Altas Limited ('Altas') entered into a contract with the Union of India after successfully bidding in a tender issued by the Ministry of Mining. The contract specified various technical and financial obligations, includi

The facts of the given situation are similar to the case of Larsen Air Conditioning and Refrigeration Company vs Union of India . In this case the dispute revolved around a contract between Larsen Air Conditioning and the Union of India, specifically the Ministry of Defence and Garrison Engineer (P) Factory. The contract led to arbitration due to arising disputes. The arbitral tribunal awarded Larsen Air Conditioning an 18% interest rate on the awarded amount, which included pendente lite and future compound interest. The Union of India challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996 (Act), but the District Court dismissed the application. The Union of India then appealed to the High Court of Allahabad, which modified the interest rate from 18% to 9%, interpreting the award under the Arbitration Act of 1940 instead of the 1996 Act. Larsen Air Conditioning then took the matter to the Supreme Court. On August 11, 2023, the Supreme Court reinstated the original 18% interest rate, emphasizing the limited scope of judicial interference under Section 34 of the 1996 Act. The court reiterated that unless the arbitrator explicitly states otherwise, the awarded amount should carry an 18% interest rate from the date of the award to the date of payment. The Supreme Court underscored that the 1996 Act aims to minimize judicial intervention and does not allow courts to modify arbitral awards. The decision reinforced the principle that arbitral awards can only be set aside on grounds such as patent illegality or denial of natural justice. In view of the above case law, it can be said that the court cannot reduce/alter the rate of interest.