The Delhi High Court dismissed a petition filed by the decree holder where they sought to execute the outstanding parts of an award which were not covered in the first execution petition. The Court held that “in execution proceedings, the court cannot go behind the award and enable decree holder to fill in the gaps by producing evidence to quantify costs.”
Brief Facts of the Case:
A second execution petition was filed under Section 36 of the Arbitration and Conciliation Act (hereinafter referred to as 'the Arbitration Act') as the decree holder sought to execute the outstanding parts of an award, which were not covered in the first execution petition. The decree holder claimed that the award remained unsatisfied, specifically referring to arbitration costs and interest awarded under the previous award.
The tribunal had held that the claimant was entitled to Rs. 4,60,34,008, adjusting an interim payment of Rs. 1,28,70,118. The remaining Rs. 3,31,63,870 was directed to be paid by the respondent. Interest, calculated at 12% per annum, was specified for different periods. All other claims were rejected. The respondent was ordered to pay the claimant's arbitration costs, including arbitrator fees, counsel fees, and an amount paid to the respondent's arbitrator.
Contentions of the Parties:
The decree holder requested the Court to resolve the dispute regarding the outstanding balance of Rs. 46,81,892.83 against the Arbitral Award. The decree holder contended that the Arbitrator awarded interest only on the principal sum of Rs. 3,31,63,870/- and not on the pre-reference or pendent lite interest awarded in the Award or on the cost awarded. The decree holder sought Court's intervention to enforce the payment of the claimed amount by the Judgment Debtor within a specified period.
Observations by the Court:
The Court stated that the judgment debtor had been directed to pay a sum of Rs.7,57,948/- to the decree holder regarding the interest component and this amount was acknowledged as paid. The Court then addressed the issue of arbitration cost, highlighting that the tribunal, in accordance with Section 31A of the Arbitration Act, has the discretion to determine and award costs. The Court noted that the tribunal awarded costs, specifying three counts: the judgment debtor's share of Arbitrator's fees and expenses, including tribunal's administrative expenses (quantified at Rs.4,12,500/-); the fee payable by the judgment debtor to its nominated arbitrator (paid on its behalf by the decree holder, quantified at Rs.9,46,780/-); and the fee and expenses of the decree holder's counsel, if certified.
However, the Court pointed out that the cost statement which mentioned the counsel's fee was made subject to certification and no quantification was recorded for the last count. The Court acknowledged the judgment debtor's claim that Rs.4,12,500/- and Rs.9,46,780/- had already been paid. The Court stated that the cost statement, though available before the tribunal during the award's passage, lacked certification and had no supporting invoices or proof of payment.
The Decision of the Court:
The High Court dismissed the petition stating that the decree holder in execution proceedings cannot pursue a claim left unquantified in the award due to the parties' failure to furnish substantiating proof. The Court asserted its inability to delve behind the award to facilitate the decree holder in substantiating costs through evidence to quantify costs.
Case Title: H.P. Cotton Textile Mills Ltd. vs. The Oriental Insurance Company Limited
Coram: Hon'ble Mr. Justice Manoj Kumar Ohri
Case no.: OMP (Enf.) (Comm.) 123/2019
Advocates for the Decree Holder: Ms. Shantha Devi Raman and Mr.Mayank Ranjan Yadav, Advocates
Advocate for the Judgment Debtor: Mr.Udyan Srivastava, Advocate
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