Gujarat High Court
Shah Enterprise vs State Of Gujarat on 23 September, 2025
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Reserved On : 12/09/2025
Pronounced On : 23/09/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18521 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE MAULIK J.SHELAT
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Approved for Reporting Yes No
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SHAH ENTERPRISE
Versus
STATE OF GUJARAT
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Appearance:
LD.SR.ADV. MR B.S.PATEL WITH MR CHIRAG B PATEL(3679) for the
Petitioner(s) No. 1
MR SHAILESH DESAI, ASSISTANT GOVERNMENT PLEADER for the
Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE MAULIK J.SHELAT
CAV JUDGMENT
1. Rule returnable forthwith. Learned AGP, Mr. Shailesh
Desai, waives service of notice of rule on behalf of the
respondent.
2. The present application is filed under Article 227 of the
Constitution of India, seeking the following relief:-
"(A) This Hon'ble Court may be pleased to issue a of writ and/or a
writ in the certiorari nature of certiorari and/or an appropriate writ,
order or direction to quash and set aside impugned order dated
12th June, 2017 qua not accepting the modification at Annexure-A
to the petition and further be pleased to allow the applications at
Exhibits 22 & 32 filed by the petitioner at Annexure-G & Annexure-
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H to the petition in Arbitration Darkhast No. 359 of 2002;
(B) Pending the admission hearing and final disposal of this
petition, Your Lordship may be pleased to direct the respondent to
make the payments as per applications Exhibit 22 (Annexure-G to
the petition) and 32 ((Annexure-H to the petition);
(C) Cost of this petition be awarded;
(D) Any other and further relief or reliefs to which this Hon'ble Court
deems fit in the interest of justice may kindly be granted.
3. THE BRIEF FACTS OF THE CASE:
3.1. As per the petitioner's case, having received a work
order from the respondent and having executed work in terms
of the tender condition, amounts under different heads were
due and payable from the respondent. Since there was an
arbitration clause, arbitration proceeding was initiated.
3.2. The petitioner herein was the original claimant,
who invoked arbitration to resolve the dispute with the
respondent; thereby, a sole arbitrator was appointed.
3.3. After hearing the parties, the sole arbitrator, vide
its award dated 31.05.2000, passed an award in favour of the
petitioner, thereby, granted different claims in favour of the
petitioner.
3.4. As per the award, the total principal amount comes
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to around Rs.80,47,100.30/-. The arbitrator also awarded 16%
interest from 01.10.1997 till 31.05.2000 i.e., the date of the
award. There is, as such, no mention of granting interest post-
award by the learned arbitrator. The cost of arbitration was
quantified at Rs.12,500/.
3.5. As the award was not satisfied by the respondent,
the petitioner appears to have filed Arbitration Execution
Petition No. 359 of 2002 before the concerned District Court,
i.e., District Court, Bharuch (hereinafter referred to as "the
Court").
3.6. It appears from bare reading of the execution
petition that the petitioner claimed 18% interest on the
principal sum + interest accrued thereon at the rate of 16%
from 25.09.1997, and 01.10.1997, till 31.05.2000.
3.7. The respondent resisted the execution petition on all
counts, including the institution of arbitration proceedings
itself. Such a preliminary objections raised turned down by the
Court vide its order dated 21.10.2005. While turning down the
objection of the respondent, the Court directed the respondent
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to pay Rs.80,46,920/-. It bifurcates it, Rs.79,93,930/- as per
Claim No. 3A, 4B (i), 4B(ii), 4B(iii), 4B(iv), 5, 7, 8, 9, 10, and
1(A) and 1(B) with interest at the rate of 16% per annum from
25.09.1997 till realization, and interest at the rate of 16% per
annum on Rs.53,000/- from 01.10.1997, till realization. The
Court has also calculated interest at the rate of 16% till the
date of passing of the order on 21.10.2005, i.e.,
Rs.1,03,19,835/- and Rs.68,281/-, respectively, with arbitration
costs of Rs.12,500/-. Thus, directed respondent to deposit a
sum of Rs. 1,84,35,046/ with Rs.12,500/- as the costs.
3.8. The respondent appears to have challenged the said
order passed by the Court by filing a writ application, being
Special Civil Application No. 628 of 2006, before this Court,
which came to be dismissed on 01.08.2014. It may be noted
here that the respondent has not questioned the order passed
by the Court on 21.10.2005.
3.9. The respondent carried the matter further before the
Honorable Supreme Court, challenging the order passed by this
Court in the aforesaid writ application. Having filed the Special
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Leave Petition, being Special Leave Petition (C)- CC No. 6379
of 2015, which was dismissed by the Honorable Supreme Court
on 13.04.2015.
3.10. The respondent, having not deposited any single
amount till the time the Special Leave Petition was dismissed,
the petitioner herein appears to have filed impugned
applications below Exhibit 22 and Exhibit 32 on 08.02.2016,
and 29.08.2016, respectively, in the execution application.
3.11. It is submitted by the petitioner that it would be
entitled to receive interest at the rate of 18% on the sum
payable as on the date of passing of the award by the sole
arbitrator as per Section 31(7)(b) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as "the Act,
1996").
3.12. It appears that the respondent defaulted having not
deposited the amount as per the order dated 21.10.2005 at
given point of time, thereby, contested both impugned
applications filed by the petitioner.
3.13. After hearing the parties at length, the Court, vide
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its common order dated 12.06.2017, partly allowed the
impugned application filed below Exhibit 22 but rejected the
Review Application filed below Exhibit 32 by the
petitioner/decree holder.
4. Being aggrieved and dissatisfied with the aforesaid
impugned common order passed by the Court, the present writ
application came to be filed.
