LEELA HOTELS LTD. Vs HOUSING & URBAN DEV.CORP.LTD.
Bench: ALTAMAS KABIR,CYRIAC JOSEPH,SURINDER SINGH NIJJAR
Case number: C.A. No.-009763-009763 / 2011
Diary number: 21876 / 2009
REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.9763 OF 2011
(Arising out of SLP(C) No.18509 of 2009)
Leela Hotels Ltd. … Appellant
Vs.
Housing & Urban Development Corporation Ltd. … Respondent
J U D G M E N T
ALTAMAS KABIR, J.
1. Leave granted.
2. This Appeal has been filed by Leela Hotels Ltd.
against the judgment and order dated 20th July,
2009, passed by the Division Bench of the Delhi
High Court in EFA(OS) No.4 of 2009, heard along
with several Miscellaneous Applications setting
aside the order dated 19th November, 2008, passed by
the learned Single Judge, who had directed payment
to the Appellant herein as per its calculations.
It is the common case of the parties that on 17th
October, 1996, the Housing and Urban Development
Corporation Ltd. (HUDCO) invited offers for grant
of sub-lease of land measuring 11,480 sq. meters in
HUDCO Place situated in Andrews Ganj, New Delhi,
for construction of a Five-Star Hotel thereupon.
The Appellant herein being the highest bidder, a
letter of allotment of the said land was issued to
it on 31st March, 1997, which was followed by a
perpetual sub-lease dated 4th July, 1997. Out of
the total consideration, the first instalment
comprising 40% of the consideration amount was paid
by the Appellant herein on 10th April, 1997. The
2
second and third instalments, each amounting to
Rs.65,38,29,000/-, were payable by 31st March, 1998,
and 31st March, 1999, respectively. It was
stipulated in the sub-lease that in case of default
in payment of the second and third instalments, the
same could be paid along with interest at the rate
of 20% per annum within three months of the due
date. It was further stipulated that in default of
payment even in terms of the said relaxation, the
allotment would automatically stand cancelled and
in such event 50% of the amount paid upto that date
would stand forfeited and the balance 50% would be
refunded without interest. Admittedly, the second
instalment was paid by the Appellant herein along
with interest for the delayed payment and ground
rent was also paid till 31st March, 1998. Since,
however, the Appellant defaulted in payment of the
third instalment, the lease agreement was cancelled
and as per the terms of the agreement 50% of the
3
total amount paid by the Appellant amounting to
Rs.76,28,00,500/- was refunded by the Corporation
to the Appellant, while forfeiting the balance 50%.
3. Being aggrieved by the steps taken by the
Respondent Corporation, the Appellant filed a
Petition before the Chief Justice of the Delhi High
Court to appoint an Arbitrator in terms of the
arbitration clause, which was registered as
Arbitration Application No.193 of 1999. On 23rd
June, 1999, an Arbitrator was appointed by the
Delhi High Court before whom the Appellant herein
claimed a sum of Rs.142,16,08,896/- from the
Respondent Corporation along with interest at the
rate of 20% per annum along with a further sum of
Rs.19,24,45,800/- comprising the ground rent paid
along with interest thereon at the rate of 25% per
annum along with a sum of Rs.5,98,22,058/- towards
refund of property tax. A sum of Rs.5,62,27,715/-
was also claimed by way of damages.
4
4. The learned Arbitrator allowed the claims of
Leela Hotels and rejected the counter-claim made by
HUDCO. In his Award, the learned Arbitrator held
that Leela Hotels was entitled to recover and HUDCO
was obliged to pay damages computed with regard to
the amounts paid as the first and second
instalments of the premium, together with interest
paid with the second instalment, less the amount
refunded by HUDCO to Leela Hotels under letter
dated 8th July, 1999, and as further reduced by the
amount of property tax paid by HUDCO on behalf of
Leela Hotels to the Municipal Corporation of Delhi.
