Alimenta S.A. vs N.A.C.M.F.Of India

YOGESH KHANNA, J.

EA (OS) No.392/2017

The decree holder moves this application under Order XXI read with Section 151 CPC for direction to the judgment debtor to deposit the decretal

amount with interest.

The following are the relevant facts for determining this application:-

a) on 13.02.1981 the decree holder invoked arbitration to be held in London under FOSFA (Fats, Oils, Seeds & Fats Association) Rules as disputes

had arisen between the parties consequent to default by the judgment debtor in effecting supplies under the contract dated 12.01.1980;

b) on 15.11.1989 the original arbitral award was passed. The relevant extract of the award is as under:-

“We AWARD that Sellers shall pay to Buyers within 14 days from the date of this award the sum of US$4,681,000 (Four million six hundred and

eighty one thousand United States Dollars) being the difference between the contract price of US$765 per metric tonne plus US$15 per metric tonne

for double bags and the settlement price US$2275 plus US$15 per metric tonne for double bags and damages with interest thereon at the rate of

10.5% from 13 February 1981 to the date of this award.â€​

c) on 13.05.1990 judgment debtor preferred an appeal under FOSFA Rules against the original award;

d) on 14.09.1990 an appeal Award passed affirming the original award of 15.11.1989 directing, inter alia, that the judgment debtor shall pay to the

decree holder within 14 days from the date of the appeal award a sum of US$ 4,526,000 with interest thereon @11.25% per annum from 13.02.1981

to the date of the appeal award i.e. 14.09.1990. The judgment debtor was also directed to pay the fees, cost and expenses of the appeal amounting to

£9,344.55;

e) on 08.07.1993 the decree holder filed a petition registered as Suit No. 1885 of 1993 (“Suitâ€) under S. 5 r/w S. 6 of the Foreign Awards

(Recognition and Enforcement) Act, 1961 before the Honâ€ble Delhi High Court for filing and enforcement of the Appeal Award read with the

original award;

f) on 28.01.2000 the learned Single Judge by his final judgment and order dated allowed the Suit and passed a decree also dated 28.01.2000 as under:-

“This suit coming on this day for final hearing before this Court in the presence of the counsel for the parties as aforesaid, it is ordered that the

Award dated 15.11.1989, and confirmed by the appeal award dated 14.9.90 by the Board of Appeal of Federation of Oil and Fats Association Ltd.,

appended hereto as annexure „A†and „B†is taken on record and made a rule of the Court and a decree is hereby passed in terms of the said

award which shall form part of the decree.

It is further ordered that the petitioner shall be entitled to interest @ 18% per annum from the date of the award till the date of realization.

xxxxxx

It is also ordered that the respondent shall make payment of any loss on account exchange variation between the date of Award and the date of actual

payment.â€​

g) on 26.05.2000 judgment debtor filed an appeal being FAO (O.S.) No.205/2000 before the Division Bench of this Court against the judgment in the

Suit;

h) on 28.02.2001 at the time of admission of the FAO, a stay was granted on execution of the Decree by the Division Bench passed in CM No. 1071

of 2000 in said FAO, against said order dated 28.02.2001, decree holder filed SLP (C) Nos.7033 of 2001 and 14943 of 2001 before the Supreme

Court;

i) on 05.04.2002 the Supreme Court passed an order disposing of SLP (C) Nos. 7033 of 2001 and 14943 of 2001 and modified the order dated

28.02.2001 passed in the FAO by directing that the JD shall furnish either bank guarantee or property security for the principal amount decreed to the

Registrar of this Court within eight weeks from the date of the said order failing which the order of stay granted by the this Court would stand

vacated;

j) on 05.08.2002 the Supreme Court was pleased to grant two weeks time to comply with its earlier order dated 05.04.2002;

k) on 26.08.2002 the Supreme Court directed that if within the two weeks†time granted by its order dated 05.08.2002 the security furnished has not

been accepted, the decree becomes executable and stay order stands vacated;

l) in September 2002as security offered was not accepted within the said two weeks, extension was granted by the Supreme Courtâ€s order, Decree

holder filed Execution Petition No.204/ 2002 which is presently pending before this Court and in which, inter alia, EA(OS) No. 392/ 2017 has been

filed by the decree holder;

m) In October 2002 judgment debtor filed its reply/objections to the Execution Petition and rejoinder thereto was filed by the decree holder;

n) On 08.01.2003 the Supreme Court modified its order dated 05.04.2002 to the extent that in case the judgment debtor furnished bank guarantee for

the entire principal amount to the Registrar of this Court within four weeks from the date of the said order, the execution proceedings would remain

stayed. In the event the bank guarantee is not furnished, the Supreme Court directed that the said order dated 08.01.2003 shall stand automatically

vacated without reference to the Court

o) on 06.03.2003 modification/corrigendum was issued to BG No.86/2002 pursuant to order dated 24.02.2003 of the Registrar General of this Court.

