Delhi High Court
Alimenta S.A. vs N.A.C.M.F.Of India on 31 October, 2018
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 08th October, 2018
Pronounced on: 31st October, 2018
+ EX.P. 204/2002 and EA.(OS) Nos.434/2011, 543/2011, 62/2012
ALIMENTA S.A. ..... Decree Holder
Through : Mr.Arvind K Nigam, Sr Advocate
with Mr.Shailendra Swarup,
Ms.Bindu Saxena, Ms.Aparajita
Swarup, Mr.Mikhil Sharda and
Mr.Mehtaab Singh Sandhu,
Advocates.
versus
N.A.C.M.F.OF INDIA ..... Judgment Debtor
Through : Mr.A.K.Thakur, Mr.Aaditya Vijay
Kumar, Mr.Anurag Tiwari and
Ms.Akshita Katoch, Advocates.
CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA
YOGESH KHANNA, J.
EA (OS) No.392/2017
1. The decree holder moves this application under Order XXI read
with Section 151 CPC for direction to the judgment debtor to deposit the
decretal amount with interest.
2. The following are the relevant facts for determining this
application:-
a) on 13.02.1981 the decree holder invoked arbitration to be
held in London under FOSFA (Fats, Oils, Seeds & Fats Association)
Rules as disputes had arisen between the parties consequent to default
by the judgment debtor in effecting supplies under the contract dated
12.01.1980;
b) on 15.11.1989 the original arbitral award was passed. The
relevant extract of the award is as under:-
"We AWARD that Sellers shall pay to Buyers within 14 days
from the date of this award the sum of US$4,681,000 (Four
million six hundred and eighty one thousand United States
Dollars) being the difference between the contract price of
US$765 per metric tonne plus US$15 per metric tonne for
double bags and the settlement price US$2275 plus US$15
per metric tonne for double bags and damages with interest
thereon at the rate of 10.5% from 13 February 1981 to the
date of this award."
c) on 13.05.1990 judgment debtor preferred an appeal under
FOSFA Rules against the original award;
d) on 14.09.1990 an appeal Award passed affirming the original
award of 15.11.1989 directing, inter alia, that the judgment debtor
shall pay to the decree holder within 14 days from the date of the
appeal award a sum of US$ 4,526,000 with interest thereon @11.25%
per annum from 13.02.1981 to the date of the appeal award i.e.
14.09.1990. The judgment debtor was also directed to pay the fees, cost
and expenses of the appeal amounting to £9,344.55;
e) on 08.07.1993 the decree holder filed a petition registered as
Suit No. 1885 of 1993 ("Suit") under S. 5 r/w S. 6 of the Foreign
Awards (Recognition and Enforcement) Act, 1961 before the Hon‟ble
Delhi High Court for filing and enforcement of the Appeal Award read
with the original award;
f) on 28.01.2000 the learned Single Judge by his final judgment
and order dated allowed the Suit and passed a decree also dated
28.01.2000 as under:-
"This suit coming on this day for final hearing before this
Court in the presence of the counsel for the parties as
aforesaid, it is ordered that the Award dated 15.11.1989,
and confirmed by the appeal award dated 14.9.90 by the
Board of Appeal of Federation of Oil and Fats Association
Ltd., appended hereto as annexure „A‟ and „B‟ is taken on
record and made a rule of the Court and a decree is hereby
passed in terms of the said award which shall form part of
the decree.
It is further ordered that the petitioner shall be entitled to
interest @ 18% per annum from the date of the award till
the date of realization.
xxxxxx
It is also ordered that the respondent shall make payment of
any loss on account exchange variation between the date of
Award and the date of actual payment."
