Karnataka High Court
Venkateshwara Power Project Ltd And vs The Yamakanamaradi Urban Co-Op Society ... on 21 February, 2018
1
W.P.Nos.108279-280/2016
IN THE HIGH COURT OF K ARNAT AKA
DHARWAD BENCH
DATED THIS THE 21 S T DAY OF FEBRUARY 2018
BEFORE
THE HON'BLE MRS. JUSTICE K.S.MUDAGAL
WRIT PETIT ION NOs. 108279-280/2016 (CS-RE S)
BETWEEN:
VENKATESHWARA POWER PROJ ECT LTD AND
SUGAR FACTORY , BEDAKIHAL VI LLA GE,
TQ: CHIKK ODI, DI ST: BELGAUM,
REP. BY IS MANAGING DIRECT OR.
... PETITIONER
(BY SRI MRUTYUNJ AY TATA BANGI , A DVOCATE)
AND:
THE YAMAKANMARADI URBAN
CO-OP S OCI ETY LT D, YAMKANMARADI,
TQ: HUKK ERI, DIS T: BELGAUM.
REP. BY ITS GENERAL MANAGER,
SRI SOMSHEKAR ZUTTI.
... RES PONDENT
(BY SRI PRASHAN T T. GOUDAR, ADV OCATE, F OR
C/RESPONDENT)
THESE WRIT PETI TIONS ARE FI LED UNDER ARTICLES
226 & 227 OF CONSTITUTION OF INDIA, PRAYING TO SET
ASIDE THE ORDER PASSED BY T HE PRL. SENI OR CIVIL
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W.P.Nos.108279-280/2016
JUDGE, CHIKKOD I PASSED IN EX.P.NO.158/2007 DATED
15.09.2016, COPY AS PER ANNEXURE-P, AND ALLOW THE
MEMO DATED 20.08.2016 FI LED BY THE PETITIONER, COPY
AS PER ANNEXURE-N AND DISMISS THE MEMO FILED BY THE
RESPOND ENT DATED 05.08.2016, COPY AS PER ANNEXURE-
L, ETC.
THESE WRIT PETIT IONS COMING ON FOR PRELIMINARY
HEARING - B GROUP THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
Heard.
2. Whether the order Annexure-P dated 15.9.2016 passed by the Prl. Senior Civil Judge, Chikkodi in Ex.P.No.158/2007 accepting the decree holder's memo of calculation dated 5.8.2016 and rejecting the judgment debtor's memo of calculation dated 20.8.2016 and holding that the J.Dr. company is still liable to pay Rs.2,56,69,866/- as on 5.8.2016 is arbitrary and illegal, is the question involved in these cases.
3. These cases have a checkered history of more than one decade. The petitioner is the company 3 W.P.Nos.108279-280/2016 incorporated under the provisions of the Companies Act, 1956 (hereinafter referred to as 'the company' for short). The respondent is the co-operative society registered under the Co-operative Societies Act (hereinafter referred to as 'the society' for short).
4. On 31.3.2004 the society deposited a sum of Rs.3,01,12,945/- with the company for a period of one year i.e., from 1.4.2004 to 31.3.2005. The rate of interest agreed to be paid on deposit was 17% p.a. The fixed deposit matured on 31.3.2005. The company neither refunded the deposit amount nor paid the future interest despite the demand from the society for the same. Therefore the society raised dispute before the Joint Registrar of Co-operative Societies under Section 70 of the Karnataka Co- operative Societies Act in No.JRL/B/DDS.3232/2006-07.
5. The Joint Registrar of Co-operative Societies vide Annexure-A dated 22.10.2007 passed 4 W.P.Nos.108279-280/2016 award granting the claim of Rs.4,32,87,873/-. In the award the Joint Registrar held that the company is liable to pay interest at 17% p.a. on Rs.3,01,12,945/- from 1.5.2006 till the realization of the amount.
6. The company challenged the said award before the Karnataka Appellate Tribunal. The Karnataka Appellate Tribunal vide order Annexure-A1 dated 16.7.2010 modified the award and directed the company to pay Rs.3,78,32,983/- with interest at 6% p.a. from 1.4.2006 till realization. In the meantime the society initiated execution proceedings in Ex.P.No.158/2007. In the execution petition on 17.4.2008 a memo was filed as follows:
"I) The dispute between the Decree holder and Judgment Debtor is settled with the intervention of elderly persons and the terms of the settlement are as under:-
1) The Decree Holder has accepted the cheque bearing No.268511 for 5 W.P.Nos.108279-280/2016 Rs.1,00,00,000/- (Rs.one crore) dated 15.04.2008, Rs.1,05,00,000/- Cheque No.786863, dated 15.04.2008 and for Rs.10,00,000/- bearing cheque No.786864 dated 15.04.2008, drawn on Bank of Baroda and Indian Overseas Bank, Kolhapur from the Judgment debtor. The total amount of Rs.2,15,00,000/- (all cheques) received out of the Principle amount (subject to the Audit report).
