with grant of post-award interest. Pre-award interest is to ensure that arbitral proceedings are concluded without unnecessary delay. Longer the proceedings, would be the period attracting interest. Similarly, post-award interest is to ensure speedy payment in·compliance of the award. Pre- award interest is at the discretion of Arbitral Tribunal, while the post-award interest on the awarded sum is mandate of statute - the only difference being that of rate of interest to be awarded by the Arbitral Tribunal. In other words, if the Arbitral Tribunal has awarded post-award interest payable from the date of award to the date of payment at a particular rate in its discretion H

1080 SUPREME COURT REPORTS (2014] 14 S.C.R.

A then it will prevail else the party will be entitled to claim post- award interest on the awarded sum at the statutory rate specified in clause (b) of Section 31(7) of the Act, i.e., 18%. Thus, there is a clear distinction in time period and the intended purpose of grant of interest.

B 6. Section 31 (7)(a) employs the words " ... the arbitral tribunal may include in the sum for which the award is made interest... ". The words "include in the sum" are of utmost importance. This would mean that pre-award interest is not independent of the "sum" awarded. If in case, the Arbitral C Tribunal decides to award interest at the time of making the award, the interest component will not be awarded separately but it shall become part and parcel of the award. An award is thus made in respect of a "sum" which includes within the "sum" component of interest, if awarded.

D 7. Therefore, for the purposes of an award, there is no distinction between a "sum" with interest, and a "sum" without interest. Once the interest is "included in the sum" for which the award is made, the original sum and the interest component cannot be segregated apd be seen independent of each other. E The interest component then looses its character of an "interest" and takes the colour of "sum" for which the award is made.

8. There may arise a situation where, theArbitral Tribunal may not award any amount towards principal claim but award F only "interesf'. This award of interest would itself then become the "sum" for which an award is made under Section 31 (7)(a) of the Act. Thus, in a pre-award stage, the legislation seeks to make no distinction between the sum award and the interest component in it.

G 9. Therefore, I am inclined to hold that ihe amount award under Section 31 (7)(a) of the Act, whether with interest or without interest, constitutes a "sum" for which the award is made.

10. Coming now to the post-award interest, Section H 31 (7)(b) of the Act employs the words, "A sum directed to be

M/S. HYDER CONSULTING (UK) LTD. v. GOV., STATE OF 1081 ORISSATHR. CHIEF ENGR. [ABHAY MANOHAR SAPRE, J.]

paid by an arbitral award... ". Sub-clause (b) uses the words A "arbitral award" and not the "arbitral tribunal". The arbitral award, as held above, is made in respect of a "sum" which includes the interest. It is, therefore, obvious that what carries under Section 31 (7)(b) of the Act is the "sum directed to be paid by an arbitral award" and not any other amount much less by or under the name "interesf'. In such situation, it cannot be said thatwhatis being granted under Section 31(7)(b) of the Act is ".interest on interest". Interest un_der sub-clause (b) is granted on the "sum" directed to be paid by an arbitral award wherein the "s.um" is nothing more than what is arrived at under sub-clause (a).

11. Therefore, in my view, the expression "grant of interest on interest" while exercising the power under Section 31(7) of the Act does not arise and, therefore, the Arbitral Tribunal is well empowered to grant interest even in the absence of clause in the contract for grant of interest. · 12·. My aforesaid interpretation of Section 31 (7) of the Act is based on three golden rules of interpretation as explained by Justice G.P. Singh - Interpretation of Statute (13th Edition- 2012) where the learned author has said that while interpreting any Statue, language of the provision should be read as it is and the intention of the legislature should be . gathered primarily from the language used in the provision meaning thereby that attention should be paid to what has been said as also to what has not been said; second, in selecting out of different interpretations "the Court will adopt that which is just, reasonable, and sensible rather than that which is none of those things"; and third, when the words of the Statute are clear, plain or unambiguous, i.e., they are reasonably susceptible to only one meaning , the Courts are bound to give effect to that meaning irrespective of the consequence (see pages 50, 64, and 132). I have kept these principles in mind while interpreting Section 31 (7) of the Act.

Nidhi Jain Referred questions answered.