It was also directed that the interest at the rate
of 20% per annum would be paid by HUDCO to Leela
Hotels on the amount representing property tax for
the period during which the amount remained with
HUDCO until payment to MCD and also on the amount
refunded by HUDCO under its letter dated 8th July,
1999, for the period for which that amount remained
5
with HUDCO until repayment to Leela Hotels. Leela
Hotels was also held to be entitled to such
interest on the balance of the amount from the date
of the respective payments made initially by Leela
Hotels to HUDCO till the date of the Award.
5. The Appellant filed its objections under
Section 34 of the Arbitration and Conciliation Act,
1996, hereinafter referred to as the “1996 Act”,
before the High Court. The same was dismissed by
the High Court by its order dated 21st January,
2003. Before the said petition was dismissed, the
Respondent herein undertook to deposit the
principal sum awarded by the Arbitrator on or
before 21st October, 2002. The said sum of
Rs.89,78,84,930/-, was allowed to be deposited
without prejudice to the rights and contentions of
the Respondent herein. When the cheque for the
aforesaid amount was brought to Court on 21st
October, 2002, the said Respondent got it recorded
6
that it represented the net principal amount due
and payable to the Appellant herein under the Award
and that the said deposit was without liability on
its part to pay future interest thereupon.
6. The first appeal from the said order dated 20th
January, 2003, having been dismissed by the High
Court on 9th November, 2004, the Respondent filed a
Special Leave Petition before this Court, which was
dismissed on 12th February, 2008. Although, the
Special Leave Petition was dismissed, the rate of
interest for the pre-Award period was reduced from
20% to 18% per annum. Furthermore, since this
Court had directed the Appellant to pay or deposit
50% of the balance decretal amount, the Respondent
paid a sum of Rs.59.61 crores to the Appellant
herein on 23rd March, 2006. The Respondent paid a
further sum of Rs.48.09 crores to the Appellant
herein on 16th April, 2008, which, according to the
7
Respondent, satisfied the decree. This, in fact,
was the genesis of the dispute between the parties.
7. As far as the Appellant herein was concerned,
in its calculation sheet the sum of
Rs.89,78,84,930/- was shown to be appropriated
towards the interest due under the Award. A claim
was also made for interest on the interest. On the
other hand, in the calculation sheet filed by the
Respondent herein it was indicated that the
aforesaid amount deposited should be appropriated
towards the principal sum payable to the Appellant
herein under the Award and had calculated simple
interest at the rate awarded by the Arbitrator as
modified by this Court. Consequently, as was noted
by the Division Bench of the Delhi High Court, the
controversy which surfaced on account of the
contesting claims of the parties was whether the
aforesaid amount could be adjusted, as claimed by
the Appellant herein, towards the interest, or was
8
the Appellant obliged to appropriate the said sum
towards the principal sum due to it under the
Award. A further question which surfaced was
whether the Appellant herein was entitled to charge
interest on interest or compound interest in
accordance with the method indicated in the
calculation sheet filed by it.
8. In dealing with the first question as to
whether the payment made by the judgment-debtor is
to be appropriated first towards discharge of the
principal or towards discharge of the interest, the
Division Bench noted the decision of this court in
M/s I.C.D.S. Ltd. Vs. Smithaben H. Patel & Ors.
