Delhi High Court
Mohan Lal Kapoor vs Jawahar Lal Kapoor & Another on 8 August, 2008
Author: Sanjiv Khanna
Execution Petition No. 124/2005 1
REPORTABLE
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ EXECUTION PETITION NO. 124/2005
Date of decision : August 8th , 2008.
MOHAN LAL KAPOOR ......Decree Holder
Through Mr. Arun Khosla, Advocate.
versus
JAWAHAR LAL KAPOOR & ANR .... Judgment Debtors
Through Mr. Ashish Bhagat, Ms.
Manisha Suri & Ms. Prerana,
Advocates.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
1. Whether Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not ? YES.
3. Whether the judgment should be reported
in the Digest ? YES.
SANJIV KHANNA, J.:
1. Subject matter of the present execution petition is the
compromise award dated 26th May, 2005. As issues with regard to
interpretation of the said award arise for consideration, I am
reproducing the same for the sake of convenience:-
"TRUE TYPED COPY OF THE STATEMENT
DATED 20.5.2005
Execution Petition No. 124/2005 2
STATEMENT OF SHRI M.L. KAPOOR, SHRI
MANAS KAPOOR, W/O SHRI SUBHASH LAL
KAPOOR AND SHRI J.L. KAPOOR.
Parties have arrived at a settlement.
Shri M.L. Kapoor and Shri Subhash Lal
Kapoor hereby give up and relinquish all their
rights, title and interest in the business,
properties etc. in dispute including goodwill,
etc. in favour of Shri J.L. Kapoor subject to the
condition that Shri J.L. Kapoor pays to Shri
M.L. Kapoor and Shri Subhash Lal Kapoor a
total sum of rupees five crores in the manner
as under: Out of the said rupees five crores
the share of Shrif M.L. Kapoor will be
Rs.2,69,23,076=00. The share of Shri
Subhash Lal Kapoor will be
Rs.2,30,76,923=00. First installment of total
amount of rupees one crore shall be paid
within twenty days from today. Three crores
shall be paid within 120 days thereafter the
remaining amount within three months
thereafter. In case any installment is not paid
in time Shri J.L. Kapoor shall be liable to pay
interest at the rate of 18% per annum on the
outstanding amount. In case of any document
being required to carry out the letter and spirit
of this settlement, the parties shall promptly
execute the same. Henceforth Shri M.L.
Kapoor and Shri Subhash Lal Kapoor cease
to have anything to do with the business and
properties forming part of these proceedings.
Shri Manas Kapoor assures that he is
authorized by Shri S.L. Kapoor to arrive at the
settlement and to bind him. Award be passed
in terms of this statement.
Sd/-
Jaspal Singh
20.5.2005 (Sole Arbitrator)
Sd/- Sd/- Sd/- Sd/-
(J.L Kapoor) (ML Kapoor) (Manas Kapoor) (Bhagat)
Execution Petition No. 124/2005 3
2. The present execution petition has been filed by Mr. M.L.
Kapoor, who in terms of the above award was entitled to payment of
Rs.2,69,23,076/-. It is admitted case of the parties that full payment
of this amount has been made by Mr. J.L. Kapoor as per details given
below:-
Sr. Amount of Date of Date when Period Interest
Installment Release payment of @ 18%
No. (in Rs.) of became due delay claimed
payment as per (Days) for delay
Mr.M.L.Kapoor (in Rs.)
1. 53,84,615 24.05.06 10.06.05 380 10,08,900
2. 1,61,53,846 13.12.06 08.10.05 430 34,25,509
3. 53,84,616 07.09.07 08.01.06 605 16,06,275
Total 2,69,22,077 60,40,684
3. Mr. M.L. Kapoor claims interest @ 18% per annum on the
ground that Mr. J.L. Kapoor did not pay the installments in time. It is
stated that the award itself specifically stipulated that the first
installment was to be paid within 20 days from 20th May, 2005 and
balance two installments as per amounts specified were to be paid
within 120 days thereafter and three months after the second
installment respectively. It is accordingly submitted that payment of
Rs.53,84,615/- had become due and payable as per the compromise
award of 10th June, 2005, Rs.1,61,53,846/- became due and payable
on 8th October, 2005 and Rs.53,84,616/- became due and payable on
Execution Petition No. 124/2005 4
8th January, 2006. It is admitted case of the parties that the first
installment was paid on 24th May, 2006, the second installment was
paid on 13th December, 2006 and the third installment was paid on 7th
September, 2007.
