Bombay High Court
Walter Bau - Ag (Il) vs Municipal Corporation Of Greater ... on 20 September, 2021
Author: A. K. Menon
Bench: A. K. Menon
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION (LODGING) NO.8959 OF 2020
IN
COMMERCIAL EXECUTION APPLICATION NO.35 OF 2017
Walter Bau - AG (IL), New Delhi .. Applicant-Claimant-Award Holder
Vs.
Municipal Corporation of Greater Mumbai .. Respondent-Judgment Debtor
Mr. Gaurang Mehta a/w Ms. Sneha Shukla & Vidya Chaudhari i/b. Chambers
of Javed Gaya, for the Applicant-Claimant-Award Holder.
Mr. Yashodeep Deshmukh a/w Mr. Sagar Patil and Ms. Yamuna Parekh, for
the Respondent-Judgment Debtor.
CORAM : A. K. MENON, J.
DATED : 20TH SEPTEMBER 2021.
P.C. :
1. By this interim application, the applicant-award holder ("company") seeks a relief in terms of an order and declaration that a sum of Rs.1,19,29,570/- is still due and payable to it by the respondent-judgment debtor ("MCGM") as on 20th September, 2020 and for a direction to the Prothonotary and Senior Master to issue process in execution against MCGM for recovery of the said amount. Further relief is sought directing MCGM to deposit the aforesaid amount of Rs.1,19,29,570/- with interest thereon @ 18% p.a. from 21st September, 2020 till the date of deposit.1/36
Digitally signed by SANDHYA IAL-8959-20 (COMEX-35-17)(f) SANDHYA BHAGU BHAGU WADHWA WADHWA Date:
wadhwa 2021.09.25 10:15:53 +0530
2. The factual background leading to the present IA is as follows;
The applicant-award holder filed Execution Application No.35 of 2017 seeking enforcement of Award dated 6th August, 2013 and Additional Award dated 23rd October, 2013 against the MCGM. Both the Awards are today partly satisfied and according to the applicant, the balance of Rs.1,19,29,570/- is still due and payable.
3. In the IA, the applicant has contended that the total amount due under the Award was Rs.20,42,24,167/- and Deutsche Marks (DM) 6,71,465/- and costs of Rs.20,00,000/-. The amounts were payable within 12 weeks, failing which interest was awarded as per the provisions of the Arbitration and Conciliation Act, 1996 ("the Act"). On 23 rd October 2013, an Additional Award came to be passed substituting a portion of the main Award. The amount awarded was modified to Rs.16,04,75,205/- and DM 39,39,818/-. The MCGM filed a petition under Section 34 of the Act, being Arbitration Petition No.433 of 2014, which came to be dismissed on 31 st October, 2017. Meanwhile the above Execution Application was filed. An Appeal, under Section 37 of the Act, being Commercial Appeal No.27 of 2018, filed by the MCGM also came to be dismissed on 22nd December, 2017. Meanwhile, as directed by the appeal court, a sum of Rs.35,61,81,190/- (First Deposit) was deposited, with the office of the Prothonotary and Senior Master, to the credit of the appeal. The MCGM had then not specified computation of 2/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa Rs.35,61,81,190/-. The payment was claimed to be the full and complete payment of the amounts awarded. The applicant then made enquiries to ascertain that the amount had been deposited and sought withdrawal of the said amount. MCGM opposed the proposed withdrawal on the basis that it had filed a Special Leave Petition in the Supreme Court. The registry therefore declined to release the aforesaid amount. The SLP later came to be dismissed on 6th April, 2018.
4. The applicant pursued its execution application sought amendments vide Chamber Order No.419 of 2018 (Chamber Order-1) which was allowed on 18th April, 2018 and carried out amendments in columns "G" and "J" to reflect the correct amount. The decretal amount was computed as Rs.50,65,09,118/- as of 1st September 2016. Further interest @ 18% p.a. was sought from 2nd September, 2016 till payment. A further sum of Rs.14,43,06,842/- was deposited by the MCGM on or about 8th June, 2018 (Second Deposit). The Prothonotary and Senior Master permitted withdrawal of an amount of Rs.35,61,81,190/-. On 14th June, 2018 Later, MCGM informed the Prothonotary and Senior Master that interest had been computed @ 12% p.a. instead of 18% p.a. on the amount awarded. In the meantime, on 25th July, 2018, the Prothonotary and Senior Master permitted withdrawal of Rs.14,43,06,842/-. By August 2018, a total sum of Rs.50,88,70,303/- had been collected by the applicant and pursuant thereto, the Office of the Prothonotary and Senior Master issued part-satisfaction 3/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa certificate on 30th August, 2018.
