Section 31 of Arbitration and Conciliation Act, 1996

Sec.31 -Form and Contents of Arbitral Award

Sl. Name of the case Year Court Judgement/ Principle
No. of which
case passed the
judgement
1. Home of Homes Ltd. 2003 English The HC (England and Wales HC) held that, “Although
Vs. Hammersmith and Wales High there is no statutory definition of an ‘award’, however in
Fulhan [LBC (2003) Court Case principle an award is a
EWHC 807] • Final determination of a particular issue or claim
in arbitration. It may be contrasted with orders
and directions which address the procedural
mechanisms to be adopted in the reference.
• Such procedural orders and directions are not
necessarily final, that the tribunal may choose to
vary or rescind them altogether.

2. Satwant Singh Sodhi 1999 Supreme Here the SC explained that as per the language of Sec-
vs. State of Punjab Court Case 31(1), an award will be complete as soon as it is made
and singed. The expression ‘signing’ means writing one’s
name in the award. There can be no finality in the award
except when it is signed because signing of an award
gives legal effect to it and gives validity to an award. An
award is made when it is authenticated by the person who
makes it. The word ‘made’ suggests that the mind of the
arbitrator is being declared and it is validly deemed to be
a pronounced as soon as the arbitration has signed it.

3. M/S Som Datt 2009 Supreme • Here the SC held that, Sec.-31(3) of the Act is not
Builders Ltd. Vs. State Court Case merely an empty formality. It ensures that the
of Kerela (AIR 2009 arbitral tribunal fairly and legitimately deals with
SC 2388) the issues presented by the parties.
• The arbitral tribunal is not expected to unite
judgements like a court.

4. UOI vs. Royal 2001 Calcutta The Calcutta HC attempted to summarize the law on the
Construction (AIR High Court extent of reasoning in an arbitral award. It was observed
2001 Cal HC) Case that,
• First, to make a reasoned award the arbitrator has
to make his mind known on the basis on which he
has acted.
• Second, the statement of reasons is not the same
thing as the gibing of a detailed judgement.
• Third, reasons are nothing more than short and
intelligent indications of the arbitrator’s mind.
• Fourth, the reasons must have such connection
with the conclusions reached by the arbitration as
to show that the arbitrator has not acted
irrelevantly, unreasonably or capriciously.
• Fifth, the reasons should deal with the substantial
points raised in the reference.
5. M/S Indian Farmers 2018 Supreme • Court held that, The language of Section 31(6) is
Fertilizer Co ... vs Court Case advisedly wide in nature. A reading of the said
M/S Bhadra Products sub-section makes it clear that the jurisdiction to
(2018, SC) make an interim arbitral award is left to the good
sense of the arbitral tribunal, and that it extends to
“any matter” with respect to which it may make a
final arbitral award. The expression “matter” is
wide in nature, and subsumes issues at which the
parties are in dispute. It is clear, therefore, that any
point of dispute between the parties which has to
be answered by the arbitral tribunal can be the
subject matter of an interim arbitral award.
• Court further observed that in order to ascertain
whether an order is an Interim Award, the two
most important factors that would weigh upon the
Court are the concept of "finality" and "issue". If
the nature of the order is "final" in the sense that
it conclusively decides an "issue" in the
arbitration proceedings, the order would qualify
to be an Interim Award, open to be challenged
under Section 34 of the Act.

6. Delhi Airport Metro 2022 Supreme • Here SC held that, ‘If Sec 31(7)(a) of 1996 Act is
Express Pvt. Ltd. Vs. Court Case given a plain & literal meaning, the legislative
Delhi Metro Rail intent would be clear that the discretion with
Corp. (AIR 2022 SC regard to grant of interest would be available to
708) the Arbitral Tribunal only when there is no
agreement to the contrary between the parties.
• SC further ruled that Arbitral Tribunal may
exercise its discretion with regard to-
1. Period of granting interest
2. Whether interest should be granted on the
whole or part of the money
3. At what rate interest should be awarded.

7. Vedanta Ltd. Vs. S.S. 2019 Delhi High Here the SC postulated certain rules with regard to which
Nuclear Power Court Case Arbitral Tribunal shall consider while granting interest-
Construction Co. Ltd. • The lose of use of the Principal Sum.
(AIR 2019 SC 4773) • The types of sums to which the interest must
apply.
• The time period over which interest should be
awarded.
• Whether the rate of interest awarded is
commercially prudent from an economic stand
point
• The rates of inflation
• Proportionality of the count awarded as interest to
the principal sums awarded

8. M/S Hyder Consulting 2015 Supreme In this case, the SC addressed the interpretation of
(UK) Ltd. Vs. Court Case Sec.31(7)(a) & (b) of the Act with regards to awarding of
Governor State of interest on arbitral awards.
Orissa (AIR 2015 SC
856)
 SC held that, the phrase ‘sum’ includes the includes the
principal amount as well as the interest awarded by the
tribunal under Sec-31(7)(a).
Therefore, post- award interest is applicable on the total
amount, i.e. the Principal amount and Pre award interest.

9. M/S Morgan 2020 Supreme Here the bench held that –

Securities & Credits Court case • Sec 31(7)(b) does not fetter or restrict the
Pvt Ltd. Vs. Videocon discretion that the arbitrator holds in granting
Industries Ltd. (AIR post- award interest. The arbitrator has the
2020 SC 473) discretion to award post-award interest on part of
the sum.
• The arbitrator must exercise the discretionary
power to grant post award interest reasonably
and in good faith, talking into account all
relevant circumstances.