M/S M.L. Dalmiya & Co. Ltd. vs International Airport Authority ...
2013 Latest Caselaw 4561 Del

$~ SPL-1
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+      EX.P.238/2009
%                                             Order dated 03.10.2013

       M/S M.L. DALMIYA & CO. LTD.                   ..... Petitioner
                     Through : Mr.Ram K. Watel, Adv.

                          versus

       INTERNATIONAL AIRPORT AUTHORITY
       OF INDIA LTD.                              ..... Respondent

Through : Mr.J.P. Sengh, Sr. Adv. with Ms.Padma Priya, Ms.Meenakshi Sood and Mr.Mukesh Kumar, Adv.

CORAM:

HON'BLE MR. JUSTICE G.S.SISTANI

G.S.SISTANI, J (ORAL) EX.APPL.(OS) 114/2010 & EX.APPL.(OS) 185/2010

1. In this case an award was rendered by the learned Umpire on 15.4.1991 under the Arbitration Act, 1940, by which the decree holder herein was awarded to US$ 21,86,402 with interest @ 12% per annum from the date of award till realization, however, no pendente lite interest was granted.

2. The judgment-debtor herein filed objections to the award, which were dismissed by a Single Judge of this court on 7.10.1994, however, the rate of interest was modified from 12% to 9% per annum and no pendente lite interest was allowed. The decree holder thereafter filed an appeal before the Division Bench, assailing the order by which the future interest was reduced from 12% to 9% per annum and pendente lite interest was declined. This appeal was allowed by the Division Bench on 6.7.1999 with respect to the payment of future interest, but the prayer for grant of

pendente lite interest was declined. Thereafter a Special Leave Petition was filed by the decree-holder. The Supreme Court remanded the matter back to the Division Bench for re-hearing. The Division Bench upon re- hearing granted pendente lite interest to the decree-holder vide its judgment dated 18.7.2000. In the meanwhile by an order dated 19.3.2009 the appeal filed by the judgment-debtor before the Division Bench against the judgment dated 7.10.1994 of the Single Judge was dismissed; and the appeal filed by the judgment-debtor in the Supreme Court against the order of the Division Bench by which pendente lite interest was granted to the decree-holder, was also dismissed on 23.7.2009. In effect, the order of the Division Bench granting pendente lite interest in favour of the decree holder became final.

3. The short controversy in this execution petition has arisen on account of the fact that when the matter was pending before the Division Bench, part payment was made by the judgment-debtor to the decree-holder which was accepted by the decree-holder without prejudice to their rights and contentions.

4. According to the decree-holder the amount so received was to be appropriated by him towards the interest and then towards the principal, as per the settled law laid down by the Constitution Bench of the Supreme Court in the case of Gurpreet Singh Vs. Union of India reported at (2006) 8 SCC, 457.

5. Per contra counsel for the judgment-debtor further submits that when the part payment was made it was understood that the same would be appropriated towards the principal amount.

6. The sum and substance of argument of counsel for the judgment-debtor is that not only the part payment was to be appropriated towards the principal amount but also at the time when the amount was deposited

there was no order of paying pendente lite interest and, thus, pendente lite interest would become payable only after the Division Bench modified the order of the Single Judge on 18.7.2000 and 17.1.2003.

7. I have heard counsel for the parties and also considered their rival submissions. In the absence of any document in writing, the submission of Mr.J.P. Sengh, learned senior counsel for the judgment-debtor that there was an understanding between the parties that the part payment made would be initially appropriated towards the principal is unacceptable. In the case of Gurpreet Singh Vs. Union of India (Supra) the provisions of Order 21 Rule 1 CPC was duly considered and the amendment to Order 21 Rules 3 and 4 was also considered. It would be useful to reproduce the following paragraphs of the judgment:

"23. Order 23 of the Code contains a scheme of appropriation in a case where Rules 12 and 13 of that Order apply and there is a prior mortgage that remains to be satisfied. The view taken by the Lahore High Court as well as by the Madras High Court in the decision referred to in the judgment of the Full Bench of the Lahore High Court was that, in the absence of a distinct order to the contrary, the Court must normally follow the rule of law applicable to the case in handing over the sale proceeds to the decree holder and the rule of appropriation as referred to in the decision followed. But the question is whether the same principle can be extended in view of the specific provision contained in Rule 1 of Order XXI of the Code especially after its amendment by Act 104 of 1976. That Rule provides for the modes of paying money under a decree. The modes are: (a) by deposit into the Court whose duty it is to execute the decree, or (b) out of Court, to the decree holder in the manner provided, or (c) otherwise, as the Court which made the decree, directs. Sub-rules (4) and (5) seem to be relevant for our purpose. They read:

"1.(4) On any amount paid under clause (a) or clause

(c) of sub-rule (1), interest, if any, shall cease to run

from the date of service of the notice referred to in sub- rule (2).

(5) On any amount paid under clause (b) of sub-rule (1), interest, if any, shall cease to run from the date of such payment:

Provided that, where the decree-holder refuses to accept the postal money order or payment through a bank, interest shall cease to run from the date on which the money was tendered to him, or where he avoids acceptance of the postal money order or payment through bank, interest shall cease to run from the date on which the money would have been tendered to him in the ordinary course of business of the postal authorities or the bank, as the case may be."