5. The applicant then filed Chamber Order, being Chamber Order No.972 of 2018 (Chamber Order-2), for amendment of columns "E" and "G" of the Execution Application for recording the amounts received in part-satisfaction. MCGM opposed Chamber Order-2 claiming the amount deposited was the entire decretal sum payable. Amendment was allowed on 16th October, 2018. As on that date, according to the applicant, an amount of Rs.10.90 crores remained payable. MCGM however filed a Chamber Summons No.25 of 2019 seeking recall of the order dated 18th April, 2018 passed in Chamber Order-1 permitting amendment to columns "G" and "J" of the Execution Application inter alia claiming that interest was payable only @ 12% p.a. and not @ 18% p.a.
6. On 9th April, 2019, this court, while considering Chamber Summons No.25 of 2019, directed MCGM to deposit a sum of Rs.6.73 crores by 12 th April, 2019 (Third Deposit). MCGM which had filed a computation of this amount (1st Computation) complied, without prejudice to its rights and contentions, by depositing the aforesaid amount on 12 th April, 2019 but later submitted a revised computation on 23rd April, 2019 (2nd Computation) claiming that only a sum of Rs.2.62 crores was payable with interest @ 12% p.a. and that only a sum of Rs.4.42 crores was payable after computing interest @ 18% p.a. as against a sum of Rs.6.73 crores, which it had admitted 4/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa earlier. The applicant contended that the computations relied upon by MCGM through its counsel on 9th April, 2019 and 23rd April, 2019 were erroneous, not being in accordance with the Award. On 23 rd April 2019, this court has set aside the order dated 18th April, 2018 passed in Chamber Order
-1 to facilitate "interest rate amendment". Chamber Order-1 was restored, withdrawn to the court for hearing and MCGM was granted an opportunity of filing a reply. Chamber Order-1 was heard and disposed on 8th July 2019 granting interest rate amendment upto 18% per annum.
7. MCGM then filed an affidavit-in-reply on 11th June 2019 in Chamber Order-1. In its reply, MCGM filed yet another computation, the third, showing an amount of Rs.1,81,83,122/- as the balance amount (3rd Computation). MCGM continued to compute interest @ 12% p.a. on all the principal amounts inter alia contending that it had made excess deposit of Rs.4,91,16,877/-. On 8th July 2019, this court permitted interest rate amendment under Chamber Order-I in terms of the order dated 18th April, 2019. According to the applicant, by virtue of this order, the interest rate controversy was resolved. The court held that interest was payable @ 18% p.a. The applicant then sought deposit of the balance amount, as revised. This application was made by a praecipe dated 16th August, 2019. The Prothonotary and Senior Master, after hearing the parties on 24 th September, 2019 directed release of a sum of Rs.6.73 crores to the applicant. 5/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa
8. On 4th December 2019, the applicant received the Third Deposit and sought amendment of the Execution Application to record further part- satisfaction of a sum of Rs.6.92 crores and a sum of Rs.6,46,73,466/- continued to remain due. MCGM then moved a praecipe dated 3rd January, 2020 so as to deposit a further sum of Rs.5,61,45,334/-, without furnishing any particulars of computation. The applicant questioned the computation and submitted that the correct figure would be Rs.6.78 crores, but this issue is still being agitated. The applicant was allowed to withdraw Rs.5.61 crores. On 8th January 2020, MCGM furnished a further calculation of interest (4 th Computation) on all the principal sums only for a period from 23 rd October, 2013 till 17th January, 2018 and on the reduced principal sums for subsequent period / years and quantifying at Rs.5,61,45,334/-.
9. MCGM has filed an affidavit-in-reply to the IA on 14th May 2021, in which the deponent states that the application is misconceived. The interest is payable till the date of realization of monies in the applicant's bank account and for that reason, there is a difference in calculations. MCGM contended that interest will stop accruing once the amount is deposited in court and from the date of deposit MCGM would not be liable to pay any interest on the amount deposited. If there were delays in receiving monies by the applicant, the MCGM cannot be held liable. The deponent has relied upon a comparative chart providing for dates of deposit, requests for withdrawal, order(s) permitting withdrawal and receipt of funds. MCGM's case is thus 6/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa simple interest would stop accruing once the amount is deposited in the court and from that date, MCGM is not liable to pay any interest "at-least to the extent of amount deposited".