SUBMISSION OF THE PETITIONER - CLAIMANT
5. Learned Senior Counsel, Mr. B.S. Patel, would submit
that the Court has committed a serious error of law while
rejecting the Review Application filed below Exhibit 32 and so
also committed a gross error in not allowing the impugned
application filed below Exhibit 22 in toto. It is submitted that
as per the settled legal position, the petitioner, being the
decree holder, is entitled to get 18% interest on the sum
payable as on the date of the award passed by the arbitrator,
i.e., the principal sum + interest accrued thereon till the date
of the award. It is further submitted that having not received
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such amount though filed execution, entitled to receive it by
way of filing impugned applications.
5.1. Learned Senior Counsel, Mr. Patel, would
respectfully submit that the Court has erroneously observed
that, having not challenged the order dated 21.10.2005,
thereby not questioned it by the petitioner at a given point of
time, it has waived its right to question it by way of any
application, including review.
5.2. Learned Senior Counsel, Mr. Patel, would
assiduously submit that there would not be any principle of
waiver and estoppel coming into play, inasmuch as when there
is an error apparent on the face of the record pointed out to
the Court, it is required to exercise its power of review and to
correct such an error apparent on the face of the record while
passing the order dated 21.10.2005. It is respectfully submitted
that as per Section 31 (7) (b) of the Act, 1996, as it stood
prior to its amendment, would entitled the petitioner/decree
holder/claimant to receive 18% interest on the sum directed to
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be paid by the arbitrator's award. Having neither paid such
sum by respondent as per law nor passed any appropriate
order in this regard by the Court, it is required to correct its
error, which is apparent on the face of the record.
5.3. Learned Senior Counsel, Mr. Patel, would submit
that the Court, while partly allowing the impugned application
below Exhibit 22, lost sight of the fact that after the passing of
the order by the Court on 21.10.2005, execution was still
pending, and as such, there was no occasion for the petitioner
to point out such an error at a given point of time, inasmuch
as the respondent, instead of complying, challenged it before
this Court and before the Hon'ble Supreme Court. It is
respectfully submitted that when the award passed by the
arbitrator was not granting any interest post-award, as per the
said provisions of the Act, 1996, the petitioner would be
entitled to receive interest at the rate of 18% on the 'sum'
post award till its realization. The sum as per S. 31 (7) (b) of
the Act, 1996 would be the principal amount + interest @ 16%
from period so granted by arbitrator on principle amount up to
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the date of the award.
5.4. Learned Senior Counsel, Mr. Patel, would further
submit that a writ application so filed by the respondent
challenging the order dated 21.10.2005, by the respondent,
wherein, as such there was no occasion arose before this
Court, and in fact, it was not adjudicated upon by this Court
in regards to the issue germane in the review application and
or present application. It is submitted that as regards the
interest at the rate of 18% would be payable post award on
aforesaid 'sum' and or amount so ordered was wrong etc.,
never pressed into service by respondent/petitioner as the case
may be before this Court in earlier round of litigation.
5.5. Learned Senior Counsel, Mr. Patel, would further
submit that the doctrine of merger would not be applicable,
inasmuch as what was not argued and decided before this
Court in the said writ application, the order dated 21.10.2005,
though confirmed by this Court, would not disentitled the
petitioner to receive the benefit as per the provisions of the
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Act, 1996. It is submitted that doctrine of merger is not of
universal principle and as such would not apply in writ
jurisdiction inas much as earlier writ application having filed
under Article 227 of the Constitution of India, as per settled
legal position, no such principle of merger would apply to the
facts of the present case.
5.6. Learned Senior Counsel, Mr. Patel, would submit
that the Court has fallaciously observed that when this Court
confirmed the order dated 21.10.2005, and it was confirmed
up to the Hon'ble Supreme Court, it should not review the
order dated 21.10.2005. It is submitted that the order dated
21.10.2005, was challenged by the respondent, questioning the
legality and validity of the award passed by the arbitrator, and
at that point of time, none of the parties to the litigation
raised/agitated the issues as raised by way of impugned
applications. So, in that view of the matter, it would not be
appropriate to foreclose the right of the petitioner to receive
the amount as per the provisions of the Act, 1996.
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5.7. Learned Senior Counsel, Mr. Patel, would submit
that the doctrine of merger would not be applicable in a case
of a writ petition like the one filed by the respondent before
this Court when challenged the order dated 21.10.2005. It is
submitted that the doctrine of merger can be applied either in
appeal or revision proceedings. It is submitted that when the
point which was never raised and answered by this Court
while dismissing the writ petition filed by the respondent, the
claim of the petitioner cannot be put to rest on the basis of
erroneous observation of the Executing Court, and so also
under the wrong premise of the doctrine of merger.
5.8. Learned Senior Counsel, Mr. Patel, would further
submit that there cannot be any waiver/estoppel against
statutory provisions. It is submitted that since inception, in
execution itself, the petitioner was claiming interest at the rate
of 18% on the sum payable under the award, and as such, as
per Section 31(7)(b) of the Act, 1996, is entitled to receive
18% interest post award periodon the sum, i.e., the principal
amount + interest till the date of the award. Having not
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passed such an order on 21.10.2005, by the Court, the
impugned application filed below Exhibit 32, seeking review,
requires to have been allowed in the interest of justice.
5.9. Lastly, Learned Senior Counsel, Mr. Patel, would
submit that the petitioner, vide its affidavit dated 10.09.2025,
filed in this matter, would state that if this Court grants relief
in its favour by directing the respondent - State to pay the
amount as per the execution proceeding and such amount will
be paid by the respondent within the time stipulated by this
Court, the petitioner undertakes that it will waive additional
interest as claimed in the execution for any period between
21.10.2005 to 29.08.2016 (from date of earlier order till the
day on which Exhibit 32 - Review Application filed by the
petitioner/decree holder).
5.10. It is respectfully submitted that the present writ
application was filed on 11.09.2017, but the execution
application No.360 of 2002 was conditionally withdrawn on
03.11.2018, subject to the outcome of this present application.
