Full Judgement
Delhi High Court
M/S Tata Motors Limited vs Delhi Transport Corporation on 9 August, 2024
Author: C.Hari Shankar
Bench: C. Hari Shankar
$~20
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (ENF.) (COMM.) 137/2018
M/S TATA MOTORS LIMITED .....Decree Holder
Through: Mr. Rajiv Nayar and Mr. Gopal
Jain, Sr. Advocates with Ms. Meera Mathur,
Ms. Nandini Gore, Ms. Swati Bhardwaj, Mr.
Rajat Dasgupta and Ms. Manvi Rastogi,
Advs.
versus
DELHI TRANSPORT CORPORATION ....Judgment Debtor
Through: Mr. Vibhor Garg and Mr.
Keshav Tiwari, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
JUDGMENT (ORAL)
% 09.08.2024
OMP (ENF.) (COMM.) 137/2018
1. Arbitral proceedings between the petitioner Tata Motors Limited and the respondent DTC resulted in an award dated 16 August 2017, of which, for the purposes of the present petition, it is only necessary to reproduce paras 234, 236 and 239, thus:
"234. In the facts of the case, and in the light of Clause 29.4 of the GCC, in the opinion of the Tribunal, through use of the words "unadjudicated payments", the clause contains an express bar on the Tribunal's powers to award interest pendente lite, as well as bar a claim for pre-reference interest. Therefore, the Claimant would not be entitled to interest pendente lite. It is relevant to note, that with regard to interest on statutory service tax and VAT, these are not contractual payments, and DTC
OMP (Enf) (Comm) 137/2018 Signature Not Verified Page 1 of 12 Signature Not Verified Digitally Signed By:AJIT Digitally Signed KUMAR By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:12.08.2024 Signing Date:12.08.2024 14:12:08 14:10:55 would be statutorily liable to reimburse the same along with interest. The Tribunal, therefore, grants interest at the rate of 12% per annum on the statutory amounts granted to TML. The interest on the originally claimed statutory payments would be calculated from 1.10.2012 (the filing of the claim) till 31.7.2017 (the issuance of the award). The interest on the additional amounts claimed on statutory payments as per various updated charts would be from the date of updated charts till the date of the award.
***** Conclusion
236. In conclusion, the Tribunal grants the following claims:
a. Towards reimbursement of illegally recovered LD: Rs.87.32 crore.
b. Towards the balance 5% total sale consideration for buses: Rs.55 crore
c. Towards reimbursement of service tax: Rs.66,01,83,151/-
d. Towards interest on initial amount of Rs.7,87,40,992/- claimed towards reimbursement of service tax, for the period ending on 31.03.2012: Rs.4,56,69,776/-.
e. Towards interest on amount of Rs.12,22,44,468/- claimed towards reimbursement of service tax, for the period ending on 30.06.2013: Rs.5,98,99,790/-.
f. Towards interest on additional amount of service tax of Rs.45,91,97,691/- claimed through updated charts, from 1.10.2016 to 31.7.2017: Rs.4,59,19,770/-.
g. Towards reimbursement of VAT on indivisible AMC: Rs.75,40,51,523/-.
h. Towards interest on amount of Rs.13,64,34,417/- claimed towards reimbursement of VAT on indivisible AMC from April 2010 onwards as on 31.03.2012: Rs.7,91,31,962/-.
i. Towards interest on additional amount of VAT of Rs.61,76,17,106/- claimed through updated charts, from 1.10.2016 to 31.7.2017: Rs.6,17,61,711/-.
OMP (Enf) (Comm) 137/2018 Signature Not Verified Page 2 of 12 Signature Not Verified Digitally Signed By:AJIT Digitally Signed KUMAR By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:12.08.2024 Signing Date:12.08.2024 14:12:08 14:10:55 j. Towards reimbursement of VAT on spare parts used in accident repairs - Rs.2,23,21,656/-
k. Towards interest on amount of Rs.2,23,21,656/- claimed pertaining to reimbursement of VAT on spare parts used in accident repairs of Rs.2,23,21,656/-:
Rs.1,29,46,561/-.
l. Towards reimbursement of illegal penalty recovery for not making buses available under the old tender as originally claimed: Rs.10,19,23,721/-.
