Unitech Ltd vs Mahanagar Telephone Nigam Ltd on 20 July, 2022

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Delhi High Court - Orders

Unitech Ltd vs Mahanagar Telephone Nigam Ltd on 20 July, 2022

1. Although there are certain proceedings pending before the Supreme Court relating to the management of Unitech Ltd. ["Unitech"], which is the petitioner in these enforcement proceedings, learned counsel for both sides are ad idem that there is no impediment in this Court proceeding with the present enforcement proceedings.

2. The present enforcement proceedings are in respect of an arbitral award dated 11.10.2012 passed by a sole arbitrator in disputes arising between the parties under a contract for construction of a building for the respondent.

3. The disputes between the parties were first adjudicated by a sole arbitrator and culminated in an award dated 28.01.2000. The award was in respect of several substantive claims as also in respect of interest Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 1 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47 thereupon.

4. The award was challenged by the respondent- judgment debtor- Mahanagar Telephone Nigam Ltd. ["MTNL"], before this Court by way of O.M.P. 91/2000, which was partly allowed by a learned Single Judge on 23.11.2009. The award was set aside with respect to claim No. 1

(a)(1), claim No. 1(a)(4), claim No. 4(b), claim No. 4(d), claim No. 5 and with regard to interest awarded. As far as claim Nos. 4(b), 4(d) and 5 are concerned, the learned Single Judge remanded the matter to the arbitrator. The relevant paragraph of the judgment dated 23.11.2009 is as follows: -

"12. In view of the above, to the extent, the Award is being remanded for re-decision of Claim Nos. 4 and 5, the Award shall not become final. So far as the other claims are concerned, the Award shall become final and capable of being executed I may however note that so far as the rate of interest is concerned, that would be payable @ 9% per annum simple with respect to the claims which are being sustained. So far as the claims which are remanded back to the Arbitrator for a fresh decision, the rate of interest which would be granted by the Arbitrator will be such after keeping in view the aforesaid judgments of the Supreme Court and the facts and circumstances of this case."

[Emphasis supplied]

5. Pursuant to the remand on claim Nos. 4 and 5, the learned arbitrator made the award which is under enforcement in these proceedings. MTNL's challenge to the second award was dismissed by the learned Single Judge vide order dated 09.05.2018 in O.M.P (COMM) 461/2016.

6. The judgments were carried in appeal by both sides. Three appeals were filed [FAO (OS) 159/2010, FAO (OS) 383/2010 and FAO (OS) (COMM) 214/2018], which were disposed of by a common judgment of Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 2 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47 the Division Bench dated 04.12.2018. The Division Bench dismissed FAO(OS) 383/2010 and FAO(OS) (COMM) 214/2018, filed by MTNL against the judgments dated 23.11.2009 and 09.05.2018. Unitech had filed FAO(OS) 159/2010 with regard to claim no. 1(a)(4), which had been set aside by the learned Single Judge vide judgment dated 23.11.2009, and also with regard to downward revision of the rate of interest from 18% to 9%. On both these counts, Unitech succeeded before the Division Bench. MTNL's challenge to the judgment of the Division Bench by way of S.L.P(C) No. 5661-5663/2019 was dismissed by the order of the Supreme Court dated 07.05.2019.

7. In these circumstances, the award under enforcement has attained finality.

8. In the present execution petition, the amounts for which the petitioner-award holder seeks recovery of the award under enforcement have been tabulated. The petitioner has claimed a total amount of ₹2,18,34,638/-, which had admittedly been paid by MTNL to the petitioner on 07.03.2019, and interest thereupon.

9. The issue which remains for adjudication is whether the petitioner is entitled to interest upon the said amount. As far as the interest rate is concerned, by the judgment dated 23.11.2009, extracted above, the learned Single Judge had reduced the rate of interest on the sustained claims under enforcement from 18% per annum to 9% per annum. In paragraph 12 of the said judgment, the rate of interest on the claims which were remanded back to the arbitrator were left open for a decision by the arbitrator. The award under enforcement, however, does not contain any further award in this regard.

Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 3 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47

10. Ms. Anubha Agrawal, learned counsel for the award holder, submits that this issue was not re-agitated before the learned arbitrator because the matter had been taken to the Division Bench as noted above. I am unable to accept this argument for the reason that the remand order clearly included the issue of interest upon the remanded claims. The judgment dated 23.11.2009, in so far as it interfered with the rate of interest, was confined to the claims which were being sustained. In the appeal filed by the petitioner before the Division Bench [FAO(OS) 159/2010], a copy of which has been placed on record of these proceedings, the award holder has described the scope of the appeal in the following terms: -

"1. That the appellant has filed the present appeal against the judgment and order dated 23.11.2009 passed by the learned single judge of this Hon'ble Court whereby claim No.1(a)(4) was rejected, and the interest granted by the learned arbitrator has been reduced in claim Nos. 7 to 9 from 18% to 9% p.m. simple interest. Certified copy of the order dated 23.11.2009 is annexed herewith and marked as Annexure A-1."

[Emphasis supplied]

11. On the question of the remanded claims and interest thereupon, no appeal was filed before the Division Bench and the judgment of the Division Bench sustaining the award @ 18% per annum, in my view, could not apply to those claims.

12. As an executing Court, it is not open to this Court to add to or subtract from the award under enforcement. The limitations of the executing Court, while enforcing arbitral awards, have been emphasised inter alia in Punjab State Civil Supplies Corporation Limited & Anr. vs. Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 4 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47 Atwal Rice and General Mills (2017) 8 SCC 116 [paragraph 18] and Municipal Council, Thanesar & Ors. vs. Virender Kumar & Ors. (2020) 15 SCC 364 [paragraphs 5 and 10]. I am therefore unable to uphold the request of the award holder for recovery of interest @ 18% per annum on the amounts awarded in the award under enforcement.

13. At this stage, Ms. Aggarwal submits that interest may instead be granted at the rate specified under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 ["the Act"], which provides as follows: -

"31. Form and contents of arbitral award -

                                                  xxxx       xxxx         xxxx
                                 7. (a) .................

(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."

14. Mr. Jasbir Bidhuri, learned counsel for MTNL, resists the recovery of interest, even at this rate, on the ground that in terms of the judgment dated 23.11.2009, this was a matter that ought to have been agitated before the learned arbitrator in the second round. In my view, the statutory provision addresses exactly the kind of situation which has occurred in the present case, where the arbitral award is entirely silent as to interest. On the claims which were sustained by the judgment dated 23.11.2009, the net effect of the judgment of the Division Bench, is that Unitech has recovered interest @ 18% per annum. Certainly, Unitech's failure to agitate the claim for interest on the remanded claims before the learned arbitrator was at its own peril. However, having succeeded in its claims, I am of the view that the award holder is entitled to recovery of Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 5 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47 interest on these claims at the rate provided in Section 31(7)(b) of the Act. In fact, albeit by way of an alternative argument, MTNL has itself quantified the liability on this basis in an affidavit filed by it on 01.08.2019. The rate at which interest is calculated is 10.5% per annum. Ms. Agrawal seeks time to take instructions on this aspect. She is directed to place an affidavit on record within two weeks in the event the rate of interest is disputed.

15. There is one further issue which requires consideration. Ms. Agrawal submits that in the execution petition itself, one element of the award has inadvertently been missed out while computing the total amount due to the petitioner. This is an amount of ₹11,29,603/- which is part of claim No. 4(d) as awarded. I find from the calculation sheet attached to the aforesaid affidavit of MTNL that MTNL has also accepted its liability for the said amount. Mr. Bidhuri seeks time to take instructions on this aspect.

16. It is made clear that the only two remaining issues are with regard to the claim of ₹11,29,603/- [being the second element of claim No. 4(d)] and the rate at which the interest is liable to be awarded under Section 31 (7)(b) of the Act, in respect of the award under enforcement. Learned counsel for the parties will address on these two issues on the next date of hearing.

17. List on 01.09.2022.

EX. APPL.(OS) 440/2019 This is an application filed by the decree holder for clarification of the order dated 08.03.2019.

The application stands disposed of in terms of the order passed Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 6 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47 today in the execution petition.

EX. APPL.(OS) 529/2019 This is an application filed by the decree holder for placing copies of orders of the Division Bench and the Supreme Court on record.

The application is allowed and the documents are taken on record. The application stands disposed of.

EX. APPL.(OS) 915/2019 In view of the order passed today in the execution petition, this application is not pressed.

The application stands disposed of.

PRATEEK JALAN, J JULY 20, 2022 'Bhupi'/ Click here to check corrigendum, if any Signature Not Verified Digitally signed OMP (ENF.) (COMM.) 220/2018 Page 7 of 7 By:SHITU NAGPAL Signing Date:22.07.2022 12:17:47

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Delhi High Court - Orders