2) The Judgment debtor has preferred an appeal before the KAT under Appeal No.932/2007. The Decree Holder has appeared in the said appeal.
3) The question of total interest on this deposit is kept open and the same is pending under appeal before the KAT. The Decree holder admits that, the decision of the KAT is binding on both parties.
Thus, in lieu of the settlement the execution case is to be kept pending till the disposal of appeal No.932/2007 by the KAT.
Hence, the memo."
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W.P.Nos.108279-280/2016 It is clear that the said sum of Rs.2,15,00,000/- was received towards principal with the condition that the same is subject to the audit report and pending the proceedings before the Karnataka Appellate Tribunal.
7. Aggrieved by the order of the Karnataka Appellate Tribunal, the society filed W.P.No.65339/2010 before this Court. In the said writ petition, this Court vide order Annexure-B dated 17.1.2013 referring to section 58A(3)(A) of the Companies Act held that the company has to pay 17% interest, however on the ground of hardship to the company reduced the interest at 12% p.a. payable on the amount adjudged.
8. The company as well as the society challenged the said order in Writ Appeal No.30196/2013 C/w. Writ Appeal No.30336/2013. In those writ appeals the Division Bench vide order 7 W.P.Nos.108279-280/2016 Annexure-C allowed the appeal of the society and dismissed the appeal of the company and held as follows:
"19. Hence, we pass the following order:-
i) Writ appeal 30196/2013 is hereby dismissed;
ii) Writ Appeal 30336/2013 is
allowed;
iii) The order passed by the learned
Single Judge as well as the Karnataka
Appellate Tribunal are hereby set aside. The award passed by the Arbitrator is restored;
Parties to bear their own costs.
In terms of the calculation filed by the Society before the Court, calculating interest at 12% p.a. the company is due in a sum of Rs.1,95,75,886/-. However, according to the appellant it was only a sum of Rs.51,61,946/- which has to be deposited by them. In terms of the order passed by 8 W.P.Nos.108279-280/2016 this Court on 14.6.2013 the said amount of Rs.51,61,946/- has been deposited. Now that we have restored the award passed by the Arbitrator where the interest awarded is 17%, we are of the view the amount in deposit should be paid to the successful party i.e. the Society. Accordingly the High Court Registry is directed to pay Rs.51,61,946/- to the society. However, as the Execution Petition is still pending before the Executing Court, it is open for the parties to file respective memo of calculation and depending on the same, they can work out the amounts due in terms of the award."
9. The company challenged the said judgment before the Supreme Court in Special Leave to Appeal (Civil) Nos.31581-31582/2013. Annexure-D the order dated 31.7.2013 in the above SLPs shows that the society's counsel made the statement that the society will not claim compound interest on the amount directed to be paid to it by the High Court. Recording 9 W.P.Nos.108279-280/2016 the same the Hon'ble Supreme Court disposed of the appeals as follows:
"On instructions, learned counsel appearing on behalf of respondent No.1 states that the society shall not claim compound interest on the amount directed to be paid to it by the High Court. The details shall be worked out before the Executing Court. That satisfies learned counsel appearing on behalf of the petitioner.
Accordingly, the special leave petitions are dismissed."
(emphasis supplied)
10. The above order goes to show that the order of the arbitrator awarding Rs.4,32,87,873/- and interest at 17% on Rs.3,01,12,945/- from 1.5.2006 was maintained. The petitioner was also complacent with the said order and did not pursue the matter regarding the sum adjudged under Annexure-A. 10 W.P.Nos.108279-280/2016
11. Thereafter the parties are reverted to the executing Court. They filed memos of calculation before the executing Court. The executing Court took up the memo of calculation dated 5.8.2016 filed by the decree holder and the memo of calculation dated 20.8.2016 filed by the judgment debtor for consideration.
12. On hearing the parties by the impugned order executing Court accepted Decree Holder's memo and rejected Judgment Debtor's memos of calculation on the following grounds:
(i) The acceptance of the amount of Rs.2,15,00,000/- was towards the principal amount subject to the audit report and it was not unconditional. Since the sum adjudged by the arbitrator and the rate of interest decided to be paid by the arbitrator is upheld up to the Supreme Court, the petitioner cannot again seek to rely on the said memo and contend that the society has 11 W.P.Nos.108279-280/2016 to adjust the said sum first towards principal.
