Full Text
HIGH COURT OF DELHI
M/S COBRA INSTALACIONES Y SERVICIOS, S.A & M/S
SHYAM INDUS POWER SOLUTION PVT. LTD.(JV) ..... Decree Holder
M/S COBRA INSTALACIONES Y SERVICIOS, S.A AND M/S
COBRA INSTALACIONES Y SERVICIOS, S.A AND M/S
M/S COBRA INSTALACIONES Y SERVICIOS, S.A AND M/S
M/s Cobra Instalaciones Y Servicios, S.A & M/s Shyam
Indus Power Solution Pvt. Ltd.(JV).
Mr.Varun Kalra and Mr.Krishan Kumar, Advocates for
JUDGMENT
Ltd. (HVPNL).
1. By way of present Execution Petitions filed under Section 36 of the Arbitration and Conciliation Act, 1996 (hereafter, ‘the A&C Act’) read with Order XXI Rule 1 CPC, the Decree Holder seeks enforcement of common Award dated 29.07.2020 passed in ARB. PET. Nos.547/2018, 548/2018, 551/2018 and 549/2018 (hereafter, ‘the Award’) by the Arbitral Tribunal comprising of a former Judge of this Court as the Sole Arbitrator (hereafter, ‘the AT’).
2. By way of the Award, AT has awarded cumulative amount of Rs.5,54,09,437/-, including interest at the rate of 9% per annum from 29.07.2020 till the date of payment (hereafter, ‘the Award amount’), in favour of the Award Holder/Decree Holder (hereafter, ‘the DH’).
3. Award Debtor/Judgement Debtor (hereafter, ‘the JD’) challenged the award by filing Objections under Section 34, whereas the DH filed the present petition for execution of the Award under Section 36.
4. Record reveals that, in order to avoid facing any coercive action in these proceedings, the JD deposited the entire Award amount, along with the interest till the date of deposit, in this court on 19.05.2021, pursuant to an order dated 15.03.2021 passed in these proceedings. JD wanted to await the outcome of its challenge to the Award for which reason, apparently, it persuaded the court to defer passing any orders in these proceedings. Eventually, JD’s objections under Section 34 were dismissed on 06.05.2022, which was not challenged. Consequently, the award attained finality and thus, executable without any impediment.
5. The DH withdrew the Award amount deposited by the JD in pursuance of order dated 02.08.2022, which had resulted in the satisfaction of the award put up for execution in these proceedings. However, the DH has kept the execution alive by demanding interest on the Award amount from 19.05.2021 till 06.05.2022 i.e., from the date of deposit of the Award amount till the date of dismissal of the objections under Section 34 of the A&C Act.
6. Learned counsel for the DH contended that the deposit of Award amount by the JD in Court per se does not transfer its title to the DH, who could withdraw the said amount only subject to conditions imposed by the Court. As such, the withdrawal of the Award amount, was always conditional. The DH was not free to withdraw the said amount whenever he liked.
7. Per contra, learned counsel for the JD has vehemently opposed the above submissions by contending that the Award amount deposited by the JD on 19.05.2021 was in terms of Order XXI Rule 1 CPC, and as such the DH was free to withdraw the same. After the deposit, the interest ceased to accrue, and hence it is not liable to pay any interest post the deposit. The DH made no application in this regard and eventually withdrew the Award amount on dismissal of objections under Section 34 of the A&C Act.
8. It is seen that the Award amount deposited by the JD was kept in the form of an interest-bearing FDR. As per the DH, the FDR earned interest of Rs. 25,09,194/-. DH’s total claim towards interest is Rs. 41,36,655/- and after adjusting the aforesaid interest amount earned on the FDR, DH is claiming the remaining sum of Rs. 16,27,461/-.
9. As noted above, the short issue involved is as to whether JD is liable to pay interest for the period between the date of deposit till the date of withdrawal of the deposit by the DH or dismissal of the objections, as in the present case.
10. It is pertinent to note that the JD had deposited the Award amount in the present execution proceedings in pursuance of the order dated 15.03.2021. While passing the said order, this Court had noted that in the objections filed by the JD under Section 34 of A&C Act, the impugned award was not stayed. It was clarified that the parties would comply with further orders that would be passed in the objections filed under Section 34 of the A&C Act.
