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HLV Limited (Formerly known as Hotel Leelaventure Pvt. Ltd.) vs PBSAMP Projects Pvt. Ltd.

Not available · 2025 INSC 1148Decided 24 Sept 2025
Not available
Justice Manoj Misra · Justice Ujjal Bhuyan

Background

The two companies had a 2014 MoU for sale of land in Banjara Hills, Hyderabad, under which the respondent paid Rs. 15.5 crores as advance. After the MoU was terminated, the dispute went to arbitration, and a 2019 arbitral award directed the appellant to repay Rs. 15.5 crores with 21% annual interest from disbursement to repayment (as per the MoU's own termination clause). After the appellant paid Rs. 44.42 crores towards this, the respondent sought additional compound/post-award interest in execution proceedings; the executing court rejected this, but the High Court set aside that order and remanded the matter, prompting this appeal.

Decision Breakdown

The Supreme Court held that Section 31(7)(a) of the Arbitration Act gives party autonomy primacy. Where parties have themselves fixed the rate and duration of interest (as this MoU did, at 21% from disbursement until repayment), the arbitral tribunal's award is only enforcing that agreement, and Section 31(7)(b)'s default post-award interest provision (relied on for compound interest in cases like Hyder Consulting) applies only where the award is silent on interest. Since the tribunal here had already specified both the rate and the terminal date (till actual repayment), there was no scope to layer additional compound or post-award interest at the execution stage, doing so would amount to impermissibly rewriting the award during execution. The Court therefore set aside the High Court's remand order and restored the executing court's order closing the execution petition, allowing the appeal with no order as to costs.

Lesson Learnt

Where parties have contractually fixed the interest rate and period, an arbitral tribunal's award enforcing that agreement is treated as a complete interest regime: a decree-holder cannot later claim extra compound or post-award interest at the execution stage, since courts will not use execution proceedings to modify or supplement a final arbitral award.

Official source (sci.gov.in)View Judgment (PDF)

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