INDU MALHOTRA,J. - (1.) Leave granted. The present Special Leave Petition has been filed to challenge the judgment and order dated 30 th August, 2018 passed by the Delhi High Court in an Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as "the said Act "].
(2.) The factual matrix of the present case, briefly stated, is as under: 2.1 On 22nd May 2008, the Appellant and the Respondent ­Company entered into four inter­ related contracts for the construction of a 210­ MW Co­Generation Power Plant, viz.: ­ i. Offshore Engineering and Technical Services Contract ii. Offshore Supply Contract iii. Onshore Services and Construction Contract iv. Onshore Supply Contract These contracts are hereinafter collectively referred to as the 'EPC Contracts '. 2.2 Each of the four contracts contained an Arbitration Clause which is identically worded, which reads as under: "Article 10 ARBITRATION 10.1 The parties hereto shall endeavor to settle all disputes and difference relating to and/or arising out of the Contract amicably. 10.2 In the event of the parties failing to resolve any dispute amicably the same shall be referred to Arbitration in accordance with the Arbitration and Conciliation Act 1996 with all modifications and re­ enactments thereto, as is prevalent in India. Each party shall be entitled to nominate an Arbitrator and the two Arbitrators so nominated shall jointly nominate a third presiding Arbitrator. The Arbitrators shall give a reasoned award. 10.3 The place of arbitration shall be Mumbai and the language of the arbitration shall be English. 10.4 The parties further agree that any arbitration award shall be final and binding upon the parties. 10.5 The parties hereto agree that the Supplier shall be obliged to carry out its obligations under the Contract even in the event a dispute is referred to Arbitration. It is clarified that the purchaser shall be entitled to retain any sum or portion of Contract Price which has become due and payable, for any unfinished works or any subject matter under arbitration. " 2.3 The Governing law of the Contracts is the Law of India. The relevant Clause is set out herein below for ready reference: " Article 12 GOVERNING LAW AND JURISDICTION 12.1 This contract shall be construed in accordance with and governed by the laws of India and in the event of any litigation the courts in India shall be exclusive jurisdiction. " 2.4 The EPC Contracts contained a termination clause which reads as under : "35.2.1­ The Purchaser may suspend the work in whole or in part at any time by giving Supplier notice in writing to such effect stating the nature, the date and the anticipated duration of such suspension. On receiving the notice of suspension, the Supplier shall stop all such work which the Purchaser has directed to be suspended with immediate effect. The Supplier shall continue to perform other work in terms of the Contract which the Purchaser has not suspended. The Supplier shall resume the suspended work as expeditiously as possible after receipt of such withdrawal of suspension notice. 35.2.2­ During suspension, the Supplier shall be entitled to receive from the Purchaser a Variation Order covering reasonable costs if any due to suspension and appropriate adjustment for Completion Schedule, and other terms and conditions of this Contract. 35.2.3­ If such suspension continues for more than 180 (one hundred and eighty) days, at the end of the period, the Supplier shall be by a further 30 (thirty) days prior notice, entitled to terminate the Contract and Purchaser shall pay to the Supplier 105% (one hundred and five percent) of the cost incurred by the Supplier till the date of termination as compensation after adjusting payments already made till the termination. No consequential damages shall be payable by the Purchaser to the Supplier in the event of such suspension. " (Emphasis supplied) 2.5 The EPC Contracts are entered into between the Petitioner herein an Indian Company, and a company incorporated in the People 's Republic of China. The arbitration between these parties is an international commercial arbitration, having its seat in India, which would be governed by Part I of the 1996 Act. The termination clause provided that in the event of termination, the Purchaser shall pay 105% of the cost incurred by the Supplier as compensation. The EPC contracts did not contain any provision on payment of Interest. 