The modified /amended Bank Guarantee No.86/2002 for Rs.22.5 crores accepted by the. Registrar General of this Court;

p) on 02.06.2011, the said BG for Rs. 22.5 crores encashed and the amount placed in FDR No. 15530310192931 dated 02.06.2011 for Rs.22,50,000/-

in UCO Bank, Delhi High Court Branch, renewable yearly. Thereafter, the Execution Petition was adjourned sine die. As per judgment debtor in its

EA(OS) No.165 of 2018 in Ex.P. No.204/2002, the value of said FDR on 26.03.2018 stood at Rs.38,00,56,225/;

q) on 06.09.2010 judgment of the third Judge, HMJ Ravindra Bhat, concurring with the judgment of HMJ Mudgal, holding LPA is not admissible and

hence FAO not maintainable. The judgment debtor preferred SLP (C) No. 28325 of 2010 against the judgment and order dated 06.09.2010 of the third

Judge in the FAO;

r) on 25.10.2010 order of the Supreme Court in SLP(C) No.28325 of 2010 granting interim stay of the impugned High Court judgment subject to

deposit of the amount due as per the award with further interest at the same rate as per the award within eight weeks, before the Delhi High Court;

The judgment debtor thereafter filed SLP (C) No. 35065 of 2010 against the final judgment and order of the Ld. Single Judge dated 28.01.2000 passed

in the Suit. The judgment debtor filed an application for modification of the order dated 25.10.2010 of the Supreme Court;

s) on 17.01.2012 the Supreme Court while granting leave to appeal in both the aforementioned SLPs renumbered as Civil Appeal Nos.665 of 2012 and

667 of 2012, respectively, did not accede to prayer in the third modification application of judgment debtor. The Court rejected the prayer for interim

relief preferred by judgment debtor in its SLPs, and gave DH liberty to enforce the Decree dated 28.01.2000 passed by this Honâ€ble Court in view

of non-compliance with its order dated 07.04.2011. Pursuant to order dated 17.01.2012 of the Supreme Court, decree holder pursued execution of the

Decree in this Honâ€​ble Court in the Execution Petition;

t) On 21.08.2014 order of this Court inter alia in EA (OS) No. 573 of 2012 of DH granting rectification of the Decree dated 28.01.2000 passed in Suit

No. 1885 of 1993 wherein principal amount was corrected to US $ 4,526,000 and period of interest was corrected to 13.02.1981 to 14.09.1990. As per

the said order, the Decree shall remain unaltered in all other respects and a copy of order dated 21.08.2014 passed in EA (OS) No. 573/2012 be

placed in the Suit file. The judgment debtor preferred appeals by EFA (OS) No. 25 of 2014 and FAO (OS) No. 104 of 2015 against the order dated

21.08.2014;

u) on 16.04.2015 judgment of the Division Bench disposing of both the said appeals and directing the Registry was directed to prepare a decree sheet

in accordance with the order dated 21.08.2014 passed by the Single Judge;

v) on 20.05.2015 order of the Division Bench clarifying order dated 16.04.2015 whereby, inter alia, the Registry was directed to calculate the amounts

afresh and correctly mentioned in the decree.

Thereafter, the Registry of this Court issued a corrigendum in the Decree dated 28.01.2000 whereby the third paragraph on the second page of the

Decree was modified to read as under:

“It is further ordered that the respondent shall deposit in this Court an amount of US$ 4,526,000 with interest thereon @11.25% p.a. with effect

from 13.02.1981 to 14.09.1990 the date of award aggregating to US$ 9,408,500 as per the terms of the Award together with the sum of pound Sterling

9,344.55 towards fee and costs of Appeal and the fee of Pound Sterling 100.00 paid by the petitioner for application before Federation & further

