Citation: 2026 INSC 1036 North Eastern Electric Power Corporation Limited (NEEPCO) v. Astra Construction Private Limited, Civil Appeal arising out of SLP (Civil) No. 24803 of 2025, decided on September 22, 2026)
Whether a public works contract clause (Clause 54 of the General Conditions of Contract) legally prevents an arbitral tribunal from awarding pre-reference interest to a contractor for delayed payments. The Supreme Court ruled in favor of the appellant, NEEPCO, finding that Clause 54 explicitly and independently bars claims for interest or damages arising from delayed payments, unlike older case precedents that interpreted similar clauses more narrowly. Consequently, the Court set aside the High Court’s judgment and held that the arbitral tribunal lacked the jurisdiction under the contract to award pre-reference interest.
In June 1995, North Eastern Electric Power Corporation Limited (NEEPCO) invited tenders for civil works on a gas turbine power project in Tripura, which led to a formal contract awarded to Astra Construction Private Limited in May 1996. After the project faced significant delays that the arbitral tribunal later attributed to NEEPCO, disputes arose between the parties and the matter was pushed to arbitration.
The Arbitral Tribunal ruled in favor of the contractor in June 2015, awarding a principal sum of Rs. 3.30 crores along with a 12% pre-reference interest and 9% pendente lite and future interest. While NEEPCO argued that Clause 54 of their contract completely barred interest on delayed payments, the lower courts and High Court initially disagreed, sparking the appeal to the Supreme Court.
The Supreme Court held that Clause 54 of the contract explicitly and clearly bans claims for interest on delayed payments, meaning the arbitral tribunal had no legal authority to award pre-reference interest to the contractor. Therefore, the Court set aside the High Court’s decision and ruled in favor of NEEPCO, canceling the extra interest payout.
