Himachal Pradesh High Court
Sh. Deepak Arora And Another ...Decree ... vs Sh. Vijay Khanna on 16 October, 2015
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA OMP No. 138 of 2015 In .
Execution Petition No. 10 of 2013 Order Reserved on 8.10.2015 Date of decision: October 16, 2015 Sh. Deepak Arora and another ...Decree Holder (Original of Claimants) /Applicants.
Versus
Sh. Vijay Khanna
rt ...Judgment Debtor/
Respondent/Non-applicant.
Coram
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting?1 No For the Applicants: Mr.R.L. Sood and Mr.Ashwani Sharma, Senior Advocates with Mr.Sanjeev Sood, Advocate.
For the Respondent: Mr.Ajay Mohan Goel and Mr.Rajesh Mandhotra, Advocates.
Tarlok Singh Chauhan J.
The decree holders (herein after referred to as applicants) have preferred this application under Section 152 read with Sections 153 and 151 of the Code of Civil Procedure for correction/modification of order dated 2.5.2015 in OMP No. 44 of 2015 on the ground that there are certain clerical/arithmetical mistake in the said order because of the wrong calculations submitted by the judgment debtor.
Whether the reporters of the local papers may be allowed to see the Judgment? Yes ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 2
2. It is averred that in terms of the award passed by the learned Arbitrator, the judgment debtor (herein after referred to as .
the respondent) was bound to pay the award amount within one month, failing which he would be liable to pay interest @ 18% per annum from the date of award. Since the amount was admittedly not deposited within the grace period of 30 days, therefore, the of respondent become liable to pay 18% interest on the amount of `1,84,58,030/- till the date of its payment.
rt The applicants have further claimed proportionate interest accruable on the fixed deposit receipts that is the difference of the rate of interest as per the award viz-a-viz rate of interest accrued on the FDR amount of `3,70,49,770.80 and have prayed for modification of the order dated 2.5.2015 to that limited extent. According to the applicants they are entitled to the following amounts:-
A a Amount along with interest received by the Rs.3,77,34,175.80p decree holders on being credited to their account on 22.07.2015, which was inclusive of interest prorate on the FDR b Amount the decree holders were held to be Rs.3,70,49,770.80p entitled to be released in their favour as per . the order date 02.05.2015, passed by this Hon'ble Court.
c But the decree holders received prorate Rs.6,84,405.00p.
interest on the amount of Rs.3,70,49,770.80p on account of interest prorate for five months upto 20.7.2015 d Therefore amount of prorate interest for two Rs.2,73,762.00p months i.e. upto 30.4.2015 on FDR comes to.
e Interest claimed at the rate of 18% on Rs.11,11,493.00p Rs.3,70,49,770.00p upto 30.4.2015 as claimed comes to f Hence interest now payable is (e)-(d) i.e. Rs.8,37,725.00p ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 3 B a Amount on account of unpaid interest Rs.2,76,870.00p from date of award i.e. 01.12.2012 to .
31.12.2012 as per award.
b Interest @ 18% on Rs.2,76,870.00 Rs.30,889.26p from 01.03.2015 to 30.09.2015 i.e. for 214 days Total Rs.3,07,759.26p c Hence total amount payable to decree Rs.8,37,725+Rs.3,07,759 holder is Rs.11,45,484.26p of
3. The respondent/judgment debtor in his reply to the application denied not only there being a clerical or arithmetical rt error, but also denied the claim as set forth by the applicants/decree holders.
I have heard the learned counsel for the parties and have gone through the records of the case.
4. It cannot be disputed that in case the applicants have deprived of use of money, because of the lapse, fault or lack of the respondents, to which they were otherwise legally entitled to, then they have a right to be compensated for such deprivation, which may be called interest, compensation or damages etc.
5. A Constitution Bench of the Hon'ble Supreme Court in Secretary, Irrigation Department, Government of Orissa and others versus G.C.Roy (1992) 1 SCC 508, held that:-
"43...(i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 4 principle of Section 34, Civil Procedure Code and there is no reason or principle to hold otherwise in the case of arbitrator."