g) on 26.05.2000 judgment debtor filed an appeal being FAO
(O.S.) No.205/2000 before the Division Bench of this Court against the
judgment in the Suit;
h) on 28.02.2001 at the time of admission of the FAO, a stay was
granted on execution of the Decree by the Division Bench passed in
CM No. 1071 of 2000 in said FAO, against said order dated
28.02.2001, decree holder filed SLP (C) Nos.7033 of 2001 and 14943
of 2001 before the Supreme Court;
i) on 05.04.2002 the Supreme Court passed an order disposing
of SLP (C) Nos. 7033 of 2001 and 14943 of 2001 and modified the
order dated 28.02.2001 passed in the FAO by directing that the JD
shall furnish either bank guarantee or property security for the
principal amount decreed to the Registrar of this Court within eight
weeks from the date of the said order failing which the order of stay
granted by the this Court would stand vacated;
j) on 05.08.2002 the Supreme Court was pleased to grant two
weeks time to comply with its earlier order dated 05.04.2002;
k) on 26.08.2002 the Supreme Court directed that if within the
two weeks‟ time granted by its order dated 05.08.2002 the security
furnished has not been accepted, the decree becomes executable and
stay order stands vacated;
l) in September 2002as security offered was not accepted within
the said two weeks, extension was granted by the Supreme Court‟s
order, Decree holder filed Execution Petition No.204/ 2002 which is
presently pending before this Court and in which, inter alia, EA(OS)
No. 392/ 2017 has been filed by the decree holder;
m) In October 2002 judgment debtor filed its reply/objections to
the Execution Petition and rejoinder thereto was filed by the decree
holder;
n) On 08.01.2003 the Supreme Court modified its order dated
05.04.2002 to the extent that in case the judgment debtor furnished
bank guarantee for the entire principal amount to the Registrar of this
Court within four weeks from the date of the said order, the execution
proceedings would remain stayed. In the event the bank guarantee is
not furnished, the Supreme Court directed that the said order dated
08.01.2003 shall stand automatically vacated without reference to the
Court
o) on 06.03.2003 modification/corrigendum was issued to BG
No.86/2002 pursuant to order dated 24.02.2003 of the Registrar
General of this Court. The modified /amended Bank Guarantee
No.86/2002 for Rs.22.5 crores accepted by the. Registrar General of
this Court;
p) on 02.06.2011, the said BG for Rs. 22.5 crores encashed and
the amount placed in FDR No. 15530310192931 dated 02.06.2011 for
Rs.22,50,000/- in UCO Bank, Delhi High Court Branch, renewable
yearly. Thereafter, the Execution Petition was adjourned sine die. As
per judgment debtor in its EA(OS) No.165 of 2018 in Ex.P.
No.204/2002, the value of said FDR on 26.03.2018 stood at
Rs.38,00,56,225/;
q) on 06.09.2010 judgment of the third Judge, HMJ Ravindra
Bhat, concurring with the judgment of HMJ Mudgal, holding LPA is
not admissible and hence FAO not maintainable. The judgment debtor
preferred SLP (C) No. 28325 of 2010 against the judgment and order
dated 06.09.2010 of the third Judge in the FAO;
r) on 25.10.2010 order of the Supreme Court in SLP(C)
No.28325 of 2010 granting interim stay of the impugned High Court
judgment subject to deposit of the amount due as per the award with
further interest at the same rate as per the award within eight weeks,
before the Delhi High Court; The judgment debtor thereafter filed SLP
(C) No. 35065 of 2010 against the final judgment and order of the Ld.
Single Judge dated 28.01.2000 passed in the Suit. The judgment debtor
filed an application for modification of the order dated 25.10.2010 of
the Supreme Court;
s) on 17.01.2012 the Supreme Court while granting leave to
appeal in both the aforementioned SLPs renumbered as Civil Appeal
Nos.665 of 2012 and 667 of 2012, respectively, did not accede to
prayer in the third modification application of judgment debtor. The
Court rejected the prayer for interim relief preferred by judgment
debtor in its SLPs, and gave DH liberty to enforce the Decree dated
28.01.2000 passed by this Hon‟ble Court in view of non-compliance
with its order dated 07.04.2011. Pursuant to order dated 17.01.2012 of
the Supreme Court, decree holder pursued execution of the Decree in
this Hon‟ble Court in the Execution Petition;
t) On 21.08.2014 order of this Court inter alia in EA (OS) No.
573 of 2012 of DH granting rectification of the Decree dated
28.01.2000 passed in Suit No. 1885 of 1993 wherein principal amount
was corrected to US $ 4,526,000 and period of interest was corrected
to 13.02.1981 to 14.09.1990. As per the said order, the Decree shall
remain unaltered in all other respects and a copy of order dated
21.08.2014 passed in EA (OS) No. 573/2012 be placed in the Suit file.
The judgment debtor preferred appeals by EFA (OS) No. 25 of 2014
and FAO (OS) No. 104 of 2015 against the order dated 21.08.2014;
u) on 16.04.2015 judgment of the Division Bench disposing of
both the said appeals and directing the Registry was directed to
prepare a decree sheet in accordance with the order dated 21.08.2014
passed by the Single Judge;
v) on 20.05.2015 order of the Division Bench clarifying order
dated 16.04.2015 whereby, inter alia, the Registry was directed to
calculate the amounts afresh and correctly mentioned in the decree.
