Delhi High Court
Knr-Patel (Jv) vs National Highways Authority Of ... on 17 January, 2019
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 17.1.2019
+ EX.P. 310/2015
KNR-PATEL (JV) ..... Decree Holder
Through Dr. Amit George, Mr. Rishabh Dheer,
Mr. Swaroop George and Ms. Rajsree
Ajay, Advs.
versus
NATIONAL HIGHWAYS AUTHORITY
OF INDIA ..... Judgement Debtor
Through Mr. Manish K. Bishnoi and Mr.Archit
Kumar, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J. (ORAL)
Ex. Appl. (OS) No.422/2018
1 This is an application moved in a disposed of Execution
Petition.
2 The record shows that the matter was carried right up to the
Supreme Court.
2.1 NHAI‟s Special Leave Petition, after being admitted, was
allowed to a limited extent. The relief granted by the Supreme Court,
vide its final order dated 03.03.2017, which, in fact, confirmed its
interim order date 27.11.2015 was to the effect that interest would be
paid by NHAI at the rate of 12% per annum.
2.2 There is no dispute amongst the counsel for the parties that
interest at the rate of 12% per annum on the principal sum adjudged
Ex. P. No.310 of 2015 Pg. 1 of 9
by the Arbitral Tribunal has been paid by NHAI for the pre-award
period.
3 The grievance, which brings the decree holder to the Court, is
that NHAI has not paid future interest at the rate of 12% per annum
after aggregating the principal amount, as adjudged, and the pre-
award interest awarded by the Arbitral Tribunal.
4 Mr. Bishnoi, who, appears for NHAI/judgment debtor, draws
my attention to the directions issued by the Arbitral Tribunal vis-a-vis
the claim pertaining to interest. It is Mr. Bishnoi‟s submission that the
Arbitral Tribunal had awarded future interest at the rate of 12% per
annum on the "entire amount awarded in respect of claims No.1, 2,
3, 5 and 6" from the date of the award till the date of payment. It is
Mr. Bishnoi‟s contention that, since the expression "in respect of
claims No. 1, 2, 3, 5 and 6" follows the expression the "entire
amount", it is implied that future interest would not run on the
aggregate sum comprising the principal amount and the interest
awarded for the pre-award period.
5 On the other hand, Dr. Amit George, who, appears for the
decree holder, contends to the contrary.
6 Before I proceed further, I may also note that the decree holder
had, in fact, filed a contempt petition before the Supreme Court to
agitate its grievance. The contempt petition was, however, disposed of
as withdrawn giving leave to the decree holder to take recourse to
other remedies. This aspect is reflected in the order dated 04.09.2018
passed by the Supreme Court.
6.1 It is in this background that the decree holder has approached
Ex. P. No.310 of 2015 Pg. 2 of 9
this Court.
7 Thus, what is relevant, insofar as this application is concerned,
are the operative directions of the Arbitral Tribunal in respect of the
claim for future interest on the aggregate sum, which, as indicated
above, according to the decree holder, should include the principal
and pre-award interest (hereafter referred to "aggregate sum").
7.1 The relevant part of the Arbitral Award, which is dated
08.08.2013, is extracted hereafter:
"As claim No. 1,2,3,5 & 6 have been sustained and
justified to the extent mentioned against each, the AT after
careful consideration, is of the view that the same rate of
interest as provided in the contract, is justified for those
claims and accordingly awards interest to the Claimant on
the above claims for the period and at the rates set out
below:
i) Interest on claim No. 1, 2 10% P.A.
& 3 from 13.09.2005, the Compounded
date on which the Claimant Monthly as per
referred the disputes to DRB Appendix to bid
till date of the award. read with Clause
60.8
ii) Interest on claim No. 5 & 12% P.A.
6 for the period from Simple interest.
04.12.2007, the date on
which the Claimant has
appointed its Arbitrator to
adjudicate disputes after
notifying its intention to
commence arbitration of
these disputes till date of
Award.
We award interest both past and future on Claims No. 1, 2
Ex. P. No.310 of 2015 Pg. 3 of 9
and 3 at 10% compounded monthly with effect from
13.09.2005 till award and award interest on claim nos. 5
& 6 from 04.12.2007 at 12% simple interest per annum till
the date of Award. We further direct that in the event of
default in payment of the claim as awarded, within a
period of three months, from the date of award, the
respondent shall pay interest at 12% per annum on the
entire amount awarded in respect of claims 1, 2, 3, 5 and 6
from the date of the award till the date of payment. The
respondent is directed to pay the above amounts as
awarded to the claimants along with interest both past and
future and cost of Rs.8,75,000/- (Rupees Eight Lac Seventy
Five Thousand Only)."