4. To decide the controversy, I may note some orders passed by
this Court in the present execution petition, which have been
accepted by the parties. The first order dated 10th March, 2006 was
passed by A.K. Sikri, J. It was contended by Mr. M.L. Kapoor that
disputes relating to the company M/s Nawab Auto Engineers Private
Limited alone were subject matter of reference and the arbitration
award did not cover personal properties of the parties. This
contention of Mr. M.L. Kapoor was rejected and it was held that all
properties were taken into consideration and were subject matter of
the award. The said order noted that the award was passed
subsequent to a settlement between the parties and not an award
wherein the merits of the rival contentions were taken into
consideration. It included properties situated at NOIDA as well as
Shankar Market. I may note here that this order was passed in view
of the submission made on behalf of Mr. M.L. Kapoor that Mr. J.L.
Kapoor had failed to make payment along with interest. The stand
taken by Mr. J.L. Kapoor, on the other hand, was that Mr. M.L.
Kapoor had failed to execute the documents in respect of the
properties at NOIDA and Shanker Market and had wrongly and
Execution Petition No. 124/2005 5
falsely claimed that only properties of the company were subject
matter of the award and therefore payments were not made. I may
refer to portions of the order dated 10th March, 2006 and the findings
given by the learned Single Judge.
" Therefore, this execution petition is filed for
enforcement of this part of the Award seeking
a direction against Judgment Debtor No. 1 to
make this payment along with interest payable
under the said settlement and award.
Judgment Debtor No. 1 has filed reply to the
petition wherein plea taken is that under the
said settlement/award, the Decree Holder was
also to execute certain documents which
decree-holder has not executed. Judgment
Debtor No. 1 states that it is willing to make
payment in accordance with the said award
subject to decree-holder fulfilling his obligation
therein.
xxxx
Counsel for Judgment Debtor No. 1,
therefore, is right in his submission that the
petitioner has to execute necessary
documents like relinquishment deed etc. in
favour of the respondent no. 1 in order to
become entitled to get the amount under the
Award. Indubitably the respondent no. 1 had
even prepared draft in the sum of
Rs.53,84,615/- on 3.6.2005 being the first
instalment, for payment under the settlement.
However, decree holder refused to sign the
necessary documents.
Contention of learned counsel for the
decree holder is that the disputes referred
were only in respect of company and,
therefore, neither the learned Arbitrator could
enlarge the scope of reference nor was it
done. His submission was that the expression
that the settlement dated 20.5.2005 whereby
the petitioner had relinquished his right, titled
and interest in "business, properties etc. in
dispute including goodwill" referred to only the
business, properties and goodwill of the
company in respect of which the disputes
were referred. This contention would have
merited consideration only if the Arbitrator had
proceeded to adjudicate the disputes.
However, that did not happen. In stead the
parties arrived at settlement. Form the
narration of facts disclosed above, it is clear
that while settling the matter, parties did not
stick to the scope of reference but wanted all
the family disputes to be settled including in
respect of aforesaid two properties situated at
C-24, Sector-VIII Noida, District Gautam Budh
Nagar, UP and Flat no. 16, New Central
Market, Shankar Market, (Rajiv Chowk), New
Delhi. If these two properties are excluded
the petitioner and the respondent no. 2 would
not have been entitled to the extent of amount
settled and disclosed in the settlement dated
20.5.2005. When the learned Arbitrator took
up the matter for settlement, parties did not
restrict to the scope of settlement to disputes
which were subject matter of the reference
which is obvious from the facts narrate above.
There was no bar in settling all the family
disputes including other properties, even
when not referred for arbitration.
It is, therefore, not open to the petitioner
to contend that he is entitled to the sums
under the Award without relinquishing his
share in the properties including aforesaid two
properties situated at C-24, Sector-VIII Noida,
District Gautam Budh Nagar, UP and Flat no.
16, New Central Market, Shankar Market,
(Rajiv Chowk), New Delhi. Since he has
refused to sign those papers in order to carry
out his obligation under the settlement and
award, he is not entitled to the amount as
claimed at this stage. While directing the
judgment debtor no. 1 to make payment to the
decree holder of the amount as per the Award
on decree holder executing necessary
documents."
5. The aforesaid order dated 10th March, 2006 seriously indicts
Mr. M.L. Kapoor for his failure to execute necessary documents like
relinquishment deed etc.; in favour of Mr. J.L. Kapoor in order to
become entitled to payment under the award. The Court also notices
that Mr. J.L. Kapoor had even prepared a bank draft for the first
installment and the fact that Mr. M.L. Kapoor had wrongly refused to
sign papers and carry out his obligations under the settlement award.
