Facts:

• M/S Larsen Air Conditioning and Refrigeration Company (Appellant) a contractor awarded a tender by the Union of India (Respondent).
• Disputes arose during the contract’s execution, leading to arbitration. Arbitration tribunal issued an award on 21.01.1999 in Appellant's favor.
• The respondent-state challenged the award before the District Court, Kanpur, which dismissed the Respondent's challenge, ruling in favor of the Appellant.
• Aggrieved by the decision of District Court Kanpur appealed to the High Court, which partially allowed the appeal.
• Dissatisfied with the High Court’s decision, the appellant filed an appeal before the Supreme Court.
  
  

Background:

Arbitration Tribunal:

• The respondent-state referred the dispute to arbitration, which concluded on 24.10.1998.
• The Tribunal issued its award on 21.01.1999 in favour of Appellant, directing the payment of 18% pendente lite and future compound interest on Claim Nos. 1-8. (Paragraph 2)
  

District Court:

• The Respondent challenged the Arbitral award passed by the Tribunal under Section 34 of the Arbitration and Conciliation Act, 1996.
• The District Court dismissed the challenge stating it could not act as an appellate authority and noting the Respondent failed to provide proof for the alleged grounds. (Paragraph 3)
  

Allahabad High Court:

• Aggrieved by the decision of District Cout Kanpur the Respondent appealed to the High Court in 2003.
• The High Court partially allowed the appeal, disapproving the ₹3 lakhs awarded for loss due to non-issue of tender documents and reducing the interest rate from 18% to 9% per annum. Directed the remaining amount to be deposited by the appellants within 12 weeks. (Paragraph 3-4)
  

Supreme Court:

• Aggrieved by the High Court's judgment, the appellant approached the Supreme Court.
  

Main Issue

Whether the High Court erred in modifying the arbitral award to the extent of reducing the interest, from compound interest of 18% to 9% simple interest per annum? (Paragraph 1)