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/133/2012
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.1,38,44,430/- alongwith interest on
Rs.1,17,77,080/- at the rate of 15% from 1 September 2003 to the date of
the award and interest @ 18% till the date of the payment on the awarded
sum till the date of payment if not complied with within four months 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/ (i.e. 50% of the
awarded sum) 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.
Thereafter, 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.1,74,40,844.00 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/- with
the Registrar Original Side, Calcutta was withdrawn by the award holder
upon furnishing requisite bank guarantees on 21 June 2013.
7. It was alleged on behalf of the award-holder that an amount of
Rs.1,74,40,844.00 still remains due and payable under the award details of
which are set out below:
1. Awarded Principal as on 16.09.2009 Rs.1,38,44,430.00
Pendente lite Interest
2.
(a) @ 15% p.a. on Rs.1,17,77,080.00 from Rs.1,06,86,720.00
01.09.2003 (date of service of notice for
interest) to 16.09.2006 (date of award)
i.e. for 2208 days.
3. "Sum" as on 16.09.2009 (date of final award) Rs.2,45,30,920.00
4. Post Award Interest (A)
@ 15% p.a. on Rs.2,45,30,920.00 from Rs.5,31,78,330.00
17.09.2009 to 30.11.2023 i.e. for 5275 days
(as per order of Supreme Court) (instead of
18% p.a.)
5. Total sum as on 30.11.2023 Rs. 7,77,09,250.00
6. LESS:- Payment Received
(i) Encashment of Bank
Guarantee - Rs. 1,65,80,577.00
(ii) Payment through
ECS - Rs. 4,74,03,104.00
Rs.6,39,83,681.00
7. "Adjusted" Amount due on 30.11.2023 Rs.1,37,25,569.00
8. Bank's Commission and charges (+) Rs.14,25,647.00
9. Interest against Bank's charges of Rs.27,89,628.00
Rs.14,25,647.00 @15% p.a. from
18.03.2013 to 30.11.2023 [3908 days]
10. Final Amount receivable from Award Debtor Rs.1,74,40,844.00
as on 30.11.2023
(Rupees One Crore Seventy Four Lakhs Forty Thousand Eight Hundred Forty Four only)
8. It was contended by the award debtor that since the money deposited by the
award holder 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.
Accordingly, there is no scope to make any additional payment either on
account of interest on the awarded amount or on account of interest on
bank guarantee charges. 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 or
interest on such amount. 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.60,58,506/- as full
and final settlement and forego the balance amount on account of interest in
view of the long pendency of this proceeding provided that the said amount
is paid by 31st May, 2025. In support of such submission, 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. 4,74,03,104.00
calculation of Award Debtor)
2. Add Interest @ 15% p.a. on Rs. 60,58,506.00
Rs.4,74,03,104.00 from 01.11.2020 to
07.09.2021 i.e. for 311 days.
3. Sum as on 08.09.2021 Rs. 5,34,61,610.00
4. Less:- Payment received from: (-) Rs. 4,74,03,104,00
Judgement Debtor through ECS.
5. Balance Amount as on 08.09.2021 Rs. 60,58,506.00
6. Add:- Interest @ 15% p.a. on Rs. 32,33,211.00
Rs.60,58,506.00 from 10.09.2021 to
31.03.2025 for 1299 days.
7. Final Amount Receivable as on: Rs. 92,91,717.00
31.03.2025
(Rupees Ninety Two Lakhs Ninety One Thousand Seven Hundred and
Seventeen only)
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.1,99,303/-. 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.4,74,03,104/-. 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.60,58,506/- being the balance interest component by 30th May, 2025. In
default, the State would be entitled to pay the interest component @ 15%
per annum on Rs.60,58,506/- 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.1.38
crores in 2009 is still being satisfied notwithstanding payment of more than
Rs.7 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/133/2012 stands disposed of.
(Ravi Krishan Kapur, J.)
S.Bag