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5.11. To buttress his arguments, Learned Senior Counsel,
Mr. Patel, would rely upon the follwing decisions:-
(i) Kunhayammed & Ors V/s State of Kerala &
Anr, reported in (2000) 6 SCC 359 (Para: 28, 38, 40
and 44),
(ii) Sanjay Kumar Agarwal V/s State Tax Officer (I)
and Anr, reported in (2024) 2 SCC 362 (Para: 10,
15 and 16),
(iii) Commissioner of Customs V/s Canon India
Private Limited, reported in (2025) 4 SCC 509
(Para: 63, 64 and 70),
(iv) Hyder Consulting (UK) Limited V/s Governor,
State of Orissa, reported in (2015) 2 SCC 189,
(v) Niyamat Ali Molla V/s Sonargon Housing
Cooperative Society Ltd and Others, reported in
(2007) 13 SCC 421 (Para: 18, 19 and 29),
(vi) Siddamsetty Infra Projects Pvt Ltd V/s Katta
Sujatha Reddy and Others, reported in 2024 SCC
Online SC 3214 (Para: 46 and 49),
5.12. Making the above submissions, Learned Senior
Counsel, Mr. Patel, would request this Court to allow the
present application.
SUBMISSION OF THE RESPONDENT-STATE
6. Per contra, Learned AGP, Mr. Shailesh Desai, would
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submit that the present application is misconceived on facts as
well as on law, inasmuch as, having not challenged the order
dated 21.10.2005, passed by the Court in the execution
proceedings, at this stage, the petitioner cannot find fault with
such order. It is submitted that after the passing of the award
by the arbitrator, when execution proceeding filed by the
petitioner, on adjudicating the objections, the Court partly
allowed the relief claimed in the execution proceedings. It is
further submitted that when such order of the Court partly
allowing the relief in favour of the petitioner was not
challenged by the petitioner before this Court, after about 11
years, having filed the impugned applications is nothing but a
delay on the part of the petitioner to claim interest, which
should not be granted.
6.1. Learned AGP, Mr. Desai, would submit that once
the order dated 21.10.2005, was not questioned by the
petitioner, later on, by way of seeking review, the petitioner
cannot claim any more relief than awarded by the Trial Court
in its favour.
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6.2. Learned AGP would further submit that such order
sought to be reviewed by the petitioner merged in the order
passed by this Court when rejecting the writ application filed
by the respondent on 01.08.2014, and so confirmed by the
Honorable Supreme Court when dismissing the Special Leave
Petition on 13.04.2015. It is submitted that as per the doctrine
of merger, whenever a higher forum confirms/modifies/reverses
an order passed by a lower Court, such order merges with the
order passed by the higher forum. It is respectfully submitted
that when such would be the position, especially this Court
dismissed the writ application, having confirmed the order
dated 21.10.2005, passed by the Court; such order merges in
the order passed by this Court, which, thereafter, cannot be
reviewed by the Court.
6.3. Learned AGP, Mr. Desai, would submit that there
was delay of around 11 years in filing the Review Application,
which was not satisfactorily explained. Rather, it appears that
the petitioner waited for too long to file the impugned
applications, which is not permissible in law. It is submitted
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that the petitioner, though claiming interest at the rate of 18%
for post award period, having claimed it in its execution
petition, but having not so granted, it could have either
challenged the order dated 21.10.2005 before this Court or
sought its review at the given point of time. Having not done
so, after this much time, the petitioner cannot be allowed to
raise a grievance about non-receipt of interest at the rate of
18% as alleged.
6.4. Learned AGP would submit that there is no error,
much less any gross error of law, committed by the Trial
Court while rejecting the Review Application filed below
Exhibit 32 and also partly allowing the impugned application
filed below Exhibit 22. It is submitted that pursuant to the
impugned order dated 12.06.2017, the respondent has already
deposited the balance amount, and as such, as on date, there
is nothing due and payable to the petitioner.
6.5. Learned AGP, Mr. Desai, would humbly submit to
this Court that, considering the peculiar facts and
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circumstances of the present case and also the principle of
waiver, estoppel, and merger, the petitioner is not entitled to
get any relief as prayed in the matter.
6.6. To buttress his arguments, Learned AGP, Mr. Desai,
would rely upon the following decisions:-
(i) Kunhayammed & Ors V/s State of Kerala & Anr,
reported in (2000) 6 SCC 359 (Para: 28, 38, 40 and
44),
(ii) Sanjay Kumar Agarwal V/s State Tax Officer (I)
and Anr, reported in (2024) 2 SCC 362 (Para: 10, 15
and 16),
(iii) Mary Pushpam Vs. Telvi Curusumary and others,
reported in 2024 (3) SCC 224 (Para 17 to 20),
(iv) N. Anantha Reddy Vs. Anshu Kathuria and ors.,
reported in (2013) 15 SCC 534 (Para -7 and 6),
(v) Kamlesh Verma Vs. Mayawati and others.,
reported in 2013 (8) SCC 320 (Para 12 to 20),
(vi) Yashwant Sinha and others. Vs. Central Bureau of
Investigation through its Director and anr., 2019 (16)
Scale 1, Para 74(40), 75 (41), 77(43), 81(47).
6.7. Making the above submissions, Learned Advocate,
Mr. Desai, would request this Court to dismiss the present
application.
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7. No other and further submissions are being made by any
of learned advocates appearing for the parties.
8. Heard learned advocates appearing for the respective
parties at length.
POINTS FOR DETERMINATION
8.1. Whether the order dated 21.10.2005, passed by the
Court in Arbitration Execution Petition No. 359 of 2002, would
merge in the judgment/order dated 01.08.2014, passed by this
Court in Special Civil Application No. 628 of 2006 for all
purposes?
8.2. Whether, in the facts and circumstances of the case,
the impugned Review Application filed below Exhibit 32 was
erroneously rejected by the Court vide its common order dated
12.06.2017, passed in Arbitration Execution Petition No. 359 of
2002?