Pound Sterling 2,950/- paid by the petitioner towards Federation Fee, Arbitrators Fees etc. with interest for payment.â€​

w) on 25.01.2016 the decree holder thereafter filed EA (OS) No. 87 of 2016 in Ex. P. No. 204 of 2002 for placing on record the corrigendum to the

Decree dated 28.01.2000 and for consequential amendment of the Execution Petition.

x) on 03.01.2017 this Court allowed the said application and the amended petition was taken on record subject to decree holder placing on record the

original Power of Attorney, which decree holder accordingly filed on 16.01.2017;

y) on 24.08.2017 this Court directed that till the next date of hearing, JD shall except with the leave of this Honâ€ble Court not alienate, transfer,

encumber or create any third party right in respect of immoveable properties mentioned in Annexure B to the Affidavit dated 21.08.2017 filed by JD

(including details of inter alia bank accounts and immoveable properties of JD filed in compliance with order dated. 11.07.2017 passed in the Execution

Petition);

z) on or about 11.09.2017 judgment debtor filed EA(OS) No. 356 of 2017 in Ex. P. No. 204 of 2002 seeking stay of the execution proceedings, and

EA(OS) No. 358 of 2017 in Ex. P. No. 204 of 2002 seeking modification of the order dated 24.08.2017;

aa) on 14.09.2017 said applications dismissed by the Ld. Single Judge and against said order dated 14.09.2017, judgment debtor preferred EA(OS) No.

23 of 2017 before the Division Bench;

bb) Per orders dated 23.10.2017 and 13.11.2017 the Division Bench as an ad-hoc interim measure without prejudice to the rights and contentions of

the parties, which are the subject matter of Civil Appeals arising out of SLP(C) Nos. 28325 of 2010 and 35065 of 2010 and the issues and contentions

raised before the Ld. Single Judge in the Execution Petition modified the interim order passed by the Ld. Single Judge in the Execution Petition and

inter alia directed the JD to furnish an unconditional bank guarantee or fixed deposit in favour of the Registrar General of this Honâ€bleÂ

Court for a sum of Rs. 96,48,41,675/- less the amount of the FDR lying in the name of the Registrar General. The Ld. Division Bench

clarified in its order dated 23.10.2017 that they have not examined and answered the question relating to the date of conversion nor have they

expressed any opinion on the rights and contentions of the parties and on the maintainability of the appeal. In its order dated 13.11.2017, the Ld.

Division Bench again clarified that it has not commented on the merits of the appeal/case or made any observation with regard to issues which are

pending before the Execution Court (which include the question of relating to the date of conversion as clarified in order dated 23.10.2017). It may be

noted that the Ld. Division bench did not stay the proceedings in the Execution Petition at any time. In the execution proceedings, JD has stated that it

has furnished an FDR being FDR No 000340600358497 dated 26.03.2018 for Rs.58,47,85,450/-(Rs.96,48,41,675/- less Rs.38,00,56,225/-) issued by

Yes Bank in compliance with the orders passed in EFA (OS) No.23/2017;

cc) on 28.10.2017 decree holder filed EA(OS) No. 392 of 2017 in the Execution Petition seeking deposit of the entire decretal amount with accrued

interest as of 2017 being 27 years from date of the Appeal Award dated 14.09.1990, together with the decreed cost/fees and accrued interest thereon

at the rate as decreed in the Suit by this Honâ€ble Court to the extent not covered by the deposit made/to be made by JD in the pending Execution

Petition and sought that JD be restrained from disposing, transferring, alienating or encumbering in any manner the immovable properties, which are

the subject matter of the restraint order dated 24.08.2017 till the deposit of the amount;

dd) on or about 10.11.2017 reply filed by the JD to EA(OS) No.392/2017.

On the above facts three issues have been raised before me:- a) upon which amount the interest @ 18% p.a. is payable viz., either upon the

principle amount of $4,526,000 or upon the consolidated amount viz. the principal amount coupled with interest @ 11.25% p.a. as on date of decree; b)

the relevant date of the applicability of conversion rate; and c) the adjustment of the amount so deposited by the judgment debtor till date.