[(1999) 3 SCC 80], wherein, this Court had held
that Sections 59 and 60 of the Contract Act, 1872,
would only be applicable at the pre-decretal stage
and not thereafter and that post-decretal payments
would have to be made either in terms of the decree
or in accordance with the agreement arrived at
9
between the parties, though, on the genuine
principles indicated in Sections 59 and 60 of the
aforesaid Act. After referring to various other
decisions of this Court and the Lahore High Court,
the Division Bench of the High Court referred to
the decision in Meghraj Vs. Mst. Bayabai & others,
[AIR 1970 SC 161], wherein the law in this regard
was laid down by this Court that the general rule
of appropriation of payment towards a decretal
amount is that such an amount is to be adjusted
firstly strictly in accordance with the directions
contained in the decree and in the absence of such
direction, adjustments would have to be made
firstly towards payment of interest and costs and,
thereafter, in payment of the principal amount. It
was, however, indicated that such a principle would
be subject to an exception when the parties might
agree to the adjustment of the payment in any
manner despite the decree. It was, accordingly,
10
held that unless the Respondent herein was able to
show that the parties had either impliedly or
expressly agreed to adjustment of the said sum of
Rs.89,78,84,930/- towards the principal amount, the
Appellant herein would be entitled to appropriate
the said amount fully towards the payment of
interest.
9. It may be indicated that on 11th October, 2002,
the Respondent herein undertook to deposit the
principal amount awarded by the Arbitrator on or
before 21st October, 2002. Such deposit was allowed
to be made without prejudice to the rights and
contentions of HUDCO in the proceedings before the
High Court. Subsequently, by order dated 21st
October, 2002, the said position was reiterated and
it was recorded that the deposit made by the
Respondent would be without prejudice to the rights
and contentions of the parties in the pending
proceedings and without any liability on the part
11
of the Respondent to make payment of further
interest on the above-mentioned amount. The
Division Bench took the view that having regard to
the submissions made on behalf of the Respondent
herein that the said amount of Rs.89,78,84,930/-
was on account of the principal sum due and payable
to the Appellant herein under the Award, and since
no objection had been raised by the Appellant
herein to such contention, it would have to be held
that the said sum had, in fact, been adjusted
towards the principal sum. After observing that
before withdrawing the amount, the Appellant herein
had neither sought permission of the Court to
appropriate the sum towards interest nor given any
intimation regarding withdrawal of the said amount,
the Division Bench made it clear that the said
amount would be appropriated towards the principal
amount due and not towards interest. The Division
Bench noted that the amount being withdrawn was
12
without prejudice to the Appellant’s rights towards
payment of interest. The Division Bench took the
view that since the Respondent herein was keen to
avoid the possibility of paying further interest on
the principal sum, in the event of its objections
being dismissed, it offered to deposit the
principal sum payable under the Award. The
Division Bench observed that it made good business
sense on the part of the Appellant, at that time,
to accept the aforesaid amount towards the
principal sum payable to it under the Award and to
utilize the said sum for its business, instead of
waiting for the final outcome of the litigation
between the parties. The Division Bench came to
the conclusion that it was in such circumstances
that the Respondent had agreed to deposit the said
sum of Rs.89,78,84,930/- specifically, towards the
principal amount under the Award.
13
10. The Division Bench further observed that both
the parties were duly represented by their
respective counsel, when the Respondent herein
offered and undertook to deposit the principal
amount awarded by the Arbitrator and also insisted
that it be recorded as part of the proceedings that
the said payment was to be appropriated towards the
principal amount awarded by the learned Arbitrator
and was without any further liability on the part
of the Respondent to make payment of further
interest on the said amount. The Division Bench
based its judgment, to a large extent, on the
assumption that since the Appellant had remained
silent to the said stipulation made on behalf of
the Respondent, it would have to be presumed that
the Appellant herein had consented to the said
proposal.
11. On such reasoning, the Division Bench set aside
the order passed by the learned Single Judge on 19th
14
November, 2008, and after noting that a sum of
Rs.50.54 crores had been deposited by the
Respondent No.1 herein during the pendency of the
Appeal, directed him to decide in the light of the
judgment rendered by the Division Bench as to
whether any further amount was payable by the
Respondent No.1 herein to the Appellant in terms of
the judgment. Consequential directions were also
given on the outcome of such findings.
12. As mentioned hereinbefore, this Appeal is
directed against the said judgment of the Division
Bench dated 20th July, 2009.
