*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Ex.26/2007
% Date of decision: 18.05.2009
SH. JAI PRAKASH NARAIN SINGH ....... Decree Holder
Through: Mr. Sumit Batra, Advocate proxy
counsel
Versus
N.B.C.C.LTD. ....... Judgment Debtor
Through: Mr. Manoj Kumar Das, Advocate
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? Yes
2. To be referred to the reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
RAJIV SAHAI ENDLAW, J.
1. The question for adjudication in this execution of an arbitral award made rule of the court under the provisions of the Arbitration Act, 1940 is, on what amount the interest (i) from the date of the award and till decree and (ii) from date of decree till payment to be calculated-whether only on the principal amount awarded or also on the pre institution and pendente lite interest allowed under the award.
2. It is not in dispute that under the award dated 30th November, 2002, a principal sum of Rs.1,10,061.46 was awarded under claims 1 to 6. Under claim No. 8, costs of Rs.50,000/- were awarded. The award under claim No.7 allowed interest at 15% per annum on claims 1 to 8 from, 21st October, 1991 to 1st April, 1994 being the pre reference period as well as pendent lite before the arbitrator from Ex.26/2007 Page 1 of 6 2nd April, 1994 to the date of the award and payment/decree whichever is earlier.
3. Suit No.816A/2003 was filed by the decree holder in this court for making the award a rule of the court. The judgment debtor filed objections to the award. The said objections were dismissed vide Order dated 16th February, 2006. However, while dismissing the objections, the rate of interest awarded was reduced from 15% per annum to 9% per annum. Decree in terms of award so modified was passed. The decree holder was also granted future interest at 9% per annum from the date of the decree.
4. Upon execution being filed, the judgment debtor paid a sum of Rs.2,69,770/- to the decree holder in this court on 20th October, 2008. It was contended by the judgment debtor that the said amount represented the entire amount due under the decree. However, the senior counsel for the decree holder contended otherwise. The matter was posted before the Registrar General of this court to report on the amount due under the decree.
5. The Registrar General has found that there is no dispute of the principal amount allowed by the Arbitrator i.e. of Rs.1,10,061.46. There is also no dispute that @ 9% per annum, from 21st October, 1991 till 30th November, 2002, on Rs.1,10,061.46p, a sum of Rs.1,10,057.68p became due as interest. The registry on direction of the Registrar General calculated total amount due as Rs.3,54,940.73. The judgment debtor having paid Rs.2,69,770/-, a sum of Rs.85,170.73 was reported to be due.
6. The registry while arriving at the aforesaid figures, calculated interest w.e.f. 1st December, 2002 till 20th October, 2008 on the Ex.26/2007 Page 2 of 6 principal amount of Rs.1,10,061.46p as well as on the costs of Rs.50,000/-, i.e. total Rs.1,60,061.46p.
7. The objection of the judgment debtor is that no interest is leviable on the costs of Rs.50,000/- from 1st December, 2002 onwards as done by the registry.
8. The contention of the decree holder is that interest w.e.f. 1st December, 2002 ought to have been calculated not only on Rs. 1,60,061.46 but also on Rs.1,10,057.68 being the interest due till 30th November, 2002.
9. The counsel for the judgment debtor has relied on Section 29 of the Arbitration Act, 1940 to contend that the court is empowered to order interest from the date of the decree on the principal sum only as adjudged by the award.
10. Per contra, the senior counsel for the decree holder has urged that the question is no longer res integra. He has relied upon: (A) Oil Natural Gas Commission vs. M.C. Clelland Engineers (1999) 4 SCC 327 laying down that arbitrators can award interest also on pre reference interest. It was held that pre reference interest is in the form of damages/compensation for delayed payment and would become part of principal.
(B) M/s. Saraswati Construction Co. Vs. DDA 112 (2004) DLT 736 in which it has been held that after the passing of an award or the dismissal of the objections by the court and passing a decree in terms of the award, not only the amount of claim upheld by the Arbitrator or the court but the pre suit and pendente lite interest awarded in favour of the decree holder crystallizes into the decretal amount and the future interest becomes payable on the entire Ex.26/2007 Page 3 of 6 amount comprising the claims as well as pre suit and pendente lite interest. It was held that from the date of passing of the decree, the future interest is not to be calculated merely on the amount of the claims upheld by the Arbitrator/court but also on the amount of interest awarded by the Arbitrator or the court.
