As per case facts an Arbitral Tribunal awarded the appellant interest for three distinct periods pre-reference pendente lite divided into two segments and future interest with the interest compounding for ... the pendente lite period i e applying interest on the principal plus accrued interest The Single Judge reduced the future interest rate On appeal the Division Bench set aside the compounding interest portion paragraph b of the award holding that the Act recognized only two periods for interest pre-award and post-award and compounding interest was impermissible The appellant appealed to the Supreme Court The question arose whether the Division Bench erred in holding that the Arbitral Tribunal could not award interest for pre-reference and pendente lite periods separately and whether compounding of interest interest on interest was permissible under the Arbitration and Conciliation Act Finally the Supreme Court set aside the Division Bench's judgment The Court held that the Arbitral Tribunal drawing on the interpretation of Section a has the discretion to grant interest for the whole period from the cause of action to the award date or sub-divide this period pre-reference and pendente lite with varying rates including excluding periods of laches Crucially the Court affirmed that the law permits the awarding of post-award interest on the total sum awarded which includes the principal plus the interest accrued up to the date of the award confirming that compounding interest on interest is permissible under the Act thus overruling the view that it amounts to levying compound interest which is impermissible