26. Thus, in cases of execution of money decrees or award decrees, or rather, decrees other than mortgage decrees, interest ceases to run on the amount deposited, to the extent of the deposit. It is true that if the amount falls short, the decree holder may be entitled to apply the rule of appropriation by appropriating the amount first towards the interest, then towards the costs and then towards the principal amount due under the decree. But the fact remains that to the extent of the deposit, no further interest is payable thereon to the decree holder and there is no question of the decree holder claiming a re-appropriation when it is found that more amounts are due to him and the same is also deposited by the judgment debtor. In other words, the scheme does not contemplate a reopening of the satisfaction to the extent it has occurred by the deposit. No further interest would run on the sum appropriated towards the principal.

27. As an illustration, we can take the following situation. Suppose, a decree is passed for a sum of Rs.5,000/- by the trial court along with interest and costs and the judgment debtor deposits the same and gives notice to the decree holder either by approaching the executing court under Order XXI Rule 2 of the Code or by making the deposit in the

execution taken out by the decree-holder under Order XXI Rule 1 of the Code. The decree holder is not satisfied with the decree of the trial court. He goes up in appeal and the appellate court enhances the decree amount to Rs.10,000/- with interest and costs. The rule in terms of Order XXI Rule 1, as it now stands, in the background of Order XXIV would clearly be, that the further obligation of the judgment debtor is only to deposit the additional amount of Rs. 5,000/- decreed by the appellate court with interest thereon from the date the interest is held due and the costs of the appeal. The decree holder would not be entitled to say that he can get further interest even on the sum of Rs.5,000/- decreed by the trial court and deposited by the judgment debtor even before the enhancement of the amount by the appellate court or that he can re-open the transaction and make a re-appropriation of interest first on Rs.10,000/-, costs and then the principal and claim interest on the whole of the balance sum again. Certainly, at both stages, if there is short-fall in deposit, the decree holder may be entitled to apply the deposit first towards interest, then towards costs and the balance towards the principal. But that is different from saying that in spite of his deposit of the amounts decreed by the trial court, the judgment debtor would still be liable for interest on the whole of the principal amount in case the appellate court enhances the same and awards interest on the enhanced amount. This position regarding execution of money decrees has now become clear in the light of the amendments to Order XXI Rule 1 by Act 104 of 1976. The argument that what is awarded by the appellate court is the amount that should have been awarded by the trial court and so looked at, until the entire principal is paid, the decree holder would be entitled to interest on the amount awarded by the appellate court and therefore he can seek to make a re-appropriation by first crediting the amount deposited by the judgment debtor pursuant to the decree of the trial court towards the cost in both the courts, towards the interest due on the entire amount and only thereafter towards the principal, is not justified on

the scheme of Order XXI Rule 1 understood in the context of Order XXIV Rules 1 to 4 of the Code. The principle appears to be that if a part of the principal has been paid along with interest due thereon, as on the date of issuance of notice of deposit, interest on that part of the principal sum will cease to run thereafter. In other words, there is no obligation on the judgment debtor to pay interest on that part of the principal which he has already paid or deposited.

52. What is to happen when a part of the amount awarded by the reference court or by the appellate court is deposited pursuant to an interim order of the appellate court or of the further appellate court and the awardee is given the liberty to withdraw that amount? In such a case, the amount would be received by the decree holder on the strength of the interim order and the appropriation will be subject to the decision in the appeal or the further appeal and the direction, if any, contained therein. In such a case, if the appeal is disposed of in his favour, the decree holder would be entitled to appropriate the amount already received by him pursuant to the interim order first towards interest then towards costs and the balance towards principal as on date of the withdrawal of the amount and claim interest on the balance amount of enhanced compensation by levying execution. But on that part appropriated towards the principal, the interest would cease from the date on which the amount is received by the awardee. Of course, if while passing the interim order, the court had indicated as to how the deposited amount is to be appropriated, that direction will prevail and the appropriation could only be done on the basis of that direction."

8. In a recent decision rendered by the Supreme Court in Bharat Heavy Electricals Ltd. Vs. R.S.Avtar Singh & Co. (2013) 1 SCC 243, similar view has been expressed.

9. A careful reading of the judgment in the case of Gurpreet Singh Vs. Union of India (Supra) and more particularly the paragraphs reproduced hereinabove, would show that in case the entire amount is deposited by the judgment-debtor, the interest if any, shall cease to run from the date of the deposit. It has also been held that the interest would also cease to run to the extent the amount is deposited. However, it has been clearly held that if the amount falls short the decree-holder would be entitled to apply the rule of appropriation by appropriating the amount first towards interest and then towards the principal amount due under the decree.

10. In the present case admittedly, part payment was made pursuant to directions passed by the Division Bench of this court, to enable the judgment-debtor, to seek interim relief. Since there is no denial to the fact that the part payment was made, the logical conclusion would be that this amount was necessarily to be appropriated by the decree-holder towards the principal amount, unless it was mutually agreed to the contrary.

11. Another submission made by counsel for the judgment-debtor that since initially the Single Judge had declined grant of pendente lite interest, which was granted only by the Division Bench after the matter was remanded back by the Supreme Court, thus the judgment-debtor would be entitled to pay interest only from that date, is also without any force, as neither the Supreme Court nor the Division Bench had rendered this clarification and in the absence thereof it would run from the date when the pendente lite interest was awarded in terms of the award.

12. In view of the settled position of law, the judgment debtor is directed to make the balance payment to the decree-holder within a period of four weeks from today, on the basis of the law laid down and duly applied by the Court to the facts of this case, failing which the decree-holder would be entitled to take recourse to such remedies as available, in accordance

with law. Both the applications stand disposed of. EX.P.238/2009

13. List the matter before appropriate Bench on 8.11.2013.

G.S.SISTANI, J OCTOBER 03, 2013 ssn