11. The DH’s contention about the withdrawal of the award amount by him being conditional does not characteristically change the nature of money in the hand of the DH, who was free to use the money upon its withdrawal, with the only conditionality that in case the JD succeeded in his objections and the award was set aside, the DH would be required to restitute the gains i.e., return the Award amount. DH chose to await the outcome of the JD’s objections under Section 34 of his own volition, without there being any impediment in having access to the deposit either in the court order dated 15.03.2021 or otherwise.
12. Under Order XXI Rule 1(1)(a), payment of Award amount by JD by way of court deposit is permissible. Under Order XXI Rule 1(2), a court notice is required to be given to DH in case the Award amount is deposited in court under Sub-Rule (1)(a). Proviso to Rule 1 stipulates that in case DH refuses to accept the Award amount tendered to him, interest shall cease to run from the date of tender.
13. In the present case, DH was aware of the court order dated 15.03.2021. In fact, the order was passed in the presence of the DH, whereby the court allowed JD to deposit the Award amount in court, and simultaneously permitted the DH to withdraw the same subject to conditionality mentioned in the order. On the day JD deposited the Award amount in court pursuant to the court order, the same amounted to ‘tendering’ the same to the DH as envisaged in the proviso to Order XXI Rule 1, who refused to accept the same (by not making an application for its withdrawal), and consequently, interest ceased to run on from the date of such deemed refusal.
14. DH was never denied access to the Award amount. The deposit was made available to the DH to be had subject to an obvious condition of returning the same if the award was set aside. DH withdrew the money pursuant to order dated 02.08.2022, only after JD’s objections under Section 34 were dismissed. DH was not required to await the outcome of the Objections, however, if it did choose to remain under a self-imposed embargo, then it can’t demand interest, for the reasons explained above.
15. Adverting now to the case law relevant to consider the issue involved in the present case. In P.S.L. Ramanathan Chettiar and Ors. v. O.R.M.P.R.M Ramanathan Chettiar[1], a decree was passed by the Trial Court in a suit for recovery. The decree was confirmed by the High Court. In the execution of decree, though the decretal amount was deposited, the Court permitted the decree holder to withdraw the decretal amount on furnishing security. The Supreme Court, while taking note of the divergent views of the Calcutta and Bombay High Courts, observed that judgement debtor’s depositing a sum in (1968) 3 SCR 367 Court to purchase peace by way of stay of execution of decree on the terms that decree holder could withdraw the amount on furnishing security, would not pass the title of money to the decree holder. It further observed as under:-
16. Pertinently, Order XXI Rule 1 CPC came to be amended in the year 1977 by Act 104 of 1976. A Constitution Bench of the Supreme Court in Gurpreet Singh v. Union of India[2] noted the objects and reasons for the amendment as under:-
18. In Himachal Pradesh Housing and Urban Development Authority and Anr. v. Ranjit Singh Rana[4], apparently the judgement debtor, while filing objections against the impugned award, deposited the award amount before the High Court. The objections were rejected and the intra-Court appeal was pending. In the execution proceedings, the judgement debtor filed objections. An issue arose before the High Court as to whether the decree holder was entitled to interest from the date of award till the date of actual payment to the decree holder. The High Court held that the decree holder was entitled to the post award interest from the date of the award till the date of the actual payment. This decision was challenged before the Supreme Court. The question to be determined was whether deposit of the entire award amount by the judgment debtor in the High Court amounted to the payment to the decree holder and the judgement debtor’s liability to pay interest from the date of the award ceased from that date. The Supreme Court considered the definition of expression ‘payment’ and observed here as under:-
19. In Union of India and Anr. v. M.P. Trading and Investment Rac. Corporation Ltd.5, the Supreme Court while seized with a similar issue observed as under:-
20. Learned counsel for the decree holder has contended that the decisions in Ranjit Singh Rana (Supra) and M.P Trading (Supra) both 2015 SCC OnLine SC 868 rendered by two Judge Bench, did not consider the earlier decision rendered by a three Judge Bench in Ramanathan Chettiar (Supra).
21. Although learned counsel for the decree holder has also referred to a decision of Division Bench of this Court in Adidas India Marketing Pvt. Ltd. v. Hicare India Properties Pvt. Ltd.6, however, the said decision is stayed by the Supreme Court in SLP(C) No.6978/2016, which is pending consideration.
