Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 22 September 2026

Case Overview

  • Appellant: North Eastern Electric Power Corporation Limited (NEEPCO); Respondent: Astra Construction Private Limited.
  • Contract: Civil works for the main plant and auxiliary building of a Gas Turbine Power Project in Tripura, tender invited on 12‑06‑1995, agreement executed on 23‑05‑1996, contract value Rs 17,09,26,913, completion date 26‑03‑1997.
  • Dispute: Arbitration under the Arbitration and Conciliation Act, 1996. Arbitral Tribunal award dated 05‑06‑2015 awarded Rs 3.30 crore to Astra and granted pre‑reference interest at 12% p.a. and pendente‑lite/future interest at 9% p.a.
  • Commercial Court (Section 34) set aside the interest awards, relying on Sayeed Ahmed and interpreting Clause 54 of the General Conditions of Contract (GCC) as a bar to any interest.
  • High Court of Meghalaya (Section 37 appeal) restored the interest awards, relying on Harish Chandra and holding that Clause 54 barred interest only on money withheld due to a dispute, not on delayed payments.
  • Submissions: NEEPCO (via Solicitor General Tushar Mehta and Additional Solicitor General Raghavendra P. Shankar) argued that Clause 54 bars both pre‑reference and pendente‑lite interest and that the High Court erred by relying on Harish Chandra; Astra (via senior counsel Ritin Rai) contended the clause was not raised before the Tribunal and that NEEPCO waived the right.
  • Intervenors (C.S. Vaidyanathan) supported NEEPCO’s interpretation, emphasizing the separate wording in Clause 54 that expressly bars interest on delayed payments.
  • Legal framework discussed: Section 31(7) of the Arbitration Act, 1996 granting tribunals power to award interest unless expressly excluded; contrast with the 1940 Act; analysis of prior Supreme Court decisions (Secretary, Irrigation Dept. v. G.C. Roy, Harish Chandra, Sayeed Ahmed, THDC‑II).
  • Detailed comparison of Clause 54 with clauses in the cited cases showed a drafting difference: Clause 54 contains an independent provision barring interest on delayed payments, unlike the clause in Harish Chandra.

Final Outcome

  • The Supreme Court held that Clause 54 of the GCC bars the grant of interest for the pre‑reference period.
  • Consequently, the Arbitral Tribunal exceeded its jurisdiction under Section 31(7)(a) by awarding such interest.
  • The High Court’s judgment restoring pre‑reference interest is set aside.
  • The appeal is allowed; no order as to costs; any pending applications are disposed of.

Topics: Arbitration, Interest Clause Interpretation