13. Appearing for the Appellant, Mr. Ashok Desai,
learned Senior Advocate, submitted that the crucial
question to be considered and decided in this case
was whether the amounts deposited or paid by HUDCO
from time to time were to be appropriated first
towards the interest payable on the principal
15
amount, following the decision in Smithaben’s case
(supra), or towards the principal, having regard to
the provision in the Award relating to future
interest which states that Leela Hotels is entitled
to interest at the rate of 15% per annum from the
date of the Award to the date of recovery. Mr.
Desai submitted that the language of the Award is
clear that the amount on which future interest has
to be calculated includes interest awarded by the
Arbitrator till the date of the Award. Mr. Desai
submitted that it was not a case of compound
interest, but a case of calculating simple interest
on the amount as remained unpaid each year. Mr.
Desai also submitted that after the Award had been
passed, Leela Hotels had calculated interest on the
basis of yearly rests, but subsequently gave up its
claim on the basis of compound interest and limited
its claim to simple interest after appropriating
the amount received from HUDCO first towards
16
interest and then towards principal, in accordance
with the decision in Smithaben’s case (supra). Mr.
Desai submitted that the High Court had erred in
accepting the calculation made by HUDCO which had
not computed the amount awarded by the Arbitrator
and had not computed future interest in terms of
the Award.
14. On the second issue as to how the money paid by
HUDCO is to be appropriated, Mr. Desai urged that
in Smithaben’s case (supra), it had been very
clearly explained that in view of the consistent
view taken first by the Privy Council and then by
this Court, the general rule of appropriation of
payment towards a decretal amount is that such an
amount is to be adjusted firstly in accordance with
the directions contained in the decree and in the
absence of such directions, adjustment should
firstly be made in payment of interest and costs
and thereafter towards payment of the principal
17
amount. Mr. Desai urged that the Division Bench
had misapplied the ratio in Smithaben’s case
(supra) in assuming that the unilateral and
voluntary deposit offered to be made by HUDCO in
Court amounted to such deposit being made upon an
implied acceptance that the same would be
appropriated towards the principal amount. It was
urged that the issue of implied agreement had never
been raised or argued before the learned Single
Judge and there is no pleading in support thereof.
Mr. Desai also urged that the provisions of
Sections 59 and 60 of the Indian Contract Act would
also have no application to the facts of this case
since they only applied in regard to distinct debts
and not for enforcing a decree or what is regarded
as a decree by legal fiction.
15. Mr. Desai submitted that the judgments of both
the learned Single Judge and the Division Bench
were centered around the payment of Rs.89.78 crores
18
and the manner in which the same was to be
appropriated. It was urged that since the same was
paid after the passing of the decree, Leela Hotels
is entitled to appropriate the said amount first
towards the interest and costs and then towards the
principal. Mr. Desai urged that on account of the
wrong assumptions made by the Division Bench, its
judgment under appeal was liable to be set aside.
16. On the other hand, appearing for HUDCO, Mr.
Parag P. Tripathi, learned Additional Solicitor
General, firstly urged that the issue regarding
charging of compound interest did not survive,
since the parties had agreed that no compound
interest was payable in terms of the Award. As to
the other question as to whether the sums deposited
by HUDCO were to be appropriated first against the
interest and then against the principal, it was
contended that the same was no longer res integra
since the Award had made it clear that the first
19
payment of Rs.76.28 crores had to be reduced from
the principal amount which was due. The learned ASG
submitted that it was for the first time before
this Court that the Appellant has contended that
the sum of Rs.76.28 crores would be appropriated
first towards the interest and then towards the
principal amount. The learned ASG pointed out that
the refund had been made even prior to the making
of a Reference to the Arbitrator or pronouncing of
the Award i.e. at the pre-decretal stage and,
accordingly, when the refund was made, there was no
determination as to whether any payment was due
from HUDCO to the Appellant. Accordingly, the
contention of Leela Hotels that the said refund of
Rs.76.28 crores was to be first appropriated
towards the interest does not even arise. It was
also submitted that the first payment of 50% of the
awarded amount amounting to Rs.76.28 crores was,
therefore, treated by the Award to be payment
20
appropriated towards the principal and since the
Award had not been challenged by the Appellant
herein, the objections to the Award under Section
34 of the Act filed by the Respondent also stood
concluded by the decision of this Court in Civil
Appeal No.1094 of 2006.