Finding has been given in the said order that Mr. M.L. Kapoor was
not entitled to the amounts claimed as he himself had refused to carry
out his obligations. This order was not appealed against and has
become final and was accepted by Mr. M.L. Kapoor.
6. In the order dated 24th May, 2006, it is recorded that Mr. M.L.
Kapoor through his counsel had handed over blank transfer deeds of
shares to the counsel appearing for Mr. J.L. Kapoor. He also
undertook on the said date to hand over resignation of his daughter
along with affidavit that she ceases to be a Director of the company
within two weeks thereof. On the said date, payment of
Rs.53,84,615/- was made to the counsel for Mr. M.L. Kapoor.
Therefore, till 24th May, 2006, Mr. M.L. Kapoor certainly is not entitled
to interest in view of the order dated 10th March, 2006 and the
findings given therein. Even otherwise, as per Section 51 of the
Contract Act, 1872, when a contract consists of reciprocal promises
to be simultaneously performed, no promiser need perform his
promise unless the promisee is ready and willing to perform his
reciprocal promise. The compromise award specifically recorded that
Mr. M.L. Kapoor shall promptly execute documents to carry out letter
and spirit of the settlement in respect of the properties. Reference in
this regard can also be made to Section 52 of the Indian Contract Act,
1872, which stipulates that reciprocal promises shall be performed as
expressed by the contract to be performed in that order and where
order is not specifically fixed; they shall be performed in the order
which the nature of transaction requires.
7. Another Single Judge of this Court in his order dated 9th May,
2008 after examining the facts of the case, has held as under:-
"4. The order dated 24.05.2006 records that
the decree holder had handed over the
documents, as required, duly signed by him to
the judgment debtor No. 1. Since the
payment of the first instalment was itself made
on 24.05.2006, there is no question of the
payment of interest in respect of the first
instalment. However, with regard to the
second and third instalments, it is the
contention of the learned counsel for the
decree holder that they, also, had become
immediately payable on 24.05.2006 and as
they were paid subsequently on 13.12.2006
and 07.09.2007, the judgment debtor, as per
the terms of the settlement, would be liable to
pay interest on the principal amounts due on
account of the delayed payments @ 18% per
annum. Therefore, the claim with respect to
interest for the delayed payments to the extent
of Rs 34,25,509/- and Rs 16,06,275/- for the
second and third instalments was being
claimed."
8. This order dated 9th May, 2008 has also not been appealed
against and has been accepted by Mr. M.L. Kapoor. Thus, till 24th
May 2006 the entire lapse and fault lies with Mr. M.L Kapoor and
therefore he is not entitled to any interest till that date. On 24th May
2006, the first installment was paid and subsequent installments
become payable as per the period stipulated in the settlement award
only thereafter and not immediately.
9. Regarding the second and the third installments as noticed
above, Rs.1,61, 53, 846/- was paid on 13th December, 2006, whereas
the first installment was paid on 24th May, 2006. The period of 120
days expired on 24th September, 2006. Similarly, the third installment
was paid on 7th September, 2007 and with 24th May, 2006 as the date
for payment of the first installment, then in terms of the settlement
award, the third installment was due and payable on 24th December,
2006.
10. I again note the findings against Mr. M.L. Kapoor and his
conduct as recorded in the order dated 10th March, 2006. The
execution petition itself was dismissed by the said order after
recording the findings. After the said order was passed, Mr. M.L.
Kapoor filed an application being E.A. No. 606/2006, which is being
disposed of by this order on the question of interest and for
modification of the order dated 10th March, 2006 as the petition itself
was dismissed by the said order. Order sheets reveal that thereafter,
Mr. J.L. Kapoor had handed over several other documents which
were required to be executed by Mr. M.L. Kapoor and the matter had
remained pending in this Court. As immovable properties were
involved, documents executed by Mr. M.L. Kapoor also required
registration in the office of the Sub-Registrar to confer legal title on
Mr. J.L. Kapoor. In fact, it is the case of Mr. J.L. Kapoor that Mr. S.L.
Kapoor to whom a sum of Rs.2,30,76, 923/- was to be paid, had
executed necessary documents and payments were made to him
within time and there was no dispute and claim for interest. It is
submitted that problems arose with Mr. M.L. Kapoor because he
refused to firstly execute the documents and thereafter there was
always suspicion and doubt whether he would execute further
documents, which may be required by the authorities and also get the
relinquishment deed etc. registered in the office of the Sub-Registrar.