(ii) Under the memo of calculation dated 5.8.2016 the decree holder has adjusted the amount repaid by the judgment debtor company first towards interest component and thereafter towards principal component and after such adjustment as on 5.8.2016 the principal amount due is Rs.1,88,35,818/- and simple interest due is Rs.68,34,048/-. Therefore the total amount due is Rs.2,59,69,866/-.
(iii) The memo of calculation furnished by the decree holder is correct.
(iv) So far as the contention that the company has paid TDS on deposit in W.P.No.62721/2011, the High Court has held that if the judgment debtor has deposited any amount towards TDS, he can show the same in the accounts of the decree holder society and decree holder society as per the order of the High Court in ITA No.5002/2011 and 5008/2011 may claim refund of TDS amount.12
W.P.Nos.108279-280/2016
13. Sri Mrutyunjay Tata Bangi, the learned counsel for the petitioner reiterating the grounds of petition seeks to assail the order on the following grounds:
(i) The society has calculated the interest at compoundable rates.
(ii) The fixed deposit was paid to the respondent prior to the date of maturity.
Therefore calculating interest on the said amount does not arise.
(iii) From the date of deposit of the amount in the Court, the company is not liable to pay interest on the amount so deposited.
(iv) The memo of calculation filed by the society is inconsistent with the other memos filed by it.
(v) In the execution petition the society itself filed memo agreeing to adjust the amount paid towards the principal sum. Therefore it cannot turn back and adjust amount towards interest.
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W.P.Nos.108279-280/2016
14. In support of his contention he seeks to rely on the following judgments:
a) Central Bank of India Vs. Ravindra and others (2001 AIR SCW 4468);
b) M/s Nandi Investments and Enterprises Vs. L.M.Saravamangala (2004 AIR SCW 5434);
c) Himachal Pradesh Housing and Urban Development Authority and another Vs. Ranjit Singh Rana [(2012) 4 Supreme Court Cases 505)];
d) Shalini Shyam Shetty & another Vs. Rajendra Shankar Patil (2010 AIR SCW 6387).
15. As against that Sri Prashant Goudar, the learned counsel for the respondent seeks to justify the order on the following grounds:
i) Under writ jurisdiction this court cannot act as the Appellate Court;14
W.P.Nos.108279-280/2016
ii) The sum adjudged and the interest payable have attained finality. Therefore it is not open to the petitioner to contend that the sum adjudged included compound interest;
iii) In the memo filed before the executing court the payment was accepted towards the principal amount subject to the audit report and since auditor raised objections, the society which holds the public money was required to apply it first towards interest;
iv) There is no infraction of law by the executing court in accepting the memo of calculation;
v) The company is interested only in delaying the payment;
vi) The order of the Arbitrator is confirmed after perusing all the records which were produced including the memo of the JDr before the executing 15 W.P.Nos.108279-280/2016 court. Therefore, the JDr cannot re-agitate the matter again on the same material.
16. In support of his arguments he seeks to rely on the following judgments:
a) Radhey Shyam and another Vs. Chhabi Nath and others [(2015) 5 Supreme Court Cases 423];
b) Shalini Shyam Shetty and another Vs. Rajendra Shankar Patil [(2010) 8 Supreme Court Cases 329);
c) Sadhana Lodh Vs. National Insurance
co. Ltd., and another [(2003) 3
Supreme Court Cases 524];
d) Raj Kumar Bhatia Vs. Subhash
Chander Bhatia (Civil Appeal
No.19400 of 2017 disposed on
15.12.2017);
e) Authorized Officer, State Bank of
Travancore and another Vs. Mathew K.C. (Civil Appeal No.1281 of 2018 disposed on 30.01.2018).
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W.P.Nos.108279-280/2016
17. Having regard to the aforesaid rival contentions, this court has to examine whether the executing court has committed any error in passing the impugned order warranting interference of this court under the writ jurisdiction.
18. The scope of the writ jurisdiction to re- examine the order of a Civil Court under Articles 226 and 227 is elaborately examined by the Hon'ble Supreme Court on a reference, in Radhey shyam's case referred to supra. While answering the reference, the Hon'ble Supreme Court in paragraph No.29 (1) & (2) has held as follows:
"29. Accordingly, we answer the question referred as follows;
29.1. Judicial orders of the civil court are not amenable to writ jurisdiction under Article 226 of the Constitution.
29.2. Jurisdiction under Article 227 is distinct from jurisdiction under Article 226.
(Emphasis supplied) 17 W.P.Nos.108279-280/2016
19. From the above observation, it is clear that the present order under challenge cannot be examined under Article 226 of the Constitution. Therefore, what remains is whether the order calls for interference of this Court under Article 227 of the Constitution.