17. As regards the second amount of Rs.89.78 crores
tendered by HUDCO in the Delhi High Court on 21st
October, 2002, during the pendency of the
proceedings under Section 34 of the Arbitration and
Conciliation Act, 1996, it was submitted by the
learned ASG that the same has to be appropriated
towards the principal amount due from HUDCO to
Leela Hotels. It was submitted that the said
amount was in the nature of a pre-decretal payment
and that the appropriation of the amount will have
to be in the manner indicated by the Respondent to
which there had been no demur.
21
18. It was next submitted by the learned ASG that
analogy of a post-decretal payment cannot be
applied to an Arbitration Award under the 1996 Act
for the simple reason that the Arbitration Award
under the 1996 Act does not attain the status or
character of a decree within the meaning of the
Code of Civil Procedure. It is to be executed “as
if it were a decree”, which means that it is not a
decree.
19. It was thirdly urged by the learned ASG that
assuming that the Award could be treated as a
decree and the second payment is a post-decretal
payment, even then the said payment will have to be
treated as appropriation towards the principal sum,
since Leela Hotels had been duly intimated of the
nature of the deposit and by way of an implied
contract, Leela Hotels had appropriated the said
sum towards the principal.
22
20. The learned ASG referred to the decision of
this Court in NALCO Vs. Presteel & Fabrication Pvt.
Ltd. [(2004) 1 SCC 540], wherein it had been held
that there is no question of any decree being
honoured pursuant to the passing of an Award and
unlike a judgment within the meaning of the Civil
Procedure Code, an Award remains unenforceable
during the period available for challenging the
Award, and, thereafter, till such time as the
Petition under Section 34 is disposed of by the
appropriate Court. Reference was also made to the
decision of this Court in (1) Paramjeet Singh
Patheja Vs. ICDS Ltd. [(2006) 13 SCC 322], wherein
it was explained that the Arbitrator is not a Court
and accordingly an arbitration is not an
adjudication and an Award is not a decree, (2)
Morgan Securities and Credit Pvt. Ltd. Vs. Modi
Rubber Ltd. [(2006) 12 SCC 642] and (3) West Bengal
Essential Commodities Supply Corporation Vs.
23
Swadesh Agro Farming & Storage Pvt. Ltd. & Anr.
[(1999) 8 SCC 315], where similar views have been
expressed. Reference was also made to the decision
of the Privy Council in the case of Rai Bahadur
Seth Nemichand Vs. Seth Radha Kishen [AIR 1922 PC
26], wherein it was, inter alia, held that a
creditor to whom principal and interest are owed is
entitled to appropriate any indefinite payment
which he gets from a debtor towards the payment of
interest. However, a debtor might in making a
payment stipulate that it was to be applied only
towards the principal. If such a stipulation was
made, the creditor was at liberty to refuse the
payment on such terms, but then he would have to
give back the money or the cheque by which the
money was offered. If the amount was accepted then
the creditor would be bound by the appropriation as
proposed by the debtor.
24
21. As to the decision of this Court in
Smithaben’s case (supra), the learned ASG submitted
that the payment was unilaterally made out of Court
by the debtor with a covering letter, which was
immediately responded to by the decree-holder who
made it clear that he had appropriated the amount
towards interest alone. This Court, therefore,
held that the creditor was not bound by the
appropriation so made by the debtor. The learned
ASG submitted that in the instant case the
Respondent had tendered a sum of Rs.89.78 crores in
Court as payment towards the principal amount and
the same had been accepted by Leela Hotels without
objection and accordingly the decision in
Smithaben’s case (supra) would have no application
to the facts of this case. The learned ASG
submitted that there being little or no substance
in the Appeal, the same was liable to be dismissed
with costs.