8.3. Whether, in the facts and circumstances of the case,
the Court committed any serious error of law and/or a
jurisdictional error by not allowing the impugned applications
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filed below Exhibits 22 and 32 in Arbitration Execution
Petition No. 359 of 2002?
ANALYSIS
9. The facts, which are narrated hereinabove, are not in
dispute. It remained undisputed that while passing the award
by the sole arbitrator, he did not award any post-award
interest to the petitioner/claimant on the amount including
interest thereon @ 16%. The arbitral award passed on
31.05.2000. The execution petition came to be filed by the
petitioner, claiming the principal amount + interest at the rate
of 16%, so awarded by the arbitrator from the date of the
cause of action till the date of the award then interest 18% on
such amount including interest amount.
10. It appears from bare reading of the execution petition
filed on 27.11.2002 by the petitioner, wherein it claimed
interest at the rate of 18% on such amount, i.e., the principal
amount + interest @ 16% from date of cause of action till the
date of the award. Nonetheless, while adjudicating the
objections and also granting relief in favour of the petitioner,
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the Court concerned, vide its order dated 21.10.2005, partially
allowed the claim of the petitioner made in the execution. As
per the order dated 21.10.2005, the Court, while granting
relief in favour of the petitioner, observed as under:-
"(24) Thus, as discussed above at length, the judgment debtor fails
to raise any objections against the award or during Arbitral
proceedings held by the Sole arbitrator Shi.M. Patel. Hence, the
award passed for the Sole arbitrator becomes final as per Sec. 35
of the Arbitration Act, 1996 and liable to force as final decree under
Sec. 36 of the Arbitration Act, 1996. It is not say and submission
about compliance. Hence, decree holder is entitled to recover
Rs.80,46,920-00 as per Claim No. 3A, 4 B (i), 4 B (ii), 4 B (iii), 4 B
(iv), 5, 7, 8, 9, 10, 1 (A) and 1 (B) with interest @ 16% p.a. on
Rs.79,93,930-00 from 25.09.97 till realization and interest @ 16%
p.a. on Rs.53,000-00 from 01.10.97 till realization. The date of
order below this Execution petition is fixed as on 20.10.05. Hence,
the interest @ 16% be calculated for 8 years 25 days and 8 years
19 days respectively comes to Rs.1,03,19,835-00 & Rs.68,281-00
respectively with Arbitration cost of Rs. 12,500-00."
10.1 Thereafter, in its operative portion of said order, the
Court has observed thus:-
"The State of Guiarat through Executive Engineer, Μ.Ι.Ρ.. Ι.Ρ.. Ρ..
division, Ankleshwar is hereby ordered to make deposit of Rs.
1,84,35,046-00 (including interest @ 16 % p.a. on principal amount
till 20.10.2005) with Arbitration cost of Rs.12,500-00 before this
Court within fifteen day.
The Surity for Rs.85,000-00 is also hereby released."
11. It appears from bare reading of the aforesaid order that
the Court has not granted interest at the rate of 18% post
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award period on the sum payable as per the award, having so
provided under Section 31 (7) (b) of the Act, 1996. As dispute
and arbitration award prior to amendment of the Act, 1996,
this Court concern with pre-amended Section 31 (7) (b) of the
Act, 1996. Such provision (pre-amended) will be considered in
the later part of the judgment.
12. Being dissatisfied with the aforesaid order of the Court,
the respondent questioned it by way of a writ application,
being Special Civil Application No. 628 of 2006, which came
to be rejected on 01.08.2014. It remained undisputed that the
petitioner has not questioned the aforesaid order passed by the
Court. It also remained undisputed that there was no occasion
for this Court to examine as to whether the order passed by
the Trial Court, granting relief in favour of the petitioner in
regards to directing the respondent to pay the amount, was in
accordance with law or not, as the respondent herein had
questioned the legality and validity of the award, including the
appointment of the arbitrator itself but never disputed the
amount so ordered by the Court.
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13. Such judgment/order passed by this Court was confirmed
by the Hon'ble Supreme Court, having dismissed the Special
Leave Petition filed vide its order dated 13.04.2015. It would
be a case of petitioner that due to challenge of the order dated
21.10.2005 passed by the Court at instance of respondent,
there was no reason for the petitioner to file review
application at given point of time. Nonetheless, review
application filed below Ex. 32 not rejected on ground of any
delay.
14. So, in view of said peculiar facts and circumstances of
the case, now, I would like to deal each point separately as
follows.
POINT NO.I
15. The argument so canvassed by learned AGP as regards
the doctrine of merger, and would submit accordingly that in
view of the dismissal of the writ application filed by the
respondent challenging the order dated 21.10.2005, by the
Court in the execution proceeding, later in point of time, the
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petitioner cannot seek review of the order dated 21.10.2005,
and claim any more relief in the execution proceedings.
16. To appreciate such an argument, it is first required to see
as to whether any adjudication in regards to the issue germane
in the Review Application and so also, in this application, ever
pressed into service by the respondent and/or the petitioner in
the earlier round of litigation, i.e., Special Civil Application
No. 628 of 2006.
16.1. The plain reading of the entire judgment/order
passed by this Court on 01.08.2014 in Special Civil Application
No. 628 of 2006, would not remotely suggest that at that point
of time, either of the parties to the writ application ever
questioned the legality and/or validity of the order dated
21.10.2005, passed by the Court in regards to the 'sum'
directed to be paid by the respondent would or would not
carry interest @ 18% post award period.
16.2. When such would be the position, this Court had
no occasion to decide the question in regards to the
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entitlement of the petitioner to receive interest at the rate of
18% after date of arbitral award on the sum due and payable
as on the date of passing of the award, and so as to whether
the claim made by the petitioner in the execution petition
would be payable in accordance with law or not, and could
have been granted as per the provisions of the Act, 1996?. No
such issues either raised or answered in earlier round of
litigation.