6. Black's Law Dictionary (7th Edition) defines 'interest' inter .
alia as:
'3. The compensation fixed by agreement or allowed by law for the use or detention of money, or for the loss of money by one who is entitled to its use; especially, the amount owed to a lender in return of for the use of [the] borrowed money.'
7. According to Stroud's Judicial Dictionary of Words And rt Phrases (5th Edition) interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money.
8. The essence of interest in the opinion of Lord Wright, in Riches versus Westminster Bank Ltd., 1947 AC 390 : (1947) 1 All ER 469 (HL) (AC at p.400: All ER at p.472-E-F) is that:-
'.....it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or conversely the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation';
the money due to the creditor was not paid, or, in other words, 'was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation, whether the compensation was liquidated under an agreement or statute'.
9. At this stage, it may be relevant to note that the following observations made by a Division Bench of the High Court of Punjab in CIT versus Dr.Sham Lal Narula AIR 1963 Punj 411 on the concept of 'interest' were duly approved by the Hon'ble Supreme ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 5 Court in Dr.Sham Lal Narula versus CIT, AIR 1964 SC 1878 and it was held as under:-
.
"8. The words "interest" and "compensation" are sometimes used interchangeably and on other occasions they have distinct connotation. "Interest" in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. In its narrow sense, "interest" is understood to mean the amount which one has contracted to pay for use of of borrowed money......
In whatever category "interest" in a particular case may be put, it is a consideration paid either for the use of money or for rt forbearance in demanding it, after it has fallen due, and thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by custom or usage, for use of money, belonging to another, or for the delay in paying money after it has become payable."
10. In South Eastern Coalfields Ltd. Vs. State of M.P. and others (2003) 8 SCC 648, it was held that interest is also payable in equity in certain circumstances. It was further observed that rule in equity is that interest is payable even in the absence of any agreement or custom to that effect though subject, of course, to a contrary agreement. Applicability of the rule to avoid interest in equity is attracted when the existence of a state of circumstances is established which justify the exercise of such equitable jurisdiction and such circumstances can be many. It is apt to reproduce paragraphs 21, 24, 26 and 28 of the judgment, which reads thus:-
"21. Interest is also payable in equity in certain circumstances, me rule in equity is that interest is payable even in the absence of any agreement or custom to that effect though subject, of course, to a contrary agreement (See: Chitty on Contracts, Addition 1999, Vol. II, Part 38-248, at page 712). Interest in equity has been held to be ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 6 payable on a market rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the exercise of such equitable jurisdiction .
and such circumstances can be many.
24. We are, therefore, of the opinion that in the absence of there being a prohibition either in law or in the contract entered into between the two parties, there is no reason why the Coalfields should not be compensated by payment of interest for the period for of which the consumers/purchasers did not pay the amount of enhanced royalty which is a constituent part of the price of the mineral for the period for which it remained unpaid. The justification rt for award of interest stands fortified by the weighty factor that the Coalfields themselves are obliged to pay interest to the State on such amount. It will be a travesty of justice to hold that though the Coalfields must pay the amount of interest to the State but the consumers/purchasers in whose hands the money was actually withheld be exonerated from liability to pay the interest. Liability of the consumers/purchasers to pay interest to the Coalfields:
(b) for the period for which the restraint order passed by the Court remained in operation.
