Sh. Jai Prakash Narain Singh vs N.B.C.C.Ltd.
2009 Latest Caselaw 2110 Del

         *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              Ex.26/2007

%                                  Date of decision: 18.05.2009

SH. JAI PRAKASH NARAIN SINGH                          ....... Decree Holder

                         Through: Mr. Sumit Batra, Advocate proxy
                                 counsel

                                 Versus

N.B.C.C.LTD.                                .......         Judgment Debtor

                         Through: Mr. Manoj Kumar Das, Advocate


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.      Whether reporters of Local papers may
        be allowed to see the judgment?   Yes

2.      To be referred to the reporter or not?        Yes

3.      Whether the judgment should be reported
        in the Digest?                                      Yes


RAJIV SAHAI ENDLAW, J.

1. The question for adjudication in this execution of an arbitral

award made rule of the court under the provisions of the Arbitration

Act, 1940 is, on what amount the interest (i) from the date of the

award and till decree and (ii) from date of decree till payment to be

calculated-whether only on the principal amount awarded or also on

the pre institution and pendente lite interest allowed under the

award.

2. It is not in dispute that under the award dated 30th November,

2002, a principal sum of Rs.1,10,061.46 was awarded under claims 1

to 6. Under claim No. 8, costs of Rs.50,000/- were awarded. The

award under claim No.7 allowed interest at 15% per annum on

claims 1 to 8 from, 21st October, 1991 to 1st April, 1994 being the pre

reference period as well as pendent lite before the arbitrator from

2nd April, 1994 to the date of the award and payment/decree

whichever is earlier.

3. Suit No.816A/2003 was filed by the decree holder in this court

for making the award a rule of the court. The judgment debtor filed

objections to the award. The said objections were dismissed vide

Order dated 16th February, 2006. However, while dismissing the

objections, the rate of interest awarded was reduced from 15% per

annum to 9% per annum. Decree in terms of award so modified was

passed. The decree holder was also granted future interest at 9%

per annum from the date of the decree.

4. Upon execution being filed, the judgment debtor paid a sum of

Rs.2,69,770/- to the decree holder in this court on 20th October,

2008. It was contended by the judgment debtor that the said amount

represented the entire amount due under the decree. However, the

senior counsel for the decree holder contended otherwise. The

matter was posted before the Registrar General of this court to

report on the amount due under the decree.

5. The Registrar General has found that there is no dispute of the

principal amount allowed by the Arbitrator i.e. of Rs.1,10,061.46.

There is also no dispute that @ 9% per annum, from 21st October,

1991 till 30th November, 2002, on Rs.1,10,061.46p, a sum of

Rs.1,10,057.68p became due as interest. The registry on direction of

the Registrar General calculated total amount due as Rs.3,54,940.73.

The judgment debtor having paid Rs.2,69,770/-, a sum of

Rs.85,170.73 was reported to be due.

6. The registry while arriving at the aforesaid figures, calculated

interest w.e.f. 1st December, 2002 till 20th October, 2008 on the

principal amount of Rs.1,10,061.46p as well as on the costs of

Rs.50,000/-, i.e. total Rs.1,60,061.46p.

7. The objection of the judgment debtor is that no interest is

leviable on the costs of Rs.50,000/- from 1st December, 2002 onwards

as done by the registry.

8. The contention of the decree holder is that interest w.e.f. 1st

December, 2002 ought to have been calculated not only on Rs.

1,60,061.46 but also on Rs.1,10,057.68 being the interest due till 30th

November, 2002.

9. The counsel for the judgment debtor has relied on Section 29

of the Arbitration Act, 1940 to contend that the court is empowered

to order interest from the date of the decree on the principal sum

only as adjudged by the award.

10. Per contra, the senior counsel for the decree holder has urged

that the question is no longer res integra. He has relied upon:

(A) Oil Natural Gas Commission vs. M.C. Clelland Engineers

(1999) 4 SCC 327 laying down that arbitrators can award interest

also on pre reference interest. It was held that pre reference

interest is in the form of damages/compensation for delayed payment

and would become part of principal.

