Delhi High Court
M/S Pt. Munshi Ram & Asso.P.Ltd. vs Delhi Development Authority on 27 October, 2009
Author: Manmohan
#25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ EX. APP. (OS) 144/2009 IN EX.P. 196/2006
M/S PT. MUNSHI RAM &
ASSO.P.LTD. ..... Decree Holder
Through Mr. Sudhir Nandrajog, Senior
Advocate with Mr. Debasish Moitra,
Advocate
versus
DELHI DEVELOPMENT
AUTHORITY ..... Judgement Debtor
Through Mr. Ashwani Kumar with
Mr. Akshay Sahai, Advocates
% Date of Decision : 27th October, 2009
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the 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.
JUDGMENT
MANMOHAN, J : (Oral)
1. Present application has been filed by the judgment debtor
claiming refund of alleged excess payment of Rs. 60,01,823.18 along
with interest at the rate of 16% p.a. w.e.f. 4th October, 2006 till the date
the amount is refunded to judgment debtor-DDA.
2. At the outset, learned counsel for judgment debtor-DDA fairly
stated that in view of non-encashment of DDA's cheque No. 090317
dated 27th September, 2006 for Rs. 43,20,531.00/-, he is not claiming
refund of the said amount.
3. Consequently, the only issue that arises for consideration before
this Court in the present proceedings is as to how much interest is
payable to the decree holder.
4. In the Award, learned Arbitrator has awarded interest in the
following manner :-
"11.3. AWARD:
It is seen that the work has been completed by the
Claimants on 4.8.90. Assuming a reasonable
period of 3 months for preparation of the Final
Bill and another 6 months for passing of the
same, the interest is due from 1.9.1991. The
Claimant has demanded interest from 22.12.91
(Exhibit C-82) @ 24% per annum. A rate of 15%
simple interest per annum is considered
reasonable in the case of abnormal delay in the
payment of the Final Bill.
(i). For the pre-suit period :- According to the
Interest Act, 1978, interest is payable for the pre-
suit period i.e. 22.12.91 to 10.5.93 (16.5 months)
simple interest @ 15% per annum on an amount
of Rs.25,64,362/- will be payable i.e.
Rs.5,28,900/-.
(ii). For the pendentalite period :- According
to the latest judgment of the Supreme Court, i.e.
from 11.5.93 upto 30.9.95 (28.5 months) simple
interest @ 15% per annum on an amount of
Rs.25,64,362/- will be payable i.e. Rs.9,13,554/.
(iii). For future interest from 1.10.95 onwards
till the date of payment or decree whichever is
earlier for an amount of Rs.25,64,362/- a simple
interest of 15% per annum shall be payable.
Accordingly, I award that the Respondents to pay
the Claimants an amount of Rs.14,42,454/- as
pre-suit and pendentalite interests and future
interest as simple interest @ 15% per annum on
an amount of Rs.25,64,362.00 from 1.10.1995
onwards till the date of payment or decree
whichever is earlier."
(emphasis supplied)
5. Learned Single Judge while disposing of the judgment debtor-
DDA's objection petition observed with regard to interest as under :-
"32. The objections having been disposed of, the
award of the sole Arbitrator Shri C. Rama Rao dated
30.9.1995 is made rule of the court with the
modifications whereby the award in respect of the claim
for escalation, being claim No.1 is set aside and part of
the amount towards the final bill dealing with cutting
and straightening of reinforcement steel bars is also set
aside and the interest is awarded on the awarded
amounts at simple rate of interest of 12% per annum for
past and pendent lite period. The petitioner shall also
be entitled to future interest at the rate of 9% simple
interest from the date of decree till date of realization.
However, if the respondent pays the decretal amount
within 60 days from today, the respondent would be
exempted from payment of future interest. Parties are
left to bear their own costs."