7.2 A perusal of the aforesaid extract of the Arbitral Award would
show that the Arbitral Tribunal has granted interest for both pre-
award period and post-award period. The submission made by Mr.
Bishnoi that since the expression „the entire amount awarded‟ is
followed with the expression „in respect of claims 1, 2, 3, 5 and 6‟
and, therefore, it is suggestive of the fact that it ought not to include
the pre-award interest, to my mind, is a submission I am not
persuaded to accept.
7.3 The fact (and this is an aspect which was vehemently argued by
Mr. Bishnoi) that interest was claimed by the decree holder by way of
a separate claim (i.e. claim No. 7) would not dislodge the decree
holder‟s contention that it is entitled to post-award interest on the
aggregate sum as it is often the case when parties lodge their claims
before an Arbitral Tribunal they have a separate head under which
interest is claimed. The Arbitral Tribunal, after adjudging as to
whether claims with regard to the principal amount, under various
Ex. P. No.310 of 2015 Pg. 4 of 9
heads, are tenable or not, proceed to decide as to whether against
those claims, interest ought to be paid.
7.4 In this case, the Arbitral Tribunal has done exactly that and, as
noted above, in the extract from the award, that interest has been
awarded on the claims. In fact, what the Arbitral Tribunal has done is
awarded interest for the pre-award period at the rate of 10%
compounded monthly, which was pared down by the Supreme Court
vide its orders dated 27.11.2015 and 03.03.2017.
7.5 The Supreme Court, as has been correctly argued by Dr.
George, did not examine the issue as to what would be the sum on
which future interest was to be paid.
7.6 The issue raised by Mr. Bishnoi is no longer res integra in view
of the judgment of the Supreme Court in Hyder consulting (UK)
Limited Vs. Governor, State of Orissa, (2015) 2 SCC (Civ.) 38. The
relevant observations, as contained in the majority but concurrent
judgments of Hon‟ble Mr. Justice S.A. Bobde and Hon‟ble Mr.
Justice Abhay Manohar Sapre, for the sake of convenience, are set
forth hereafter:-
"...Per se: Hon'ble Mr. Justice S.A. Bobde:
7. Thus, when used as a noun, as it seems to have
been used in this provision, the word "sum" simply means
"an amount of money"; whatever it may include -
"principal" and "interest" or one of the two. Once the
meaning of the word "sum" is clear, the same meaning
must be ascribed to the word in clause (b) of sub-section
(7) of Section 31 of the Act, where it provides that a sum
directed to be paid by an Arbitral Award "shall carry
interest ........" from the date of the Award to the date of
the payment i.e. post-award. In other words, what clause
Ex. P. No.310 of 2015 Pg. 5 of 9
(b) of sub-section (7) of Section 31 of the Act directs is
that the "sum," which is directed to be paid by the Award,
whether inclusive or exclusive of interest, shall carry
interest at the rate of eighteen per cent per annum for the
post- award period, unless otherwise ordered.
8. Thus, sub-section (7) of Section 31 of the Act
provides, firstly, vide clause (a) that the Arbitral Tribunal
may include interest while making an award for payment
of money in the sum for which the Award is made and
further, vide clause (b) that the sum so directed to be
made by the Award shall carry interest at a certain rate
for the post award period.
9. The purpose of enacting this provision is clear,
namely, viz. to encourage early payment of the awarded
sum and to discourage the usual delay, which
accompanies the execution of the Award in the same
manner as if it were a decree of the court vide Section
36 of the Act.
10. In this view of the matter, it is clear that the
interest, the sum directed to be paid by the Arbitral
Award under clause (b) of sub-section (7) of Section
31 of the Act is inclusive of interest pendent lite.
11. At this juncture, it may be useful to refer to Section
34 of the CPC, also enacted by Parliament and
conferring the same power upon a court to award interest
on an award i.e. post-award interest. While
enacting Section 34, CPC, Parliament conferred power
on a court to order interest "on the principal sum
adjudged" and not on merely the "sum" as provided in
the Arbitration Act. The departure from the language of
Section 34 CPC in Section 31 (7) of the Act, 1996 is
significant and shows the intention of Parliament.