17. To buttress their respective arguments, both, the Learned
Senior Counsel, Mr. Patel, as well as Learned AGP, have
placed reliance upon the decision of the Honorable Apex Court
in the case of Kunhayammed (Supra), wherein it has held in
Para 44 as under:-
"44. To sum up, our conclusions are:
(i) Where an appeal or revision is provided against an order
passed by a court, tribunal or any other authority before superior
forum and such superior forum modifies, reverses or affirms the
decision put in issue before it, the decision by the subordinate
forum merges in the decision by the superior forum and it is the
latter which subsists, remains operative and is capable of
enforcement in the eye of law.
(ii) The jurisdiction conferred by Article 136 of the Constitution is
divisible into two stages. The first stage is upto the disposal of
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prayer for special leave to file an appeal. The second stage
commences if and when the leave to appeal is granted and the
special leave petition is converted into an appeal.
(iii) The doctrine of merger is not a doctrine of universal or
unlimited application. It will depend on the nature of jurisdiction
exercised by the superior forum and the content or subject-matter
of challenge laid or capable of being laid shall be determinative of
the applicability of merger. The superior jurisdiction should be
capable of reversing, modifying or affirming the order put in issue
before it. Under Article 136 of the Constitution the Supreme Court
may reverse, modify or affirm the judgment-decree or order
appealed against while exercising its appellate jurisdiction and not
while exercising the discretionary jurisdiction disposing of petition
for special leave to appeal. The doctrine of merger can therefore
be applied to the former and not to the latter.
(iv) An order refusing special leave to appeal may be a non-
speaking order or a speaking one. In either case it does not attract
the doctrine of merger. An order refusing special leave to appeal
does not stand substituted in place of the order under challenge.
All that it means is that the Court was not inclined to exercise its
discretion so as to allow the appeal being filed.
(v) If the order refusing leave to appeal is a speaking order, i.e.,
gives reasons for refusing the grant of leave, then the order has
two implications. Firstly, the statement of law contained in the order
is a declaration of law by the Supreme Court within the meaning of
Article 141 of the Constitution. Secondly, other than the declaration
of law, whatever is stated in the order are the findings recorded by
the Supreme Court which would bind the parties thereto and also
the court, tribunal or authority in any proceedings subsequent
thereto by way of judicial discipline, the Supreme Court being the
Apex Court of the country. But, this does not amount to saying that
the order of the court, tribunal or authority below has stood merged
in the order of the Supreme Court rejecting the special leave
petition or that the order of the Supreme Court is the only order
binding as res judicata in subsequent proceedings between the
parties.
(vi) Once leave to appeal has been granted and appellate
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jurisdiction of Supreme Court has been invoked the order passed
in appeal would attract the doctrine of merger; the order may be of
reversal, modification or merely affirmation.
(vii) On an appeal having been preferred or a petition seeking
leave to appeal having been converted into an appeal before the
Supreme Court the jurisdiction of High Court to entertain a review
petition is lost thereafter as provided by sub-rule (1) of Rule 1 of
Order 47 CPC."
(emphasis supplied)
18. What is discernible from the ratio of the aforesaid
decision would be that in a case where, there is any appeal or
revision under statute, whereby a superior forum modifies,
reverses, or affirms the decision on the issue before it, the
decision of the subordinate forum merges in the decision of the
superior forum.
19. It also clearly observed that the doctrine of merger is not
a doctrine of universal or unlimited application. It would
depend on the nature of jurisdiction exercised by the superior
forum, and the content or subject matter of challenge laid or
capable of being laid, shall be determinative factor for the
applicability on the issue of merger.
20. Having so noticed hereinabove that in the earlier round
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of litigation, when the respondent - State preferred a writ
application, which appears to have been filed under Article
226/227 of the Constitution of India, but as per the settled
position of law, when an order impugned is passed by a Civil
Court, it would only be questioned by way of an application
under Article 227 of the Constitution of India, having
supervisory jurisdiction over its subordinate Court. Such order
passed by Civil Court is not amenable to writ jurisdiction
under 226 of the Constitution of India. [See Radheshaym and
others vs. Chhabi Nath and others, reported in (2015) 5 SCC
423 (Para 27)].
21. It is also required to be observed that order dated
01.08.2014 passed in Special Civil Application No.628 of 2006
by this Court, binds respondent so far as maintainability of
arbitral award is concerned and to that extent, principle of
merger stands applied. But for an issue, which is never
germane before this Court in the aforesaid application, and not
answered it, question of application of principle of merger
would not arise.
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22. In view of the aforesaid, when this Court had no
occasion to deal with the issue, which germane in this matter,
inasmuch as this Court had never opined about the amounts
ordered by the Court vide its order dated 21.10.2005, was just
and appropriate, thus, the doctrine of merger, would not be
applicable in the case on hand as pressed into service by the
learned AGP.
23. Thus, the order dated 21.10.2005, passed by the Court in
Arbitration Execution Petition No. 359 of 2002, would not
merge in the judgment/order dated 01.08.2014, passed by this
Court in Special Civil Application No. 628 of 2006 for all
purposes. Hence, Point No.I is answered accordingly.
POINT NO.II
24. The petitioner, having filed an application below Exhibit
22, thereby, requested the Executing Court to direct the
respondent to pay the amount due and payable under the
arbitration award. It has provided its calculation, so mentioned
in Paragraph 4 of the impugned application at Exhibit 22.
Thereafter, the impugned Review Application also came to be
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filed below Exhibit 32, whereby it was pointed out to the
Court that there was an error apparent on the face of the
record when it directed the respondent to pay the amount vide
its order dated 21.10.2005.
