A separate bar on interest for delayed payments prevents an arbitral tribunal from awarding pre-reference interest under Section 31(7)(a): Supreme Court distinguishes Harish Chandra

Case Name: North Eastern Electric Power Corporation Limited (NEEPCO) v. Astra Construction Private Limited

Date of Judgment: 22 September 2026

Citation: 2026 INSC 1036

Bench: Pamidighantam Sri Narasimha and Alok Aradhe, JJ.

Held: Clause 54 of the General Conditions of Contract bars pre-reference interest. Unlike the clause considered in State of U.P. v. Harish Chandra and Co., it separately prohibits interest claims arising from delayed periodical or final payments, whether or not a dispute caused the delay. Under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, the tribunal’s power to award interest is subject to the parties’ agreement.

Summary: An arbitral tribunal awarded Astra Construction approximately ₹3.30 crore in principal and interest, including pre-reference interest. The Commercial Court set aside the interest awarded on the relevant claims, but the Meghalaya High Court restored it after treating Clause 54 as equivalent to the clause in Harish Chandra. The Supreme Court found a decisive difference in wording: Clause 54 makes delay in payment an independent ground for excluding interest. It also rejected the contention that NEEPCO had waived reliance on the clause, finding that NEEPCO had pleaded it before the tribunal.

Decision: Appeal allowed to the extent of setting aside the High Court’s restoration of pre-reference interest.