Legal Updates 27 October 2026
Allahabad HC Bars Arbitral Tribunal from Awarding Compound Interest
India's Allahabad High Court ruled that an arbitral tribunal cannot grant compound interest unless a contractual clause expressly permits it, citing the Constitution Bench decision in Central Bank of India v. Ravindra. The judgment emphasizes strict adherence to contract terms in commercial disputes, limiting tribunals from imposing additional interest without clear agreement.
The Allahabad High Court held that an arbitral tribunal lacks authority to award compound interest unless the contract contains a specific clause.
- Key ruling: Tribunals must follow the contract's terms; no default right to impose compound interest.
- Legal precedent: Relied on the Constitution Bench judgment in *Central Bank of India v. Ravindra*.
- Impact: Commercial parties will need explicit interest provisions to avoid unexpected awards.
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