Thereafter, the Registry of this
Court issued a corrigendum in the Decree dated 28.01.2000 whereby
the third paragraph on the second page of the Decree was modified to
read as under:
"It is further ordered that the respondent shall deposit in
this Court an amount of US$ 4,526,000 with interest
thereon @11.25% p.a. with effect from 13.02.1981 to
14.09.1990 the date of award aggregating to US$
9,408,500 as per the terms of the Award together with the
sum of pound Sterling 9,344.55 towards fee and costs of
Appeal and the fee of Pound Sterling 100.00 paid by the
petitioner for application before Federation & further
Pound Sterling 2,950/- paid by the petitioner towards
Federation Fee, Arbitrators Fees etc. with interest for
payment."
w) on 25.01.2016 the decree holder thereafter filed EA (OS) No.
87 of 2016 in Ex. P. No. 204 of 2002 for placing on record the
corrigendum to the Decree dated 28.01.2000 and for consequential
amendment of the Execution Petition.
x) on 03.01.2017 this Court allowed the said application and the
amended petition was taken on record subject to decree holder placing
on record the original Power of Attorney, which decree holder
accordingly filed on 16.01.2017;
y) on 24.08.2017 this Court directed that till the next date of
hearing, JD shall except with the leave of this Hon‟ble Court not
alienate, transfer, encumber or create any third party right in respect
of immoveable properties mentioned in Annexure B to the Affidavit
dated 21.08.2017 filed by JD (including details of inter alia bank
accounts and immoveable properties of JD filed in compliance with
order dated. 11.07.2017 passed in the Execution Petition);
z) on or about 11.09.2017 judgment debtor filed EA(OS) No. 356
of 2017 in Ex. P. No. 204 of 2002 seeking stay of the execution
proceedings, and EA(OS) No. 358 of 2017 in Ex. P. No. 204 of 2002
seeking modification of the order dated 24.08.2017;
aa) on 14.09.2017 said applications dismissed by the Ld. Single
Judge and against said order dated 14.09.2017, judgment debtor
preferred EA(OS) No. 23 of 2017 before the Division Bench;
bb) Per orders dated 23.10.2017 and 13.11.2017 the Division
Bench as an ad-hoc interim measure without prejudice to the rights
and contentions of the parties, which are the subject matter of Civil
Appeals arising out of SLP(C) Nos. 28325 of 2010 and 35065 of 2010
and the issues and contentions raised before the Ld. Single Judge in the
Execution Petition modified the interim order passed by the Ld. Single
Judge in the Execution Petition and inter alia directed the JD to furnish
an unconditional bank guarantee or fixed deposit in favour of the
Registrar General of this Hon‟ble Court for a sum of Rs.
96,48,41,675/- less the amount of the FDR lying in the name of the
Registrar General. The Ld. Division Bench clarified in its order dated
23.10.2017 that they have not examined and answered the question
relating to the date of conversion nor have they expressed any
opinion on the rights and contentions of the parties and on the
maintainability of the appeal. In its order dated 13.11.2017, the Ld.
Division Bench again clarified that it has not commented on the merits
of the appeal/case or made any observation with regard to issues which
are pending before the Execution Court (which include the question of
relating to the date of conversion as clarified in order dated
23.10.2017). It may be noted that the Ld. Division bench did not stay
the proceedings in the Execution Petition at any time. In the execution
proceedings, JD has stated that it has furnished an FDR being FDR No
000340600358497 dated 26.03.2018 for Rs.58,47,85,450/-
(Rs.96,48,41,675/- less Rs.38,00,56,225/-) issued by Yes Bank in
compliance with the orders passed in EFA (OS) No.23/2017;
cc) on 28.10.2017 decree holder filed EA(OS) No. 392 of 2017 in
the Execution Petition seeking deposit of the entire decretal amount
with accrued interest as of 2017 being 27 years from date of the Appeal
Award dated 14.09.1990, together with the decreed cost/fees and
accrued interest thereon at the rate as decreed in the Suit by this
Hon‟ble Court to the extent not covered by the deposit made/to be
made by JD in the pending Execution Petition and sought that JD be
restrained from disposing, transferring, alienating or encumbering in
any manner the immovable properties, which are the subject matter of
the restraint order dated 24.08.2017 till the deposit of the amount;
dd) on or about 10.11.2017 reply filed by the JD to EA(OS)
No.392/2017.
3. On the above facts three issues have been raised before me:- a)
upon which amount the interest @ 18% p.a. is payable viz., either upon
the principle amount of $4,526,000 or upon the consolidated amount viz.
the principal amount coupled with interest @ 11.25% p.a. as on date of
decree; b) the relevant date of the applicability of conversion rate; and c)
the adjustment of the amount so deposited by the judgment debtor till
date.
