H.P.HOUSING & URBAN DEVT.AUTH. Vs RANJIT SINGH RANA
Bench: R.M. LODHA,H.L. GOKHALE
Case number: C.A. No.-002751-002751 / 2012
Diary number: 25303 / 2009
Advocates: Y. PRABHAKARA RAO Vs
BINU TAMTA
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2751 OF 2012 [ARISING OUT OF S.L.P. (C) NO. 26581 OF 2009]
H.P.HOUSING & URBAN DEVT.AUTH.& ANR. ... APPELLANT(s)
Versus
RANJIT SINGH RANA ... RESPONDENT(s)
J U D G M E N T
R.M. LODHA,J.
Leave granted.
2. Pursuant to the agreement between the parties
being agreement No. 11 of 1989-90 concerning
construction of residential complex at Shimla, certain
disputes arose. As per the terms of the contract, the
Arbitrator was appointed to adjudicate the claims of
the respondent and counter-claims of the appellants.
On August 12, 1998, the Arbitrator passed the award.
Aggrieved thereby, the appellants filed objections
under Section 34(3) of the Arbitrator and Conciliation
Act, 1996 (for short “the Act”). The objections were
accepted by the High Court to the extent that the
reasons were not given by the Arbitrator and,
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accordingly, the matter was sent back to the
Arbitrator for giving reasons in support of the award.
3. After remand, the Arbitrator considered the
matter and passed the award on February 14, 2001.
The appellants filed objections against the award dated
February 14, 2001. They also deposited the entire
amount due under the award before the High Court on May
24, 2001. The objections filed by the appellants were
ultimately rejected by the single Judge of the High
Court on February 26, 2008. Against this order, intra-
court appeal is said to be pending. The respondent,
however, started execution of the Award dated February
14, 2001 by filing Execution Petition on August 12,
2008. The appellants filed objections to the Execution
Petition.
4. The question before the High Court was whether
the respondent was entitled to interest @ 18% p.a.
from the date of the award dated February 14, 2001 till
the date of actual payment to the respondent.
5. The High Court considered the diverse provisions
of the Act including Section 31(7)(a) and (b) of the
Act and few decisions of this Court and ultimately held
that the respondent was entitled to post-award interest
@ 18% p.a. from the date of the award till the date of
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the actual payment. It is this order which is in
appeal before us.
6. There is no dispute that the entire amount due
under the Award dated February 14, 2001 was deposited
by the appellants before the High Court on May 24,
2001. The question that arises for determination
before us is, whether deposit of the entire award
amount by the appellants on May 24, 2001 into the High
Court amounts to payment to the respondent and the
appellants liability to pay interest @ 18% p.a. from
the date of the award ceased from that date.
7. Section 31(7)(a) and (b) of the Act reads as
under:
“31(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.”
8. The above provision has been recently considered
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by this Court in State of Haryana and others vs. S.L.
Arora and Company (2010)3 SCC 690. This Court held as
under:
“........In a nutshell, in regard to pre-award period, interest has to be awarded as specified in the contract and in the absence of contract, as per discretion of the Arbitral Tribunal. On the other hand, in retard to the post-award period, interest is payable as per the discretion of the Arbitral Tribunal and in the absence of exercise of such discretion, at a mandatory statutory rate of 18% per annum.”
This Court further observed in para 24.6 as under:
“.........but if the award is silent in regard to the interest from the date of award, or does not specify the rate of interest from the date of award, then the party in whose favour an award for money has been made, will be entitled to interest at 18% per annum from the date of award. He may claim the said amount in execution even though there is no reference to any post-award interest in the award. Even if the pre-award interest is at much lower rate, if the award is silent in regard to post-award interest, the claimant will be entitled to post- award interest at the higher rate of 18% per annum.
9. Learned counsel for the parties are ad idem that
the Arbitrator has not exercised any discretion in the
matter pertaining to the interest for the post-award
period. Obviously, in absence thereof, by virtue of
Section 31(7)(b) of the Act, the award would carry
interest @ 18% p.a. from the date of the award till
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the date of payment. Whether May 24, 2001 when the
entire award amount was deposited by the appellants
into the High Court is the date of payment ?
10. Payment is not defined in the Act. The Concise
Oxford English Dictionary (Tenth Edition-revised)
defines 'payment' '1. the action of paying or the
process of being paid. 2. an amount paid or payable'.
Webster Comprehensive Dictionary (International
Edition) Volume two defines 'payment' '1. the act of
paying. 2 Pay; requital; recompense.' The Law Laxicon,
2nd Edition reprint by P. Ramanatha Aiyar, inter alia,
states 'payment is defined to be the act of paying, or
that which is paid; discharge of a debt, obligation or
duty; satisfaction of claim; recompense; the
fulfillment of a promise or the performance of an
agreement; the discharge in money of a sum due.'
11. The word 'payment' may have different meaning in
different context but in the context of Section
37(1)(b); it means extinguishment of liability arising
under the award. It signifies satisfaction of the
award. The deposit of the award amount into the Court
is nothing but a payment to the credit of the decree-
holder. In this view, once the award amount was
deposited by the appellants before the High Court on
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May 24, 2001, the liability of post-award interest from
May 24, 2001 ceased. The High Court, thus, was not
right in directing the appellants to pay the interest @
18% p.a. beyond May 24, 2001.
12. The appeal is, accordingly, allowed in part. The
impugned order of the High Court is modified and it is
directed that the appellants shall be liable to pay
interest @ 18% p.a. for the post-award period from the
date of award until May 24, 2001. After May 24, 2001,
the appellants are not liable to pay any interest on
the award amount under Section 37(1)(b) of the Act.
13. We are informed by Mr. Y. Prabhakara Rao, learned
counsel for the appellants that the amount as per the
impugned order dated March 5, 2009 was deposited by
the appellants which has been withdrawn by the
respondent. In light of this, we observe that the
High Court shall now re-determine the amount due and
payable to the respondent under the award and the post-
award interest as indicated above. The excess amount,
if withdrawn by the respondent shall be refunded to the
appellants within two months of re-determination by
the High Court.
14. No costs.
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.....................J. (R.M. LODHA)
.....................J. (H.L. GOKHALE)
NEW DELHI MARCH 12, 2012.
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