10. According to MCGM, once the judgment-debtor deposits the amount, it is absolved of all liabilities to the extent of deposit and MCGM has no further liability. It is contended that if there is any delay in applying for withdrawal of monies or time is lost in actual receipt of monies after submitting applications, MCGM cannot be held liable. Once the monies are deposited in court, MCGM has no control over monies and the same are at the disposal of the court in its discretion. Filing a Special Leave Petition did not mean that MCGM continued to retain control over money. Moreover, withdrawal of amount deposited with interest accrued thereon was allowed by the Prothonotary and Senior Master and the applicant is wrongfully seeking to gain interest for the period taken for monies to be paid over. MCGM admits of certain calculation errors but submits that such errors cannot cause prejudice to the MCGM, fastening it with additional liability. There is also delay in disposal of the Execution Application, which delay has been caused by the applicant. The applicant has obtained orders on Chamber Order-I apparently without notice to MCGM.
11. According to MCGM, on deposit of Rs.5.61 crores, the entire decretal dues stood paid. The balance sum now claimed is exaggerated and incorrect. 7/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa It is on this basis that the parties have proceeded to seek adjudication. The applicant has in its further submissions contended that a sum of Rs.1,19,29,570/- is due as of 20th September, 2020 along with further interest on the balance principal sum of Rs.1,06,62,356/-. It is contended that the Execution Application reveals that a balance of Rs.6.46 crores was payable as balance principal sum. MCGM claims that the amount payable as of 31 st December, 2019 was Rs.5.61 crores, which it had deposited in full satisfaction of the Award. There is a dispute relating to computation of the balance sum.
12. The applicant has refuted MCGM's contentions that (i) interest will cease to accrue once the amount is deposited in court and (ii) MCGM is not liable for payment of interest to the extent of amount deposited in court. Once the amount was deposited pursuant to court orders, time for deposit is so specified. While MCGM contends that the normal rule requiring a special notice to a judgment-creditor does not apply when it is represented by an Advocate and therefore MCGM is not liable for delay in receipt of monies by the applicant, the applicant claims that it has given credit for all amounts received from the office of the Prothonotary and Senior Master pursuant to orders dated 14th June, 2018, 25th July, 2018 and 24th September, 2019. It is contended that part-satisfaction has been entered only on the basis of receipt of amounts. The Execution Application would reveal a balance of Rs.6,46,73,466/-. MCGM, however, claims that only Rs.5,61,41,333/- was due under the 4th computation. Reliance is placed on the provisions of Order 8/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa XXI of the Code of Civil Procedure, 1908, which provides for execution of decrees and modes of payment of money under decree and Rule 335 of the Bombay High Court (Original Side)Rules.
13. The next submission of the applicant is that the deposit of money into court cannot be treated as payment under the decree in such a manner that interest stops running, because if deposit is made pursuant to an order of the court, as in the present case, it was made only to obtain stay of the execution of Award, pending challenge to the order of the Appeal Court. The deposits do not discharge the judgment-debtor and the deposit does not qualify as a "Payment" under the decree, as contemplated under Order XXI Rule 1(a) of the CPC. Interest does not cease to run. In the present case, the first deposit of Rs.35.61 crores made in January 2018 and the second deposit of Rs.14.43 crores made in June 2018 were pursuant to orders passed in Commercial Appeal (Lodging) No.92 of 2017. The order of the Appeal Court records the request of the MCGM for staying execution of the Award for three months in order to enable MCGM to challenge the order of the Appeal Court. Thus, execution proceedings were kept in abeyance based on the statements of the MCGM that it will deposit the entire amount awarded within four weeks to prevent further steps in execution. Reliance is placed on a copy of the order passed by the Appeal Court.
14. It is contended that monies were deposited by MCGM to the credit of 9/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa the appeal, as evidenced from the receipts issued by the Prothonotary and Senior Master. Thus, these were not the monies paid towards the Award. MCGM also treated it as a deposit in court pursuant to the Appeal Court's directions in order to secure stay of the execution of the Award. This, Mr. Mehta submits, is evidenced by the fact that MCGM had objected to the applicant withdrawing first deposit of Rs.35.61 crores, resulting in the Prothonotary and Senior Master rejecting the application for withdrawal on 23rd February, 2018. It is submitted that the applicant continued seeking to exercise control over the money and the deposit was not unconditional towards satisfaction of the Award.
