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Amarsons Commercial Private Ltd vs. Sentiss Pharma Private Limited

First Appeal from Order (Commercial) · 2026:DHC:8223-DBDecided 21 Sept 2026New Delhi Bench
FAO (COMM) 77/2026CNR: DLHC010103062026
Justice Dinesh Mehta · Dr. Justice Aditi Choudhary

Background

The appellant challenged only the post-award interest rate, not the underlying award amount, fixed by an arbitrator at 18% per annum in a February 2022 award (and later upheld with a modified start date by the court below). It argued that under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 as amended in 2015, post-award interest should instead be calculated at 2% above the prevailing bank rate.

Decision Breakdown

The Court agreed with the appellant, holding that the pre-2015 flat 18% statutory rate (relied upon in the older Supreme Court precedent cited by the respondent) had been replaced by the "2% above the prevailing rate" formula for any award passed after 23.10.2015. Since this award was passed in February 2022, when the applicable Reserve Bank of India rate was 9.71%, the correct post-award interest rate was 11.71% per annum, not 18%. The award was modified accordingly, with a further escalation to 15% if the appellant failed to pay by a set deadline.

Lesson Learnt

Since a 2015 amendment to arbitration law, post-award interest on money awards must be calculated using the "current bank rate plus 2%" formula rather than the old flat 18% figure: a detail worth checking whenever an older-style 18% interest rate appears in a post-2015 arbitral award.

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