Morgan Securities & Credits Pvt. ... vs B.K. Modi
2013 Latest Caselaw 1211 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                Judgment Reserved on: February 26, 2013
                                 Judgment delivered on: March 12, 2013
+              E.A.(OS) No.818/2012 in Ex.P.No.112/2010

       MORGAN SECURITIES & CREDITS PVT. LTD.
                                                          ..... Decree Holder
                             Through   Mr.P.S. Bindra, Adv. with Ms.Inklee
                                       Roy Barooah, Adv.
                    versus

       B.K. MODI                                   ..... Judgment Debtor
                             Through   Mr.Srinivasan Ganesh, Sr. Adv. and
                                       Mr.Harish Malhotra, Sr. Adv. with
                                       Ms.Shweta Bharti, Mr.Vineet
                                       Dwivedi, Ms.Neha Kapoor and
                                       Mr.Vikram Hazarika, Advs.
       CORAM:
       HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. By this order I propose to decide E.A.(OS)No.818/2012 filed by Dr.B.K. Modi, judgment debtor, who has sought permission to withdraw the undertaking given on 28th April, 2010 regarding creating any third party interest in his assets and has also sought de-attachment of properties bearing No.1, Prithviraj Road Property, New Delhi, and 36, Amrita Shergil Marg, New Delhi.

2. The main dispute between the parties arose from the inter corporate deposit given by the decree holder to M/s. Modi Rubbers Ltd. for which judgment debtor i.e. Dr.B.K. Modi and Sh.V.K. Modi stood guarantors. Since the amount was not repaid in terms of the agreement, the decree holder invoked the arbitration in which the sole Arbitrator passed the Award

dated 6th May, 2004 holding that Modi Rubber, Dr.B.K. Modi and Sh.V.K. Modi were jointly and severally liable to pay `6,72,63,015/- up to the date of reference, thereafter interest at the contractual rate of 21% per annum from the date of reference upto the date of Award and thereafter similar interest @18% per annum from the date of Award till payment.

3. The judgment debtor Dr.B.K. Modi admittedly paid `13 crores paid to the decree holder in terms of the orders passed by the Division Bench. According to the decree holder, after deducting an amount of `13 crores paid by the judgment debtor in the present proceedings, an amount of `118,684,065/- is still due and payable as on 8th February, 2013 by the judgment debtor to the decree holder.

4. The decree holder has filed the Computation Chart showing the calculation of amount payable and due to the decree holder as on 8 th February, 2013. The details given in the said chart are reproduced hereinbelow:

5. It is an undisputed fact that the judgment debtor also challenged the award by way of petition under Section 34 of the Arbitration and Conciliation Act, 1996 which was dismissed by order dated 21 st October, 2009. Aggrieved by the said judgment, the judgment debtor filed an appeal, being FAO (OS) No.39/2010, under Section 37 of the Arbitration and Conciliation Act, 1996 which was dismissed as withdrawn on 19th January, 2010.

6. The other two judgment debtors Modi Rubbers Ltd. and Sh.V.K. Modi had filed Special Leave Petitions before the Supreme Court with regard to dismissal of objections under Section 34 of the Act, wherein notice was issued.

7. The present judgment debtor thereafter, filed an application before the Division Bench of this Court in his appeal seeking withdrawal of order dated 19th January, 2010 on the ground of parity with Modi Rubbers Ltd. and S.V.K. Modi. The said application of the judgment debtor was dismissed by the Division Bench by order dated 21st September, 2010. The Special Leave Petition filed by the judgment debtor against the said order was also dismissed by the Supreme Court on 21st January, 2011.

8. The contention of the decree holder is that as far as the Award against the present judgment debtor is concerned, the same has attained finality and the judgment debtor's prayer seeking permission to withdraw the undertaking given on 28th April, 2010 regarding creating any third party interest in respect of the assets of the judgment debtor as well as de- attachment of properties bearing No.1, Prithviraj Road Property, New Delhi, and 36, Amrita Shergil Marg, New Delhi, cannot be allowed by the executing Court unless the judgment debtor be asked to deposit a sum of `118,684,065/- which is still due and payable (as on 8th February, 2013) to

the decree holder.

