Bhagyanagar Metals Ltd. vs Mahanagar Telephone Nigam Ltd.
2004 Latest Caselaw 1446 Del

JUDGMENT

H.R. Malhotra, J.

1. This is an execution petition made by the decree holder seeking issuance of warrants of attachment for recovery of Rs. 90,52,617/- including interest commencing from 15.7.2002 to 31.7.2002 in the sum of Rs. 63,050/- and further interest from 1.8.2002 till the date of realisation at the rate of 16 per cent annum.

2. It is stated in the execution petition that the judgment debtor has made part payment in the sum of Rs. 4,61,58,302/- to the satisfaction of the arbitral award which was accepted by the decree holder under protest requesting their right to recover the rest of the amount in terms of the award dated 19.3.2002. The decree holder also wrote a detailed letter to the judgment debtor on 27.7.2002 but of no avail.

3. The judgment debtor filed reply to this petition repudiating the claim of the decree holder on the grounds inter alia that out of the total sum of Rs. 5,51,47,869/-, the judgment debtor has paid a sum of Rs. 4,61,58,302/- in terms of the ward towards the satisfaction of that award after making deduction of Rs. 60,56,115/- against short closure of P.O. of 1998 and liquidated damages as the judgment debtor was within its right to deduct that sum for the reasons that the liquidated damages did not come under the purview of arbitration clause as the same fell outside the Arbitral Tribunal. The judgment debtor while objecting this part of the claim referred to para 16 of the Bid Documents which deals with liquidated damages indicating that liquidated damages would not come under the purview of arbitration clause 20. The judgment debtor also referred to the Arbitration award where learned arbitrator while dealing with this aspect observed as under:

"The question for consideration is whether we will be justified in examining the correctness or otherwise of the levy of liquidated damages of Rs. 13,14,585/-. Para 16 of the Bid Documents deals with 'Liquidated Damages'. According to para 16.3, this clause relating to liquidated damages will not come under the provisions of Arbitration Clause 20. Thus, the contract between the parties is that so far as the liquidated damages are concerned, it shall not be the subject matter of arbitration. In that view, we are unable to entertain the plea of the claimant that the liquidated damages are unjustly levied."

4. Rejoinder was filed by the decree holder to the reply of the judgment debtor where the findings of the arbitrators were quoted on page 1 of the rejoinder as well as on page 2 of the same. The question which comes for consideration is, if the judgment debtor has paid the amount to the decree holder in terms of the award or not. It is true that the arbitrators made award against the judgment debtor for a sum of Rs. 5,51,47,869/- but reading of the award makes it very clear that the arbitrators while dealing with that aspect quoted as under:

"We are unable to entertain the plea of the claimant that the liquidated damages are unjustly levied. As far as the present Arbitration is concerned, the levy shall stand. It is open to the claimant to question the correctness or otherwise of the levy of liquidated damages by pressing any other remedy available. The arbitrators further observed that at the fag end of the arguments, the respondent's Counsel filed a memo before us seeking our permissions to set off liquidated damages amounting to Rs. 15,20,930.53 till short closure of the Purchase Order dated 6.11.1998. The arbitrators also observed that whether or not the levy of liquidated damages of Rs. 15,20,930.53 till short closure of the Purchase Order dated 6.11.1998 is valid and justified, the fact remains that the respondent did not make any claim for levy of the same in the pleadings filed. The claim was made through a memo on 12.2.2002 after the close of the arguments on 11.2.2002. In the circumstances, and for the same reasons as mentioned in relation to the liquidated damages of Rs. 13,14,585/- referred to above, we are unable to consider the same for the purpose of the present arbitration. It is open to the respondent to press its claim for liquidated damages by taking recourse to any other remedy available."

5. There is thus no denial of the fact that arbitrators did deal with this aspect of the matter and perhaps, after hearing both the parties on this part of the claim, rejected the claim of the claimant being not entertainable before them and rather advised the claimant to avail the remedy separately. I may state that neither the respondent/judgment debtor assailed that part of the order by filing an appeal or by way of preferring objections to the award. Thus, finalities stood attached to the award. More so, the award was given for a sum of Rs. 5,51,47,869/- which included the liquidated damages as well and, therefore, the judgment debtor was under legal obligation to pay to the decree holder strictly in terms of the findings given in the award. The judgment debtor on its own had no right to deduct any amount without having recourse to the remedy, as available to him which he failed to avail and, therefore, award became final for all purpose.

6. This being so, the decree holder has become entitled to receive the remaining amount in terms of the award. Consequently, the execution application is allowed. The judgment debtors are granted four weeks time to make the remaining payment, otherwise decree holder shall become entitled to execute the decree as prayed for.