GARG BUILDERS versus BHARAT HEAVY ELECTRICALS LIMITED

GARG BUILDERS versus BHARAT HEAVY ELECTRICALS LIMITED

Because Clause 17 of the contract expressly barred payment of interest on "any moneys due to the contractor," and Section 31(7)(a) of the 1996 Act and Section 3(3) of the Interest Act, 1978 permit parties to contract out of interest, the Arbitrator lacked power to award pre-reference/pendente lite interest; accordingly the interest-barring clause is not ultra vires Section 28 of the Indian Contract Act, 1872.

Parties
Appellant: GARG BUILDERS; Respondent: BHARAT HEAVY ELECTRICALS LIMITED
Jurisdiction
India
Judgment Date
04 October 2021
Procedural Posture
Civil Appeal / On Appeal From Division Bench Judgment of the High Court of Delhi (fao (os) (comm) No.120 of 2017) Upholding Single Judge Order in OMP (comm) No.28 of 2017
Outcome
Appeal dismissed
Legal Topics
Pendente Lite Interest, Interest Barring Clause, Section 31(7)(a), Section 28 Indian Contract Act
Arbitration and Conciliation Act, 1996 Indian Contract Act, 1872 Interest Act, 1978 Pendente Lite Interest Interest Barring Clause Section 31(7)(a) Section 28 Indian Contract Act

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 3 Authorities cited 9 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

GARG BUILDERS

Appellant

BHARAT HEAVY ELECTRICALS LIMITED

Respondent

Procedural Posture

Civil Appeal / On Appeal From Division Bench Judgment of the High Court of Delhi (fao (os) (comm) No.120 of 2017) Upholding Single Judge Order in OMP (comm) No.28 of 2017

Legal Issues

  1. 1 Whether an arbitrator can award pre-reference and pendente lite interest when the contract contains an express clause barring payment of interest
  2. 2 Whether Clause 17 of the contract (barring interest) is ultra vires Section 28 of the Indian Contract Act, 1872
  3. 3 Whether the Interest Act, 1978 permits parties to contract out of payment of interest

Ratio Decidendi

Because Clause 17 of the contract expressly barred payment of interest on "any moneys due to the contractor," and Section 31(7)(a) of the 1996 Act and Section 3(3) of the Interest Act, 1978 permit parties to contract out of interest, the Arbitrator lacked power to award pre-reference/pendente lite interest; accordingly the interest-barring clause is not ultra vires Section 28 of the Indian Contract Act, 1872.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed
  • Each party shall bear their own costs