25
22. Of the two issues involved in this matter, it
appears that the issue relating to charging of
compound interest did not survive since the parties
had agreed that no compound interest would be
payable in terms of the Award. In fact, although
such an assertion had been made by the learned ASG,
the same was not seriously opposed by Mr. Desai who
had taken the stand that this was not a case of
compound interest, but a case of calculating simple
interest on the amount as remained unpaid. Mr.
Desai also accepted the position that after the
Award had been passed by the learned Arbitrator,
Leela Hotels had calculated the interest on the
basis of yearly rests, but had subsequently given
up its claim of compound interest and limited its
claim to simple interest after appropriating the
amount received from HUDCO, first towards interest
and then towards the principal in accordance with
the decision in Smithaben’s case (supra).
26
23. Consequently, the only issue which remains for
decision is whether the amounts deposited and/or
paid by HUDCO to M/s Leela Hotels in terms of the
Award of the learned Arbitrator, was first to be
appropriated towards payment of the interest due on
the principal sum or whether the same was to be
appropriated against the principal sum itself.
24. From the submissions made on behalf of the
respective parties, the following payments appear
to have been made by HUDCO to the Appellant
herein:-
(i) 12.07.1999 - Rs.76.28 crores
(ii) 21.10.2002 - Rs.89.78 crores
(iii) March 2006 - Rs.59.61 crores
(iv) May 2008 - Rs.48.09
crores and
(v) May 2009 - Rs.50.54
crores.
27
It has been contended by the learned ASG that
the amount of Rs.89.78 crores having been paid
towards the principal amount, the other payments
made subsequently were towards interest and,
accordingly, there was no amount due and payable to
the Appellant. On the other hand, it has been
claimed on behalf of the Appellant that the said
sum of Rs.89.78 crores had been appropriated
against the interest as per the decision in
Smithaben’s case (supra), and, accordingly, the
stand taken on behalf of HUDCO was erroneous.
25. As indicated hereinbefore, the submissions made
by the learned ASG on behalf of HUDCO was based on
the proposition as contained in Sections 59 and 60
of the Indian Contract Act, 1872, on account of the
stipulation recorded on behalf of HUDCO that the
amount of Rs.89.78 crores was being tendered
towards the principal sum, to which there was no
28
objection from the Appellant and, accordingly, it
must be held that that since the amount had been
received without demur, such payment fell within
the provisions of Section 59 of the aforesaid Act.
In fact, the Division Bench of the High Court
proceeded to consider such payment and acceptance
to be a voluntary acceptance by the Appellant of
the aforesaid amount as appropriation towards the
principal as it made good business sense to accept
the same and to utilise the same in spite of
waiting for something indefinite in the future.
Such a submission, though legal and correct, is not
supported by the materials on record.
26. Admittedly, there was no agreement between the
parties as to how the amounts to be paid in terms
of the Award were to be appropriated by the
Appellant. Accordingly, in terms of the well
settled principle that in such cases it was for the
creditor to appropriate such payment firstly
29
against the interest payable, would, in our view,
be squarely attracted to the facts of this case.
As was laid down by the Privy Council in Meka
Venkatadri Appa Rao Bahadur Zamindar Garu & Ors.
Vs. Raja Parthasarathy Appa Rao Bahadur Zamindar
Garu [AIR 1922 PC 233], and later reiterated in Rai
Bahadur Seth Nemichand’s case (supra), when monies
are received without a definite appropriation on
the one side or the other, the rule which is well
established in ordinary cases is that in those
circumstances, the money is first applied in
payment of interest and when that is satisfied, in
payment of the capital. In the latter case, the
said principal was restated and it was indicated
that a creditor to whom principal and interest are
owed is entitled to appropriate any indefinite
payment which he gets from a debtor to the payment
of interest. It was also indicated that a debtor
might in making a payment stipulate that it was to
30
be applied only towards the principal. If he did
so, the creditor was at liberty to refuse payment
on such terms, but then he would have to give back
the money or the cheque by which the money is
proffered and if the same is accepted, the creditor
would then be bound by the appropriation as
proposed by the debtor.