20. The guidelines for exercising the power under Article 227 of the Constitution are enumerated in paragraph No.62 of the judgment in Shalini shyam Shetty's case relied upon by the petitioner's counsel himself. Paragraph No.62 of the said judgment reads as follows:
62. On an analysis of the aforesaid decisions of this Court, the following principles on the exercise of High Court's jurisdiction under Article 227 of the Constitution may be formulated:
(a) A petition under Article 226 of the Constitution is different from a petition under Article 227. The mode of exercise of power 18 W.P.Nos.108279-280/2016 by High Court under these two Articles is also different.
(b) In any event, a petition under Article 227 cannot be called a writ petition. The history of the conferment of writ jurisdiction on High Courts is substantially different from the history of conferment of the power of Superintendence on the High Courts under Article 227 and have been discussed above.
(c) High Courts cannot, on the drop of a hat, in exercise of its power of superintendence under Article 227 of the Constitution, interfere with the orders of tribunals or Courts inferior to it. Nor can it, in exercise of this power, act as a Court of appeal over the orders of Court or tribunal subordinate to it. In cases where an alternative statutory mode of redressal has been provided, that would also operate as a restrain on the exercise of this power by the High Court.
(d) The parameters of interference by High Courts in exercise of its power of superintendence 19 W.P.Nos.108279-280/2016 have been repeatedly laid down by this Court. In this regard the High Court must be guided by the principles laid down by the Constitution Bench of this Court in Waryam Singh (AIR 1954 SC 215) (supra) and the principles in Waryam Singh (supra) have been repeatedly followed by subsequent Constitution Benches and various other decisions of this Court.
(e) According to the ratio in Waryam Singh (supra), followed in subsequent cases, the High Court in exercise of its jurisdiction of superintendence can interfere in order only to keep the tribunals and Courts subordinate to it, `within the bounds of their authority'.
(f) In order to ensure that law is followed by such tribunals and Courts by exercising jurisdiction which is vested in them and by not declining to exercise the jurisdiction which is vested in them.
(g) Apart from the situations pointed in (e) and (f), High Court can interfere in exercise of its power of superintendence when there has been a patent perversity in the orders of tribunals and Courts subordinate to it or where there has been 20 W.P.Nos.108279-280/2016 a gross and manifest failure of justice or the basic principles of natural justice have been flouted.
(h) In exercise of its power of superintendence High Court cannot interfere to correct mere errors of law or fact or just because another view than the one taken by the tribunals or Courts subordinate to it, is a possible view. In other words the jurisdiction has to be very sparingly exercised.
(i) High Court's power of superintendence under Article 227 cannot be curtailed by any statute. It has been declared a part of the basic structure of the Constitution by the Constitution Bench of this Court in the case of L. Chandra Kumar vs. Union of India & others, reported in (1997) 3 SCC 261 : (AIR 1997 SC 1125 : 1997 AIR SCW 1345) and therefore abridgement by a Constitutional amendment is also very doubtful.
(j) It may be true that a statutory amendment of a rather cognate provision, like Section 115 of the Civil Procedure Code by the Civil Procedure Code (Amendment) Act, 1999 21 W.P.Nos.108279-280/2016 does not and cannot cut down the ambit of High Court's power under Article 227. At the same time, it must be remembered that such statutory amendment does not correspondingly expand the High Court's jurisdiction of superintendence under Article 227.
(k) The power is discretionary and has to be exercised on equitable principle. In an appropriate case, the power can be exercised suo motu.
(l) On a proper appreciation of the wide and unfettered power of the High Court under Article 227, it transpires that the main object of this Article is to keep strict administrative and judicial control by the High Court on the administration of justice within its territory.
(m) The object of superintendence, both administrative and judicial, is to maintain efficiency, smooth and orderly functioning of the entire machinery of justice in such a way as it does not bring it into any disrepute. The power of interference under this Article is to be kept to the minimum to ensure that the wheel of justice 22 W.P.Nos.108279-280/2016 does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the functioning of the tribunals and Courts subordinate to High Court.
(n) This reserve and exceptional power of judicial intervention is not to be exercised just for grant of relief in individual cases but should be directed for promotion of public confidence in the administration of justice in the larger public interest whereas Article 226 is meant for protection of individual grievance. Therefore, the power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above.