Mr. M.L. Kapoor also raised the issue with regard to his guarantees
given to the bank and wanted specific release letters. This resulted in
issue of notice to the Manager, ICICI Bank for clarification whether
Mr. M.L. Kapoor still continued to be a guarantor.
11. Order dated 23rd May, 2007 reveals that still some documents
were required to be executed by Mr. M.L. Kapoor. I may also note
here that Mr. M.L. Kapoor had been writing letters to Tata Motors and
claiming that he was a Director of Nawab Auto Engineers Private
Limited as he had not been paid full amount of Rs.2,69,23,076/-.
Mr.M.L. Kapoor in the release deed and other documents, which he
was ready and willing to sign, wanted a specific clause that the said
release deed would become effective upon completion of entire
payment in the manner and mode as stated in the agreement, which
required payment of the three stipulated installments on or before 10th
June, 2005, 10th October, 2005 and 1st January, 2008. Mr. J.L.
Kapoor had prepared a draft for Rs.1,61,53,854/- dated 20th
September, 2006 and a copy of the same was sent to Mr. M.L.
Kapoor along with the letter dated 23rd September, 2006. It was
mentioned in this letter that the covenant in the proposed release
deed circulated by the Mr. M.L Kapoor that the same shall be
effective in the manner and mode stated therein, was not acceptable
to the financial institution and, therefore, should be deleted. This
letter was replied by Mr. M.L. Kapoor stating that he was not ready
and willing to execute the release deed as he has already executed
the relinquishment deed. Mr. J.L. Kapoor thereafter again on 21st
November, 2006 had written a letter asking Mr. M.L. Kapoor to accept
the second tranche of money and at least sign release deed of one
property located at NOIDA but Mr. M.L. Kapoor refused to sign the
release deed and insisted on payment of the second installment. It
was in these circumstances that E.A. No. 608/2006 was filed by Mr.
J.L. Kapoor and upon execution of the release deed in respect of
NOIDA property, payment was made on 13th December, 2006. Thus,
Mr. J.L Kapoor cannot be blamed and held responsible for the said
delay.
12. It is the case of Mr. J.L. Kapoor that due to these letters he
faced considerable difficulty and problems with Tata Motors freezing
their accounts etc. The terms of the settlement, award required that
"in case of any document being required to carry out the letter and
spirit of the settlement, the parties shall promptly execute the same".
It is also the case of respondent No. 1 that he had to secure loans
and facilities from banks to make the said payments of installment
and in view of the stand taken by Mr. M.L. Kapoor, there were
difficulties and problems. Keeping all these aspects in mind, I feel
that Mr. M.L. Kapoor is not entitled to interest on Rs.1,61,53,846/-
paid to him on 13th December, 2006.
13. However, there is some delay in payment of the final
installment after period of three months from the date of payment of
the second installment, which expired on 12th March, 2007. Payment
of the third installment of Rs.53,84,616/- was only made on 7th
September, 2007. It appears that during this time the Court had
issued several directions to NDMC to ensure that necessary
formalities are completed to transfer complete title of the Shankar
Market property. With regard to the third installment, Mr. J.L. Kapoor
did not prepare any bank draft for payment to Mr. M.L. Kapoor.
Moreover, as per the award, the obligation of Mr. M.L. Kapoor was to
only execute documents. The entire effort and exercise to get proper
title transferred and recorded with NDMC obviously was with and
upon Mr. J.L. Kapoor. Mr. M.L. Kapoor cannot be penalized for the
delay by NDMC. It also appears that this Court had passed several
orders directing the parties to appear before NDMC and there is no
allegation that Mr. M.L. Kapoor intentionally or otherwise avoided
signing the documents after payment of the second installment.
Order dated 23rd May, 2007 reveals that on the said date the Counsel
for NDMC had handed over a list of documents that were required to
be executed by Mr. M.L Kapoor in favour of Mr. J.L Kapoor for the
title to be perfected in favour of the latter and to be filed with the
Directorate of Estates. On the said date the counsel for Mr. M.L
Kapoor undertook to execute the said documents within one week of
the said order.
14. In these circumstances, I feel that Mr. M.L. Kapoor would be
entitled to interest @ 18% per annum as stipulated in the award for
the period between 13th March, 2007 and 7th September, 2007 on
Rs.53,84,616/-. After calculation, the aforesaid payment will be made
within a period of four weeks from today.
List the execution petition again on 8th September, 2008.
.
(SANJIV KHANNA)
JUDGE
AUGUST 08, 2008.
VKR/P