Qua issue a) the learned counsel for the objector has referred to Indian Oil Corporation Ltd. Vs. G.S.Jain & Associates MANU/DE/4613/2012 to

say the interest can be charged only upon the principal and there is no provision to charge interest upon interest per Arbitration Act, 1940. The Court

in this case held:

28.We may add that there is force in the contention of the learned counsel for the appellant that the golden rule of interpretation of statute must be

followed and where the wordings of the statute are clear, plain and unambiguous, the courts are bound to give effect to the meaning irrespective of the

consequences. In Section 29 of the Old Act, it is after a comma that a complete line comes, “to be paid on the principal sum as adjudged by the

award and confirmed by the decreeǁ. This expression has to be read as a whole. The reference to confirmed by the decree' is, thus, in the context of a

possible variation in the principal sum which may arise on account of modification of the award. The word „principal' cannot be irrelevant and has to

be understood as per the common parlance. The „principal' is thus distinct from any other amount which would include interest. Similarly, costs

would be a third category. The provisions of Section 29 of the Old Act thus provide for post decretal interest by the court only on the principal sum. If

one may say, this is also in consonance with the general view of the legislature as is apparent from the provisions of Section 34 of the CPC and as to

why the amendment was brought into force in Section 34 pursuant to the recommendations of the Law Commission of India in its 55th Report of

1973. The effect of the amendment carried out in 1956 was explained i.e. prior to the amendment of 1956, the Section left the rate of interest even for

the post decree stage to discretion of the Court, but after the amendment, it provided for a maximum rate of interest. Moreover, the rate of interest

was previously permissible on the aggregate sum and not merely on the principal as was the position under the unamended Section. The Minister of

Legal Affairs was quoted in the report giving an explanation for the amendment of 1956 explaining the objective to be that interest ought not to be

allowed on an amount of interest itself i.e. to prevent compound interest. Thus, where the expression „principal' is used and continues to be used, it

cannot be said that the legislature was ignorant of the complexity of the issue i.e. whether interest should be granted only on the principal sum or

interest should be granted on the complete amount inclusive of interest i.e. the compound interest. In fact, conscious decisions have been taken to

remove the concept of compound interest and exceptions which have been carved out as per the judicial interpretation are restricted to cases where

there is a specific contract or statute providing compound interest.

The result of the aforesaid is that the appeals are allowed and it is held that the appellant is liable to pay interest on only the principal component of

the award and not the interest component of the award. The parties are left to bear their own costs.â€​

Further reference was made to section 3 of the Interest Act 1978 and it says:

“3. Power of court to allow interest.â€

(1) xxxxx

(2) xxxxx

(3) nothing in this section

(a) xxxxx

(b) xxxxx

(c) shall empower the court to award interest upon interest.â€​

Hence it was argued since the decree dated 28.01.2000 does not specify as to upon which amount the interest of 18% p.a. is to be paid viz. upon

the principle or upon the consolidated amount of principle plus interest, hence per G.S.Jain (supra) and per provisions of the Interest Act, it needs to be

paid only upon the principle amount and not upon such consolidated amount. It is argued even under Section 29 of the Arbitration Act, 1940, the

interest needs to be paid only upon the principle and any reference to Section 34 CPC or Section 31(7) of the Arbitration and Conciliation Act 1996, as

amended, is wholly misplaced. It is argued Section 34 CPC is not applicable as under the said section the future interest cannot increase above 6%

p.a. in normal circumstances (though, of course, the court has power otherwise) and the 1996 Act is not applicable on facts.

The learned counsel for judgment debtor also argued though under Section 31(7) of the 1996 Act, the words used are “money†and “sumâ€

but Section 29 of the 1940 Act says there cannot be any interest upon interest, so clarified in para 136 of Renusagar Power Company Ltd. vs. General

Electric Company & Anr. AIR 1985 SC 1156 as under:

“INTEREST OF AWARDS - Where and in so far as award is for the payment of money the Court may in the decree order interest, form the date

of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree.â€​

Heard.

Before proceeding further let me discuss how this Court has dealt with this issue.

In Saraswati Construction Co. vs. Delhi Development Authority 2004(2) Arb.LR 429 (Delhi) the Court held:

“4. Learned counsel for the Decree Holder has relied upon a judgment of Apex Court in ""Oil and Natural Gas Commission Vs . M.C. Clelland

Engineers, S.A"". reported in MANU/SC/0931/1999 : [1999]2SCR830 in which their Lordships considered the question of interest on interest and held

that the power of the Arbitrator to grant interest on the amount of interest, which may be termed as interest on damages or compensation for delayed

payment, would also become part of the principal amount and as such, Section 3 of the Interest Act at sum adjudged.

