K. Hassainar vs State of Goa

A.H. Joshi, J.—Rule. Rule is made referable forthwith and is called out for hearing by consent.

Petitioner is the contractor. A dispute between petitioner and the respondent was subjected to arbitration. At the behest of petitioner the arbitral award dated 3.9.1992 was made rule of court by judgment and decree passed in Special Civil Suit No. 331/92/B dated 18th December 2000.

This decree was put into execution in

Execution Application No. 4/2001.

In this execution petitioner has claimed the amounts as follows:

a) The claim granted in award as item Nos.

1 to 4:

(b) Petitioner has then claimed interest thereon added to basic dues i.e. compounded at the intervals of his choice as follows:

(i) 15% on 1,93,182.00 for 6 years and 95 days, calculated to Rs.1,81,405.81.

(ii) He has then compounded a and b above, and made principal sum to Rs.3,74,587.89/-.

It is seen that the petitioner has compounded on basic dues, and interest accrued thereon.

He has thus claimed recovery of an amount of Rs.8,50,563,71/-, being total of items (a) and (b) shown in foregoing para.

This claim also comprised of claim on interest on the amount kept in deposit in High Court on which the interest was not paid to the Decree Holder, which according to petitioners, he is entitled to receive as per settled law.

Petitioner''s calculations were disputed by Judgment Debtor, and were totally denied as false and incorrect and it was further averred that, in fact, state has made excess payment.

Learned Advocate Mr. Mascarenhas urged in support of petitioner''s right to recover "interest on interest" by placing reliance on Judgments of Hon''ble Supreme Court namely:

(1) Oil and Natural Gas Commission Vs. M.C. Clelland Engineers S.A., .

(2) M/s. Jit Ram Shiv Kumar Vs. National Insurance Company Ltd., .

(3) Union of India v. Harbans Singh Tuli & Sons Builders (P) Ltd. 2001(1) Arb. LR 234 (P&H).

Learned Advocate Mr. Mascarenhas has then made submissions on the point of liability of Judgment Debtor for payment of interest continues though the Judgment Debtor may deposit in Court part or full decreetal amount and said amount did lay in deposit in the Court and the decree holder could receive only after decision in appeal, by placing reliance on following Judgments: (1) P.S.L. Ramanathan Chettiar and Others Vs. O. Rm. P. Rm. Ramanathan Chettiar, . (2) Smt. Tara Sundari Ghosh Vs. Smt. Chhayarani Dandapath, .

Learned Advocate Mr. Bandodkar for the respondent has explained the 1st set of Judgments relied, on by the petitioner. It is pointed out that the ratio decidendi of these four Judgments relied upon by petitioner does not allow, by any interpretation, compounding of interest accrued on claim amount, in the principal sum recoverable under the award.

Learned Advocate Mr. Bandodkar however is unable to dispute that if interest on delayed payment itself is the claim, and if arbitrator awards interest on such awarded sum of interest, the award may do so.

Learned Advocate Mr. Bandodkar, is also unable to dispute the later preposition that the deposit of amount in the court as a condition for stay or otherwise however does not suspend or keep in abeyance the liability to pay interest accruing on the amount awarded recoverable as a decree, until money so deposited is paid to the decree-holder.

This court therefore holds that the order of executing court, in denying the compounding of interest is legal and proper, as it is based on settled law.

Law as laid down by Hon''ble Supreme Court in P. S. L. Ramanathan Chettiar''s case and Kumar v. K. Sinha Roy''s cases supra, still governs the field, and ought to have been followed by the executing Court.

The executing court however has failed to discuss about the point of interest payable on the decreetal amount which has remained unpaid due to stay of execution and deposit of part of the amount in the High Court for that purpose. This Court holds that by modifying impugned order, for this limited purpose, impugned execution petition can be reopened.

Impugned order is therefore liable to be modified, and execution case is liable to be remanded. After remand, the decree Holder should furnish statement showing:

(a) Interest accrued on amount of claims allowed in arbitration i.e. of Rs. 1,93,282/- on year to year basis at simple rate till date amount of Rs.3,13,500/-, was paid to the appellant after order of High Court, and total up separately, the arrears of interest.

(b) Deduct from the sum of Rs.3,13,500/i. e. the amount received through High court, the total interest calculated as per item (a) above.

(c) Balance remaining if any, after adjusting in the manner directed in Clause (b) above, be appropriated towards basic dues.

(d) Calculate and furnish interest accrued as per award on un-recovered principal amount recoverable under award if there be any.

Upon receiving calculations in the manner indicated in the foregoing para, and after hearing parties on it, and continue or certify the execution appropriately.

Rule is therefore made partly absolute for calculating the dues according to the modalities for payment of decreetal dues at simple rate as per the procedure indicated in para 16 & 17 above.

In the circumstances, of the case parties shall bear own costs.