UNION OF INDIA vs M/S AMBIKA CONSTRUCION

The Supreme Court addressed the issue of an Arbitrator's power to award pendente lite interest under the Arbitration Act, 1940, particularly when the contract contains a bar against such interest. The Court referred to the Constitution Bench judgments in Secretary, Irrigation Department, Government of Orissa v. G.C. Roy and Executive Engineer, Dhenkanal Minor Irrigation Division v. N.C. Budharaj, establishing that an Arbitrator can award interest unless expressly barred by the contract. The matter was referred to a larger bench due to doubts raised about previous decisions, including Board of Trustees for the Port of Calcutta v. Engineers-De-Space-Age and Madnani Construction Corporation v. Union of India, which were distinguished in this context.