(2013) 1 Supreme Court Cases 243
BHARAT HEAVY ELECTRICALS LIMITED Vs R.S. AVTAR SINGH AND COMPANY
A. Civil Procedure Code, 1908 – Or. 21 Rr. 1(1), (4) and (5) r/w S. 34 – Execution of money decree – Payment of interest – Part-payment of decretal amount deposited in court pursuant to its orders – Principle of appropriation applicable – Primacy of terms of decree/award – Decree consisting of award amount of 1.42 crores with interest @ 12% p.a. thereon from 12-3-1981 up to date of decree i.e. 31-51985 and in the event of non-payment, calculation of future interest at 12% p.a. from date of decree till realisation of award amount – Court directing payment of 1 crore as condition for grant of stay of decree – Execution of payment kept in abeyance by deposit of further amount of 1.95 crores – Appropriating payments first against interest and adjusting balance amount against principal, Single Judge of High Court ordering execution by calculating subsequent interest only on outstanding principal amount dismissing objections of appellant judgment-debtor that by virtue of payments made entire decretal amount was fully satisfied – Sustainability Held, it is the decree which has to be applied in letter and spirit to find out whether stipulations therein were duly fulfilled by judgment-debtor – Both, award of arbitrator and rule of court make a clear distinction between award amount and interest payable on award amount – When such a clear distinction was consciously made it cannot be stated that award amount and interest merged together and became payable as one sum which thereby became the decretal amount – Having regard to specific terms of part-payments were effected by appellant after date of decree i.e. 31-5-1985 on 18-10-1985 and thereafter on 13-12-2000 – Single Judges of High Court, held, correctly upheld action of respondent decree-holder in adjusting amounts received first against interest which had become due as on that date, and adjusting only balance amount against principal – Hence, Division Bench of High Court rightly affirmed Single Judge’s order which applied rule of construction of Or. 21 R. 1 based on Constitution Bench Ss. 29, 14 and 17 – Enforcement of award – Payment of interest – Principle of appropriation applicable – Arbitration and Conciliation Act, 1996 – Ss. 31 and 36 – Contract Act, 1872 – S. 59 – Interest Act, 1978, S.3(3)(C)
B. Civil Procedure Code, 1908 – Or. 21 Rr. 1(4) & (5) and S. 34 – Interest, cessation of – Payment made towards satisfaction of decree – Part-payment by judgment-debtor by deposit in court – Liability to pay further interest, held, ceases thereafter on that part of principal sum which stands as paid after appropriation of amount which has been paid – Hence, held, since deposit of amount pursuant to order of Division Bench of High Court was made and was also withdrawn by respondent decree-holder from the date of service of notice as contemplated in Or. 21 R.1(2) the same was deemed to have been effected – Therefore, applying Or. 21 R.1(4), insofar as cessation of interest is concerned, same would operate upon that part of principal sum which stood paid – Hence, after last deposit of payment by judgment-debtor, decree-holder calculating/claiming interest on entire award amount ( instead of on outstanding principal amount ( 1,42,96,318) 1,19,61,134), held, rightly rejected by Single Judge and Division Bench of High Court
C. Civil Procedure Code, 1908 – Or. 21 Rr. 1(1)(a), (b) and (c) – “All money payable under a decree” – Connotation of – Held, words used in sub-rule (1) mean whatever money that is due and payable under a decree, which could be paid in the manner stipulated in cls. (a),(b) and (c) of the sub-rule (1) – What is required to be scrutinized is as to how decree has been made while granting relief as regards payment – Or. 21 R.1(1) does not refer to the decretal amount: rather the expression used is “all money payable under a decree”
D. Civil Procedure Code, 1908 – Or. 21 Rr.1(1), (2), (4) and (5) – Execution of money decrees – Rule of appropriation – General principles as laid down by the Constitution Bench in Gurpreet Singh, (2006) 8 SCC 457, summarized.
E. Interest Act, 1978 S. 3(3)(C) – Applicability – Decree directing payment of interest on delayed payment of award amount – Interest calculated as per decree of Court which made arbitral award rule of court – Challenge to, on basis it amounted to awarding interest upon interest – Held, there is no scope to apply S. 3(3)(c) as the controversy was subsequent to passing of decree where direction for payment of interest on award amount had been spelt out – Challenge is not to decree on footing that it was in violation of S. 3(3)(c), hence rejected – Civil Procedure Code, 1908 – S. 34 and Or. 21 R. 1- Arbitration Act, 1940 – Ss. 29, 14 and 17 – Arbitration and Conciliation Act, 1996, Ss. 31 and 26