Delhi High Court
K.R.Builders Pvt.Ltd vs Dda on 20 October, 2011
Author: Sanjay Kishan Kaul
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision : 20.10.2011
EFA (OS) No. 44/2009
K.R.BUILDERS PVT.LTD ... ... ... APPELLANT
Through : Mr.Raman Kapur, Sr.Adv. with
Mr.Aviral Tiwari, Advocate.
-VERSUS-
DDA ... RESPONDENT
Through : Mr.Arjun Pant, Advocate.
CORAM :
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE RAJIV SHAKDHER
1. Whether the Reporters of local papers NO
may be allowed to see the judgment?
2. To be referred to Reporter or not? YES
3. Whether the judgment should be NO
reported in the Digest?
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EFA(OS) No.44/2009 Page 1 of 11
SANJAY KISHAN KAUL, J. (ORAL)
1. Admit.
2. Learned counsel for the respondent accepts notice.
3. At request of learned counsel for the parties, the appeal
is taken up for final disposal.
4. The appellant is aggrieved by the unsuccessful
endeavour of the respondent to re-open a closed chapter
of a satisfied decreed by the impugned order dated
25.09.2009.
5. The disputes between the parties which were governed
by the arbitration clause resulted in an award in favour of
the appellant dated 12.08.1996. The amount awarded
was with simple interest at the rate of 16 % per annum
from the date of the award till the date of payment or
date of decree, whichever was earlier, on the awarded
amount. Both the parties understood that the award was
governed by the Indian Arbitration Act, 1940 („the old
Act‟ for short) as the reference was made on 01.01.1993
i.e. prior to The Arbitration and Conciliation Act, 1996
(„the new Act‟) coming into force. Thus, the appellant as a
decree holder filed an application under Sections 14 & 17
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of the old Act for filing the award in court and making it
rule of the court. On the filing of the said application, the
award was filed in the court and notice was issued to the
respondent who filed objections under Sections 30 & 33
of the old Act. The application filed by the appellant and
the objections filed by the respondent were disposed of
by the learned single Judge (as he then was) vide the
order dated 27.05.2002 holding that the provisions of the
old Act would not apply and that the award was governed
by the provisions of the new Act. On the basis of this
finding, a conclusion was reached that the exercise of
filing an application under Sections 14 & 17 of the old Act
was futile as the award was enforceable as a decree of
the court and since no application had been filed by the
respondent under Section 34 of the new Act within the
statutory period, there was no valid challenge to the
award and the objections were consequently dismissed.
This was in view of the legal principles enunciated in
Thyssen Stahlunion GMBH v. Steel Authority of India;
(1999) 9 SCC 334.
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6. The appellant thereafter proceeded to seek execution of
the decree in terms of the award dated 12.08.1996 as
none of the parties filed an appeal against the order
dated 27.05.2002 which became final. The respondent
sought to satisfy the decree by making a payment of a
sum of Rs.12,21,856.53/- after deducting the TDS
thereon.
7. This payment was made on 12.06.2003 calculating
interest at the rate of 16 % per annum on the awarded
amount from the date of the award till the order was
passed on 27.05.2002. The payment was, thus, made
assuming that the order dated 27.05.2002 amounted to a
decree as if the award dated 12.08.1996 was made rule
of the court and a decree had been passed. The
aforesaid should have put quietus to the issue, but the
appellant sought to execute the decree for the remaining
amount with interest payable from 27.05.2002 to date of
payment. The appellant, however, gave up this
endeavour and withdrew the application for the said
purpose, but in the bargain kindled some thoughts in the
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minds of the competent authority of the respondent, who
re-examined the issue.
8. The respondent felt that since the award provided for
payment of interest up to the date of the decree or date
of payment whichever is earlier, interest was liable to be
paid only till the expiry of 90 days from the date of the
award in view of the provisions of the new Act. This was
in view of the stipulation in the award itself as worded.
9. The other development which took place was re-thought
given to the legal position by the Supreme Court in
Milkfood Ltd.v. GMC Icecream (P) Ltd.; JT 2004 (4) SC 393
in terms whereof if a reference was made prior to the
new Act coming into force, the award was to be governed
by the old Act unless the parties specifically agreed to
have the proceedings under the new Act (which was not
so in the present case)
10. The effect was, thus, that the award in question was
liable to be governed by the old Act, but then the order
dated 27.05.2002 had already become final as none of
the parties had challenged the same.
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11. The respondent sought to re-open the chapter by
filing EA No.417/2005 setting out the aforesaid facts and
claiming that the interest paid for the period beyond 90
days from the date of the award till 27.05.2002 was the
excess amount paid which was liable to be refunded
amounting to Rs.5,27,308/-. This application has been
allowed vide the impugned order.