*****
239. The above mentioned amounts shall carry interest at the rate of 18% per annum from the date of the award till realization."
(Emphasis supplied)
2. The aforesaid award stands challenged by the petitioner in OMP (Comm) 425/2017, in which the petitioner filed IA 4647/2019 for stay of the execution of the award.
3. After the award was passed, the DTC has deposited ₹ 100 crores on 30 August 2018, ₹ 140 crores on 19 March 2019 and ₹ 100 crores on 4 March 2020.
4. The parties are at issue on the balance amount, if any, which the DTC has to pay to the respondent as per the arbitral award. This dispute essentially revolves around the interpretation of para 239 of the award, which reads thus:
"239. The above mentioned amounts shall carry interest at the rate of 18% per annum from the date of the award till realization."
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5. To my mind, para 239 of the arbitral award is both unequivocal and unambiguous. It clearly states that "above mentioned amounts"
would carry interest @ 18% per annum from the date of award till realization. In other words, the post award interest, till the date of payment, has been awarded on the "above mentioned amounts".
6. The "above mentioned amounts" quite obviously relate to the amounts covered by sub paras a. to l. of para 236. What Mr. Vibhor Garg, learned Counsel for the petitioner seeks to contend is that the amounts covered by sub paras d., e., f., h., i. and k. of para 236, which represent interest, should be excluded from this mandate. He submits that the direction for payment of post award interest @ 18% per annum, in para 239, cannot include the interest components of para 236 as that would amount to awarding interest on interest, which is impermissible. He places reliance on the judgment of the Supreme Court, rendered the day before yesterday, in D. Khosla & Co v. UOI1.
7. As an Executing Court, it is not possible for me to go behind the award of which execution is sought. Sanwarlal Agrawal v. Ashok Kumar Kothari2 thus sets the law in perspective:
"16. This Court has time and again cautioned against the Execution Court adopting such an approach. In Topanmal Chhotamal v. Kundomal Gangaram3, a three-Judge Bench held as follows:
"5. ... It is a well-settled principle that a court executing a decree cannot go behind the decree : it must take the decree
1 2024 SCC OnLine SC 1898 2 (2023) 7 SCC 307 3 AIR 1960 SC 388
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17. Yet again, in Meenakshi Saxena v. ECGC Ltd4it was reiterated that:
"17. The whole purpose of execution proceedings is to enforce the verdict of the court. Executing court while executing the decree is only concerned with the execution part of it but nothing else. The court has to take the judgment in its face value. It is settled law that executing court cannot go beyond the decree. But the difficulty arises when there is ambiguity in the decree with regard to the material aspects. Then it becomes the bounden duty of the court to interpret the decree in the process of giving a true effect to the decree. At that juncture the executing court has to be very cautious in supplementing its interpretation and conscious of the fact that it cannot draw a new decree. The executing court shall strike a fine balance between the two while exercising this jurisdiction in the process of giving effect to the decree."
18. As is commonly known, the stream cannot rise above its source."
8. Right or wrong. I have to execute the award as it stands. If there is any part of award which is legally untenable, that would have to be addressed in the substantive Section 34 challenge, which is presently pending. In these execution proceedings, the award, to reiterate, has to be executed as it has been issued.
9. There is no justification whatsoever for this Court to exclude, from the ambit of para 239 of the award, any component of the amounts comprising sub paras a. to l. in para 236, irrespective of whether it represents the principal amount or interest. This would amount to rewriting para 239 which, as an executing Court, I cannot
4 (2018) 7 SCC 479
OMP (Enf) (Comm) 137/2018 Signature Not Verified Page 5 of 12 Signature Not Verified Digitally Signed By:AJIT Digitally Signed KUMAR By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:12.08.2024 Signing Date:12.08.2024 14:12:08 14:10:55 do. Para 239 of the award clearly awards interest on the entire amount covered by para 236, which would include all the amounts covered by sub paras a. to l. thereof.
10. As such, the submission of Mr. Garg that, while implementing para 239, the Court has to exclude, from the total amounts covered by para 236, the interest amounts mentioned in sub paras d., e., f., h., i. and k. thereof, cannot be accepted.