In view of the aforesaid judgments, this Court is of the considered view that after the passing of an Award or the dismissal of the objections by the

Court and passing a decree in terms of the Award, not only the amount of a claim upheld by the Arbitrator or the Court but the pre-suit and pendente

lite interest awarded in favor of the Decree Holder crystallizes into the decretal amount and the future interest becomes payable on the entire amount

comprised of the claims as well as the pre-suit and pendente lite interest. Therefore, from the date of the passing of the decree, the future interest is

not to be calculated merely on the amount of the claims upheld by the Arbitrator/Court but also on the amount of the interest awarded by the

Arbitrator or the Court. In many cases, as in the present case, the amount of interest up to the date of the passing of the Award or passing of the

decree is much higher than the principal amount and in case a view is taken that the future amount is not payable on the amount of interest, a Decree

Holder may be put to substantial monetary loss by an unscrupulous judgment Debtor by withholding the amount and ultimately paying future interest

only on the amount of claims. Courts cannot permit any party to take undue advantage of law and exploit legal provisions to cause wrongful loss to the

opposite party.â€​

In Kali Charan Sharma (since deceased) vs. New Okhla Industrial Development Authority 149(2008) DLT 244 the Court held:

“12. In the Oil and Natural Gas Commission case, the Supreme Court held that the award of interest on amounts due, by an arbitrator amount to

interest on damages or compensation; therefore, the provisions of Section 3 of the Interest Act do not get attracted. In Saraswati Construction (supra)

it was held that the passing of an Award or the dismissal of the objections by the Court and passing a decree in terms of the Award, not only the

amount of a claim upheld by the Arbitrator or the Court but the pre-suit and pendente lite interest awarded in favour of the decree holder crystallizes

into decretal amount. Thus, future interest becomes payable on the entire amount comprised of the claims as well as the presuit and pendente lite

interest. Thus, future interest is not to be calculated merely on the amount of the claims upheld by the Arbitrator/Court but also on the amount of the

interest awarded by the Arbitrator or the Court from the date of the passing of the decree. In view of this clear position in law, the court has to hold

that the entire amount, i.e principal and interest accruing till the date of the judgment making the award rule of court, became part of the decree. No

part of it could be segregated as either principal or interest.â€​

Now Indian Oil Corporation (supra) shall not be applicable in the present case as was premised upon two judgments viz. Pandit Munshi Ram and

S.L.Arora. Rather Pandit Munshi Ram relied upon Mr.S.L.Arora which has since been overruled.

I may here also refer to Central Bank of India vs. Ravindra and Others (2002) 1 SCC 367 wherein the Court held:

“41. A few points are clear from a bare reading of the provision. While decreeing a suit if the decree be for payment of money, the Court would

adjudged the principal sum on the date of the suit. The Court may also be called upon to adjudge interest due and payable by the defendant to the

plaintiff for the pre-suit period which interest would, on the findings arrived at and noted by us hereinabove, obviously be other than such interest as

has already stood capitalised and having shed its character as interest, has acquired the colour of the principal and having stood amalgamated in the

principal sum would be adjudged so. The principal sum adjudged would be the sum actually loaned plus the amount of interest on periodical rests

which according to the contract between the parties or the established banking practice has stood capitalised. Interest pendente lite and future interest

(i.e. interest post-decree not exceeding 6 per cent per annum) shall be awarded on such principal sum, i.e. the principal sum adjudged on the date of

the suit. It is well settled that the use of the word 'may' in Section 34 confers a discretion on the Court to award or not to award interest or to award

interest at such rate as it deems fit. Such interest, so far as future interest is concerned may commence form the date of the decree and can be made

to stop running either with payment or with such earlier date as the Court thinks fit. Shortly hereinafter we propose to give an indication of the

circumstances in which the Court may decline award of interest or may award interest at a rate lesser than the permissible rate.

xxxxx We are, therefore, of the opinion that the expression ""the principal sum adjudged"" may include the amount of interest, charged on periodical

rests, and capitalised with the principal sum actually advanced, so as to become an amalgam of principal in such cases where it is permissible or

obligatory for the Court to hold so. Where the principal sum (on the date of suit) has been so adjudged, the same shall be treated as ""principal sum"" for

the purpose of ""such principal sum"" - the expression employed later in Section 34 of C.P.C. The expression ""principal sum"" cannot be given different

meanings at different place in the language of same section, i.e. Section 34 of C.P.C.

xxxxx The amendment is intended to deprive the court of its pre-amendment power to award interest on interest i.e. interest on interest adjudged

as such. The amendment cannot be read as intending, expressly or by necessary implication, to deprive the court of its power to award future interest

on the amount of the principal sum adjudged, the sense in which the expression was understood, also judicially expounded even before 1955; the

expression having been left untouched by the 1956 amendment.