26. In our opinion, the principle of restitution takes care of this submission. The word 'restitution' in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order, what has been lost to him in execution or decree or order or the court or in direct consequence of a decree or order (See : Zafar Khan and Ors. v. Board of Revenue, U.P., and Ors., . In law, the term 'restitution' is used in three senses; (i) return or restoration of some specific thing to its rightful owner or status; (ii) compensation for benefits derived from a wrong done to another; (iii) compensation or reparation for the loss caused to another. (See Black's Law Dictionary, Seventh Edition, p.1315). The Law of Contracts by John D. Calamari & Joseph M. Perillo has been quoted by Black to say that 'restitution' is an ambiguous term, sometimes referring to the disgorging of something which has been taken and at times referring to compensation for injury done:
::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 7"Often, the result in either meaning of the term would be the same. ..... Unjust impoverishment as well as unjust enrichment is a ground for restitution. If the defendant is guilty of a non-tortuous misrepresentation, the measure of recovery .
is not rigid but, as in other cases of restitution, such factors as relative fault, the agreed upon risks, and the fairness of alternative risk allocations not agreed upon and not attributable to the fault of either party need to be weighed."
The principle of restitution has been statutorily recognized in Section of 144 of the Code of Civil Procedure, 1908. Section 144 of the C.P.C. speaks not only of a decree being varied, reversed, set aside or modified but also includes an order on par with a decree. The scope rt of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree or order. The interim order passed by the Court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of final decision going against the party successful at the interim stage. Unless otherwise ordered by the Court, the successful party at the end would be justified with ail expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand
(a) the delivery of benefit earned by the opposite party under the interim order of the court, or (b) to make restitution for what it has lost; and it is the duty of the court to do so unless it feels that in the facts and on the circumstances of the case, the restitution would far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the Court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier would not or ought not to have passed. There is nothing, wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed.
28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the 'act of the court' embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 8 have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the Court being wrongful or a mistake or error committed by the Court; the test is whether on account of an act of the party persuading the .
Court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise corned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the Court and the set of such party. The quantum of restitution, depending on the of facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonably have made. There is rt nothing wrong in the parties demanding being placed in the same position in which they would have been had the court not intervened by its interim order when at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict. Whenever called upon to adjudicate, the court would act in conjunction with what is the real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the Courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the litigant would stand to gain by swallowing the benefits yielding out of the interim order even though the battle has been lost at the end. This cannot be countenanced, we are, therefore, or the opinion that the successful party finally held entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation."
::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 911. Judged in the light of the aforesaid exposition of law, I would first consider the claim B of `3,07,759.26. It is not in dispute .
that at the time of announcement of award by the learned Arbitrator on 1.12.2012 the respondent was directed to pay a sum of Rs.1,84,58,830/- within a period of one month, failing which he would be liable to pay interest @ 18% per annum on this amount till of the date of its payment. Admittedly, the amount was not deposited within the stipulated period of one month and therefore, the rt respondent was bound to pay the interest for this period.
12. Indisputably, respondent while submitting his calculations in OMP No. 44 of 2015 has calculated the interest only w.e.f. 1.1.2013 and not from 1.12.2012, but then as noticed above this benefit of grace period was available to the respondent only if he would pay a sum of `1,84,58,030/- within a period of one month.
Accordingly, the applicants are entitled to the interest for the period w.e.f. 1.12.2012 to 1.1.2013 on the aforesaid amount, which works out to `2,76,870/-. Since the applicants have been deprived of the interest on this amount, they are, therefore, further held entitled to a sum of `30,889.26 @18% per annum towards interest from 1.3.2015 to 30.9.2015 that is for 214 days.
13. Now coming to claim A regarding awarding of proportionate interest on the amount of `3,70,49,777.80 for the period 1.3.2015 to 2.5.2015, it would be noticed that the respondent ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 10 on 23.2.2015 had filed an application under Order 21 Rule 1 and 55 C.P.C. with the following prayer:-
.
"It is, therefore, most respectfully prayed that this Hon'ble High Court may graciously be pleased to:
i) Recall the order dated 8th January, 2015 of this Hon'ble Court regarding sale of the attached property in Execution Petition No. 10 of 2013.
of
ii) Pass order regarding full payment of the decreetal amount as per Order XX! Rule 1 of Code of Civil Procedure.
rt
iii) Pass the order regarding full satisfaction of the decree and removal of attachment of property of the judgment debtor known as "Snow Hermitage Resorts" constructed over land bearing Khasra No. 172, 173, 239, 237 and 240 situated at Muhal Kand, Mauza Kahnyara, Sub-Tehsil Dharamshala, District Kangra, H.P. as per Order XXI Rule 55 of Code of Civil Procedure.
iv) Any other order which this Hon'ble Court deems fit and proper may kindly be passed in the interest of justice."
