Delhi High Court
Ideb-Sucg Jv, Ideb Projects Pvt. Ltd. vs Delhi Metro Rail Corporation Ltd on 26 July, 2024
Author: C.Hari Shankar
Bench: C. Hari Shankar
$~52
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (ENF.) (COMM.) 246/2022
IDEB-SUCG JV, IDEB PROJECTS PVT. LTD..Decree Holder
Through: Mr. Vadlamani Seshagiri, Mr.
Ankit Bhushan and Ms. Ananya Kukreti,
Advs.
versus
DELHI METRO RAIL
CORPORATION LTD .....Judgment Debtor
Through: Mr. Tarun Johri and Mr.
Vishwajeet Tyagi, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
JUDGMENT (ORAL)
% 26.07.2024
OMP (ENF.) (COMM.) 246/2022
1. This petition seeks enforcement of an arbitral award, the
operative part of which reads as under:
"32.0 TRIBUNAL AWARD
32.1 The Tribunal Awards a total amount of Rs. 5,51,95,198/-
(Rupees Five Crores, Forty Nine Lacs, Thirty Three Thousand,
Two hundred and Eight Only) to the Claimant against the
various claims filed by them before the Tribunal.
32.2 The Tribunal Awards a total amount of Rs 2,62,93,252/-
(Rupees Two Crores, Sixty Two Lacs, Ninety Three Thousand,
Two hundred and Fifty Two Only) to the Respondent against the
various Counter Claims filed by them before the Tribunal.
32.3 To settle the Tribunal Award in respect of Claims and
Counter Claims filed before the Tribunal, the Respondent shall
pay net amount of Rs 2,89,01,946/- (Rupees Two Crores, Eighty
Six Lacs, Thirty Nine Thousand, Nine hundred and Fifty Six Signature Not Verified
OMP(Enf) (Comm).246/2022 Page 1 of 6 Digitally Signed
By:CHANDRASHEKHARAN
KUMAR HARI SHANKAR
Signing Date:31.07.2024 Signing Date:31.07.2024
14:08:24 14:01:40
Only) to the Claimant.
32.4 The Tribunal Award that the Respondent which had made
a recovery of Rs 6,26,91,900/- (Rupees Six Crores, Twenty Six
Lacs, Ninety One Thousand, Nine hundred Only) from another
Contract No. BC-7 of the Claimant (M/s IDEB-SUCG JV) to
recover the amount alleged for certain Items due to the
Respondent against this Contract BC-34 should be reversed and
payment of this recovered amount be arranged to the Claimant."
2. There is no dispute about the fact the respondent has paid, to the
petitioner, an amount of ₹ 2,89,01,946/- after deducting TDS, and ₹
6,26,91,900 /- along with interest.
3. Mr. Seshagiri, learned Counsel for the petitioner, has two
submissions to make.
4. The first is that the respondent could not have deducted the
amount ₹ 2,62,93,252/- awarded to the respondent against the counter
claims preferred by it before the Arbitral Tribunal from the amount of
₹ 5,51,95,198/- awarded to the petitioner, as the respondent is in
liquidation following initiation of proceedings under the Insolvency
and Bankruptcy Code, 20161.
5. As such, Mr. Seshagiri would contend that the liability of the
respondent to the petitioner, under paras 32.1, 32.2 and 32.3 of the
arbitral award, would be of ₹ 5,51,95,198/- and not ₹ 2,89,01,946/-.
6. This argument, in my opinion, is not available to the petitioner,
as the Arbitral Tribunal has itself, in the impugned award, set off the
amount of ₹ 2,62,93,252/- against the amount of ₹ 5,51,95,198/- and
OMP(Enf) (Comm).246/2022 Page 2 of 6 Digitally Signed
By:CHANDRASHEKHARAN
KUMAR HARI SHANKAR
Signing Date:31.07.2024 Signing Date:31.07.2024
14:08:24 14:01:40
has arrived at a difference of ₹ 2,89,01,946/-.
7. What Mr. Seshagiri would seek to contend is essentially that the
adjustment of the awarded amount to the respondent against the
counter claims preferred by it, from the amount awarded to the
petitioner, is impermissible. That, however, would require the
petitioner to challenge the award, which has not been done till date.
8. This submission is, therefore, rejected.
9. The second submission of Mr. Seshagiri is that the respondent
could not have deducted TDS from the amount of ₹ 2,89,01,946/-.
10. On the last date of hearing, Mr. Seshagiri, learned Counsel for
the decree holder submitted that he would be relying on judgment to
support his contention that the TDS could not have been deducted by
the respondent from the amount of ₹ 9,15,93,846/-, payable to the
decree holder under the arbitral award.