12. A perusal of the impugned order shows that the
learned single Judge appears to have proceeded on the
principle of „double jeopardy". Learned single Judge has
opined that the respondent suffered on account of the
application moved under Sections 30 & 33 of the old Act
being dismissed as per the then prevalent law which
subsequently changed by pronouncements of the
Supreme Court. This was stated to be the "first jeopardy"
to the respondent. The "second jeopardy" was payment
made by the respondent assuming the award to be under
the new Act, but simultaneously making payment of
interest up to the date of payment contrary to the terms
of the award. The learned single Judge, thus, directed
refund of the excess payment made.
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13. On hearing learned counsel for the parties, we are
unable to agree with the conclusion of the learned single
Judge.
14. Insofar as the question as to which of the Acts
would govern the parties, the opinion rendered in the
judgment dated 27.05.2002 was as per the then
prevalent position. If the respondent was of the view that
it laid down an incorrect principle of law, nothing
prevented the respondent from filing an appeal. After all,
some other parties did contest the matter and took the
matter right till the Supreme Court which resulted in the
judgment in Milkfood Ltd.v. GMC Icecream (P) Ltd‟s
(supra).
15. The respondent, thus, cannot make a grievance in
this behalf as to accept such a plea would amount to re-
opening closed litigations where both the parties
accepted the same, as in the present case.
16. The second aspect arises from the award itself and
as to what nature of direction qua the issue of interest
was passed in the award. The arbitrator had granted
interest from the date of the award till date of payment
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or date of decree, whichever was earlier. This pre-
supposed that the award was liable to be filed in the
court to be made rule of the court and thus a
subsequent date would arise when the decree would be
passed. The arbitrator thus fixed interest to an earlier
date assuming that the court would fix the rate of
interest post the decree period. The fact remains that the
award was treated as an award under the new Act. As to
how such an expression has to be understood has been
dealt by the learned single Judge in S.Kumar v. Delhi
Development Authority; (103) 2003 DLT 502 where it was
observed in para 7 as under:
" 7. In view of the fact that award itself
is a decree, the directions of the
Arbitrator that the pendente lite interest
shall be paid from 8.4.1998 to the date
of payment or date of decree whichever
is earlier actually meant that interest
was payable upto date of payment. Filing
of objections by a party under Section 34
and refusal thereof is of non relevance
so far as payment of future interest is
concerned. The application under
Section 34 is only relevant for the
purpose of enforcement of the decree.
The moment this application is refused,
the decree becomes enforceable and the
date of decree remains the same as that
of the award."
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17. A similar view has been taken by another learned
single Judge in Shankar Construction Company v.
National Building Construction Corporation Ltd.; 2003 (3)
Arb.L.R.333.
18. We find that there appears to be some
misconception about the date of the decree. The date of
the decree remains the same as the date of the award.
The decree is not enforceable for a period of 90 days in
view of the provisions of Section 36 of the new Act, which
reads as under:
"36. Enforcement - Where the time for
making an application to set aside the
arbitral award under Section 34 has
expired, or such application having
been made, it has been refused, the
award shall be enforced under the Code
of Civil Procedure, 1908 (5 of 1908) in
the same manner as if it were a decree
of the court."
19. It is this window which was given to the judgment
debtor to make the payment or to challenge the award
failing which the rigours of enforcement would arise. Any
other construction would make it illogical and thus the
interest is liable to be paid till the decree is satisfied.
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20. We may also note that even otherwise, the
respondent detained the money payable under the
decree and utilized the same and is thus liable to pay
interest.
21. We are of the view that the learned single Judge
applied principle of "double jeopardy" which has no
application to the jurisprudence applicable to such
matters.
22. We also cannot lose sight of the fact that not only
did the parties accept the order dated 27.05.2002, but
even made payments in terms thereof and when the
appellant sought to enforce the award for the balance
amount from the date of the judgment of 27.05.2002 till
date of payment, it was persuaded to give up the said
claim to put a quietus to the issue. It was, thus,
impermissible for the respondent to re-agitate the issue
predicated on the plea that it became wiser after having
seen the application filed by the appellant which he had
withdrawn for payment of such balance interest.
23. We see no reason why this closed chapter ought to
have been permitted to be re-opened by the learned
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single Judge in execution proceedings through the
process of an application filed under Section 151 of CPC.
24. The impugned order is accordingly set aside and EA
No.417/2005 stands dismissed.
25. The appeal is accordingly allowed leaving the
parties to bear their own costs.
CM No.17947/2009
No directions are required in this application.
The application stands disposed of.
SANJAY KISHAN KAUL, J.
OCTOBER 20, 2011 RAJIV SHAKDHER, J.
dm
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