Delhi High Court
Power Grid Corporation Of India ... vs Klen & Marshalls Manufacturers ... on 15 March, 2016
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DECIDED ON: 15.03.2016
+ EFA (OS) 8/2015
CM APPL.6445-6446/2015
POWER GRID CORPORATION OF INDIA LTD..... Appellant
Through: Mr. Tushar Mehta, ASG with Ms.
Sharmila Upadhyay, Mr. Rajesh Chhetri,
Mr. Rajeev Chhetri and Ms. Meenakashi
Rawat, Advocates.
versus
KLEN & MARSHALLS MANUFACTURERS
AND EXPORTERS LTD ..... Respondent
Through: Ms. Mohna M. Lall with Ms.
Geetali Talukdar, Advocates.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
S.RAVINDRA BHAT, J. (ORAL)
CM APPL.6446/2015 (condonation of delay)
1. Heard the counsel for the parties.
2. The respondent/decree holder contends that the 182 days spent
in filing of the appeal should not be condoned. It is urged that the
appellant's submission that a copy of the order of 08.09.2014 was not
uploaded, and that it was not made available, is unacceptable in the
given circumstances. It is highlighted that the appellant/judgment
debtor was represented in the Court when the order was dictated.
During the hearing, on behalf of the appellant, it is urged that the
EFA (OS) 8/2015 Page 1
learned Single Judge has accepted the main submission with respect to
the involuntariness and the compulsion on the part of the appellant in
not complying with the terms of the contract and depositing the
decretal amount within the time awarded due to the garnishee order
issued by the Debts Recovery Tribunal dated 08.07.2003. It was
submitted that the subsequent para of the said order dated 08.09.2014
is in variance and this came to light only after the examination of the
text of the order.
3. We have considered the submissions and are of the opinion that
the interest of justice would be best sub-served if the delay in filing
the appeal is condoned.
4. CM APPL.6446/2015 is allowed.
EFA (OS) 8/2015
5. Issue notice in the appeal. Ms. Mohana M. Lall, Advocate
accepts notice on behalf of respondent. With consent of the counsel
for the parties, the appeal is heard finally.
6. The appellant is aggrieved by the two orders of the learned
Single Judge dated 08.09.2014 (hereafter referred to as the first order)
and 12.03.2015 (hereafter referred to as the second impugned order)
made in the course of the execution proceedings in respect of the
Award dated 09.05.2003.
7. The brief facts are that the parties referred their inter se dispute
to Arbitration. The Tribunal on 09.05.2003 rendered the Award
whereby the claimant/decree holder was held entitled to a sum of
US$ 509408/- and a further amount of `82,752/-. The Tribunal also
directed that in case these amounts were not paid within two months
EFA (OS) 8/2015 Page 2
(from the date of the Award), the judgment debtor was to pay 12%
interest till date of payment. Apparently, the decree holder/claimant
had approached the Court under Section 34 of the Arbitration and
Conciliation Act, 1996, contending that some further amounts were
due. This petition under Section 34 was disposed of finally on
03.11.2009. On 28.11.2011, the Division Bench modified the decree
arising out of the Award after noticing that in the main body (of the
Award), the Tribunal had determined the liability of the judgment
debtor to pay 6% per annum on the sum of US$ 186855 from
01.10.1999 till payment. This element was directed to be added and
the decree which was to arise from the Award was accordingly
modified.
8. In the light of the above development, the decree holder
approached this Court claiming that the entire amount was not paid. It
may be mentioned at this stage that on 08.07.2003, the judgment
debtor/appellant received a garnishee order issued by the DRT. The
decree holder was a party to the proceedings before the DRT. During
the pendency of proceedings before it, the DRT in exercise of its
powers to attach the amounts before the judgment, directed that the
amounts payable by the judgment debtor/appellant were to be
deposited with it. The judgment debtor moved the DRT and eventually
deposited the amount of `2,38,26,258/- on 24.07.2003. In the light of
the order of the Division Bench (in appeal, directing the modification
of the Award), the appellant/judgment debtor deposited a further
amount of US$ 42265.07 on 19.03.2012 in satisfaction of the
additional interest liability clarified by the Division Bench.
EFA (OS) 8/2015 Page 3
9. In the first impugned order, the decree holder had contended
before the learned Single Judge that the default interest as it were (i.e.
12%, after lapse of two months) was payable and that the decree was
not satisfied to that extent since no amounts were paid by the
judgment debtor. The judgment debtor's defence to this submission
was that the garnishee order of 08.07.2003 prevented it from
complying with the terms of the Award and discharging its liabilities
under the Award. The Single Judge in the first impugned order
accepted the submission of the appellant/judgment debtor in the
following terms: -
"7. In my view, this contention cannot be accepted for the
reason that judgment debtor herein has left with no choice but
to comply with the order of a legally constituted tribunal
directing it deposit the decretal amount with it. There is an
element of legal compulsion.
7.1 The situation which is envisaged in the case of Hindustan
Construction Corporation is entirely different. The court has
quite correctly stated that where the judgment debtor in order
to obtain a stay on the execution of the decree seeks to deposit
the money in court, would not, amount to payment under Order
22 Rule 1 of the CPC to the decree holder, and, hence, interest
would run.
7.2 The situation which has emerged in the instant case is not
pari materia with the facts obtaining in the case of Hindustan
Construction Corporation Ltd.