25. The petitioner has placed reliance upon Section 31(7)(b)
and other provisions of the Act, 1996, and so also placed
reliance upon the decision of the Full Bench of the Hon'ble
Supreme Court in the case of Hyder (Supra). The Court, after
dealing with the arguments canvassed by the parties, arrived at
a conclusion that when the petitioner had not challenged the
order dated 21.10.2005 passed by the Court, later in point of
time, no review of such order could be maintainable inasmuch
as, according to the Court, it cannot go behind its own order
and cannot discuss or decide or relook into such points raised
by the petitioner in its Review Application.
26. According to the Court, the petitioner waived his right to
claim any more amount than ordered by the Court vide its
order dated 21.10.2005. So, according to the Court, once such
order dated 21.10.2005 was confirmed up to the Hon'ble
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Supreme Court, there is no scope of interference in such order
dated 21.10.2005 inasmuch as it cannot be recalled, modified
or reviewed.
27. At this stage, it would be apt to refer the following two
cited decisions of the Hon'ble Supreme Court, firstly, in the
case of Canon India Private Limited (Supra), wherein the Full
Bench of the Hon'ble Supreme Court held thus:-
"63. Thus, in view of the above, the following grounds of
review are maintainable as stipulated by the statute:
(i) Discovery of new and important matter or evidence
which, after the exercise of due diligence, was not within
the knowledge of the petitioner or could not be produced
by him at the time when the decree was passed or order
made;
(ii) Mistake or error apparent on the face of the record; or
(iii) Any other sufficient reason.
64. The words "any other sufficient reason" have been
interpreted by the Privy Council in Chhajju Ram v. Neki
[Chhajju Ram v. Neki, 1922 SCC OnLine PC 11 : (1921-22)
49 IA 144] and approved by this Court in Moran Mar
Basselios Catholicos v. Mar Poulose Athanasius [Moran Mar
Basselios Catholicos v. Mar Poulose Athanasius, (1954) 2
SCC 42] to mean a reason sufficient on grounds, at least
analogous to those specified in the rule.
70. Thus, the decisions referred to above make it
abundantly clear that when a court disposes of a
case without due regard to a provision of law or
when its attention was not invited to a provision of
law, it may amount to an error analogous to one
apparent on the face of record sufficient to bring
the case within the purview of Order 47 Rule 1 of
the Civil Procedure Code, 1908. In other words, if a
court is oblivious to the relevant statutory
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provisions, the judgment would in fact be per
incuriam. In such circumstances, a judgment
rendered in ignorance of the applicable law must be
reviewed."
(emphasis supplied)
28. As such, learned AGP Mr. Desai also placed reliance
upon certain decisions of the Hon'ble Supreme Court on the
scope and power of review and interference by this Court
while exercising its review jurisdiction, but the same would
not be applicable to the facts of the case inasmuch as if the
case of the petitioner falls in line with the category defined in
the case of Canon India Private Limited (supra), if it is
apparent from the record itself that the order dated 21.10.2005
passed by the Court was in ignorance of Section 31(7)(b) of the
Act, 1996, such order having been passed in ignorance of law,
requires to be reviewed.
29. So, I do not want to burden this judgment by discussing
those sighted decisions by the learned AGP except to observe
that there is a well-defined scope of interference when it
exercises review jurisdiction. It is settled that under garb of
review, entire matter cannot be permitted to reopen and long
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drawn arguments and additional points which would left out
initially, cannot be allowed to pressed into service.
30. Now, coming back to the facts at hand, it remained
undisputed between the parties that while passing the award
by the sole arbitrator on 31.05.2000, the sole arbitrator not
passed any order as regards post-award interest to be paid by
the respondent. When such would be the fact, a question arises
as to whether the petitioner, having claimed an arbitral award,
would be entitled to receive any post-award interest?; if Yes,
on what 'Sum'.
31. At this stage, it would be profitable to first read Section
31 (7)(a) and (b) of the Act, 1996, which stood prior to its
amendment dated 23.10.2015, as the arbitral award was passed
on 31.05.2000, which reads as under:-
" 31. Form and contents of arbitral award.-
(7) (a) Unless otherwise agreed by the parties, where
and in so far as an arbitral award is for the payment
of money, the arbitral tribunal may include in the
sum for which the award is made interest, at such
rate as it deems reasonable, on the whole or any part
of the money, for the whole or any part of the period
between the date on which the cause of action arose
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and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award
shall, unless the award otherwise directs, carry
interest at the rate of eighteen per centum per annum
from the date of the award to the date of
payment........."
(emphasis supplied)
32. As per the aforesaid provision, the petitioner would be
entitled to receive 18% interest on the sum directed to be paid
by an arbitral award after the date of the award till the date
of actual payment. What would constitute the 'sum' on which
interest would carry @ of 18% per annum as per Section 31(7)
(b) of the Act, 1996, is already answered by the Hon'ble
Supreme Court in the case of Hyder (Supra).
33. It would be apt to refer to some of the observations and
conclusions made by the majority member (2:1) of the Full
Bench of the Hon'ble Supreme Court in the case of Hyder
(Supra), wherein, after analysing the effect of Section 31(7)(b)
of the Act, 1996 (which stood prior to its amendment dated
23.10.2015), it held thus:-
"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 pendente lite.
13. Thus, it is apparent that vide clause (a) of sub-section
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(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.
14. In fact this is a case where the language of sub-section
(7) clauses (a) and (b) is so plain and unambiguous that no
question of construction of a statutory provision arises.
The language itself provides that in the sum for
which an award is made, interest may be included
for the pre-award period and that for the post-
award period interest up to the rate of eighteen per
cent per annum may be awarded on such sum
directed to be paid by the arbitral award.
21. In the result, I am of the view that S.L. Arora case
[State of Haryana v. S.L. Arora and Co., (2010) 3 SCC 690 :
(2010) 1 SCC (Civ) 823] is wrongly decided in that it holds
that a sum directed to be paid by an Arbitral Tribunal and
the reference to the award on the substantive claim does
not refer to interest pendente lite awarded on the "sum
directed to be paid upon award" and that in the absence of
any provision of interest upon interest in the contract, the
Arbitral Tribunal does not have the power to award
interest upon interest, or compound interest either for the
pre-award period or for the post-award period. Parliament
has the undoubted power to legislate on the subject and
provide that the Arbitral Tribunal may award interest on
the sum directed to be paid by the award, meaning a sum
inclusive of principal sum adjudged and the interest, and
this has been done by Parliament in plain language.
