Delhi High Court
Pramod Kumar Mittal & Anr. vs M/S Kiri Associates (P) Ltd on 13 November, 2017
$~35
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (ENF.) (COMM) 89/2016
Date of decision: 13th November, 2017
PRAMOD KUMAR MITTAL & ANR. ..... Petitioners
Through: Ms.Deepika V. Marwaha,
Ms.Worthing Kasar,
Mr.Vaibhav Prakash, Advs.
versus
M/S KIRI ASSOCIATES (P) LTD ..... Respondent
Through: Mr.Manish Kumar, Mr.Piyush
Kaushik, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
IA No. 13008/2017
1. This application filed by the judgment debtor was listed
on 9th November, 2017, when the arguments were heard in part.
The decree holder, who was present on advance notice has also
been heard in opposition of the application.
2. The judgment debtor by way of the present application,
filed under Section 47 of the Code of Civil Procedure, 1908
(hereinafter referred to as 'CPC') has prayed for a
OMP (ENF.) (COMM) 89/2016 Page 1
determination as to whether the decree holder is entitled to
interest @ 14% per annum (simple interest) or Interest
compounded annually.
3. It is further contended that though no averment with
respect to the calculation of the interest have been made in the
application nor any objection have been filed to the calculation
filed by the decree holder on 23rd October, 2017, in terms of
order dated 8th September, 2016 passed by this Court in
OMP(I)(COMM) 341/2016, the judgment debtor had deposited
a sum of Rs. 2 crores with the Registrar of this Court on 4th
October, 2016. It is submitted that in terms of Order XXI Rule
(1)(4) of the CPC no further interest would, therefore, be
payable on this amount of Rs.2 crores and such interest shall
cease to run.
4. The learned counsel for the judgment debtor submits that
under Section 47 of the CPC, this Court shall have to go into all
questions arising between the parties relating to the execution,
deposit or satisfaction of the decree including the question
whether the arbitration award (now a decree) awards Simple
Interest or Compound Interest in favour of the decree holder.
He places reliance on the judgment of Supreme Court in
Topanmal Chhotamal v. Kundomal Gangaram & Ors. AIR
1960 SC 388 and the judgment of Kerela High Court in Abdul
Rahiman v. Parameswari Amma and Ors.
(MANU/KE/0866/1998) to contend that where the decree is
OMP (ENF.) (COMM) 89/2016 Page 2
ambiguous, it is the duty of the executing Court to construe the
same.
5. In my opinion, the above two judgments have no
relevance to the facts of the present case. The Sole Arbitrator
had passed an award dated 7th November, 2014 in favour of the
decree holder, the operative portion of which reads as under:-
"While in the normal course if the claimants
conduct was free of blame and specific
performance could not be granted for some
valid reason, the claimant would have been
at least entitled to the refund of the advance
with interest at 18% p.a. However since
some blame also attaches to the claimant's
conduct the interest should be granted to the
claimant on the advance amount at 14% p.a,
particularly when the transaction is of real
estate. This apart the Claimant would also
be entitled to Rs. 251acs as damages and
litigation costs. The interest would run from
the date of the receipt of the amount of
Rs.1.5 crores by the Respondent till the date
of payment to the Claimant."
6. The decree holder filed an application under Section 33
of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as the 'Act') seeking clarification/interpretation of
the award especially in light of an apparent contradiction
between paragraph 11 and paragraph 5 of the findings of the
OMP (ENF.) (COMM) 89/2016 Page 3
Arbitrator in the award. The Arbitrator vide his order dated 8th
December, 2014 clarified the award and passed the following
directions/award
"While in the normal course if the claimants
conduct was free of blame and specific
performance could not be granted for some
valid reason, the claimant would have been
at least entitled to the refund of the advance
with interest at 18% p.a. However since
some blame also attaches to the claimant's
conduct the compound interest compounded
annually should be granted to the claimant
on the advance amount at 14% p.a.
particularly when the transaction is of real
estate. This apart the claimant would also,
be entitled to Rs. 2 5 lacs as damages and
litigation costs. The interest would run from
the date of the receipt of the amount of Rs. 1.
5 crores by the Respondent till the date of
payment to the Claimant."
7. It is therefore evident that the arbitrator had granted
interest @ 14% per annum compounded annually in favour of
the decree holder.