7.3 The learned counsel for the decree holder is not able to cite
any precedent which would have bearing on facts of this case.
There is no provision of law cited before me which would have
me come to the conclusion that where judgment debtor deposits
money in court/ tribunal pursuant to a specific direction in that
EFA (OS) 8/2015 Page 4
regard, interest will run in favour of the decree holder. This
contention of the decree holder will thus have to be rejected. If
one were to look to an analogous principle, the provisions of
Order 21 Rule 46F of the CPC would perhaps be apposite."
10. In the later portion of the first impugned order, however, the
Single Judge directed as follows: -
"8.1 As directed in the award, if payment was not made within
two months, judgment debtor was required to pay interest @
12% p.a. from the date of the award in respect of amounts
mentioned in paragraph 33(iii) of the award.
8.2 Accordingly, the decree holder would be entitled to claim
interest for the period between 09.05.2003 till 23.07.2003."
11. In the second impugned order, the decree holder's contentions
with respect to payment of further interest on account of non-
compliance with the directions in the Award towards timely payment
within the two months' period and leading to interest on interest were
accepted and the calculations furnished by the decree holder (extracted
in paragraph 5 of the second impugned order) were taken on record.
The learned Single Judge here invoked the rule of appropriation
enunciated by the Supreme Court in Gurpreet Singh v. UOI (2006) 8
SCC 457 and Bharat Heavy Electricals Ltd. v. R.S. Avatar Singh &
Co., (2013) 1 SCC 243.
12. Learned Additional Solicitor General who appears for the
appellant argues that the both impugned orders are erroneous. It is
firstly urged that the question of interest would be calculable - in the
event of default in making the payment and has to be reckoned after
EFA (OS) 8/2015 Page 5
the two months' period elapses and not in the manner indicated by the
learned Single Judge in the first impugned order. It is further argued
that with the passing of the garnishee order on 08.07.2003, the
question of making payments thereafter to the decree holder could not
have arisen. Counsel highlights that the learned Single Judge in the
first impugned order accepted the proposition that there was an
element of involuntariness and that the judgment debtor could not
have defied the garnishee order (in paragraph 7 - 7.3) nevertheless he
proceeded to hold - after ignoring the earlier part of his own reasoning
- that interest was payable in the circumstances of the case from
09.05.2003 itself. It was submitted that the second impugned order is
unsustainable for the reason that the rule of appropriation would apply
under normal circumstances. In other words, if there were no
impediments in the payment, it would be up to the decree holder to
appropriate the amounts according to its choice - first appropriating
itself towards interest liability and thereafter liquidating the principal
amounts due etc. However, in the present case, since the garnishee
order itself placed an embargo, the question of any further liability to
make payments did not arise.
13. Ms. Mohana M. Lall, learned counsel for the decree holder
urges that the appellant virtually accepted the liability as is evident
from the second impugned order. She points out to paragraph 11 & 12
of the second impugned order to say that the counsel for the appellant
had sought time to make payments which precludes it from
maintaining the appeal. It is urged besides that as a matter of fact
nothing prevented the appellant from depositing the amount with the
EFA (OS) 8/2015 Page 6
DRT immediately on receipt of the garnishee order; instead the
deposit was made on 24.07.2003.
14. As the factual narrative would disclose, from the tenor of the
Award, the appellant was liable to pay certain amounts; a default
interest liability was fastened upon it. The first impugned order to the
extent it holds that the default interest liability would be from the date
of the Award, in the opinion of the Court cannot be faulted. However,
at the same time, the Single Judge - by the same order also noticed -
that the appellant was prevented from complying with the terms of the
Award on account of the garnishee order dated 08.07.2003. This is
not only fortuitous as far as the appellant is concerned and also the
matter of great co-incidence; 08.07.2003 also happened to be the last
date for complying with the terms of the Award. The appellant had
stated before the Single Judge that as on that date, the cheque had been
prepared towards discharge of the entire liability. The Single Judge in
fact accepted the appellant's contentions about its inability on account
of the garnishee order to deposit on or after 08.07.2003.
15. This ipso facto in the opinion of this Court should have been
sufficient for the further finding that the appellant could not be held
responsible towards discharge of the decretal amount after 08.07.2003
except in the manner indicated by the garnishee order. Here the
submission of the decree holder that the amounts were in fact
deposited on 24.07.2003, in the opinion of this Court, is of little
relevance. This is because the moment the appellant was prevented
from compliance - within the time granted by it, it matters little
whether the garnishee order was complied with immediately or within
EFA (OS) 8/2015 Page 7
the reasonable time thereafter. In the present case, the amount was
deposited on 24.07.2003. As things stood then - as indeed even now,
the decree holder cannot access the amount. The object of directing
the default interest was to ensure timeliness in compliance and not
penalize the judgment debtor for the tardiness in payment - certainly
not in compliance with an unrelated order.
16. So far as the second impugned order is concerned, this Court is
of the opinion that it entirely rests on the assumption that further
amounts were payable towards interest liability w.e.f. 09.05.2003
having regard to the payments made on 24.07.2003. So far as the 6%
liability directed to be complied with by the appellant by virtue of the
Division Bench's order is concerned, there appears to be no dispute as
the amounts were paid in full on 19.03.2012.
17. We are of the opinion that both the impugned orders cannot be
sustained; they are accordingly set aside. The appeal is allowed in the
above terms.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
MARCH 15, 2016
/vikas/
EFA (OS) 8/2015 Page 8