9. Mr.Bindra, learned counsel appearing on behalf of the decree holder, states that since the judgment debtor is asking for lifting of the interim order, at least he should deposit the said amount as suggested by the decree holder by way of bank guarantee with the Registrar General of this Court without prejudice till the decision of the Special Leave Petitions filed by Modi Rubbers Ltd. and Sh.V.K. Modi in the Supreme Court which are pending for disposal. The second alternative given by Mr.Bindra is that the judgment debtor should wait the outcome of the decision to be passed by the Supreme Court in the said Special Leave Petitions.

10. The learned Senior Counsel appearing on behalf of the judgment debtor is neither agreeable with the suggestion given by Mr.Bindra, nor computation chart showing the calculation of amount. According to judgment debtor, net amount due and payable by the judgment debtor is only `3,81,86,131/-. Counsel has referred to the Calculation Chart showing the amount due and payable filed by the judgment debtor. The said details are given as under :

S.                 Particulars          As per Decree   As per Judgment      Reason for
No.                                     Holder (Rs.)      Debtor (Rs.)       Difference

1.    Principal amount                   5,00,00,000    5,00,00,000
2.    Interest from due date of ICD, 1,72,63,015        1,72,63,015
      i.e., 18.06.2001 till the date of
      reference, i.e., 15.04.2002 @ 3%
      p.m.
3.    Interest from the date of 2,91,01,850             2,15,98,116        Principal
      reference i.e. 15.04.2002 till the                                   amount should
      date of Award i.e. 06.05.2004,                                       be taken as
      i.e., on Rs.6,72,63,015 @ 21%                                        Rs.5,00,00,000
      p.a.                                                                 instead      of
                                                                           Rs.6,72,63,015
4.    Interest from date of Award i.e. 15,21,19,200     7,91,25,000        Principal
      06.05.04 till date, i.e., 09.02.13                                   amount should
      on Rs.9,63,64,865/-                                                  be taken as
                                                                           Rs.5,00,00,000



                                                                        of
                                                                       Rs.9,63,64,865.
5.    Cost of Arbitration               2,00,000       2,00,000
6.    TOTAL AMOUNT DUE AND              24,86,84,065   16,81,86,131
      PAYABLE
      Less : Deposited by the           13,00,00,000   13,00,00,000
      Judgment Debtor and released to
      the Decree Holder
7.    NET AMOUNT DUE &                  11,86,84,065   3,81,86,131
      PAYABLE

11. The main argument of Mr. Srinivasan Ganesh and Mr. Harish Malhotra, learned Senior counsel appearing on behalf of judgment debtor is that the Award dated 6th May, 2004 contemplates payment of interest from the date of reference till the date of the Award i.e. 6th May, 2004 and from the date of Award till the date of payment merely simple interest @18% per annum on the original principal amount of `5 crores. It is argued that the decree holder instead of taking the principal amount of `5 crores has substituted the same with `6,72,63,015/- while calculating the interest from the date of reference (i.e. 15th April, 2002 till the date of Award i.e. 6th May, 2004) and thereafter on the total amount, decree holder has calculated the interest from the date of Award till 8th February, 2013 the penal interest @18% per annum instead of on principal amount. Had the decree holder made calculation of simple interest in terms of the Award on the principal amount, the figure suggested by judgment debtor would have been reached. It is stated by the learned Senior counsel for the judgment debtor that without prejudice to the rights and contentions of the judgment debtor, as per the Award dated 6th May, 2004 the amount i.e. 3,81,86,131/- which is due and payable, the judgment debtor is agreeable to furnish a bank guarantee. And subject to said deposit, the prayer made in the application be allowed.

12. In a nut-shell, his submission is that the decree holder has wrongly calculated the interest on the compound basis and not simple interest in complete disregard of the directions given by the learned Arbitrator as contained in the arbitration Award dated 6th May, 2004.