27. In the instant case, a unilateral assertion had
been made by HUDCO as the debtor that the sum of
Rs.89.78 crores was being tendered as payment
towards the principal amount and that there was,
therefore, no other amounts due and payable to the
creditor Leela Hotels Ltd. The principle as laid
down in the two aforesaid decisions, and as
subsequently followed in Smithaben’s case (supra)
will not apply in the facts of the instant case,
since the amount as deposited was accepted by the
Appellant without prejudice to its rights and
contentions in the appeal. Since the amount had
31
been accepted on protest, the principle laid down
in Rai Bahadur Seth Nemichand’s case (supra) will
have no application.
28. The philosophy behind the principle set out in
Meka Venkatadri’s case (supra) and as reiterated in
Rai Bahadur Seth Nemichand’s case (supra) and also
in Smithaben’s case (supra) and then consistently
followed by this Court, is that a debtor cannot be
allowed to take advantage of his default to deny to
the creditor the amount to which he would be
entitled on account of such default, by way of
elimination of the principal amount due itself,
unless, of course, the provisions of Section 59 of
the Indian Contract Act, 1872, were attracted or
there was a separate agreement between the parties
in that regard. That is not so in the instant case
and, accordingly, the creditor cannot be denied its
dues on a unilateral stipulation that the amount of
Rs.89.78 crores was being deposited as against the
32
principal sum due in terms of the Award. Since the
said amount was accepted by the Appellant on
protest, it would be entitled to appropriate the
same against the interest which was due and payable
till that date on the principal amount, as has been
asserted by it.
29. In our view, the Division Bench of the Delhi
High Court erred in presuming that the said amount
had been accepted by the Appellant on account of
good business sense in view of the uncertainty of
the final outcome of the case. In our view, the
Division Bench of the High Court should have
proceeded on the basis of the principles of law as
laid down by this Court in Smithaben’s case
(supra), keeping in mind the earlier decisions of
the Privy Council in both Meka Venkatadri’s case
(supra) and Rai Bahadur Seth Nemichand’s case
(supra) in interfering with the judgment of the
learned Single Judge. The Division Bench seems to
33
have erroneously taken the presence of the learned
counsel for the Appellant, when the aforesaid
undertaking of the Respondent was recorded, in
coming to the conclusion that since no objection
had been raised with regard to the said deposit, it
must be presumed that it had the consent of the
Appellant and hence was covered by the provisions
of Sections 59 and 60 of the Indian Contract Act,
1872.
30. Regarding the question as to whether the Award
of the learned Arbitrator tantamounts to a decree
or not, the language used in Section 36 of the
Arbitration and Conciliation Act, 1996, makes it
very clear that such an Award has to be enforced
under the Code of Civil Procedure in the same
manner as it were a decree of the Court. The said
language leaves no room for doubt as to the manner
in which the Award of the learned Arbitrator was to
be accepted.
34
31. Hence, the submissions made by the learned ASG
on behalf of HUDCO cannot be accepted and are,
therefore, rejected. Consequently, the Appeal
succeeds and the judgment and order of the Division
Bench of the High Court is set aside and that of
the learned Single Judge is restored.
32. Having regard to the nature of the issues
involved in this case, the parties will bear their
own costs.
………………………………………………………J. (ALTAMAS KABIR)
………………………………………………………J. (CYRIAC JOSEPH)
………………………………………………………J. (SURINDER SINGH NIJJAR) New Delhi Dated: 15.11.2011
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