Calcutta High Court
M/S. B. B. M. Enterprises vs State Of West Bengal on 21 April, 2025
Author: Ravi Krishan Kapur
Bench: Ravi Krishan Kapur
IN THE HIGH COURT AT CALCUTTA
ORIGINAL SIDE
Ordinary Original Civil Jurisdiction
EC/132/2012
M/S. B. B. M. ENTERPRISES
VS
STATE OF WEST BENGAL
Before:
The Hon'ble Justice RAVI KRISHAN KAPUR
Date: 21st April, 2025
Appearance:
Mr. Jayanta Kumar Mitra, Sr. Adv.
Ms. Nilanjana Adhya, Adv.
...for petitioner.
Mr. Anirban Ray, Adv.
Mr. Noelle Banerjee, Adv.
Mr. Ritoban Sarkar, Adv.
Mr. Arindam Mandal, Adv.
Mr. Paritosh Sinha, Adv.
...for respondent.
1. This is an application seeking enforcement of an arbitral award dated 16
September 2009 for a sum of Rs.1,25,94,512/- alongwith interest on
Rs.90,60,549/- at the rate of 15% from 1 September 2003 to 2 May 2006
(interim award) and interest @ 15% on Rs.83,22,262/- from 3 May 2006 to
the date of the award with further interest @ 18% till the date of payment of
the award if the awarded amount was not paid within four months from the
date of the award.
2. Since the awarded sum was not paid by the State and there was no
challenge to the award, the award holder filed an application being E.C.
No.26 of 2010 seeking a sum of Rs.3,12,43,916.00/- as on 5 February 2010.
By an order dated 17 February 2010, the Court had attached the above
amount, lying to the credit of the State with the Reserve Bank of India and
further directed release of the same to the award holder. Subsequently, in
an appeal against the above order of attachment by the award debtor State,
the Court had directed the award debtor to deposit 50% of the awarded
amount i.e. (Rs. 1,56,21,958) with the Registrar Original Side. Pursuant to
the above, the award debtor deposited Rs.1,56,21,958/- with the Registrar,
Original Side, High Court, Calcutta.
3. Subsequently, during the pendency of the above proceedings, the award
debtor had filed an application under Section 34 of the Arbitration and
Conciliation Act 1996, before the Additional District Judge at Barasat which
was dismissed on the ground of limitation. Being aggrieved by the order of
dismissal, the award debtor filed an appeal where the Appellate Court
remanded the application under section 34 to be heard on merits.
Subsequently, the application under section 34 was again dismissed by the
Learned District Judge at Barasat. In an appeal against the said order, the
Division Bench remanded the matter for hearing afresh. Being aggrieved by
the order of remand, the award holder filed a Special Leave Petition where
the Hon'ble Supreme Court inter alia reduced the rate of interest granted in
the award from 18% to 15% and the awarded amount was directed to be
paid within 3 months.
4. In view of the failure of the State to make payment in terms of the above
order, the award holder was compelled to initiate proceedings for contempt.
By an order dated 30 July 2021, the Supreme Court directed as follows:
'The amount, as admitted in the counter affidavit, is Rs.4,74,03,104/-.
The aforesaid amount is to be paid within a maximum period of six
weeks from today. I.A. stands allowed.'
5. Pursuant to the above direction, the judgment-debtor on 7 September 2021
paid the entire amount of Rs. 4,74,03,104/.
6. Despite payment of the above amount, the award-holder has now filed a
supplementary affidavit and sought to raise an additional claim of
Rs.1,58,69,811/- inter alia on account of interest on delayed payment and
interest on bank guarantee charges. Significantly, the amount deposited on
4 June 2013, being 50% of the awarded amount i.e. Rs.1,56,21,958/- lying
with the Registrar Original Side, Calcutta was withdrawn by the award
holder upon furnishing of requisite bank guarantees on 21 June 2013.
7. It was alleged on behalf of the award-holder that an amount of
Rs.1,29,40,137/- still remains due and payable under the award details of
which are set out below:
1. Awarded Principal as on 16.09.2009 Rs.1,25,94,512.00
Pendente lite Interest
2.
(a) Interest @ 15% p.a. on Rs.90.60,549.00 Rs.36,30,900.00
from 01.09.2003 (date of service of
notice for interest) to 02.05.2006 (date
of interim award) i .e. for 975 days.
(b) Interest @ 15% p.a. on Rs.83,22,262.00 Rs.42,16,993.00
from 03.05.2006 to 16.09.2009 (date of
final award) i.e. for 1233 days.
3. "Sum" as on 16.09.2009 (date of final award) Rs.2,04,42,405.00
4. Post Award Interest (A)
@ 15% p.a. on Rs.2,04,42,405.00 from Rs.3,40,45,200.00
17.09.2009 to 21.10.2020 i.e. for 4053 days
(date of release of Bank Guarantee)
5. "Sum" as on 21.10.2020 Rs.5,44,87,605.00
6. LESS:-Release of Bank Guarantee(-) on Rs.1,21,13,712.00
21.10.2020.
7. Adjusted Sum as on 21.10.2020 Rs.4,23,73,893.00
8. Post Award Interest (B)
@ 15% p.a. on Rs.4,23,73,893.00 from Rs.56,24,722.00
22.10.2020 to 09.09.2021 (date of payment
through ECS) for 323 days.
9. "Sum" as on 09.09.2021 Rs.4,79,98,615.00
(date of payment through ECS)
10. LESS :- Payment received through ECS (-) Rs.4,13,60,553.00
11. Balance Sum as on 09.09.2021 Rs.66,38,062.00
12. Post Award Interest (C)
@ 15% p.a. on Rs.66,38,062.00 from Rs. 33,81,480.00
10.09.2021 to 31.01.2025 i.e. 1240 days @
Rs.2727/- per dav.