13. He also submits that even otherwise, as far as remaining amount is concerned, in para 37 of the judgment passed by the Division Bench on 23rd May, 2012, the judgment debtor in compliance thereto has paid amount of `13 crores to the decree holder. In the said para, the Division Bench has observed that as far as principal amount of `5 crores is concerned, the Division Bench has already clarified that the same could not be recovered till final orders are made in the in the Special Leave Petitions, being No.14293/2010 and 21589/2010, filed by Modi Rubbers Ltd. and Sh.V.K. Modi respectively. Counsel states that as far as remaining amount, if any, is concerned ultimately the same shall be recoverable subject to the final orders of the Supreme Court.

14. Learned Senior counsel states that as the judgment debtor in terms of the order dated 23rd May, 2012 passed by the Division Bench has already discharged his liability of `13 crores the remaining amount, if any, ought not to have been recovered from the present judgment debtor in view of other two judgment debtors being involved. He has also pointed out that principal amount of `5 crores had already been deposited by another judgment debtor Mr.V.K. Modi before the Supreme Court in Special Leave Petition No.21589/2010 and also amount of `13 crores interest component had been secured vide a bank guarantee given by the principal borrower M/s Modi Rubbers Ltd. before the Supreme Court in Special Leave Petition No.26699/2010. Thus, in fact `18 crores had already been secured before the Supreme Court in favour of the decree holder over and above the amount

of `13 crores which has already been paid by the judgment debtor herein in the present execution proceedings. Thereafter, from every corner, the remaining claim is safe and despite of above, his client is prepared to deposit the bank guarantee for a sum of `3,81,86,131 without prejudice to his right so that the interim order passed be vacated due to hardship already suffered by judgment debtor on account of interim order passed The said amount is being deposited in order to show his bonafide.

15. Before passing the order sought by the judgment debtor in the present execution, it is necessary to refer to the operative portion of the Award which reads as under:

"i) The claimant is entitled to receive from the respondents and the respondents are jointly and severally liable to pay Rs.6,72,63,015/- up to the date of reference;

ii) The claimant will also be entitled to interest at the contractual rate of 21% p.a. from the date of reference i.e. 15.4.2002 till the date of Award and thereafter i.e. from the date of Award till the date of payment simple interest @18% p.a. However, if the entire amount is paid within three months from the date of the award, the rate of interest from the date of Award till the date of payment shall stand reduced to 12% p.a.

iii) The claimant will also be entitled to costs of arbitration which are fixed at Rs.2,00,000/-."

16. In case both the calculation sheets are perused, it indicates that as per the decree holder sum of `118,684,065/- is due as on 8th February, 2013. On the other hand according to the judgment debtor, a sum of `3,81,86,131 is due and payable by the judgment debtor as on 8th February, 2013. It appears that the judgment debtor has calculated the simple interest @18% per annum from the date of Award till the date of payment on the original principal

amount of `5 crores. On the other hand, the decree holder has calculated the interest @21% per annum from the date of reference i.e. 15 th April, 2002 on `6,72,63,015/- till the date of the Award and thereafter made the calculation of simple interest @18% per annum not on the principal amount but after calculation, on the total amount by adding the interest @21% which was granted from the date of reference till the date of Award. Prima facie, it appears to the court that the said calculation is not correct. Simple interest is just the amount of money paid on a loan which is the basic type of interest. The interest ought to have been calculated on the principal amount of `5 crores.

17. At present, this court finds force in the argument of judgment debtor. The prayer made in the application is allowed subject to furnishing the bank guarantee of `3,81,86,131 to the satisfaction of Registrar General of this Court within two weeks from today. It is also obvious that the interest of the decree holders is otherwise protected in view of already securing of 18 crores in two Special Leave Petition pending in the Supreme Court. The decree holder in any case is granted liberty to move an application after disposal of two petitions filed by Modi Rubber Ltd. and Shri V.K. Modi with the fresh calculation in case of such situation arises.

18. E.A. No.818/2012 is accordingly disposed of. No costs. Ex.P.No.112/2010 List the matter before the Registrar General on 1 st April, 2013 for compliance.

(MANMOHAN SINGH) JUDGE MARCH 12, 2013/jk