4. Qua issue a) the learned counsel for the objector has referred to
Indian Oil Corporation Ltd. Vs. G.S.Jain & Associates
MANU/DE/4613/2012 to say the interest can be charged only upon the
principal and there is no provision to charge interest upon interest per
Arbitration Act, 1940. The Court in this case held:
28.We may add that there is force in the contention of the learned
counsel for the appellant that the golden rule of interpretation of
statute must be followed and where the wordings of the statute are
clear, plain and unambiguous, the courts are bound to give effect to the
meaning irrespective of the consequences. In Section 29 of the Old Act,
it is after a comma that a complete line comes, "to be paid on the
principal sum as adjudged by the award and confirmed by the decree‖.
This expression has to be read as a whole. The reference to confirmed
by the decree' is, thus, in the context of a possible variation in the
principal sum which may arise on account of modification of the
award. The word „principal' cannot be irrelevant and has to be
understood as per the common parlance. The „principal' is thus distinct
from any other amount which would include interest. Similarly, costs
would be a third category. The provisions of Section 29 of the Old Act
thus provide for post decretal interest by the court only on the principal
sum. If one may say, this is also in consonance with the general view of
the legislature as is apparent from the provisions of Section 34 of the
CPC and as to why the amendment was brought into force in Section
34 pursuant to the recommendations of the Law Commission of India in
its 55th Report of 1973. The effect of the amendment carried out in 1956
was explained i.e. prior to the amendment of 1956, the Section left the
rate of interest even for the post decree stage to discretion of the Court,
but after the amendment, it provided for a maximum rate of interest.
Moreover, the rate of interest was previously permissible on the
aggregate sum and not merely on the principal as was the position
under the unamended Section. The Minister of Legal Affairs was
quoted in the report giving an explanation for the amendment of 1956
explaining the objective to be that interest ought not to be allowed on
an amount of interest itself i.e. to prevent compound interest. Thus,
where the expression „principal' is used and continues to be used, it
cannot be said that the legislature was ignorant of the complexity of the
issue i.e. whether interest should be granted only on the principal sum
or interest should be granted on the complete amount inclusive of
interest i.e. the compound interest. In fact, conscious decisions have
been taken to remove the concept of compound interest and exceptions
which have been carved out as per the judicial interpretation are
restricted to cases where there is a specific contract or statute
providing compound interest.
31. The result of the aforesaid is that the appeals are allowed and it is
held that the appellant is liable to pay interest on only the principal
component of the award and not the interest component of the award.
The parties are left to bear their own costs."
5. Further reference was made to section 3 of the Interest Act 1978
and it says:
"3. Power of court to allow interest.--
(1) xxxxx
(2) xxxxx
(3) nothing in this section
(a) xxxxx
(b) xxxxx
(c) shall empower the court to award interest upon interest."
6. Hence it was argued since the decree dated 28.01.2000 does not
specify as to upon which amount the interest of 18% p.a. is to be paid viz.
upon the principle or upon the consolidated amount of principle plus
interest, hence per G.S.Jain (supra) and per provisions of the Interest Act,
it needs to be paid only upon the principle amount and not upon such
consolidated amount. It is argued even under Section 29 of the
Arbitration Act, 1940, the interest needs to be paid only upon the
principle and any reference to Section 34 CPC or Section 31(7) of the
Arbitration and Conciliation Act 1996, as amended, is wholly misplaced.
It is argued Section 34 CPC is not applicable as under the said section the
future interest cannot increase above 6% p.a. in normal circumstances
(though, of course, the court has power otherwise) and the 1996 Act is
not applicable on facts.
7. The learned counsel for judgment debtor also argued though under
Section 31(7) of the 1996 Act, the words used are "money" and "sum"
but Section 29 of the 1940 Act says there cannot be any interest upon
interest, so clarified in para 136 of Renusagar Power Company Ltd. vs.
General Electric Company & Anr. AIR 1985 SC 1156 as under:
"INTEREST OF AWARDS - Where and in so far as award is for the
payment of money the Court may in the decree order interest, form the
date of the decree at such rate as the Court deems reasonable, to be
paid on the principal sum as adjudged by the award and confirmed by
the decree."
8. Heard.
9. Before proceeding further let me discuss how this Court has dealt
with this issue.
10. In Saraswati Construction Co. vs. Delhi Development Authority
2004(2) Arb.LR 429 (Delhi) the Court held:
"4. Learned counsel for the Decree Holder has relied upon a judgment
of Apex Court in "Oil and Natural Gas Commission Vs . M.C. Clelland
Engineers, S.A". reported in MANU/SC/0931/1999 : [1999]2SCR830
in which their Lordships considered the question of interest on interest
and held that the power of the Arbitrator to grant interest on the
amount of interest, which may be termed as interest on damages or
compensation for delayed payment, would also become part of the
principal amount and as such, Section 3 of the Interest Act at sum
adjudged.