22. The decision of Division Bench of this Court in Delhi Development Authority v. Bhai Sardar Singh & Sons[7], was rendered in the context of dismissal of an application filed by the judgement debtor seeking a direction for refund of the amount deposited in the Court. Taking note of the decision in Chettiar (Supra), the Division Bench noted that the amount deposited in the appeal filed against the dismissal of the objections against the arbitral award, was not released to the decree holder till passing of the order. It was observed that the amount lying in deposit in the appeal was not a deposit made in the executing court in terms of Order XXI Rule 1 and as such the deposit could not be construed as direct payment made to the decree holder. The decision of the Division Bench was carried to the Supreme Court. Noting the controversy, the Supreme Court[8] after traversing through the entire gamut of case law, instructively held as under:- “13. Sub-rule 1 to Rule 1 of Order XXI of the Code prescribes three modes for paying money under a decree, namely: (a) by MANU/DE/4397/2015 2009 SCC OnLine Del 519 Delhi Development Authority v. Bhai Sardar Singh and Sons, 2020 SCC OnLine SC 1450 deposit of money in the court which is to execute the decree, which deposit can be through postal money order or through bank; (b) by making payment to the decree holder by postal money order or through bank or any other mode wherein payment is evidenced in writing; or (c) as the court which made the decree directs. Sub-rule 3 prescribes the details which have to be furnished by the judgment debtor where money is paid by postal money order or through bank under clauses (a) or (b). Sub-rule 3 also permits the judgment-debtor to stipulate apportionment or adjustment where amount is payable to more than one person or towards the principal sum or interest or cost. Sub-rule 2, which applies to payment made under clauses (a) or
(c) sub-rule 1, requires the judgment debtor to give notice to the decree holder either through the court or directly to the decree holder by registered post, acknowledgement due. Sub-rule 4 states that where an amount is paid under clause (a) or (c) of sub-rule 1, interest, if any, shall cease to run from the date of service of notice referred to in sub-rule 2. As per sub-rule 5, where amount is paid under clause (b) of sub-rule 1, interest, if any, ceases to run from the date of such payment. xxx
15. A reading of the aforesaid sub-rules clarifies that when money is paid under a decree, the interest, if any, shall cease to run either from the date of direct payment or from the date of service of notice to the decree holder, wherever applicable. Subrules 4 and 5 do not stipulate that the interest would stop running only and only when the entire amount as per the decree shall stand paid. This Court, as will be seen below, has held that money even when paid in part towards the decree would cease to accrue interest to the extent of the amount paid.
16. The Constitution Bench of this Court in Gurpreet Singh (supra) had examined the ‘stage-wise’ appropriation rule as expounded in Prem Nath Kapur v. National Fertilizers Corporation of India and had, after referring to the provisions of Order XXI Rule 1 and Order XXIV of the Code, observed that the former applies to post-decretal stage and the latter applies to pre-decretal stage. In the context of Rule 1 of Order XXI it was observed as under:
23. From disposition of law extracted hereinabove, it is clear that if the JD has intimated the DH with a notice of deposit and the Award amount is available for withdrawal to the DH unconditionally i.e., without any condition of furnishing security or otherwise, the liability of JD would cease on the date of deposit.
24. In the present cases, the JD had deposited the Award amount in the execution proceedings with the requisite notice in terms of the Order XXI Rule 1 CPC. The notice was served on the date of deposit i.e., 19.05.2021 on the DH. There were no fetters upon the DH to withdraw the said amount, as admittedly there was no stay of the impugned award in the objections filed by the JD under Section 34 of the A&C Act. The failure of the DH to take steps in preferring an application for withdrawal of the Award amount would not enure to the disadvantage of the JD. The deposit alongwith its due notice to the DH was sufficient discharge of the onus put on the JD in terms of Rule 1 Order XXI CPC.
25. Admittedly, as noted above, the Award amount alongwith the interest at the awarded rate calculated till 19.05.2021, has already been withdrawn by the DH, alongwith the interest that had accrued on the deposit being kept in the form of FDR.
26. The award having already been satisfied, the present petitions are disposed of.
JUDGE SEPTEMBER 4, 2023