11. The decision in D. Khosla
11.1 The decision in D. Khosla is clearly distinguishable on facts and, in fact, to an extent supports the respondent.
11.2 D. Khosla a case which arose under the erstwhile Arbitration Act, 1940. The stipulation with respect to interest, in the arbitral award in that case, read thus:
"12. Interest:- The Union of India shall pay to M/s D Khosla & Company simple interest @ 12% per annum on the amount awarded from the date of completion of work upto the date of award and 15% from the date of award to the date of its payment or date of court decree whichever is earlier."
(Emphasis supplied)
11.3 Paras 7, 13 to 15, 17 and 25 to 27 of the decision in D. Khosla may be reproduced thus:
"7. It appears that the petitioner was paid the principal amount of compensation awarded and interest of 12% and 15% for the two periods i.e. pre-award and post-award on the principal amount awarded. However, petitioner was not satisfied and he OMP (Enf) (Comm) 137/2018 Signature Not Verified Page 6 of 12 Signature Not Verified Digitally Signed By:AJIT Digitally Signed KUMAR By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:12.08.2024 Signing Date:12.08.2024 14:12:08 14:10:55 moved execution for the realization of certain amount as shortfall of the interest. The petitioner contended that insofar as 15% interest is concerned, it is payable on the principal amount of compensation awarded plus 12% simple interest on the said amount. In other words, petitioner sought to include 12% interest in the principal amount of compensation awarded for the purposes of claiming 15% simple interest for the post-award period.
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13. In the instant case, the arbitrator had granted interest for two separate periods on the principal sum adjudged only and there is no direction that the interest for the subsequent period would be payable on the principal sum adjudged including interest for the first period.
14. The sole simple issue herein for our opinion is whether interest is payable on interest or whether 15% interest per annum awarded would be on the principal sum award plus 12% per annum interest on it for the pre-award period.
15. Section 29 of the Act provides that the court may in the decree order interest at the rate deemed reasonable to be paid on the principal sum as adjudged by the award meaning thereby in drawing the decree, the court may order for payment of interest on the principal sum as adjudged by the award. In other words, the court cannot order for payment of interest on interest but only on the principal sum adjudged.
*****
17. Section 34 of the CPC provides that, where the decree is for payment of money, the court may order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged. Again, the reading of the aforesaid Sub-Section (1) of Section 34 CPC would reveal that the interest is payable on the principal sum adjudged and not on interest part of the award.
*****
25. In view of the above legal position, we have to examine the award in question and the decree drawn in pursuance thereof to find out if compound interest or interest upon interest has been awarded.
26. The relevant part of the award pertaining to the interest
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27. A plain reading of the aforesaid award and decree reveals that interest awarded under the award has been dissected into two parts. The first part relates to the pre-award period from the date of the completion of the work till the passing of the award whereas the second part is the post-award period commencing from the date of the award till the satisfaction of the award. In the first part, simple interest @ 12% per annum has been awarded on the 'amount awarded' whereas in the second part, interest @ 15% per annum has been awarded referring to the 'amount awarded'. The amount awarded in both the situations have to be the same and cannot be two distinct amounts. The 'amount awarded' refers to the principal amount of compensation awarded that is Rs.21,56,745/-. The award and the decree nowhere specifically contemplate for awarding 15% interest per annum on the amount awarded including the interest component i.e. the pre-award interest. This could not have been done even otherwise as there is no provision to that effect under the relevant statutes or the contract. No material has been placed before us or as a matter of fact before any court below to show that the terms and conditions of the contract contained any such provision."
11.4 The issue before the Supreme Court in D. Khosla is clearly distinct from that which is before this Court in the present case. In D. Khosla, the interest portion of the arbitral award was in two parts. The first part awarded interest from the date of completion of work till the date of award. In other words, it awarded pre-reference and pendente lite interest. The second part awarded post award interest till the date of payment. On a plain reading, both parts awarded interest on the amount awarded. The Executing Court, however, while drawing up a decree in terms of the award, decreed (i) ₹ 21,56,745, (ii) interest @ 12% per annum on the awarded amount upto the date of award and (iii) interest @ 15% per annum from the date of award till the date of realization.
