Bombay High Court
National Insurance Company ... vs Reliance Industries Limited on 2 March, 2023
Bench: R. I. Chagla
Digitally signed
JITENDRA by JITENDRA
SHANKAR
SHANKAR NIJASURE
NIJASURE Date: 2023.03.06
18:54:10 +0530
1-ial-41158-2022.doc
jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.41158 OF 2022
IN
COM EXECUTION APPLICATION NO.1 OF 2023
National Insurance Co. Ltd. ...Applicant /
Judg. Debtor
In the matter between
Reliance Industries Ltd. ...Claimant /
Decree Holder
Versus
National Insurance Co. Ltd. ...Respondent /
Judg. Debtor.
----------
Mr. Firdosh Pooniwalla, Senior Advocate with Mr. Bhushan
Deshmukh, Mr. Rubin Vakil, Mr. Ashwin Dave, Ms. Reshma Ranadive
and Ms. Priyanka Masand i/b. A.S. Dayal and Associates for the
Decree Holder / Claimant.
Navroz Seervai with Yashesh Kamdar with Jenil Shah i/b. Ganesh
and Co. for the Applicant.
----------
CORAM : R.I. CHAGLA J.
DATE : 2 MARCH, 2023.
ORDER :
1. The Applicant / Judgment Debtor has sought dismissal of
the Execution Application under Section 36 of the Arbitration and
Conciliation Act, 1996 with exemplary costs. Further, relief is sought
for declaration that the award dated 11th February, 2020 is a nullity
1-ial-41158-2022.doc
and void qua the Judgment Debtor.
2. The Applicant / Judgment Debtor has stated that the
Award was passed in favour of the Judgment Creditor for a principal
sum of Rs.435,82,00,000/- and interest has been awarded for pre
Suit period; Pendente lite and also future interest. The contention of
the Applicant is that the Award is the subject matter of challenge
under Section 34 of the Arbitration and Conciliation Act, 1996.
Further, the Arbitral Tribunal has awarded interest of 12% per annum
on the principal amount for the pre reference period which is
mentioned as commencing from the date of cause of action till the
date of filing the Statement of Claim in the Arbitration Proceeding.
3. The Applicant states that in the Execution Application
filed, the Decree Holder has considered the date of cause of action to
be on 26th August, 2013. The Award does not mention that date to
be when the cause of action had arisen. Further, the Award is vague
as there is no mention of the date from when the interest for the pre
reference period is to be computed and / or payable by the Judgment
Debtor. The Statement of Claim is also silent as to when the cause of
action had arisen. Accordingly, it is stated that the Decree Holder has
1-ial-41158-2022.doc
mischievously inserted 26th August, 2013 in the Execution
Application as being the date of the cause of action and from which
date the interest pre-reference period is computed. This is
impermissible and amounts to inviting the Court to go behind the
decree in the Execution Proceedings.
4. Mr. Seervai, learned Senior Counsel appearing for the
Applicant / Judgment Debtor has taken this Court through the
relevant paragraphs of the Award. He has submitted that an issue
had been raised by the Arbitral Tribunal viz. issue III as under:-
Issue No.III . Whether the Claimant is entitled to any relief as
claimed together with interest with effect from 8th December,
2015 till the date of payment?
However, the Arbitral Tribunal has not granted interest for the
pre-reference period from 8th December, 2015 but the Award only
mentions that interest is payable from the date of the cause of
action. There is no finding in the Award as to when the cause of
action arose.
1-ial-41158-2022.doc
5. Mr. Seervai has submitted that in any event the Decree
Holder had itself limited the claim for interest in the Statement of
Claim to the period commencing from 8th December, 2015.
6. Mr. Seervai, has further submitted that the Decree
Holder has attempted to enhance the amounts awarded. He has
submitted that on this basis alone the Execution Application is liable
to be dismissed as being defective within the meaning of Order 21
Rule 11(2) read with 17 of the Code of Civil Procedure, 1908 and the
defect not being remedied. The Award is incapable of enforcement
and in any event the Decree Holder is overreaching the award which
is wholly impermissible.
7. Mr. Seervai has placed reliance upon the decision of the
learned Single Judge of this Court in Board of Control for Cricket in
India Vs. Deccan Chronicle Holdings Ltd. 1 and in particular
paragraph 268 thereof. This Court had considered the submission of
the learned Senior Counsel appearing for the Respondent therein
who had suggested that the award was to be computed in a
particular manner. This Court held that it is not for the Counsel to
1 (2021) 4 Bom CR 481
1-ial-41158-2022.doc
say. The Award must say it. The Counsel cannot supply reasons where
the award does not. No canon of arbitral law permits this. He has
submitted that in this case as well, the Decree Holder is suggesting
that the Award is to be read in a particular manner viz. that interest
for the pre reference period is granted from a particular date i.e. 26th
August, 2013 where the award itself does not mention this.