I must record that this judgment does not notice Section 29 supra (C) The aforesaid judgment was recently followed in Kali Charan Sharma Vs. Noida 149 (2008) DLT 244. No reference to Section 29 is found herein also.
(D) Union of India Vs. Harbans Singh Tuli & Sons Builders Pvt. Ltd. AIR 2000 Punjab & Haryana 313, also relied upon in Saraswati Construction (Supra) allowing interest from date of award, not only on pre reference interest but also pendente lite interest. There is no reference to Section 29 in this judgment also.
11. Section 29 is concerned with interest from the date of decree only. It has no application to pre decree interest, i.e. interest from date of award to date of decree.
12. The award in the present case allows interest on amounts allowed under claims 1 to 8 which include the amount allowed as costs, as well as amount allowed as pre reference and pendente lite interest and till the date of payment or decree, whichever is earlier. The payment aforesaid was not made before decree. In accordance with judgments aforesaid, interest post award and till the decree, if allowed, is to be calculated on pre reference and pendente lite interest also. Section 29 does not come in its way. The objection of judgment debtor of no interest being chargeable on costs of Rs.50,000/- till decree is thus rejected.
Ex.26/2007 Page 4 of 6
13. The next question is of post decree interest. Though Section 29 is unequivocal that interest allowed has to be on principal amount only but the question is what is the principal amount. The judgments aforesaid, even though not discussing Section 29, hold the pre decretal interest to form part of principal. However that would make part of Section 29, permitting interest from decree "on the principal sum as adjudged by the award and confirmed by the decree" redundant. If there was to be no distinction between "principal" and "interest" there was no need for use of expression aforesaid in Section 29. Section 29 is exhaustive of the whole law upon the subject of interest on awards. Since Section 29 enables the court to award interest on the principal sum adjudged by an award, from the date of the decree onwards, it must be held that it carries with it the negative import that it shall not be permissible to the court to award interest on any sum other than the principal sum adjudged by the award or even on the principal sum adjudged by the award, for any period prior to the date of the passing of the decree. In the face of such express provision in law, if the dicta in the aforesaid judgments were to be applied, it would mean that the court would be awarding interest on amounts other than the principal sum as adjudged by the award.
14. Per incuriam means a decision rendered by ignorance of a previous binding decision or in ignorance of the terms of a statute or a rule having the force of a law. In none of the judgments aforesaid, the provisions of Section 29 have been discussed. In Oil Natural Gas (Supra) the Apex Court has referred to Section 29 but only to the extent of empowering the court to award post decretal interest. The other part of Section 29 empowering the court to award interest only on principal amount adjudged in the award has not been Ex.26/2007 Page 5 of 6 discussed. In view of the language of the statute, I find that post decree dated 16th February, 2006 the interest awarded can be on the principal amount adjudged in the award only and which as aforesaid is Rs. 1,10,061.46p. Even costs cannot be considered as principal sum adjudged by an award.
15. Thus I find the following amounts due (got calculated) under the award:-
a. Principal amount Rs. 1,10,061.46p
b. Costs Rs. 50,000/-
c. Interest awarded at 9% per annum Rs. 2,06,479.27p from 21st October, 1991 to 16th February, 2006 on Rs.
1,60,061.46p, in terms of award as modified and decreed.
d. Interest at 9% per annum from Rs. 26,414.74p 17th February, 2006 till 20th October, 2008 on Rs. 1,10,061.46p e. Total Amount i.e. a+b+c+d. Rs.3,92,955.47p f. Less paid Rs. 2,69,770/-
g. Balance amount due. Rs.1,23,185.47p
16. Aforesaid amount be paid by the judgment debtor to the decree holder within 30 days hereof failing which on application of decree holder warrants of attachment of monies to the aforesaid extent lying in the bank account of the judgment debtor particulars whereof to be furnished by the decree holder be issued, returnable on 17th August, 2009.
RAJIV SAHAI ENDLAW (JUDGE) May 18, 2009 PP Ex.26/2007 Page 6 of 6