M/S. Om Prakash Gita Devi & Co. & Ors. vs Food Corporation Of India

The Supreme Court held that the Arbitrator had the authority to award interest under Section 3 of the Interest Act, 1978, and that the rate of interest awarded should reflect the commercial nature of the transaction. The Court found that the appellate court's reduction of the interest rate from 18% to 6% was unjustified, as the appellant incurred higher interest charges from the bank due to the premature termination of the lease. Consequently, the Court reinstated the original interest rate of 18% per annum awarded by the Arbitrator.