Accordingly, the Decree Holder cannot make such suggestions and /
or supply reasons where the award does not.
8. Mr. Pooniwalla, the learned Senior Counsel appearing for
the Respondent / Decree Holder has submitted that it is clear from
the Award that interest has been granted from the date of the cause
of action which date is ascertainable from the Award itself. He has
admitted that in the Execution Application the pre-reference interest
has been incorrectly computed from 26th August, 2013 but instead it
should have been computed w.e.f. 8th December, 2015 till the date of
filing of the Statement of Claim. He has submitted that Arbitral
Tribunal has awarded the interest commencing from 8th December,
2015 in accordance with the issue 3 framed by the Tribunal. He has
submitted that in prayer (d) of the Statement of Claim it is prayed
that an award be passed awarding the Claimant simple interest
1-ial-41158-2022.doc
@ 18% computed from 8th December, 2015 i.e. the date on which
the wrongful adjustment was made by the Respondent till the date of
payment of the amount awarded by the Arbitral Tribunal.
9. Mr. Pooniwalla has further submitted that it is clear from
the Statement of Claim that the cause of action arose when wrongful
adjustment of Rs.435.82 Crores was made by the Respondent and
submissions to that effect has been made from paragraph 35
onwards. He has accordingly submitted that there is no ambiguity in
the Award and in fact it is the duty of the executing Court to enforce
the Award as it stands and there is no cause for the executing Court
going behind the Award for which the execution has been sought.
10. Having considered these submissions, in my view,
there is much merit in the submission of Mr. Pooniwalla. There is no
ambiguity with regard to the words "date of cause of action" in the
interest pre-reference period awarded. This is apparent from the
finding to issue 2 where the Arbitral Tribunal has held that the
reduction of the amount of Rs.435.82 Crore from assessed loss of
Rs.925.10 Crore in respect of Business Interruption at DMD was
illegal and contrary to the policy. Accordingly, the Decree Holder is
1-ial-41158-2022.doc
awarded the entire amount of Rs.435.82 crores, being the amount
which was withheld by the Judgment Debtor in making payment
under the policy. It is clear from this finding that the cause of action
arose when the reduction of the amount of Rs.435.82 Crores from
the assessed loss of 925.10 Crores in respect of Business Interruption
at DMD was made and which has been held to be illegal and contrary
to the policy.
11. It is further borne out from the Statement of Claim
where the date on which the reduction of the amount of Rs.435.82
Crore made by the Applicant / Judgment Debtor is mentioned as 8th
December, 2015. This is further borne out from the correspondence
referred in paragraph 25 of the Statement of Claim i.e. on 8th
December, 2015, the Judgment Debtor had addressed letter to the
Decree Holder stating that adjustment by way of reduction of
Rs.435.82 Crores was made by the Judgment Debtor. Further, the
prayer in the Statement of Claim, viz. prayer (d), wherein the Decree
Holder has prayed for an award of simple interest @ 18% computed
from 8th December, 2015 i.e. the date on which the wrongful
adjustment was made by the Respondent, till the date of payment of
the amount awarded by the Arbitral Tribunal. Thus, there is no
1-ial-41158-2022.doc
ambiguity in the award of interest for pre-reference period i.e. date
of cause of action which is 8th December, 2015, till the date of filing
of the Statement of Claim which is ascertainable and @ 12% p.a.
12. It is noted that Mr. Seervai has only addressed the
issue of interest pre reference period in the Award. The other issues
in the Interim Application have not been raised.
13. I do not find any merit in this Interim Application
and accordingly, the prayers in the Application are not granted.
14. Mr. Pooniwalla has tendered draft amendment of
the Execution Application which is taken on record and marked 'X'
for identification. The Decree Holder is directed to carry out
amendment in the Execution Application in accordance with the draft
amendment marked 'X'. The Decree Holder shall carry out the
amendment within a period of two weeks from the date of this Order.
Re-verification is dispensed with.
15. Interim Application (L) No.41158 of 2022 is
accordingly disposed of.
1-ial-41158-2022.doc
16. It is made clear that this order is without prejudice
to the rights and contentions of the Applicant / Judgment Debtor and
will not come in the way of this Court deciding the Arbitration
Petition filed under Section 34 of the Arbitration Conciliation Act,
1996, on its own merits.
[ R.I. CHAGLA J. ]
