TaxTMI 
TaxTMI 
2012 (10) TMI 1016
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....s been fully paid and, therefore, there was nothing to be granted in the Execution Petition. The learned Single Judge dismissed the objections by order dated 12.07.2002 which was the subject matter of appeal in which the impugned judgment came to be passed by the Division Bench of the High Court of Delhi. 3. The issue centres around the interpretation of Order XXI Rules (1), (4) and (5) of CPC read with Section 34 CPC and Section 3 (3) (c) of Interest Act. Though the legal issue falls within the narrow compass, to appreciate the respective contentions of the parties, certain details about award dated 15.03.1982, the order of the Court which granted the seal of approval to the award dated 31.05.1985 in suit No.594-A/1982, the order of the Division Bench dated 18.07.2000 by which the challenge to the award and the order dated 31.05.1985 came to be rejected and the subsequent order dated 31.07.2000 declining to recall the earlier order dated 18.07.2000, thereafter the order of the learned Single Judge came to be passed on 12.07.2000 in EA No.522 of 2000 in Execution case No.208 of 2000 which was subject matter of challenge in the impugned order of the Division Bench dated 03.11.2008 ....
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....e claimant shall be entitled to future interest at the rate of 12 % per annum from the date of the decree till realization, in case the award amount is not paid within two months from today the 31st May, 1985. It is lastly ordered that suit No.409-A/1982 is hereby disposed of. Given under my hand and the seal of the Court this the 31st day of May, 1985." 5. When the appellant challenged the said decision of the learned Single Judge dated 31.05.1985 in FAO (OS) 188 of 1985, the same came to be dismissed by the order dated 18.07.2000. During the pendency of the suit FAO (OS) No.188 of 1985 by way of an interim order dated 13.09.1985 the recovery under the award was stayed subject to the condition that the respondent paid the sum of Rs. 1 crore into the Court which was directed to be withdrawn by the respondent on furnishing Bank guarantee for the purpose of restitution in case the award was set aside. It is not in dispute that in compliance of the said order necessary deposit was made. The respondent also realized the said amount of Rs. 1 crore on 13.10.1985. The appellant moved an application for recalling order dated 18.07.2000 of the Division Bench and the same was also dismiss....
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..... Mr. Chandhiok, learned ASG for the appellant by referring to Order XXI Rule 1 sub-clauses (1), (4) and (5) submitted that after the passing of the award by the Arbitrator on 15.3.1982 and it was made as a Rule of the Court by the learned Single Judge in the order dated 31.05.1985 substantial payment towards the decretal amount was made by 18.10.1985 and what remained to be paid in satisfaction of the decretal amount was only Rs. 41,68,474/- apart from interest which was due and payable in a sum of Rs. 1,53,22,603/- in all a sum of Rs. 1,94,91,077/-. The learned ASG submitted that after the filing of the Execution Petition and the orders passed thereon when the appellant moved the learned Single Judge pursuant to interim orders dated 01.12.2000, the entire balance amount was also deposited by way of two cheques representing Rs. 1,74,93,885/- and T.D.S. amount of Rs. 19,97,192/- in all a sum of Rs. 1,94,91,077/-. The learned ASG, therefore, contended that by virtue of the payments made, as above, dated 18.10.1985 and subsequently on 13.12.2000 the payment of entire decretal amount was fully satisfied and nothing more remained payable. According to learned ASG when once the balance ....
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....nsel, therefore, contended that after the award was made as a Rule of the Court after 31.05.1985 and when the first payment of Rs. 1 crore was made by the appellant on 18.10.1985, the decretal amount which was due and payable by the appellant as on that date was in a sum of Rs. 2,19,61,134/- and after giving credit to the payment of Rs. 1 crore a balance amount of Rs. 1,19,61,134/- was due and payable as from 19.10.1985. The learned Senior Counsel, therefore, contended that when the next payment was made by the appellant only on 13.12.2000 in a sum of Rs. 1,94,93,885/-, based on the calculation of the respondent, a further sum of Rs. 1,42,96,318/- was due and payable which remained unpaid. The learned Senior Counsel, however, fairly admitted that even as per the stand of the respondent a miscalculation was made while working out the interest on principal amount which was not accepted by the learned Single Judge while granting relief in the order dated 12.07.2002 and that in any event whatever calculation ultimately worked out by the learned Single Judge in the order dated 12.07.2002 was just and proper and the confirmation of the same by the Division Bench, therefore, does not call....
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....e sub-rule of Order XXI is to the effect that on payment of the amounts payable under a decree, as provided under sub-rule (1), the calculation of interest on such amount payable under the decree would cease to operate from the date of service of notice as stipulated under sub-rule (2) of Order XXI. 12. Leaving aside the intimation by way of service, as regards the payment as provided under sub-rule (2), inasmuch as in the case on hand on different dates the payments were made, such payments were all made after due notice to the respondent. Therefore, there was no controversy relating to the date when the respective payments were made. We are, therefore, only concerned with the implication and application of sub-rule (1) of Order XXI and the consequent effect on whatever payments made, as claimed by the appellant by operation of sub-rule (4). Therefore, in the forefront, we wish to examine as to what extent the prescription contained in sub-rule (1) of Order XXI was followed by the appellant in making the payments once on 18.10.1985 and subsequently on 13.12.2000. The words used in sub-rule (1) in different expressions means whatever money that is due and payable under a decree, w....