2.6 Disputes arose between the parties, which resulted in the termination of the EPC Contracts by the Respondent vide notice dated 25.02.2011. The Respondent called upon the Petitioner herein to pay the outstanding dues as mentioned in the said notice. 2.7 The Respondent­Claimants invoked the Arbitration Clause vide Notice dated 18.04.2012. The disputes emanating out of the EPC contracts were referred to arbitration by a three­member tribunal in terms of the agreement between the parties. At the first sitting of the arbitral tribunal on 17.10.2012, the parties mutually agreed to a change of the seat/place of arbitration from Mumbai to New Delhi. 2.8 The Claimant­Respondent herein raised various Claims in multiple currencies amounting to Rs. 4,472,106,315; US $ 2,380,000; and EUR 121,723,214 along with pendent lite and future Interest @ 18% p.a. 2.9 The present Appellant filed a Counter Claim amounting to Rs. 2458,34,89,367 along with Interest @18% p.a. for determination before the arbitral tribunal. 2.10 The arbitral tribunal passed a detailed Award dated 09.11.2017, wherein the Tribunal awarded the following amounts: " 134. Thus, in light of the aforesaid, the following amounts are awarded in favour of the Claimant and the Respondent is liable to pay the same to the Claimant within a period of 120 days from the date of this award: I. Under the First Claim: a) Rs. 46,71,41,942/­ and Euro 23,717,437; and b) Rs. 12,19,69,047 II. Under the Second claim: a) Rs. 25,47,325/­; and b) Rs. 6,06,707/­ c) Rs. 1,31,10,990/­ 135. The aforesaid amount shall be payable along with interest at the rate of 9% from the date of institution of the present arbitration proceedings provided the amount is paid/deposited within 120 days of the award. 136. In case the respondent fails to pay the aforesaid amounts within 120 days from the date of the Award, the claimant shall be entitled to further interest at the rate of 15% till the date of realization of the amount. 137. Considering the overall facts and circumstances of the case and the expenditure incurred in the arbitration proceedings, we consider it appropriate to award Rs. 50,00,000.00/­ (Rupees Fifty Lakh) towards costs and legal expenses to the claimant, which according to us would meet the ends of justice. The claim of payment of cost of the Respondent is rejected. " The arbitral tribunal in the Award granted a part of the First Claim in INR, while the other component was awarded in EUR. The claim made in US $ was rejected. The arbitral tribunal adopted a dual rate of Interest. If the amounts awarded were paid within 120 days ' from the passing of the Award, the awarded sum would carry a 9% rate of Interest on both the components of the Award i.e. the amounts payable in INR and EUR. However, if the awarded amounts were not paid within 120 days ', the arbitral tribunal imposed a higher rate of further Interest @ 15% till the date of realization of the amount. The arbitral tribunal also awarded Rs. 50,00,000 (Fifty Lakhs Rupees) towards Costs and Legal Expenses to the Claimant/Respondent herein. The arbitral tribunal rejected the Counter­ Claims filed by the Appellant/Award­Debtor. 2.11 Aggrieved by the said Award, the present Appellant filed Objections under Section 34 before the Delhi High Court which came to be rejected vide Order dt. 12.02.2018. 2.12 Aggrieved by the judgment of the Single Judge, the Appellant award­debtor filed an Appeal before a Division Bench of the Delhi High Court under Section 37 of the said Act. The Division Bench dismissed the Appeal vide Order dt. 30.08.2018. 2.13 Aggrieved by the judgment of the Division Bench, the Appellant has preferred the present Special Leave Petition. At the time of arguments, the Appellant restricted the challenge to the rate of Interest awarded by the arbitral tribunal. The challenge on the Interest awarded by the Tribunal is being considered in the peculiar facts and circumstances of the present case, and the specific clauses of the Contracts in question.
(3.) 'Interest ' is defined as "the return or compensation for the use or retention by one person for a sum of money belonging to or owned by any reason to another " 1. In essence, an award of Interest compensates a party for its forgone return on investment, or for money withheld without a justifiable cause. The current practice of awarding Interest in international commercial arbitrations is riddled with 1 32 HALSBURY 'S LAWS OF ENGLAND para 106 (4th Ed., 1980) inconsistencies, and is criticized for lack of uniformity In international contracts, there is no consensus on the method or rate of awarding Interest. ;