11.5 The petitioner in D Khosla was unhappy with the manner in OMP (Enf) (Comm) 137/2018 Signature Not Verified Page 8 of 12 Signature Not Verified Digitally Signed By:AJIT Digitally Signed KUMAR By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:12.08.2024 Signing Date:12.08.2024 14:12:08 14:10:55 which the decree had been drawn up and in his execution petition which was moved before the learned Principal Senior Civil Judge, contended that, while the first interest component of 12% per annum was rightly granted on the awarded amount, the second component of 15% interest per annum was chargeable on the awarded amount plus the first interest component of 12% per annum.
11.6 Thus, the dispute before the Supreme Court was only whether the post award interest awarded in the arbitral award, was on the principal awarded amount or on the principal awarded amount plus 12% interest thereon.
11.7 When comparing the decision in D. Khosla with the facts of the present case, para 13 of the judgment is of considerable significance. In the said paragraph, the Supreme Court has noted that the interest was awarded, by the arbitrator, only on the principal sum and that the arbitral award did not contain any direction that the interest in the subsequent period would be payable in the principal sum adjudged including intertest for the first period. In other words, the Supreme Court noted that whether it was for the pre award or the post award period, the arbitrator had awarded interest only on the principal sum. There was no award of interest on the interest already awarded.
11.8 This is in stark contradistinction to the present case where, in para 239, interest @ 18% per annum has been awarded on the entire amounts, covered by para 236 which includes interest components.
OMP (Enf) (Comm) 137/2018
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11.9 Following this, the Supreme Court held, that, as the arbitrator, in the case before it, had awarded interest both pre award or post award only on the principal sum, and not the principal sum plus any amount of interest, D. Khosla, as the appellant before it, was unjustified in its contention that the second component of interest @ 15% would be on the awarded amount plus the first interest component of 12%.
11.10 Clearly, therefore, the issue before the Supreme Court in D. Khosla is completely distinct from that before us. If anything, the decision in D. Khosla would support the interpretation that the decree holder seeks to canvass and which this Court has also found to be appropriate. The Supreme Court in D. Khosla specifically notes that it was not concerned with an award in which the arbitrator had awarded interest on a pre-existing interest component. As against this, at the cost of repetition, in the present case, para 239 awards interest @ 18% on the "above mentioned amounts", which would include all the amounts covered by para 236, whether they be in the nature of principal or interest.
11.11 It is true that, in D. Khosla, the Supreme Court has held that the arbitrator could not, even otherwise, have awarded interest on interest. In execution proceedings, however, I cannot adopt this view, as it would amount to my holding that para 239 of the award is unsustainable, or to reading it down to exclude, from the amounts covered by para 236, the interest components. Any such attempt would be in the teeth of the principle that an executing court cannot go
OMP (Enf) (Comm) 137/2018 Signature Not Verified Page 10 of 12 Signature Not Verified Digitally Signed By:AJIT Digitally Signed KUMAR By:CHANDRASHEKHARAN HARI SHANKAR Signing Date:12.08.2024 Signing Date:12.08.2024 14:12:08 14:10:55 behind the decree being executed, enunciated in Sanwarmal Agrawal and a host of decisions prior to it. Needless to say, however, it would be open to the petitioner to urge the contention in its Section 34 proceedings, the hearing of which is being expedited, by a separate order passed today.
12. As such, it is clarified, to avoid any ambiguity, the petitioner Tata Motors is entitled to the impugned award, not only principal amount of ₹ 326.7 crores, being the total amount covered by para 236 of the award but to interest @ 18% per annum on the total amount of ₹ 326.7 crores from the date of award till realization.
13. The execution petition stands disposed of in the aforesaid terms.
14. The learned Joint Registrar would verify the further amount which is required to be paid by the respondent, judgment debtor to the petitioner, decree holder as per the arbitral award as clarified hereinabove. The said amount would be paid by the judgment debtor to the decree holder within eight weeks of the computation of the balance amount by the learned Joint Registrar.
15. Needless to say, the simple interest would be payable on reducing balance basis.
16. The said payment shall remain subject to the outcome of the Section 34 proceedings initiated by the petitioner against the arbitral award.
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17. For the said purpose, let the parties appear before the learned Joint Registrar on 21 August 2024.
C.HARI SHANKAR, J AUGUST 9, 2024 rb Click here to check corrigendum, if any
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