5. In view of the aforesaid judgments, this Court is of the considered
view that after the passing of an Award or the dismissal of the
objections by the Court and passing a decree in terms of the Award, not
only the amount of a claim upheld by the Arbitrator or the Court but
the pre-suit and pendente lite interest awarded in favor of the Decree
Holder crystallizes into the decretal amount and the future interest
becomes payable on the entire amount comprised of the claims as well
as the pre-suit and pendente lite interest. Therefore, from the date of
the passing of the decree, the future interest is not to be calculated
merely on the amount of the claims upheld by the Arbitrator/Court but
also on the amount of the interest awarded by the Arbitrator or the
Court. In many cases, as in the present case, the amount of interest up
to the date of the passing of the Award or passing of the decree is much
higher than the principal amount and in case a view is taken that the
future amount is not payable on the amount of interest, a Decree
Holder may be put to substantial monetary loss by an unscrupulous
judgment Debtor by withholding the amount and ultimately paying
future interest only on the amount of claims. Courts cannot permit any
party to take undue advantage of law and exploit legal provisions to
cause wrongful loss to the opposite party."
11. In Kali Charan Sharma (since deceased) vs. New Okhla Industrial
Development Authority 149(2008) DLT 244 the Court held:
"12. In the Oil and Natural Gas Commission case, the Supreme Court
held that the award of interest on amounts due, by an arbitrator
amount to interest on damages or compensation; therefore, the
provisions of Section 3 of the Interest Act do not get attracted. In
Saraswati Construction (supra) it was held that the passing of an
Award or the dismissal of the objections by the Court and passing a
decree in terms of the Award, not only the amount of a claim upheld by
the Arbitrator or the Court but the pre-suit and pendente lite interest
awarded in favour of the decree holder crystallizes into decretal
amount. Thus, future interest becomes payable on the entire amount
comprised of the claims as well as the presuit and pendente lite
interest. Thus, future interest is not to be calculated merely on the
amount of the claims upheld by the Arbitrator/Court but also on the
amount of the interest awarded by the Arbitrator or the Court from the
date of the passing of the decree. In view of this clear position in law,
the court has to hold that the entire amount, i.e principal and interest
accruing till the date of the judgment making the award rule of court,
became part of the decree. No part of it could be segregated as either
principal or interest."
12. Now Indian Oil Corporation (supra) shall not be applicable in the
present case as was premised upon two judgments viz. Pandit Munshi
Ram and S.L.Arora. Rather Pandit Munshi Ram relied upon
Mr.S.L.Arora which has since been overruled.
13. I may here also refer to Central Bank of India vs. Ravindra and
Others (2002) 1 SCC 367 wherein the Court held:
"41. A few points are clear from a bare reading of the provision. While
decreeing a suit if the decree be for payment of money, the Court would
adjudged the principal sum on the date of the suit. The Court may also
be called upon to adjudge interest due and payable by the defendant to
the plaintiff for the pre-suit period which interest would, on the findings
arrived at and noted by us hereinabove, obviously be other than such
interest as has already stood capitalised and having shed its character
as interest, has acquired the colour of the principal and having stood
amalgamated in the principal sum would be adjudged so. The principal
sum adjudged would be the sum actually loaned plus the amount of
interest on periodical rests which according to the contract between the
parties or the established banking practice has stood capitalised.
Interest pendente lite and future interest (i.e. interest post-decree not
exceeding 6 per cent per annum) shall be awarded on such principal
sum, i.e. the principal sum adjudged on the date of the suit. It is well
settled that the use of the word 'may' in Section 34 confers a discretion
on the Court to award or not to award interest or to award interest at
such rate as it deems fit. Such interest, so far as future interest is
concerned may commence form the date of the decree and can be made
to stop running either with payment or with such earlier date as the
Court thinks fit. Shortly hereinafter we propose to give an indication of
the circumstances in which the Court may decline award of interest or
may award interest at a rate lesser than the permissible rate.
44. xxxxx We are, therefore, of the opinion that the expression "the
principal sum adjudged" may include the amount of interest, charged
on periodical rests, and capitalised with the principal sum actually
advanced, so as to become an amalgam of principal in such cases
where it is permissible or obligatory for the Court to hold so. Where
the principal sum (on the date of suit) has been so adjudged, the same
shall be treated as "principal sum" for the purpose of "such principal
sum" - the expression employed later in Section 34 of C.P.C. The
expression "principal sum" cannot be given different meanings at
different place in the language of same section, i.e. Section 34 of
C.P.C.
45. xxxxx The amendment is intended to deprive the court of its pre-
amendment power to award interest on interest i.e. interest on interest
adjudged as such. The amendment cannot be read as intending,
expressly or by necessary implication, to deprive the court of its power
to award future interest on the amount of the principal sum adjudged,
the sense in which the expression was understood, also judicially
expounded even before 1955; the expression having been left
untouched by the 1956 amendment.