11. Deduction of TDS by the respondent from the amount payable
to the decree holder, has admittedly been effected in terms of Section
194C(1)2 of the Income Tax Act, 1961.
1 "the IBC" hereinafter
2 194-C. Payments to contractors. -
(1) Any person responsible for paying any sum to any resident (hereafter in this section
referred to as the contractor) for carrying out any work (including supply of labour for carrying out
any work) in pursuance of a contract between the contractor and a specified person shall, at the time
of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by
issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to--
(i) one per cent where the payment is being made or credit is being given to an
individual or a Hindu undivided family;
(ii) two per cent where the payment is being made or credit is being given to a person other
than
OMP(Enf) (Comm).246/2022 Page 3 of 6 Digitally Signed
By:CHANDRASHEKHARAN
KUMAR HARI SHANKAR
Signing Date:31.07.2024 Signing Date:31.07.2024
14:08:24 14:01:40
12. Plainly read, as the petitioner was working as a contractor for
the respondent, and the money payable to the petitioner under the
arbitral award were in the petitioner's capacity as such contractor, the
deduction of TDS by the respondent from the petitioner would appear
to be in sync with Section 194C(1) of the Income Tax Act, 1961.
13. The issue in controversy, however, stands settled by the
judgment of the Supreme Court in All India Reporter Ltd v.
Ramchandra D. Datar3, which has been followed by this Court in
Voith Hydro Ltd v. NTPC Ltd4 and Glencore International AG v.
Dalmia Cement (Bharat) Ltd5. These decisions hold that an amount
payable to a decree holder in terms of a decree constitutes a judgment
debt and loses its original character, which it otherwise had under the
Income Tax Act. In the absence of any provision which permits
deduction of TDS from judgment debts, this Court has held, following
the judgment of the Supreme Court, that no TDS can be deducted
therefrom.
14. I may observe here that the Supreme Court, in All India
Reporter, clarified that it was not examining the aspect of
chargeability of the said amount in the hands of the decree holder to
tax under the Income Tax Act. The opening sentence of para 3 of All
India Reporter, reads thus:
"We are not concerned to decide in this appeal whether in the
hands of the respondent the amount due to him under the decree,
3 (1961) 41 ITR 446
4 2021 SCC OnLine Del 1325
5 2019 SCC OnLine Del 9634
OMP(Enf) (Comm).246/2022 Page 4 of 6 Digitally Signed
By:CHANDRASHEKHARAN
KUMAR HARI SHANKAR
Signing Date:31.07.2024 Signing Date:31.07.2024
14:08:24 14:01:40
when paid, will be liable to tax; that question does not fall to be
determined in this appeal."
15. I have, today, in Joginder Singh Nijjar v. Omaxe Ltd6,
followed the aforesaid decisions and held that the amount awarded to
the successful claimant in the arbitral proceedings has to be paid
without deduction of any TDS thereon.
16. Following the said decision as well as the earlier precedents of
this Court in Voith Hydro Ltd and Glencore International, it is held
that the respondent could not have deducted TDS from the amount of
₹ 9,15,93,846/- payable to the petitioner.
17. It is informed that TDS already stands paid by the petitioner to
the Income Tax Authorities as well as the Competent Authority under
the Building and Other Construction Workers' Welfare Cess Act,
1996.
18. Where the amount already stands credited to the account of the
Income Tax Authorities by the judgment debtor, this Court, in Voith
Hydro Ltd, has permitted the decree holder to apply to the Income Tax
Authorities for being paid the said amount.
19. Accordingly, it shall be open to the petitioner to apply to the
Income Tax Authorities and the competent authority under the
Authorities under the Building and Other Construction Workers'
Welfare Cess Act, 1996 for being refunded the amount of ₹
6 Order dated 26 July 2024 in OMP (ENF.) (COMM.) 65/2021
OMP(Enf) (Comm).246/2022 Page 5 of 6 Digitally Signed
By:CHANDRASHEKHARAN
KUMAR HARI SHANKAR
Signing Date:31.07.2024 Signing Date:31.07.2024
14:08:24 14:01:40
14,45,831/-.
20. On the application being made, the said authorities shall credit
the TDS deposited by the respondent into the account of the petitioner.
21. This petition stands disposed of in the aforesaid terms.
C.HARI SHANKAR, J
JULY 26, 2024
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OMP(Enf) (Comm).246/2022 Page 6 of 6 Digitally Signed
By:CHANDRASHEKHARAN
KUMAR HARI SHANKAR
Signing Date:31.07.2024 Signing Date:31.07.2024
14:08:24 14:01:40