It was also submitted that Section 34 of the CPC is general in its application to all money suits and if banking practice or banking contracts

providing for capitalisation of interest charged on periodical rests were to be recognised it will mean that application of Section 34 would be different in

suits filed by banks and in suits filed by creditors other than bankers. In our opinion it is bound to be so. Section 34 is a general procedural provision

and whether it would apply or not and if apply then to what extent would obviously depend on the fact situation of each case.â€​

Moreso this Court has already given a finding that Foreign Award (Recognition and Enforcement) Act, 1961 shall only be applicable in the present

case. Section 4 of the said Act read as under:

“4. Effect of foreign awards.

(1) A foreign award shall, subject to the provisions of this Act, be enforceable in India as if it were an award made on a matter referred to arbitration

in India.

(2) Any foreign award which would be enforceable under this Act shall be treated as binding for all purposes on the persons as between whom it was

made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any

references in this Act to enforcing a foreign award shall be construed as including references to relying on an award.â€​

The following paras of judgment dated 28.01.2000 passed in this case record the following:

“51. In view of the Notification, the objection raised by the respondent falls to the ground. Hence, I have no hesitation in coming to the conclusion

that the Award produced by the plaintiff is a foreign Award, within the meaning of the Act, 1961. This issue is decided accordingly.

Issue No. 3-What is the law applicable to the proceedings, whether English or Indian Law?

As noticed above, there is a specific provision in the agreement in this behalf. Therefore, it is not open to the respondent to contend that English

law would not apply.

In view of this clear position on facts, I think it not necessary to burden the judgment by referring the various rulings on this point. The principles

are well settled. The Arbitrators had decided the issues on the basis of English law, as agreed to between the parties. Therefore, this issue is

answered in favor of the petitioner and against the respondent.â€​

If this was the view expressed by the Court while delivering judgment dated 28.01.2000, the executing court then cannot go beyond the judgment

and decree dated 28.01.2000, to say now 1940 Act would be applicable and there shall be no interest upon interest.

Rather in Renusagar Power Co. Ltd. (supra) the Court held:

“50. xxx… Moreover, an examination of the relevant provisions of this Act and the Arbitration Act, 1940 will show that the schemes of the two

Acts are not identical and as will be pointed out at the appropriate stage there are various differences which have a material bearing on the question

under consideration and as such decisions on similar or analogous provisions contained in the Arbitration Act may not help in deciding the issue arising

under the Foreign Awards Act because just as the Arbitration Act, 1940 is a consolidating enactment governing all domestic awards the Foreign

Awards Act constitutes a complete code by itself providing for all possible contingencies in relation to Foreign awards made pursuant to agreements to

which Article II of the Convention applies. With these preliminary observations we now turn to the question of proper construction of s. 3 of the

Foreign Awards Act.

xxx… In effect, s. 3 of the Foreign Awards Act so to say combines in its own ambit both ss. 33 and 34 of the Arbitration Act

xxxx

Such being the scheme under the Foreign Awards Act we would reiterate our view that decisions of our Courts on similar or analogous provisions

contained in the Arbitration Act would not be of any help to decide questions arising under the Foreign Awards Act.â€​

I may say here earlier too an objection was raised by the respondent herein challenging jurisdiction of the foreign arbitration in OMP No.41/1981

but such challenge was dismissed on 11.12.1981 and its appeal was also dismissed and it was held English law was the governing law between the

parties and if they did not challenge the grant of interest in appeal at England then such an issue cannot be brought to Delhi.