48. It was also submitted that Section 34 of the CPC is general in its
application to all money suits and if banking practice or banking
contracts providing for capitalisation of interest charged on periodical
rests were to be recognised it will mean that application of Section 34
would be different in suits filed by banks and in suits filed by creditors
other than bankers. In our opinion it is bound to be so. Section 34 is a
general procedural provision and whether it would apply or not and if
apply then to what extent would obviously depend on the fact situation
of each case."
14. Moreso this Court has already given a finding that Foreign Award
(Recognition and Enforcement) Act, 1961 shall only be applicable in the
present case. Section 4 of the said Act read as under:
"4. Effect of foreign awards.
(1) A foreign award shall, subject to the provisions of this Act, be
enforceable in India as if it were an award made on a matter referred
to arbitration in India.
(2) Any foreign award which would be enforceable under this Act shall
be treated as binding for all purposes on the persons as between whom
it was made, and may accordingly be relied on by any of those persons
by way of defence, set off or otherwise in any legal proceedings in
India and any references in this Act to enforcing a foreign award shall
be construed as including references to relying on an award."
15. The following paras of judgment dated 28.01.2000 passed in this
case record the following:
"51. In view of the Notification, the objection raised by the respondent
falls to the ground. Hence, I have no hesitation in coming to the
conclusion that the Award produced by the plaintiff is a foreign Award,
within the meaning of the Act, 1961. This issue is decided accordingly.
62. Issue No. 3-What is the law applicable to the proceedings, whether
English or Indian Law?
63. As noticed above, there is a specific provision in the agreement in
this behalf. Therefore, it is not open to the respondent to contend that
English law would not apply.
64. In view of this clear position on facts, I think it not necessary to
burden the judgment by referring the various rulings on this point. The
principles are well settled. The Arbitrators had decided the issues on
the basis of English law, as agreed to between the parties. Therefore,
this issue is answered in favor of the petitioner and against the
respondent."
16. If this was the view expressed by the Court while delivering
judgment dated 28.01.2000, the executing court then cannot go beyond
the judgment and decree dated 28.01.2000, to say now 1940 Act would
be applicable and there shall be no interest upon interest.
17. Rather in Renusagar Power Co. Ltd. (supra) the Court held:
"50. xxx... Moreover, an examination of the relevant provisions of this
Act and the Arbitration Act, 1940 will show that the schemes of the two
Acts are not identical and as will be pointed out at the appropriate
stage there are various differences which have a material bearing on
the question under consideration and as such decisions on similar or
analogous provisions contained in the Arbitration Act may not help in
deciding the issue arising under the Foreign Awards Act because just
as the Arbitration Act, 1940 is a consolidating enactment governing all
domestic awards the Foreign Awards Act constitutes a complete code
by itself providing for all possible contingencies in relation to Foreign
awards made pursuant to agreements to which Article II of the
Convention applies. With these preliminary observations we now turn
to the question of proper construction of s. 3 of the Foreign Awards
Act.
52. xxx... In effect, s. 3 of the Foreign Awards Act so to say combines in
its own ambit both ss. 33 and 34 of the Arbitration Act
xxxx
Such being the scheme under the Foreign Awards Act we would
reiterate our view that decisions of our Courts on similar or analogous
provisions contained in the Arbitration Act would not be of any help to
decide questions arising under the Foreign Awards Act."
18. I may say here earlier too an objection was raised by the
respondent herein challenging jurisdiction of the foreign arbitration in
OMP No.41/1981 but such challenge was dismissed on 11.12.1981 and
its appeal was also dismissed and it was held English law was the
governing law between the parties and if they did not challenge the grant
of interest in appeal at England then such an issue cannot be brought to
Delhi.
19. Moreso, section 5 of the Interest Act 1978 read as under:
"5. Section 34 of the Code of Civil Procedure, 1908 to apply.- Nothing
in this Act shall affect the provisions of section 34 of the Code of Civil
Procedure, 1908 (5 of 1908)"
20. It is a settled law the Court has power to grant interest in the decree
under Section 34 CPC even in cases where the statute doesnot make any
specific provision for payment on interest on awarded sum. The Court
has power to award interest from the date of award to date of decree and
the award of post award interest in the decree making an award a rule of
Court doesnot amount to interest on interest but rather is an interest on
composite sum of principle plus interest awarded by arbitrators. Further
even of the sake of arguments if Section 29 of the Arbitration Act 1940
was to apply in the present case, the grant of interest under the said
Section on composite sum of principle with interest under the appeal
award dated 14.09.1990 would not amount to interest on interest.