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...". Clause (b) uses the words
"arbitral award" and not the "Arbitral Tribunal". The
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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 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 clause (a).
33. My aforesaid interpretation of Section 31(7) of the Act
is based on three golden rules of interpretation as
explained by Justice G.P. Singh in Principles of Statutory
Interpretation (13th Edn., 2012) where the learned author
has said that while interpreting any statute, language of
the provision should be read as it is and the intention of
the legislature should be gathered primarily from the
language used in the provision meaning thereby that
attention should be paid to what has been said as also to
what has not been said; second, in selecting out of
different interpretations "the court will adopt that which is
just, reasonable, and sensible rather than that which is
none of those things"; and third, when the words of the
statute are clear, plain or unambiguous i.e. they are
reasonably susceptible to only one meaning, the courts
are bound to give effect to that meaning irrespective of
the consequence (see pp. 50, 64 and 132). I have kept
these principles in mind while interpreting Section 31(7) of
the Act."
(emphasis supplied)
34. Thus, in view of the aforesaid provision and the ratio of
the decision in Hyder (Supra), the issue germane in the
impugned Review Application no longer remains debatable,
having already been answered/decided by the Hon'ble Supreme
Court.
35. Once, it is brought on record that the Court, while
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passing the order dated 21.10.2005, did not analyse the
aforesaid provision of the Act, 1996, and passed an order
contrary to it, would amount to an error and apparent gross
error on the face of the record.
36. Such would be the situation when such an error apparent
on the face of the record is pointed out to the Court; it
requires to review its order having been passed either in
ignorance of law or overlooking the provisions of law.
37. According to my view, considering the aforesaid peculiar
facts and circumstances of this case, the Court, while passing
the order dated 21.10.2005, committed an error apparent on
the face of the record of the case inasmuch as it did not
award 18% interest on the sum, i.e., the principal amount, but
16% interest on such principal amount post-arbitral award, i.e.,
from 01.06.2000 till its payment.
38. Having reached to the aforesaid conclusion, when there is
an erroneous order passed by the Court on 21.10.2005, the
reasons assigned by the Court while rejecting the impugned
application filed below Exhibit 32 would also fall within the
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category of an erroneous, perverse, and non-judicious order
that requires to be interfered with by this Court while
exercising its power of superintendence under Article 227 of
the Constitution of India.
39. The question of delay in filing impugned applications
would not be a ground to throw the impugned applications on
such hyper technical reason, inasmuch as, from 21.10.2005 till
13.04.2015, respondent busy in pursuing its legal remedy,
whereas petitioner busy due to aforesaid reason. Further,
review application so filed below Exhibit 32, the Court not
rejected impugned review application, on ground of delay. So,
such argument canvassed by learned AGP would not help to
his case anymore, thus, such arguments hereby rejected.
40. Furthermore, while taking note of such delay on the part
of petitioner having not filed review application below Exh.32,
immediately after passing of order dated 21.10.2005 but
appears to have been filed on 29.08.2016, this Court while
considering the claim of petitioner on merits would like to
exclude such period while giving benefit of interest as per
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Section 31 (7) (b) of the Act, 1996. Further discussion on this
aspect will find in later portion of this judgment.
41. It can be gainsaid that this Court, while exercising its
power under Article 227 of the Constitution of India, is
required to exercise such power to keep the Court within its
bounds. Whenever any perversity and/or any erroneous
observation/reasons assigned by the Court while passing the
impugned order having so found, such power of
superintendence requires to be exercised by this Court to
correct such impugned order. [See - Waryam Singh vs.
Amarnath,, reported in AIR 1954 SC 215 (para-13) & Bhudev
Mallick alias Bhudeb Mallick and Another vs. Ghoshal and
Others, reported in 2025 SCC OnLine SC 360 (para 53 to 58);
2025 1 GLH 553]. So, Point No.II is answered accordingly.
POINT NO.III
42. This Court, having found as observed hereinabove that
there was an error apparent on the face of the record on the
part of the Court when it ordered the respondent to pay the
amount as per the award. Such order was also not found in
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consonance with the provisions of the Act, 1996, and as such,
at given point of time, none of parties raised such an issue,
having so raised it in review application (Exhibit 32), would
not be a ground that petitioner forgo its right, as no question
of waiver/estopple/merger would apply to the facts of this
case, and so also against statute.
43. Having so found that the execution application in
question was not disposed of by the Court while passing the
order on 21.10.2005, the claim made by the petitioner, having
so filed in the impugned application below Exhibit 22, needs
and requires to be reconsidered, keeping in mind all such
factors including provision of the Act, 1996.
44. This Court could have remanded the matter back to the
Court for final adjudication of the amount to be paid by the
respondent to the petitioner as per the award and also interest
as per Section 31(7)(b) of the Act, 1996, but having so
recorded in the facts and during the pendency of this
application, the execution petition was withdrawn subject to
the outcome of this application. This Court would like to
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adjudicate the impugned application filed below Exhibit 22 on
its merit. Thus, matter is not remanded back to the Executing
Court.
45. Having so observed and held hereinabove that the
petitioner would be entitled to receive interest at the rate of
18% post-award on the sum directed to be paid by an arbitral
award, such sum would constitute principal + interest, thereby,
the principal amount of Rs.80,47,130/- wherein interest at the
rate of 16% for the aforementioned period requires to be
added till date of award.