Moreso, section 5 of the Interest Act 1978 read as under:

“5. Section 34 of the Code of Civil Procedure, 1908 to apply.- Nothing in this Act shall affect the provisions of section 34 of the Code of Civil

Procedure, 1908 (5 of 1908)â€​

It is a settled law the Court has power to grant interest in the decree under Section 34 CPC even in cases where the statute doesnot make any

specific provision for payment on interest on awarded sum. The Court has power to award interest from the date of award to date of decree and the

award of post award interest in the decree making an award a rule of Court doesnot amount to interest on interest but rather is an interest on

composite sum of principle plus interest awarded by arbitrators. Further even of the sake of arguments if Section 29 of the Arbitration Act 1940 was

to apply in the present case, the grant of interest under the said Section on composite sum of principle with interest under the appeal award dated

14.09.1990 would not amount to interest on interest. Similarly Section 3(3)(c) of the Interest Act 1978 does not bar post award interest awarded by

the Court in the decree making the award a rule of the Court and it does not take away the power of the Court to grant interest in the decree under

Section 34 CPC.

Hence, I hold the interest shall be payable on the consolidated amount viz. upon the principal plus interest as on date of decree. The issue a) is

answered accordingly.

The second issue raised by the learned counsel for the objector is qua merger which would be relevant to determine the date on which the

conversion rate shall apply viz (a) the date of the decree; (b) the date of decision; or (c) the date when the Supreme Court shall decide appeal in

future.

It was argued by the learned counsel for the judgment debtor since the LPA filed against decree dated 28.01.2000 was held to be not maintainable

by the Division Bench, hence the date of its decision cannot be taken as the date of merger to apply the conversion rate and had relied upon

Kunhayammed & Ors. vs. State of Kerala & Anr. AIR 2000 SC 2587 wherein the Court held:

“9. However, in the facts and circumstances of the case this Court refused to apply the doctrine of merger. There, an order of registration of a

firm was made by the Income-tax Officer. The firm was then assessed as a registered firm. The order of assessment of the assessee was subjected

to appeal before the Appellate Commissioner. Later on the order passed by the Income-tax Officer in respect of registration of the firm was sought to

be revised by the Commissioner of Income-tax. Question arose whether the Commissioner of Income-tax could have exercised the power of revision.

This Court held that though the order of assessment made by the ITO was appealed against before the Appellate Commissioner, the order of

registration was not appealable at all and therefore the order granting registration of the firm cannot be said to have been merged in the appellate

order of the Appellate Commissioner. While doing so this Court analysed several provisions of the Income-tax Act so as to determine the nature and

scope of relevant appellate and revisional powers and held if the subject matter of the two proceedings is not identical, there can be no merger. In

State of Madras v. Madurai Mills Co, Ltd. MANU/SC/0225/1966 : [1967]1SCR732 this Court held that the doctrine of merger is not a doctrine of rigid

and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority,

passed in an appeal or revision there is a fusion or merger of two orders irrespective of the subject-matter of the appellate or revisional order and the

scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or

revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.â€​

And upon an order dated 28.08.2017 passed by the Supreme Court in SLP(C) 688/2012 which read:

“Though many an apprehension has been expressed by Mr.Manan Kumar Mishra, learned senior counsel appearing for the applicant, we are only

inclined to say that when the High Court has itself stated that the appeal was not maintainable the doctrine of merger would not apply.â€​

It is thus submitted by the judgment debtor since the Supreme Court shall ultimately decide upon the validity of foreign award and as the LPA was

held to be non maintainable, so the exchange rate as on the date of decree dated 28.01.2000 only should apply.

Heard. The argument of the learned counsel for the judgment debtor lacks the importance of the following direction in decree dated 28.01.2000:

“ It is also ordered that the respondent shall make payment of any loss on account exchange variation between the date of Award and the date of

actual payment.â€​

This direction rather protects the decree holder at all times on account of exchange rate variation between the date of award and the date of

actual payment and it makes sure the decree holder do not lose any money on account of lengthy litigation as in the present case, viz. of more than 35

years.

I may here refer to Rishabh Chand Jain and Another vs. Ginesh Chandra Jain (2016) 6 SCC 675 wherein the Court held:

“14. The impugned order dismissing the suit on the ground of Res Judicata does not cease to be a decree on account of a procedural irregularity of

non-framing an issue. The court ought to treat the decree as if the same has been passed after framing the issue and on adjudication thereof, in such

circumstances what is to be seen is the effect and not the process. Even if there is a procedural irregularity in the process of passing such order, if the

order passed is a decree under law, no revision lies Under Section 115 of the Code in view of the specific bar under Sub-section (2) thereof. It is only

appealable Under Section 96 read with Order XLI of the Code.