Similarly Section 3(3)(c) of the Interest Act 1978 does not bar post award
interest awarded by the Court in the decree making the award a rule of
the Court and it does not take away the power of the Court to grant
interest in the decree under Section 34 CPC.
21. Hence, I hold the interest shall be payable on the consolidated
amount viz. upon the principal plus interest as on date of decree. The
issue a) is answered accordingly.
22. The second issue raised by the learned counsel for the objector is
qua merger which would be relevant to determine the date on which the
conversion rate shall apply viz (a) the date of the decree; (b) the date of
decision; or (c) the date when the Supreme Court shall decide appeal in
future.
23. It was argued by the learned counsel for the judgment debtor since
the LPA filed against decree dated 28.01.2000 was held to be not
maintainable by the Division Bench, hence the date of its decision cannot
be taken as the date of merger to apply the conversion rate and had relied
upon Kunhayammed & Ors. vs. State of Kerala & Anr. AIR 2000 SC
2587 wherein the Court held:
"9. However, in the facts and circumstances of the case this Court
refused to apply the doctrine of merger. There, an order of registration
of a firm was made by the Income-tax Officer. The firm was then
assessed as a registered firm. The order of assessment of the assessee
was subjected to appeal before the Appellate Commissioner. Later on
the order passed by the Income-tax Officer in respect of registration of
the firm was sought to be revised by the Commissioner of Income-tax.
Question arose whether the Commissioner of Income-tax could have
exercised the power of revision. This Court held that though the order
of assessment made by the ITO was appealed against before the
Appellate Commissioner, the order of registration was not appealable
at all and therefore the order granting registration of the firm cannot
be said to have been merged in the appellate order of the Appellate
Commissioner. While doing so this Court analysed several provisions
of the Income-tax Act so as to determine the nature and scope of
relevant appellate and revisional powers and held if the subject matter
of the two proceedings is not identical, there can be no merger. In
State of Madras v. Madurai Mills Co, Ltd. MANU/SC/0225/1966 :
[1967]1SCR732 this Court held that the doctrine of merger is not a
doctrine of rigid and universal application and it cannot be said that
wherever there are two orders, one by the inferior authority and the
other by a superior authority, passed in an appeal or revision there is a
fusion or merger of two orders irrespective of the subject-matter of the
appellate or revisional order and the scope of the appeal or revision
contemplated by the particular statute. The application of the doctrine
depends on the nature of the appellate or revisional order in each case
and the scope of the statutory provisions conferring the appellate or
revisional jurisdiction."
24. And upon an order dated 28.08.2017 passed by the Supreme Court
in SLP(C) 688/2012 which read:
"Though many an apprehension has been expressed by Mr.Manan
Kumar Mishra, learned senior counsel appearing for the applicant, we
are only inclined to say that when the High Court has itself stated that
the appeal was not maintainable the doctrine of merger would not
apply."
25. It is thus submitted by the judgment debtor since the Supreme
Court shall ultimately decide upon the validity of foreign award and as
the LPA was held to be non maintainable, so the exchange rate as on the
date of decree dated 28.01.2000 only should apply.
26. Heard. The argument of the learned counsel for the judgment
debtor lacks the importance of the following direction in decree dated
28.01.2000:
" It is also ordered that the respondent shall make payment of any loss
on account exchange variation between the date of Award and the date
of actual payment."
27. This direction rather protects the decree holder at all times on
account of exchange rate variation between the date of award and the
date of actual payment and it makes sure the decree holder do not lose
any money on account of lengthy litigation as in the present case, viz. of
more than 35 years.
28. I may here refer to Rishabh Chand Jain and Another vs. Ginesh
Chandra Jain (2016) 6 SCC 675 wherein the Court held:
"14. The impugned order dismissing the suit on the ground of Res
Judicata does not cease to be a decree on account of a procedural
irregularity of non-framing an issue. The court ought to treat the
decree as if the same has been passed after framing the issue and on
adjudication thereof, in such circumstances what is to be seen is the
effect and not the process. Even if there is a procedural irregularity in
the process of passing such order, if the order passed is a decree under
law, no revision lies Under Section 115 of the Code in view of the
specific bar under Sub-section (2) thereof. It is only appealable Under
Section 96 read with Order XLI of the Code.
15. The order passed by the trial court is a composite order on
rejection of the plaint as there is no cause of action and dismissal of the
suit as not maintainable on the ground of Res Judicata. Both aspects
are covered by the definition of decree under Section 2(2) of the Code
and, therefore, the remedy is only appeal and not revision even if there
is any irregularity in passing the order."