(emphasis supplied)
6. Mr. Sudhir Nandrajog, learned senior counsel for decree holder
submitted that the decree holder is not claiming interest on interest from
the date of Award to the date of decree but is only claiming interest on
interest from the date of decree to the date of payment as according to
him, learned Single Judge has awarded 9% per annum simple interest
on the decretal amount, which amount would include interest for the pre
suit, pendente lite and post-Award period up to the date of decree. In
this connection, Mr. Nandrajog relied upon the direction of the learned
Single Judge to the effect that in case respondent-DDA did not pay the
decretal amount within sixty days, it would have to pay future interest
@ 9% simple interest on the entire decretal amount.
7. Mr. Nandrajog also placed reliance upon a judgment of the
Supreme Court in Oil & Natural Gas Commission Vs M/s. M.C.
Clelland Engineers S.A. reported in AIR 1999 SC 1614 wherein it has
been held as under :-
"4. There cannot be any doubt that the Arbitrators have
powers to grant interest akin to Section 34 of the CPC
which the power of the court in view of Section 29 of the
Arbitration Act, 1940. It is clear that interest is not
granted upon interest awarded but upon the claim made.
The claim made in the proceedings is under two heads -
one is the balance of amount under invoices and letter
dated February 10, 1981 and the amount certified and
paid by the appellant and the second is the interest on
delayed payment. That is how the claim for interest on
delayed payment stood crystallized by the time the claim
was filed before the Arbitrators. Therefore, the power of
the Arbitrators to grant interest on the amount of interest
which may, in other words, be termed as interest on
damages or compensation for delayed payment which
would also become part of the principal. If that is the
correct position in law, we do not think that Section 3 of
the Interest Act has any relevance in the context of the
matter which we are dealing with in the present case.
Therefore, the first contention raised by Shri Datta,
though interesting, deserves to be and is rejected."
8. Having perused the Award passed by the learned Arbitrator as
well as the judgment passed by the learned Single Judge while
disposing of judgment debtor-DDA's objection petition, I am of the
view that learned Single Judge has only varied the rate of interest
awarded by the learned Arbitrator. In fact, the learned Arbitrator in his
Award stipulated a uniform rate of 15% per annum simple interest for
different periods on specified amounts mentioned in the Award. It is
pertinent to mention that pendente lite and future interest up to the date
of payment was on the same awarded sum. The learned Arbitrator
nowhere directed that interest would be payable on the pre-suit and
pendente lite interest that had accrued till the date of Award.
9. The learned Single Judge while disposing of Judgment Debtor-
DDA's objection petition only varied the rate of interest. While learned
Single Judge directed that for pre-suit and pendente lite period interest
would be payable at the rate of 12% simple interest per annum, he
directed that simple interest at the rate of 9% per annum would be
payable for future period i.e. post award. In my opinion, learned
Single Judge nowhere directed that interest would be payable on
decretal amount inclusive of interest for pre-reference, pendente lite and
post-award period.
10. Learned Single Judge also nowhere stated that in case the
Judgment Debtor-DDA did not pay the decretal amount within sixty
days, the Judgment Debtor would have to pay future interest on the
decretal amount inclusive of interest amount that had accrued till date.
In my view, had the learned Single Judge granted interest on interest, he
would have either specifically stipulated so or would have used the
expression 'compound interest'. Moreover, as stated hereinabove,
learned Single Judge only varied the rate of interest as awarded by the
Arbitrator on the different amounts awarded for different stages.
11. Decree holder's reliance upon Oil & Natural Gas Commission's
case (Supra) is misplaced in the present case as in the said matter,
interest claims were major heads of claim and the arbitrator had
awarded interest on the sum awarded which included the principal
claims of interest as compensation. This would be apparent from
paragraphs 1 and 2 of Oil & Natural Gas Commission's case (Supra),
which are reproduced hereinbelow:-
" This appeal arises out of certain arbitration
proceedings between the parties to this appeal
resulting in an award made on February 29,1988. The
Arbitrators by their award directed that the appellant
shall pay to the respondent as follows :
"(i) US $ 1004.50 being interest on US $ 40,
102.97 at 12% p.a. from 10.12.1985 to 16.4.1986.
(ii) US $ 59, 583 being interest on US $
3,12,011.00 at 12% p.a. from 3.5.1983 to 5.11.1984.