(o) An improper and a frequent exercise of this power will be counter-productive and will divest this extraordinary power of its strength and vitality.
(Emphasis supplied)
21. From the above observation it is clear that this court cannot sit over the order of the executing court as an appellate court. Interference by this Court 23 W.P.Nos.108279-280/2016 can be if the order under challenge is passed by the court which has no competence at all or where court declines to exercise the jurisdiction vested in it. It is not the case of the petitioner that the executing court has acted without jurisdiction or declined to exercise jurisdiction vested in it.
22. The only contention is that the court has passed the order without application of mind and without proper appreciation of the materials placed before it. The perversity is attributed to the executing court stating that, it has overlooked the memo filed by the society itself on 17.04.2008 to apply the amount deposited towards the principal amount. The memo was filed in the year 2008. None of the parties can dispute that the amount adjudged by the arbitrator under Annexure-A as on the date of the claim petition was Rs.4,32,87,873/-. The interest adjudged was 17% per annum for Rs.3,01,12,945/- with effect from 01.05.2006.
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W.P.Nos.108279-280/2016
23. In spite of the memo filed on 17.04.2008 and considering the very same contention raised by the company the Single Judge as well as Division Bench of this Court confirmed the amount adjudged and the period from which the interest is payable and sum on which the interest is payable. The Division Bench further confirmed the rate of interest also. The judgment of the Division Bench has attained finality before the Apex Court. Therefore, it is not open to the company again at this stage to urge the very ground regarding memo filed before the executing court on 17.04.2008.
24. The other contention is that the amount adjudged by Arbitrator included the compound interest. Even that plea is not open to the company since all such contentions are overruled up to the Supreme Court.
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W.P.Nos.108279-280/2016
25. The 3rd contention is that the memo of calculation has been incorrect. The memo of calculation accepted by executing court is produced at Annexure-L. It shows that the society levied interest from 01.05.2006 and not since beginning as claimed by the Company. The company under Annexure-N claims that it has made excess payment of Rs.81,58,905/-. The company neither filed objections to the memo of calculation filed by the society nor chose to examine anybody on its behalf to substantiate its claim that it has paid excess of Rs.81,58,909/-.
26. Sri Mruthyunjaya Tata Bangi, learned counsel for the petitioner contends that the society also has not filed any objections to the memo of calculation filed by the Company. It is settled proposition of law that court cannot expect party to produce evidence to prove a negative thing. The person who claims that he has satisfied the claim or 26 W.P.Nos.108279-280/2016 paid in excess has to substantiate such contention. The Decree Holder / society cannot be expected to adduce evidence to prove non payment by the Judgment Debtor/company.
27. Without filing any objections to the memo of calculation filed by the society and without choosing to summon the Decree Holder to cross examine touching the memo of calculation filed by it and without choosing to examine itself to substantiate the memo of calculation filed by it, in thin air the company claims that it has paid excess amount of more than Rs.81,00,000/-.
28. Very strangely, but unfortunately though the matter was finally adjudicated up to the Supreme Court considering the deposits made before the Arbitrator and the memo filed before the executing court, again the company seeks to re-agitate the 27 W.P.Nos.108279-280/2016 same before the executing court, as well as this court.
29. This court has thoroughly considered the impugned order passed by the Executing Court. The executing Court in the impugned order meets each of the contentions raised by the Judgment Debtor, considering all the material placed before it and the judgments cited before it. The order is well reasoned one. So far as the contention that the decree holder cannot claim interest for the amount deposited before the Court and reliance placed on Himachal Pradesh Housing and Urban Development Authority's case referred to supra, it is to be noted that despite such deposits made before this court and the Executing Court, the Apex Court up held the award of the arbitrator adjudicating the liability of the company at Rs.4,32,87,873/- and interest as on 01.05.2006 towards principal at Rs.3,01,12,945/-. 28
W.P.Nos.108279-280/2016
30. Moreover no attempt was made to substantiate the contention that the decree holder has not adjusted the amount paid or deposited as and when it reached the Decree Holder. Therefore the judgments relied upon by company's counsel are not applicable.
31. Looked from any angle there are no grounds to interfere with the impugned order. Petitions are only vexatious, diverting the judicial time and the resource of the court, thereby depriving the other deserving litigants of the judicial services. Having regard to that the petitions are dismissed with cost of Rs.10,000/- payable to the High Court Advocates' Association Library Fund, Dharwad within one week from the date of receipt of copy of this order.
Sd/-
JUDGE 1 to 11-Mrk/-
12 to end-Em/-