29. Now Kunhayammed (supra) is clearly distinguishable as in said
case two appeals were filed one qua registration and another qua
assessment of the firm and if appeal in one proceedings was held non-
maintainable it was rightly not treated as having merged with another,
since both appeals pertain to separate proceedings. Para 12 of the
judgment is relevant:
"12. The logic underlying the doctrine or merger is that there cannot
be more than one decree or operative orders governing the same
subject-matter at a given point of time. When a decree or order passed
by inferior court, tribunal or authority was subjected to a remedy
available under the law before a superior forum then, though the
decree or order under challenge continues to be effective and binding,
nevertheless its finality is put in jeopardy.
Once the superior court has disposed of the lis before it either
way -Whether the decree or order under appeal is set aside or modified
or simply confirmed, it is the decree or order of the superior court,
tribunal or authority which is the final, binding and operative decree or
order wherein merges the decree or order passed by the court, tribunal
or the authority below.
However, the doctrine is not of universal or unlimited
application. The nature of jurisdiction exercised by the superior
forum and the content or subject-matter of challenged laid or which
could have been laid shall have to be kept in view."
30. Even no reliance could be placed on order dated 28.08.2017 in
SLP (C) 688/2012 of the Supreme Court since was an ex-parte order.
31. Now let me find which date shall be relevant date in the present
case.
32. Though the learned counsel for judgment debtor argues the date of
conversion shall be the date when the appeals/objections shall be put to
rest by the Supreme Court while deciding the pending SLPs but here the
judgment dated 06.09.2010 passed by the learned third Judge in FAO
(OS)205/2000 would be regarded as the appellate decree into which the
trial Court decree dated 28.01.2000 in CS(OS) 1885/1993 stands merged.
33. In Fuerst Day Lawson Ltd. vs Jindal Exports Ltd, 194 (2012) DLT
this Court held:-
"17. By analogy, under the 1996 Act, the crucial date would be the
date on which the objections to the enforcement of the foreign Award
are finally rejected and the foreign Award becomes enforceable as
such. That is when "the award should be deemed to be a decree"
under Section 49 of the 1996 Act. Therefore, under the scheme of 1996
Act, where the enforcement to the foreign Award is sought, the
relevant date for conversion of the decretal amount expressed in
foreign currency into Indian Rupees would be the date of final
rejection of the objections to the enforcement of the foreign Award. In
the present cases, that date is undoubtedly 30th August 2012, the date
on which the SLPs filed by the JD were finally dismissed by the
Supreme Court. It was then, in terms of Section 49 of the 1996 Act,
that both the foreign Awards became enforceable and were deemed to
be decrees."
34. In Progetto Grano S.P.A. vs Shri Lal Mahal Limited Execution
Petition No.52/2012 pronounced on 29.05.2014 this court held as under:
"24. It would follow that only after objections filed by the person
opposing the execution of the award are adjudicated upon by the
court, and rejected, the award would become enforceable. These
objections would be filed under Section 48 of the 1996 Act. In view of
the above there is no merit in the contentions of the judgment debtor
claiming that the date of the Award is the relevant date. In the present
case the date would be date of dismissal of the appeal by the Supreme
Court.
28. In fact, a perusal of the order of this Court dated 8.08.2012 would
show that the Supreme Court had passed certain interim orders.
Hence the judgment debtor could not execute the Award at that stage.
It is only after the disposal of the appeal by the Supreme Court that
the amount deposited in the Court was directed to be released to the
decree holder on 23.09.2013.
30. Accordingly, I hold that the relevant date for calculation of the
rupee equivalent of the Award amount to Indian rupees is 8.07.2013."
35. Nevertheless, even the date of dismissal of appeal would not be of
much relevance since in the present case the award protects the petitioner
from any losses on account of variation in the exchange rate from the
date of award till the date of payment and hence there shall be no
impediment if exchange rate as of today is taken and the judgment debtor
is directed to deposit the amount of award viz. the principal amount plus
interest on date of decree with interest @18% p.a. calculated upon such
consolidated sum. This shall, perhaps also act as a warning against
protracted litigation as this one. The issue b) is decided accordingly.
36. Though issue c) viz. the adjustments of the amounts deposited was
also raised but the learned counsel for the judgment debtor intended to
argue on this issue only after settlement of first two issues. List on
30.11.2018. In the meanwhile, the calculation sheet be filed by the decree
holder in terms of directions given above para 35 with an advance copy
thereof to the learned counsel for the judgment within two weeks from
today.
EX.P. 204/2002 and EA.(OS) Nos.434/2011, 543/2011, 62/2012
37. List on 30.11.2018.
YOGESH KHANNA, J.
OCTOBER 31, 2018/VLD/DU