8. The matter did not rest here and the award was
challenged by the judgment debtor before this Court by way of
OMP(COMM) 203/2016. The same was dismissed by way of
order dated 3rd June, 2016. Paragraph 17 of the said order is
OMP (ENF.) (COMM) 89/2016 Page 4
relevant as the Single Judge also notes that compound interest
has been awarded on the amount directed to be refunded by the
Arbitrator. Paragraph 17 of the order is quoted herein below:
"17. Therefore, the Award has rightly
been passed by the Tribunal in the said
circumstances, which is not contrary to law.
The relief of Specific performance was
disallowed but seeing the misconduct,
misrepresentation and non-disclosure of
material fact as well as hiding and
concealing the crucial facts and information,
the Tribunal had ordered the refund of the
advance paid with compound interest and
also awarded compensation and the cost of
the litigation. Thus, the Award is liable to be
upheld as the same does not suffer from any
infirmity."(emphasis supplied)
9. The judgment debtor carried this order in appeal under
Section 37 of the Act, which was dismissed by the Division
Bench of this Court vide its judgment dated 3 rd July, 2017. In
paragraph 6, the Division Bench again noted that the arbitrator
had awarded refund of advance amount of Rs. 1.5 crores with
interest at the rate of 14% compound interest annually. Special
Leave Petition against the above judgment was dismissed by the
Supreme Court on 25th August, 2017.
OMP (ENF.) (COMM) 89/2016 Page 5
10. The judgment debtor, thereafter, filed a review petition
being RP No. 441/2017 in the appeal dismissed by this Court
vide judgment dated 3rd July, 2017. One of the grounds urged
therein was that the Division Bench had failed to consider the
challenge to rectification of the award under Section 33 and the
imposition of compound interest in the facts and circumstances
was unjustified. The Division Bench vide its order dated 3rd,
November, 2017 dismissed the Review Petition. As far as the
challenge to the award of compound interest is concerned, the
Division Bench held as under:-
"This Court is of the opinion that no ground for review has
been made out. The relevant discussion is Paras 9 to 12 of
the main judgment shows that these questions were agitated
and considered on merits. So far as the issue of rectification
goes, this aspect was not urged in the appeal at the time the
main judgment was delivered. Even otherwise, unless the
appellant is able to satisfy that the grant of such compound
interest was patently illegal or contrary to the contract under
Section 28(3), the Court could not have substituted its view in
reference to that of the Arbitrator." (emphasis supplied)
11. The reliance of the learned counsel of the judgment
debtor on paragraph 6 of the award dated 7th November, 2014,
in view of my above discussion is totally misplaced as much
water has flown thereafter in the form of clarification by the
arbitrator, dismissal of objections by the single Judge of this
Court, dismissal of appeal by the Division Bench, dismissal of
OMP (ENF.) (COMM) 89/2016 Page 6
SLP by the Supreme Court and dismissal of Review Petition by
the Division Bench of this Court.
12. As far as the plea of the judgment debtor premised on the
deposit of Rs. 2 crores made by it with the Registrar General of
this Court pursuant to order dated 8th September, 2016 is
concerned, in my opinion the same is also unfounded. It is first
to be noted that this deposit was made not in the execution
petition but in a petition filed under Section 9 of the Act.
Secondly, at that stage, as has been recorded in the order dated
8th September, 2016, the counsel for the judgment debtor had
submitted that the order challenging the dismissal of its
objections under Section 34 of the Act has been challenged
before the Division Bench in an appeal. It was only to balance
equity and safeguard the interest of the decree holder that an ad-
hoc amount of Rs. 2 crores was directed to be deposited by this
Court. No release of this amount was, however, directed in
favour of the decree holder. The above amount was eventually
released in favour of the decree holder only pursuant to the
order dated 11th July, 2017, which again records the objection
of the judgment debtor to such release. The relevant portion of
the order dated 11th July, 2017 is reproduced herein below:-
"Learned counsel appearing for the respondent
submits that the respondent seeks to file a Special
Leave Petition before the Supreme Court and the
amount be not released. No purpose would be served
in keeping the present petition pending. Objections to
OMP (ENF.) (COMM) 89/2016 Page 7
the Award have already been dismissed and the
appeal against the said order has also been
dismissed.
