MUNICIPAL COUNCIL THANESAR versus VIRENDER KUMAR ETC.

MUNICIPAL COUNCIL THANESAR versus VIRENDER KUMAR ETC.

The arbitral award only stipulated 7% per annum interest without specifying quarterly or yearly rests; thus, the interest is simple and not compound. Both the Executing Court and the High Court erred in awarding compound interest.

Parties
Appellant: Municipal Council Thanesar; Respondent: Virender Kumar etc.
Jurisdiction
India
Judgment Date
19 February 2019
Procedural Posture
Civil Appeal / Final Hearing (appeal From High Court Order)
Outcome
Appeals partly allowed
Legal Topics
Arbitration Award Execution, Interest on Arbitral Awards, Compound Interest Vs. Simple Interest
Arbitration Civil Procedure Arbitration Award Execution Interest on Arbitral Awards Compound Interest Vs. Simple Interest

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Parties

Municipal Council Thanesar

Appellant

Virender Kumar etc.

Respondent

Procedural Posture

Civil Appeal / Final Hearing (appeal From High Court Order)

Legal Issues

  1. 1 Entitlement of decree-holders to statutory benefits under Arbitration and Conciliation Act, 1996, Section 31(7)(a) and (b)
  2. 2 Method of calculation of interest (simple vs. compound) under arbitral award

Ratio Decidendi

The arbitral award only stipulated 7% per annum interest without specifying quarterly or yearly rests; thus, the interest is simple and not compound. Both the Executing Court and the High Court erred in awarding compound interest.

Court Disposition

Appeals partly allowed

Orders

  • Pre-award interest on the amounts in question shall be calculated at 7% per annum simple interest
  • Respondents are entitled to benefit under Section 31(7)(b) and post-award interest at 7% per annum simple interest