Supreme Court Scales Down Post-Award Interest Rate in Arbitration Case Involving Department of Women and Child Development

In a significant Order, the Supreme Court of India made a pivotal decision in the arbitration case between the Department of Women and Child Development of Karnataka and M/s Christy Friedgram Industry. The court, while upholding the main portions of the arbitral award, decided to scale down the post-award interest rate to nine percent per annum.

The dispute originated from the termination of agreements related to Mahila Supplementary Nutrition Production and Training Centres, which led to arbitration and subsequent legal challenges. The sole arbitrator had initially awarded a substantial sum of Rs. 1,66,47,31,962/- to M/s Christy Friedgram Industry, including various claims and accrued interests.

Both parties challenged the award in different capacities. While the challenges by the respondent were dismissed by the Commercial Court, High Court, and eventually by the Supreme Court, the petitioner’s independent challenge faced a setback due to the High Court’s refusal to condone a 225-day delay in filing the appeal.

The Supreme Court, in its order, emphasized the importance of adhering to legal timelines. “The explanation which was tendered on behalf of the State of Karnataka was clearly not sufficient for the purpose of condoning the delay,” the bench noted, underscoring the criticality of procedural diligence.

However, recognizing the efforts for an amicable resolution, the apex court intervened in the matter of interest rates. “Having considered the matter from all its perspectives, we are of the view that the post award interest as awarded by the arbitrator should be scaled down to nine per cent per annum,” the Court observed. This decision was made in light of mutual consent by both parties during the course of the hearing.

As a result of the court’s order, the petitioner has deposited the entire amount of the award with interest, following which a joint statement by the advocates of both parties will determine the exact amount due to the respondent post the modification of the interest rate.

Date of Decision: 20th November 2023

DEPARTMENT OF WOMEN AND CHILD DEVELOPMENT VS M/S CHRISTY FRIEDGRAM INDUSTRY