14. This application came up for consideration on 24.2.2015 and the Court passed the following order:-
"A demand draft No.576444 amounting to Rs.4,68,25,228/- has been furnished/tendered by the learned counsel appearing for the judgment debtor in the Registry of this Court. In face thereof, the learned Senior Counsel appearing for the decree holders does not oppose the prayer made by the learned counsel appearing for the judgment debtor that sale of the attached property be stayed. Accordingly, the sale of the attached property shall remain stayed till further orders. Reply to this application be filed within a week from today. List thereafter.
The learned Senior Counsel appearing for the decree holders has made a prayer that the amount as deposited by the judgment debtor be released to the decree holders. The said prayer not opposed by the learned counsel appearing for the judgment debtor. Consequently, the demand draft as ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 11 tendered/furnished by the judgment debtor is ordered to be encashed by the drawee i.e. The Registrar General and on its being encashed, the amount be handed over to the decree .
holders against proper receipt and identification."
15. Though, the applicants in terms of the aforesaid order was entitled to withdraw the entire amount, however, since OMP No. 44 of 2014 filed by the respondent under Section 151 read with of Section 144 CPC was being adjudicated upon, the decree holders were expected not to withdraw the amount deposited by the rt judgment debtor.
16. At this stage, it is worthwhile to mention that while adjudicating upon OMP No. 44 of 2015, this Court allowed the application of the respondent/judgment debtor and as against deposited amount of `4,68,25, 228/- the applicants were held entitled only to an amount of `3,70,49,770.80 and this was the precise reason why this Court had expected the decree holders/applicants not to withdraw the amount, that too despite orders to this effect having already been passed on 24.2.2015.
17. In the aforesaid background and peculiar facts and circumstances of the case, the respondent in my considered view has no reasonable or plausible reason to oppose the claim of the applicants and therefore, the applicants cannot be denied the interest w.e.f. 1.3.2015 to 2.5.2015 i.e. the period when OMP No. 44 of 2015 remained pending for adjudication before this Court.
::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 1218. Learned counsel for the respondent/judgment debtor would submit that the post award interest has to be in accordance .
with the award and if the award is silent on this, then in accordance with Section 31 (7) a and b of the Arbitration and Conciliation Act, 1996. He has further relied upon the judgment of the Hon'ble Supreme Court in H.P. Housing & Urban Development Authority of Vs. Ranjit Singh Rana (2012) 4 SCC 505 to contend that the date of deposit of award amount in the High Court is the date of payment rt to the credit of claimant/decree holder.
19. There can obviously be no quarrel with the proposition as canvassed by the learned counsel for the respondent, but it was in the aforesaid background and peculiar facts and circumstances of the case that despite there being an order of release of the award amount in favour of the applicants, they was expected not to withdraw the amount only on account of impending application being OMP No. 44 of 12015, preferred by the respondent and ultimately decided in his favour.
20. Indisputably, this Court while adjudicating upon OMP No. 44 of 2015 had simply relied upon the calculations made by the respondent, which calculations cannot be said to be wholly correct, as is evident from what has been discussed herein above.
21. Accordingly, the application is allowed and the order dated 2.5.2015 is modified and corrected to the extent that in addition to the amount of `3,70,49,770.80, the applicants shall be ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP 13 further entitled to the interest of `11,45,484.26, which needless to say shall be payable by the respondent. Application is accordingly .
allowed in the aforesaid terms, leaving the parties to bear their costs.
(Tarlok Singh Chauhan), th 16 October, 2015 Judge.
(KRS) of rt ::: Downloaded on - 15/04/2017 19:13:43 :::HCHP