46. It is not in dispute that the principal amounts awarded
by the sole arbitrator under different claims would be
Rs.80,47,130/-; its bifurcation would be Rs.79,94,130/- +
53,000/-, and interest at the rate of 16% was awarded on such
amount from 25.09.1997 to 31.05.2000 and 01.10.1997 till
31.05.2000, would come to Rs.34,31,080.60/- + Rs. 22,613/-
respectively. Total comes to Rs.1,15,00,824/- (So defined by
petitioner in Exhibit 22 in para-4) and such amount would be
treated as 'sum' as per Section 31 (7) (b) of the Act, 1993.
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47. Accordingly, the respondent is under a statutory
obligation as per Section 31(7)(b) of the Act, 1996, to pay such
sum i.e. Rs.1,15,00,824/- with 18% interest from 01.06.2000
till its realization.
48. It is reported to this Court by learned AGP that the
respondent has deposited/paid a sum of Rs.1,74,08,734/- on
26.10.2015 as per the order dated 21.10.2005 and so also,
deposited/paid Rs.1,42,32,087/- on 20.03.2018 as per the
impugned order dated 12.06.2017; thus, deposited/paid total
Rs.3,16,40,821/- and such amount requires to be given set off
from the amount payable as above. It goes without saying that
the amount, which has already deposited/paid, would first get
adjusted against the interest component (interest 18% on the
amount of 'sum') then adjusted against amount of 'sum'.
49. At this stage, it would also requires to be taken note of
the fact that the petitioner for quite a long time remained
silent, having not promptly filed the impugned application
either below Exhibit 22 or Exhibit 32, as the case may be, and
as such, as observed hereinabove, due to the long pendency of
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earlier litigation either before this Court or before the Hon'ble
Supreme Court, the petitioner also remained quiet and did
nothing, thereby, according to this Court, for such a long
period, the petitioner would not be entitled to receive interest
at the rate of 18% on the 'sum' for such period.
50. The petitioner, vide its affidavit dated 10.09.2025, filed
in the present application, thereby, declared and stated on
oath as under:-
"................if the amount as prayed and claimed by the petitioner is
granted and the respondent authority gives that amount to the
petitioner within time as stipulated by the Hon'ble Court, the
petitioner undertakes that the petitioner will waive additional
interest as claimed, for any period between 21/10/2005 to
29/08/2016 as may be fixed by this Hon'ble Court............."
51. Having considered the issue germane in the matter, the
prolonged litigation between the parties, the inaction of the
petitioner for quite long time having not pursued his execution
proceeding, and coupled with the fact that the respondent,
being a State ought not to be burdened for such period, in
view of these peculiar facts and circumstances of the case, and
so also, taking note of the statement of the petitioner in the
form of additional affidavit filed in this writ application as
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reproduced hereinabove, I would like to observe and hold that
the petitioner would not be entitled to receive interest at the
rate of 18% for the period between 21.10.2005 to 29.08.2016
on the amount of the 'sum' adjudged as per the arbitral
award. So, Point No.III is answered accordingly.
CONCLUSION
52. In view of the foregoing discussions, observations, and
reasons, I am of the view that the order dated 21.10.2005
passed by the Court in Arbitration Execution Petition No. 359
of 2002 would not merge in the judgment and order dated
01.08.2014 passed by this Court in Special Civil Application
No.628 of 2006 for all purposes.
52.1. Consequently, the claim of the petitioner to get
interest at the rate of 18% on the amount of the 'sum'
adjudged as per the arbitral award, as per Section 31 (7)(b) of
the Act, 1996 would be maintainable and requires to be
decided in accordance with law. The doctrine of merger as
pressed into service by respondent would not be applicable
accordingly.
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53. Having so found and as observed hereinabove, that there
was an error apparent on the face of the record on the part of
the Court inasmuch as it passed the order dated 21.10.2005,
thereby, directed the respondent to pay the amount with
interest as per the arbitral award with 16% interest, which was
not in consonance with Section 31(7)(b) of the Act, 1996, thus,
the impugned Review Application filed below Exhibit 32
erroneously rejected by the Court.
54. Consequently, having so reached to the aforesaid
conclusion, the petitioner would be entitled to receive interest
at the rate of 18% from 01.06.2000 on the amount of the
'sum' i.e., Rs.1,15,00,824/- adjudged as per the arbitral award,
i.e., the principal amount + interest at the rate of 16% as
awarded by the arbitrator till 31.05.2000 in the award.
55. At the same time, the petitioner would not be entitled to
receive interest @ 18% interest on the aforesaid 'sum' for the
period between 21.10.2005 to 29.08.2016, which shall be
excluded while making payments by respondent to the
petitioner. Further, whatever payment has been paid/deposited
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by respondent in the matter shall be adjusted against said
amount to be paid as per this order (See-para-47).
56. In view of the aforesaid, the respondent - State is hereby
directed to recalculate the amount as observed hereinabove
while answering Point No.3 and thereafter, pay such amount
to the petitioner on or before 31.12.2025.
57. At the time of making such payment, either to the
petitioner or depositing with the Court, the calculation sheet
shall be prepared and provided to the petitioner showing
calculation of interest and adjusted amount.
58. If the respondent - State fails to deposit such amount
within the stipulated time as granted hereinabove, then after,
it will be open for the petitioner to file a fresh execution
application against the respondent - State to recover the
amount as decided and ordered by this Court as aforesaid.
59. In view of the foregoing conclusions, the impugned order
passed on 12.06.2017 by the Principal District Judge, below
Exhibit 22 and 32 respectively, in Arbitration Execution
Petition No.359 of 2002, is hereby quashed and set aside.
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60. Accordingly, the impugned applications filed below
Exhibit 32 is hereby allowed, and the impugned application
filed below Exhibit 22 is also hereby partly allowed to the
aforesaid extent.
61. Thus, the present writ application is hereby allowed to
the aforesaid extent. Rule is made absolute accordingly. No
order as to cost.
(MAULIK J.SHELAT,J)
MOHD MONIS
