The Supreme Court held that the arbitrator has the discretion to award post-award interest on a part of the sum. The issue was whether the arbitrator has the discretion to grant post-award interest only on the principal sum under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996.

The parties entered into an agreement under which the Respondent availed of bill discounting facilities from the Appellant. Since the former did not pay the amount as demanded, the Appellant invoked the arbitration clause. The Sole Arbitrator rendered an Award in favour of the Appellant. Interest was also awarded as follows:

1. 21% p.a. from the date of the default to the date of the demand notice
2. 36% p.a. from the date of the demand notice to the date of the Award (pre-award interest)
3. 18% p.a. on the principal amount from the date of award to the date of the payment (post-award interest)

The Appellant urged that the post-award interest of 18% p.a. should be granted on the total sum awarded, inclusive both of principal and pre-award interest. Proceedings under Article 136 were initiated for challenging the judgment of the Division Bench of the Delhi High Court.

The Apex Court analysed the cases of S. L. Arora and Hyder Consulting. The latter case had held that the Arbitrator may grant post-award interest on the aggregate of the principal and the pre-award interest. The Apex Court went on to hold that the arbitrator has the discretion to award post-award interest on a part of the sum. Thus, the award of the Arbitrator granting post-award interest on the principal amount does not suffer from an error apparent.