M/S HYDER CONSULTING(UK) LTD. vs GOVERNER STATE OF ORISSA TR.CHIEF ENG.

The Supreme Court addressed the validity of the decision in S.L. Arora case (2010) 3 SCC 690 regarding the award of interest on interest under Section 31(7) of the Arbitration and Conciliation Act, 1996. The Court found that the S.L. Arora decision may not align with earlier rulings, specifically McDermott International INC v. Burn Standard Co. Ltd. (2006) 11 SCC 181 and others, which support the principle that interest awarded on the principal amount becomes part of the principal for future interest calculations. Consequently, the Court referred the matter for reconsideration by a larger bench, indicating the need for clarity on this legal principle.