Accordingly, petitioners are permitted to withdraw
the sum of Rs.2 crores in equal proportions, which is
lying deposited in court along with accumulated
interest in terms of direction of this court dated
8.9.2016. This withdrawal would be subject to any
orders that the Supreme Court may pass in case any
SLP is filed by the respondent." (emphasis supplied)
13. Order XXI Rule 1 of the CPC provides for mode of
payment of money by the judgment debtor in satisfaction of the
decree. Such payment can be made out of Court or through
deposit into Court whose duty it is to execute the decree. As
noted above, the deposit was not made to the Court executing
the decree but to the Court exercising its jurisdiction under
Section 9 of the Act. Secondly, Order XXI Rule 1 would
require an unconditional deposit of the decretal amount by the
judgment debtor. In the present case, the deposit was not
unconditional in satisfaction of the decree but only to prevent
an adverse order being passed under Section 9 of the Act and
pending the appeal that had been filed by the judgment debtor
before the Division Bench of this Court.
14. The judgment debtor has placed reliance on the judgment
of the Supreme Court in the case of Bharat Heavy Electrical
Ltd. vs. R.S. Avtar Singh and Co. (2013) 1 SCC 243 to contend
OMP (ENF.) (COMM) 89/2016 Page 8
that once a deposit is made under Order XXI Rule 1(1)CPC,
Order XXI Rule 1(4)CPC mandates that the interest shall cease
to run. The said judgment would not be applicable in the facts
of the present case inasmuch as in the case before Supreme
Court the amount deposited by the judgment debtor was
withdrawn by the decree holder from the date of service of
notice as contemplated in Order XXI Rule 1(2) of the CPC.
15. I may here quote the provisions of Order XXI Rule 1 of
the CPC;
[1. Modes of paying money under decree-(1) All money,
payable under a decree shall be paid as follows, namely:-
(a) by deposit into the Court whose duty it is to
execute the decree, or sent to that Court by postal
money order or through a bank; or
(b) out of Court, to the decree-holder by postal
money order or through a bank or by any other
mode wherein payment is evidenced in writing; or
(c) otherwise, as the Court which made the
decree, directs.
(2) Where any payment is made under clause (a) or
clause (c) of sub-rule (1), the judgment-debtor shall
give notice thereof to the decree-holder either
through the Court or directly to him by registered
post, acknowledgement due.
(3) Where money is paid by postal money order or
through a bank under clause (a) or clause (b) of
sub-rule (1), the money order or payment through
bank, as the case may be, shall accurately state the
following particulars, namely:-
(a) the number of the original suit;
OMP (ENF.) (COMM) 89/2016 Page 9
(b) the names of the parties or where there are more
than two plaintiffs or more than two defendants, as
the case may be, the names of the first two plaintiffs
and the first two defendants;
(c) how the money-remitted is to be adjusted, that is
to say, whether it is towards the principal, interest
or costs;
(d) the number of the execution case of the Court,
where such case is pending; and
(e) the name and address of the payer.
(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.]
16. A reading of Order XXI Rule 1(2) would show that a
notice of deposit has to be given by the judgment debtor to the
decree holder. The relevance of this notice is to put the decree
holder to notice that the amount has been deposited and if he so
OMP (ENF.) (COMM) 89/2016 Page 10
desires, can be withdrawn from the executing Court. As noted
above, in this case the intent of deposit by the judgment debtor
was not to ensure a release of the same to the decree holder but
only as a security in terms of the order dated 8th September,
2016 passed by this Court. It is only with the deposit being
made under Sub-Rule (1) of Rule 1 and notice thereof being
sent under Sub-Rule (2) of Rule 1 of Order XXI CPC that sub-
rule (4) of Rule 1 of Order XXI of CPC would be applicable
and interest will cease to operate.
17. Similarly, reliance of the judgment debtor on the
judgment of this Court in Engineering Projects (India) Ltd. Vs.
Arvind Construction Company Ltd. MANU/DE/0744/2009
would be of no relevance to the facts of the present case. In fact,
this Court, in the above judgment has held that the payment
made for obtaining a stay of the decree before the Appellate
Court cannot be said to be an amount paid under Order XXI
Rule 1 of the Code of Civil Procedure towards satisfaction of
the decree. Payment under Order XXI Rule 1 CPC satisfies a
decree holder whereas a deposit in the Court to avoid execution
keeps the amount beyond the reach of the decree holder and
leaves him waiting for its release. In the present case, this is
exactly the factual position.