13. "Sum" as on 31.01.2025 Rs. 1,00,19,542.00
14. Bank's Commission and charges Rs.. 10,50,917.00
15. Interest @ 15% on Bank Charges of Rs. 18,69,678.00
Rs.10,50,917.00 from 18.03.2013 to
31.01.2025 i.e. 4338 days @ Rs.431/- per
day.
16. Final Amount receivable from Award Debtor Rs. 1,29,40,137.00
(as on 31.01.2025)
(Rupees One Crore Twenty Nine Lakhs forty thousand one hundred and thirty seven only)
8. It was contended by the award debtor that since the money deposited by the
award debtor was withdrawn only upon furnishing a bank guarantee, there
is no question of stoppage of interest on the same.
9. On behalf of the award debtor it is contended that, the claimed amount on
account of the interest is wrongly based on the premise that the interest
continued to run despite the amount deposited in Court being withdrawn by
the award holder. Insofar as the claim of bank guarantee charges are
concerned, any amount on account of the same is beyond the scope of the
award and is not liable to be entertained. As such, the award holder is not
entitled to any amount on account of bank guarantee charges. The
judgment-debtor has made payment of the entire amount directed in terms
of the order dated 30 July 2021 passed by the Hon'ble Supreme Court. The
attempt to seek any further payments in respect of the default period
tantamounts to revisiting the order dated 30 July 2021 and is
impermissible.
10. There is no substance in the claim on account of bank guarantee charges.
Any such claim is beyond the scope of the award and would amount to
varying or modification of the award which is impermissible. The award
holder having consciously chosen to withdraw the money deposited in Court
cannot now claim interest thereon. The deposit into the Court is nothing but
a payment to the credit of the award holder. Once withdrawn, the liability of
the award debtor towards any interest under the award must cease. To
award interest on the amount withdrawn would tantamount to unjust
enrichment for the award-holder. It is true that the said amount was
conditionally withdrawn only after furnishing of the bank guarantee but this
was a deliberate commercial decision which disentitles the award holder to
claim interest in terms of the award on the amount withdrawn and utilized.
11. During the hearing, Mr. Mitra, Senior Advocate appearing on behalf of the
award-holder in his usual fairness submitted that even though the award-
holder is entitled to interest upto date i.e. 31st March, 2025, the award
holder is ready and willing to accept an amount of Rs.52,86,219/- as full
and final settlement and forego the balance amount on account of interest
provided that the said amount is paid by 31st May, 2025. In this
connection, the award holder relied on a fresh calculation particulars of
which are set out below:
1. Total Amount as on 31.10.2020 (as per Rs. 4,13,60,553.00
calculation of Judgement Debtor)
2. Add Interest @ 15% p.a. on Rs. 52,86,219.00
Rs.4,13,60,553.00 from 01.11.2020 to
07.09.2021 i.e. for 311 days.
3. Sum as on 08.09.2021 Rs. 4,66,46,772.00
4. Less:- Payment received from: (-) Rs. 4,13,60,553.00
Judgement Debtor through ECS.
5. Balance Amount as on 08.09.2021 Rs. 52,86,219.00
6. Add:- Interest @ 15% p.a. on Rs. Rs. 28,21,428.00
52,86,219.00 from 10.09.2021 to
31.03.2025 for 1299 days.
7. Final Amount Receivable as on: Rs. 81,07,647.00
31.03.2025
12. On behalf of the State respondent, it is submitted that no amount is due
and payable on the awarded amount save and except a sum of
Rs.2,08,776/-. In support of such contention, it is submitted on behalf of
the State that by letters commencing from 18th December, 2020, the State
had repeatedly sought for information i.e. the bank details of the award-
holder but the same were not furnished.
13. In the light of above facts, there is no dispute that the State has,
intentionally and despite the order of the Hon'ble Supreme Court refused to
make timely payment to the award-holder. Admittedly, there had been delay
in making payment of Rs.4,13,60,553/-. In such circumstances, the award
holder is justified in seeking interest on account of delayed payment as
stipulated in the award. The excuse of the State of not knowing where and
how to make payment is absurd and rejected. In case of not furnishing any
details as alleged, the State ought to have brought this fact to the attention
of the Court where the proceedings were pending and taken prudent steps.
There is no legal justification in not making payment within the prescribed
time period and the State is not entitled to any concession of this account.
14. In view of the above, the State is directed to make payment of the amount of
Rs.52,86,219/- being the balance interest component by 30th May, 2025.
This is in full and final settlement of the dues of the award holder. In
default, the State would pay the interest component @ 15% per annum on
Rs.52,86,219/- from 8th September, 2021 till the date of actual payment in
terms of the award and the above concession granted to the State would
stand withdrawn. Liberty is granted to the award-holder to file an
appropriate application in accordance with law in case of default of the
above directions.
15. In conclusion, it is a matter of grave concern, as to how public funds are
squandered by the State. An award for a sum of approximately Rs.1.25
crores in 2009 is still being satisfied notwithstanding payment of more than
Rs.6 crores (inclusive of interest). Time has its own role to play in every
litigation. In commercial transactions of this nature, interest is as valuable
as the principal. It constitutes the lifeline of doing business. The rate of
interest which some of these awards carry i.e. 24%, 18% or even 15% are
astronomical by prevalent standards. Nevertheless, the State obliviously and
merrily continues to delay and procrastinate payment, sometimes, despite
orders of the Hon'ble Supreme Court. The commercial imprudence and
miscalculation of the State leaves more than a lurking doubt as to whether
or not the State or at least some of their officers are deliberately and
intentionally in connivance with such contractors/award holders.
16. With the above directions, EC/132/2012 stands disposed of.
(Ravi Krishan Kapur, J.)
S.Bag