2. On these two items of claim the Arbitrators also
awarded interest at 12% per annum from the date of
award till realisation. The award so made by the
Arbitrators was filed into the Court. Objections filed
thereto stood dismissed and decree was passed in
terms of the award. Against that order made by the
learned Single Judge in his original jurisdiction an
appeal was carried to a division bench which also
dismissed. Hence this appeal."
12. In fact, a Constitution Bench of the Supreme Court in the case of
Central Bank of India Vs. Ravindra and Ors. reported of (2002) 1
SCC 367 held that 1956 amendment in Section 34 of Code of Civil
Procedure was intended to deprive the Court of its power to award
interest on interest, that means, interest on the interest adjudged. The
relevant portion of the said judgment reads as under :-
"45. The 1956 amendment serves a twofold purpose.
Firstly, it prevents award of interest on the amount of
interest so adjudged on the date of suit. Secondly, it brings
the last clause of Section 34, by narrowing down its ambit,
in conformity with the scope of the first clause insofar as
the expression "the principal sum adjudged" occurring in
the first part of Section 34 is concerned which has been
left untouched by amendment. The meaning to be assigned
to this expression in the first part remains the same as it
was even before the amendment. However, in the third
part of section 34 the words used were "on the aggregate
sum so adjudged". The judicial opinion prevalent then
was (to wit, see Prabirendra Mohan Vs. Berhanpore Bank
Ltd. AIR 1954 Cal 289) that 'aggregate sum' contemplated
the aggregate of (i) the principal sum adjudged, (ii) the
interest from the date of the suit to the date of decree, and
(iii) the pre-suit interest. Future interest was capable of
being awarded also on the amount of pre-suit interest -
adjudged as such, that is, away from such interest as was
adjudged as principal sum having amalgamated into it by
virtue of capitalisation. The amendment is intended to
deprive the court of its pre-amendment power to award
interest on interest i.e. interest on interest adjudged as
such. The amendment cannot be read as intending,
expressly or by necessary implication, to deprive the court
of its power to award future interest on the amount of the
principal sum adjudged, the sense in which the expression
was understood, also judicially expounded even before
1955; the expression having been left untouched by the
1956 amendment."
13. Consequently, in my opinion, the amount payable under the
Award and decree passed by this Court is as under :-
Sl. Description Amount
No. (in Rs.)
1. Principal amount 18,45,957.52
Less B.G. 1,00,000.00
__________
Net amount 17,45,957.52
2. Pre-suit interest @ 12 % p.a. on
Rs. 18,45,957.52 w.e.f. 22.12.1991 3,06,479.52
to 10.5.1993 (505 days)
3. Pendente lite @ 12 % p.a. on
Rs. 18,45,957.52 w.e.f. 11.5.93 to 28,05,653.13
4.1.06 (4623 days)
4. Future interest @ 9 % p.a. on
Rs. 18,45,957.52 w.e.f. 5.1.06 to 1,42,467.46
17.11.06 (313 days)
5. Total amount payable (1+2+3+4) 50,00,557.63
6. Amount released by way of getting
attachment orders to decree holder 63,09,537.60
7. Amount excess received by decree
holder (6 - 5) 13,08,979.97
14. Accordingly, the decree holder is directed to refund the amount
of Rs. 13,08,979.97 to judgment debtor-DDA.
15. Learned counsel for judgment debtor-DDA prayed that interest
should be awarded on the excess amount paid to the judgment debtor.
In my opinion, since the excess amount had been retained by the decree
holder and as the said amount has been recovered by way of an
attachment order, the decree holder must refund the said amount of
Rs. 13,08,979.97 with simple interest at the rate of 9% per annum to
judgment debtor-DDA from 17th November, 2006 till the date of
payment. Ordered accordingly. I may mention that while awarding 9%
p.a. simple interest I have taken into account the lowest rate of interest
awarded by this Court for different periods of time to the decree holder.
With the aforesaid directions, present application stands disposed of.
MANMOHAN,J
OCTOBER 27, 2009
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