12. It is settled law that where different language is used
by Parliament, it is intended to have a different effect. In
the Arbitration Act, the word "sum" has deliberately not
Ex. P. No.310 of 2015 Pg. 6 of 9
been qualified by using the word "principal" before it. If
it had been so used, there would have been no scope for
the contention that the word "sum" may include
"interest." In Section 31(7) of the Act, Parliament has
deliberately used the word "sum" to refer to the
aggregate of the amounts that may be directed to be paid
by the Arbitral Tribunal and not merely the "principal"
sum without interest.
13. Thus, it is apparent that vide clause (a) of sub-section
(7) of Section 31 of the Act, Parliament intended that an
award for payment of money may be inclusive of interest,
and the "sum" of the principal amount plus interest may
be directed to be paid by the Arbitral Tribunal for the
pre-award period. Thereupon, the Arbitral Tribunal may
direct interest to be paid on such "sum" for the post-
award period vide clause (b) of sub- section (7)
of Section 31 of the Act, at which stage the amount would
be the sum arrived at after the merging of interest with
the principal; the two components having lost their
separate identities.
Per se Hon'ble Mr. Justice Abhay Manohar Sapre
27. Section 31(7)(a) employs the words "...the arbitral
tribunal may include in the sum for which the award is
made interest...". The words "include in the sum" are of
utmost importance. This would mean that pre- award
interest is not independent of the "sum" awarded. If in
case, the Arbitral Tribunal decides to award interest at
the time of making the award, the interest component will
not be awarded separately but it shall become part and
parcel of the award. An award is thus made in respect of
a "sum" which includes within the "sum" component of
interest, if awarded.
28. Therefore, for the purposes of an award, there is no
distinction between a "sum" with interest, and a "sum"
without interest. Once the interest is "included in the
sum" for which the award is made, the original sum and
the interest component cannot be segregated and be seen
Ex. P. No.310 of 2015 Pg. 7 of 9
independent of each other. The interest component then
looses its character of an "interest" and takes the colour
of "sum" for which the award is made.
29. There may arise a situation where, the Arbitral
Tribunal may not award any amount towards principal
claim but award only "interest". This award of interest
would itself then become the "sum" for which an award is
made under Section 31(7)(a) of the Act. Thus, in a pre-
award stage, the legislation seeks to make no distinction
between the sum award and the interest component in it.
30. Therefore, I am inclined to hold that the amount
award under Section 31(7)(a) of the Act, whether with
interest or without interest, constitutes a "sum" for which
the award is made.
31. Coming now to the post-award interest, Section
31(7)(b) of the Act employs the words, "A sum directed to
be paid by an arbitral award...". Sub-clause (b) uses the
words "arbitral award" and not the "arbitral tribunal".
The arbitral award, as held above, is made in respect of a
"sum" which includes the interest. It is, therefore,
obvious that what carries under Section 31(7)(b) of the
Act is the "sum directed to be paid by an arbitral award"
and not any other amount much less by or under the
name "interest". In such situation, it cannot be said that
what is being granted under Section 31(7)(b) of the Act is
"interest on interest". Interest under sub-clause (b) is
granted on the "sum" directed to be paid by an arbitral
award wherein the "sum" is nothing more than what is
arrived at under sub-clause (a)...."
8. In view of the principle enunciated by the Supreme Court and
my reading of the operative portion of the Award passed by the
Arbitral Tribunal, I am of the opinion that NHAI would have to pay
future interest on the aggregate sum, which would include the
Ex. P. No.310 of 2015 Pg. 8 of 9
adjudged principal amount and the pre-award interest awarded by the
Arbitral Tribunal.
8.1 Accordingly, necessary calculations will be carried out on this
basis by NHAI and an additional amount, if payable, would be
released to the decree holder.
8.2 The amount will be released by the judgment debtor within four
weeks from today, failing which the decree holder will have liberty to
move to the Court.
9. At this stage, Dr. George graciously concedes that since the
decree holder had not taken recourse to an appropriate remedy, the
additional amount i.e. by way of interest, as directed to be paid,
should be factored in only till 03.03.2017. The said statement is taken
on record.
10. The application is disposed of in the aforesaid terms.
RAJIV SHAKDHER, J
JANUARY 17, 2019
A
Ex. P. No.310 of 2015 Pg. 9 of 9