The order passed by the trial court is a composite order on rejection of the plaint as there is no cause of action and dismissal of the suit as not

maintainable on the ground of Res Judicata. Both aspects are covered by the definition of decree under Section 2(2) of the Code and, therefore, the

remedy is only appeal and not revision even if there is any irregularity in passing the order.â€​

Now Kunhayammed (supra) is clearly distinguishable as in said case two appeals were filed one qua registration and another qua assessment of

the firm and if appeal in one proceedings was held non-maintainable it was rightly not treated as having merged with another, since both appeals

pertain to separate proceedings. Para 12 of the judgment is relevant:

“12. The logic underlying the doctrine or merger is that there cannot be more than one decree or operative orders governing the same subject-

matter at a given point of time. When a decree or order passed by inferior court, tribunal or authority was subjected to a remedy available under the

law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in

jeopardy.

Once the superior court has disposed of the lis before it either way -Whether the decree or order under appeal is set aside or modified or simply

confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges

the decree or order passed by the court, tribunal or the authority below.

However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject-

matter of challenged laid or which could have been laid shall have to be kept in view.â€​

Even no reliance could be placed on order dated 28.08.2017 in SLP (C) 688/2012 of the Supreme Court since was an ex-parte order.

Now let me find which date shall be relevant date in the present case.

Though the learned counsel for judgment debtor argues the date of conversion shall be the date when the appeals/objections shall be put to rest by

the Supreme Court while deciding the pending SLPs but here the judgment dated 06.09.2010 passed by the learned third Judge in FAO (OS)205/2000

would be regarded as the appellate decree into which the trial Court decree dated 28.01.2000 in CS(OS) 1885/1993 stands merged.

In Fuerst Day Lawson Ltd. vs Jindal Exports Ltd, 194 (2012) DLT this Court held:-

“17. By analogy, under the 1996 Act, the crucial date would be the date on which the objections to the enforcement of the foreign Award are

finally rejected and the foreign Award becomes enforceable as such. That is when ""the award should be deemed to be a decree"" under Section 49 of

the 1996 Act. Therefore, under the scheme of 1996 Act, where the enforcement to the foreign Award is sought, the relevant date for conversion of

the decretal amount expressed in foreign currency into Indian Rupees would be the date of final rejection of the objections to the enforcement of the

foreign Award. In the present cases, that date is undoubtedly 30th August 2012, the date on which the SLPs filed by the JD were finally dismissed by

the Supreme Court. It was then, in terms of Section 49 of the 1996 Act, that both the foreign Awards became enforceable and were deemed to be

decrees.â€​

In Progetto Grano S.P.A. vs Shri Lal Mahal Limited Execution Petition No.52/2012 pronounced on 29.05.2014 this court held as under:

“24. It would follow that only after objections filed by the person opposing the execution of the award are adjudicated upon by the court, and

rejected, the award would become enforceable. These objections would be filed under Section 48 of the 1996 Act. In view of the above there is no

merit in the contentions of the judgment debtor claiming that the date of the Award is the relevant date. In the present case the date would be date of

dismissal of the appeal by the Supreme Court.

In fact, a perusal of the order of this Court dated 8.08.2012 would show that the Supreme Court had passed certain interim orders. Hence the

judgment debtor could not execute the Award at that stage. It is only after the disposal of the appeal by the Supreme Court that the amount deposited

in the Court was directed to be released to the decree holder on 23.09.2013.

Accordingly, I hold that the relevant date for calculation of the rupee equivalent of the Award amount to Indian rupees is 8.07.2013.â€​

Nevertheless, even the date of dismissal of appeal would not be of much relevance since in the present case the award protects the petitioner

from any losses on account of variation in the exchange rate from the date of award till the date of payment and hence there shall be no impediment if

exchange rate as of today is taken and the judgment debtor is directed to deposit the amount of award viz. the principal amount plus interest on date of

decree with interest @18% p.a. calculated upon such consolidated sum. This shall, perhaps also act as a warning against protracted litigation as this

one. The issue b) is decided accordingly.

Though issue c) viz. the adjustments of the amounts deposited was also raised but the learned counsel for the judgment debtor intended to argue

on this issue only after settlement of first two issues. List on 30.11.2018. In the meanwhile, the calculation sheet be filed by the decree holder in terms

of directions given above para 35 with an advance copy thereof to the learned counsel for the judgment within two weeks from today.

EX.P. 204/2002 and EA.(OS) Nos.434/2011, 543/2011, 62/2012

List on 30.11.2018.