18. The learned Counsel for the decree holder has drawn my
reference to the judgment of the Supreme Court in PSL
Ramanathan Chettiar & Ors. vs. O.R.M.P.R.M Ramanathan
OMP (ENF.) (COMM) 89/2016 Page 11
Chettiar AIR 1968 SC 1047, Paragraph 12 and 13 of which are
quoted hereinbelow:-
"12. On principle, it appears to us that the facts of a
judgment-debtor's depositing a sum in court to purchase
peace by way of stay of execution of the decree on terms
that the decree-holder can draw it out on furnishing
security, does not pass title to the money to the decree-
holder. He can if he likes take the money out in terms of the
order; but so long as he does not do it, there is nothing to
prevent the judgment debtor from taking it out by
furnishing other security, say, of immovable property, if the
court allows him to do so and on his losing the appeal
putting the decretal amount in court in terms of Order 21
Rule 1 CPC in satisfaction of the decree.
13. The real effect of deposit of money in court as was
done in this case is to put the money beyond the reach of
the parties pending the disposal of the appeal. The
decree-holder could only take it out on furnishing
security which means that the payment was not in
satisfaction of the decree and the security could be
proceeded against by the judgment-debtor in case of his
success in the appeal. Pending the determination of the
same, it was beyond the reach of the judgment-debtor."
20. It is clear from the above judgment that where any
deposit is made to purchase peace by way of stay of execution
of the decree, even if the decree holder is entitled to pray for a
release of the said amount on certain terms, this would not be a
OMP (ENF.) (COMM) 89/2016 Page 12
deposit in terms of Order XXI Rule 1 CPC in satisfaction of the
decree.
21. Reliance has also been placed by the counsel for the
decree holder on the judgment of this Court in Delhi
Development Authority vs. Bhai Sardar Singh and Sons 2009
(158) DLT 8; M/s Dewan Chand vs. Union of India (judgment
dated 23rd April, 2015 in Execution Petition 287/2012); and
South Delhi Municipal Corporation vs. M/s Radhey Shyam
2015 (1) RLR 424 to the same effect.
22. The learned counsel for the judgment debtor contends
that there was no embargo on the decree holder withdrawing the
amount of Rs. 2 crores that had been deposited by it in this
Court. On the other hand, the counsel for the decree holder
submits that even on 11th July, 2017, after dismissal of the
appeal of the judgment debtor, when the decree holder had
made a prayer for release of the amount, there was opposition
on part of the judgment debtor and, therefore, it cannot be said
that this amount could have been released in favour of the
decree holder at an earlier date. I agree with the submission of
the learned counsel for the decree holder. Be that as it may, as
discussed above, the deposit itself was not in terms of Order
XXI Rule 1 and therefore the question whether the decree
holder could have sought the release of the same or not is of no
consequence.
OMP (ENF.) (COMM) 89/2016 Page 13
23. In view of the above discussion and finding, the
application is dismissed with cost of Rs. 10,000/- to be paid by
Judgment Debtor to the Decree Holder.
OMP (ENF.) (COMM.) 89/2016 & IA 9105/2016
1. Pursuant to Order dated 3rd August, 2017, warrants of
attachment of the accounts, term deposit and fixed deposit of
the judgment debtor M/S KIRI ASSOCIATES (P) LTD. with
Bank of India, East of Kailash, New Delhi for a sum of Rs.
2,75,00,000/- were issued. The counsel for the decree holder has
filed on record a calculation sheet showing that an amount of
Rs. 2,35,25,365/- would be due and payable under the
decree/award till 7th November, 2017. The learned counsel for
the judgment debtor submits that in terms of order dated 11 th
July, 2017, the amount that was released in favour of the decree
holders should have been appropriated towards principal and
interest. I fail to appreciate the said objection as this would have
no effect on the amount remaining payable under the Decree/
Award. The Decree Holder also points out that reference to
"equal proportions" in order dated 11th July, 2017 is to the two
petitioners. In any case, no objection to the calculation sheet
has been filed before me till date. The learned counsel for the
decree holder states that as on date this amount would be Rs.
2,35,71,997/- .
2. In view of the above, I direct the Bank of India, East of
Kailash, New Delhi to release a sum of Rs. 2,35,71,997/- in
OMP (ENF.) (COMM) 89/2016 Page 14
favour of the Decree Holders in equal proportion from the
Accounts, term deposits and fixed deposit of the judgment
debtor M/S Kiri Associates (P) Ltd. with Bank of India, East of
Kailash, New Delhi.
3. The amount shall be released within a period of two
weeks of service of copy of this order. The remaining amount
lying in the accounts of the judgment debtor shall be released in
its favour or in accordance with its directions.
4. With the above direction, the petition is disposed of.
5. Dasti.
NAVIN CHAWLA, J
NOVEMBER 13, 2017/NK
OMP (ENF.) (COMM) 89/2016 Page 15