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....r the decree whichever is earlier. The decree, having regard to the applicable provision, would be the date of the Rule of the Court, namely, 31.05.1985. Therefore, a strict construction of the said direction of the learned Arbitrator as regards the manner of calculation of interest would mean either the date of payment or the date of decree whichever is earlier. Since, the first date of payment in the case on hand was subsequent to the date of the Rule of the Court, namely, 31.05.1985, going by the direction of the learned Arbitrator, the calculation of interest should be made up to 31.05.1985. Since, the award received the seal of approval only after the same was made as the Rule of the Court, it is the stipulation contained in the said Rule would ultimately cover the relief really granted in the award as made operative by virtue of the Rule ordered by the Court. Therefore, in the stricto sensu, it is the decree dated 31.05.1985 which has to be applied in letter and spirit in order to find out whether the stipulations contained therein were duly fulfilled by the appellant. 14. The Rule of the Court while approving the award of the Arbitrator did not make any substantive alterati....
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....rly made known that the award contained an amount which was payable to the respondent quantifying the said amount in a sum of Rs. 1,41,68,474/-. After quantification of the said amount, the learned Arbitrator dealt with the grant of interest independent of the said payment and fixed the rate of such interest at 12 per cent per annum. When such a clear distinction was consciously made by the learned Arbitrator while passing the award no one can even attempt to state that the award amount and the interest mentioned in the award dated 15.03.1982 should be merged together and state that the award amount would comprise of a sum of Rs. 1,41,68,474/- and the interest worked out thereon became payable when once it was made the Rule of the Court and thereby became the decretal amount. Such a construction of the said award cannot be made having regard to the specific terms of the decree dated 31.05.1985. 16. Once we steer clear of the said position as regards the decree passed by the learned Single Judge, we are posed with the next question as to while applying Order XXI Rule 1 when payments were made towards the satisfaction of the said decree as provided under Order XXI Rule 1 (a), (b) a....
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....r dated 13.09.1985. 17. Keeping the above factual position in mind when we examine Order XXI Rule 4 CPC, the said sub-rule states that on any amount paid under Clause (a) or Clause (c) of sub-rule 1, interest, if any, shall cease to run from the date of service of the notice referred to in sub-rule 2. In the case on hand since the deposit of the amount pursuant to the order of the Division Bench dated 13.09.1985 came to be made and was also withdrawn by the respondent from the date of service of notice as contemplated in sub-rule 2 the same was deemed to have been effected. Therefore, applying sub-rule 4 to the case on hand in so far as the cessation of interest is concerned, the same should operate upon the sum of Rs. 1 crore deposited by the appellant and withdrawn by the respondent. There can be no dispute and in fact it is not disputed by the parties that on and after the deposit of Rs. 1 crore, no interest was payable on the said sum. The only other consideration to be made is in which component the said sum of Rs. 1 crore is to be taken. In other words, whether the said sum of Rs. 1 crore paid by the appellant should be accounted towards the award amount of Rs. 1,41,68,474/....
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....n in full of the claim in the plaint. Rule 2 thereof provides for issue of notice of deposit to the plaintiff through the court and for payment out of the amounts to the plaintiff if he applies for the same. Rule 3 specifically states that no interest shall be allowed to the plaintiff on any sum deposited by the defendant from the date of such deposit, whether the sum deposited is in full discharge of the claim or it falls short thereof. Rule 4 enables the plaintiff to accept the deposit as satisfaction in part and allows him to pursue his suit for what he claims to be the balance due, subject to the consequences provided for therein regarding costs. It also deals with the procedure when the plaintiff accepts the payment in full satisfaction of his claim." 20. In paragraph 20, the general rule of appropriation towards a decretal amount has been stated as under: "20.......It was also held that the general rule of appropriation towards a decretal amount was that such an amount was to be adjusted strictly in accordance with the directions contained in the decree and in the absence of such direction, adjustments be made firstly in payment of interest and costs and thereafter in paym....
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....lated by Order 21 Rule 1 of the Code as explained by us above. The Code or the general rules do not contemplate payment of further interest by a judgment-debtor on the portion of the principal he has already paid. His obligation is only to pay interest on the balance principal remaining unpaid as adjudged either by the court of first instance or in the court of appeal. On the pretext that the amount adjudged by the appellate court is the real amount due, the decree- holder cannot claim interest on that part of the principal already paid to him. Of course, as indicated, out of what is paid he can adjust the interest and costs first and the balance towards the principal, if there is a shortfall in deposit. But, beyond that, the decree-holder cannot seek to reopen the entire transaction and proceed to recalculate the interest on the whole amount and seek a reappropriation as a whole in the light of the appellate decree." (Emphasis added) 24. From what has been stated in the said decision, the following principles emerge: a) The general rule of appropriation towards a decretal amount was that such an amount was to be adjusted strictly in accordance with the directions contained in th....
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....that only a sum of Rs. 1,94,93,885/- was due as on 03.01.2001 under the decree is wrong and is rejected. As such the contention of the judgment debtor that the decree holder is charging interest on the amount of interest and contravening section 3(3)(c) of Interest Act is incorrect and is rejected. Having regard to the above discussion the objections filed by the judgment debtor have no merit the objection application is dismissed." 26. In fact in the calculation which was sought to be made by the respondent in its statement filed before the learned Single Judge, interest was calculated for the period subsequent to 06.03.2001 that was the date when the last payment was made by the appellant wherein the calculation of interest for the period from 04.01.2001 to 04.03.2002 was claimed on the entire sum of Rs. 1,42,96,318/- instead of calculating the same on the balance principal of Rs. 1,19,61,134/-. In the penultimate paragraph of the order dated 12.07.2002, the learned Single Judge rightly rejected such a wrong claim made on behalf of the respondent while dismissing the objections filed by the appellant. 27. The Division Bench having examined the order of the learned Single Judg....