(B) M/s. Saraswati Construction Co. Vs. DDA 112 (2004) DLT

736 in which it has been held that after the passing of an award or

the dismissal of the objections by the court and passing a decree in

terms of the award, not only the amount of claim upheld by the

Arbitrator or the court but the pre suit and pendente lite interest

awarded in favour of the decree holder crystallizes into the decretal

amount and the future interest becomes payable on the entire

amount comprising the claims as well as pre suit and pendente lite

interest. It was held that from the date of passing of the decree, the

future interest is not to be calculated merely on the amount of the

claims upheld by the Arbitrator/court but also on the amount of

interest awarded by the Arbitrator or the court.

I must record that this judgment does not notice Section 29

supra

(C) The aforesaid judgment was recently followed in Kali Charan

Sharma Vs. Noida 149 (2008) DLT 244. No reference to Section 29

is found herein also.

(D) Union of India Vs. Harbans Singh Tuli & Sons Builders

Pvt. Ltd. AIR 2000 Punjab & Haryana 313, also relied upon in

Saraswati Construction (Supra) allowing interest from date of

award, not only on pre reference interest but also pendente lite

interest. There is no reference to Section 29 in this judgment also.

11. Section 29 is concerned with interest from the date of decree

only. It has no application to pre decree interest, i.e. interest from

date of award to date of decree.

12. The award in the present case allows interest on amounts

allowed under claims 1 to 8 which include the amount allowed as

costs, as well as amount allowed as pre reference and pendente lite

interest and till the date of payment or decree, whichever is earlier.

The payment aforesaid was not made before decree. In accordance

with judgments aforesaid, interest post award and till the decree, if

allowed, is to be calculated on pre reference and pendente lite

interest also. Section 29 does not come in its way. The objection of

judgment debtor of no interest being chargeable on costs of

Rs.50,000/- till decree is thus rejected.

13. The next question is of post decree interest. Though Section

29 is unequivocal that interest allowed has to be on principal amount

only but the question is what is the principal amount. The judgments

aforesaid, even though not discussing Section 29, hold the pre

decretal interest to form part of principal. However that would make

part of Section 29, permitting interest from decree "on the principal

sum as adjudged by the award and confirmed by the decree"

redundant. If there was to be no distinction between "principal" and

"interest" there was no need for use of expression aforesaid in

Section 29. Section 29 is exhaustive of the whole law upon the

subject of interest on awards. Since Section 29 enables the court to

award interest on the principal sum adjudged by an award, from the

date of the decree onwards, it must be held that it carries with it the

negative import that it shall not be permissible to the court to award

interest on any sum other than the principal sum adjudged by the

award or even on the principal sum adjudged by the award, for any

period prior to the date of the passing of the decree. In the face of

such express provision in law, if the dicta in the aforesaid judgments

were to be applied, it would mean that the court would be awarding

interest on amounts other than the principal sum as adjudged by the

award.

14. Per incuriam means a decision rendered by ignorance of a

previous binding decision or in ignorance of the terms of a statute or

a rule having the force of a law. In none of the judgments aforesaid,

the provisions of Section 29 have been discussed. In Oil Natural

Gas (Supra) the Apex Court has referred to Section 29 but only to

the extent of empowering the court to award post decretal interest.

The other part of Section 29 empowering the court to award interest

only on principal amount adjudged in the award has not been

discussed. In view of the language of the statute, I find that post

decree dated 16th February, 2006 the interest awarded can be on the

principal amount adjudged in the award only and which as aforesaid

is Rs. 1,10,061.46p. Even costs cannot be considered as principal

sum adjudged by an award.

15. Thus I find the following amounts due (got calculated) under

the award:-

       a. Principal amount                    Rs. 1,10,061.46p

       b. Costs                               Rs. 50,000/-

c. Interest awarded at 9% per annum Rs. 2,06,479.27p from 21st October, 1991 to 16th February, 2006 on Rs.

1,60,061.46p, in terms of award as modified and decreed.

d. Interest at 9% per annum from Rs. 26,414.74p 17th February, 2006 till 20th October, 2008 on Rs. 1,10,061.46p

e. Total Amount i.e. a+b+c+d. Rs.3,92,955.47p

f. Less paid Rs. 2,69,770/-

g. Balance amount due. Rs.1,23,185.47p

16. Aforesaid amount be paid by the judgment debtor to the decree

holder within 30 days hereof failing which on application of decree

holder warrants of attachment of monies to the aforesaid extent

lying in the bank account of the judgment debtor particulars whereof

to be furnished by the decree holder be issued, returnable on 17th

August, 2009.

RAJIV SAHAI ENDLAW (JUDGE) May 18, 2009 PP