15. The Third Deposit of Rs.6.73 crores was also made pursuant to the order of the Executing Court dated 9th April, 2019 passed in Chamber Summons No.25 of 2019, which reiterates the order dated 18th April, 2018 passed in Chamber Order-I viz. "without prejudice" deposit to stay execution proceedings, which would cause "embarrassment" to MCGM. The amount was ordered to be invested by the Prothonotary and Senior Master. Order of 23rd April, 2019 also specifies that the deposit is "without prejudice". The amount of Rs.6.73 crores continued to remain invested after the order granting interest rate amendment was set aside. MCGM then claimed a refund of Rs.6.73 crores, thus continuing to claim dominion over the funds. In these circumstances, it is beyond doubt that these deposits were made on without prejudice basis to secure stay of execution and these were not 10/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa unconditional remittances for appropriation towards satisfaction of the decree.
16. That brings us to the Fourth Deposit of Rs.5.61 crores, which was once again made pursuant to an order dated 7 th January, 2020. This amount of Rs.5,61,45,334/- was paid despite the Execution Application claiming Rs.6,46,73,466/- but the MCGM chose to deposit only Rs.5,61,45,334/-. MCGM did not pay amount directly to the applicant but chose to deposit in court. This once again reveals MCGM's intention to retain control over the amount or at-least prevent the applicant from recovering the funds. Thus, it is reiterated that mere deposits in court pursuant to orders passed do not qualify a payment under the decree, as contemplated under Order XXI of CPC. The submission of the applicant is therefore that the four deposits made by the MCGM do not qualify as "payments" as provided under Order XXI Rule 1 of the CPC and therefore provisions of Order XXI Rule 1(4) or (5) cannot apply in the present case and interest will continue to run.
17. According to Mr. Mehta, MCGM has misinterpreted the nature of deposits made in court for securing stay as if they were "payments" into court under Order XXI Rule 1 of CPC. The deposits are certainly not so. They were only to prevent MCGM from facing further proceedings in execution. He submits that the deposits do not comply with the requirement of Order XXI Rule 1.
11/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa
18. The next submission on behalf of the applicant is that the computation statements are contrary to each other. Three computations were submitted, as recorded in the orders dated 9th April, 2019 and 23rd April, 2019 passed in Chamber Summons No.25 of 2019, showing that interest was computed on all the principal sums without a break and without considering the first deposit, which was made in January 2018. The part deposit made in 2018 would not stop interest running on the amount awarded. After three statements having been filed, the 4th Computation is obviously by way of afterthought. It is then submitted by Mr. Mehta that the balance amount due is computed and provided in column G of the execution application and there can be no quarrel with that since the computation made by the applicant- company is accurate and that would amount to Rs.1,19,29,570/-. Lastly, Mr. Mehta has submitted that costs should be imposed on the MCGM as the MCGM has unnecessarily delayed the proceedings by raising frivolous objections and that resulted in the need to approach this court.
19. On behalf of the MCGM, Mr. Deshmukh opposing the application submitted that when the appeal under Section 37 of the Arbitration and Conciliation Act was dismissed and MCGM was directed to deposit the amount under the Award, a sum of Rs.35,61,81,190/- was deposited on 17th January, 2018 within the time specified. The application for withdrawal is made by the applicant only on 25th January, 2018 and the applicant is now taking undue advantage of the fact that the respondent-MCGM did not 12/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa inform the applicant in writing regarding the amount being deposited. According to Mr. Deshmukh, intimation was not given since the applicant was represented in court when time was granted to deposit the amount. He attributed to the applicant constructive knowledge of the deposit and hence pleads implied waiver of notice.
20. The next submission is that MCGM had filed the Special Leave Petition, which was pending when an application for withdrawal was before the registry and the Prothonotary and Senior Master rejected the application for withdrawal. Therefore, MCGM cannot be blamed. If the applicant was aggrieved by the said rejection order, that order could have been challenged, but the applicant waited and thus it is contended that the amount of Rs.35.61 crores cannot continue to bear interest and the claim for interest can only be on the balance amount.
21. The Special Leave Petition came to be dismissed on 6 th April, 2018 and on 18th April, 2018 the Prothonotary and Senior Master allowed Chamber Order-I amending columns "G" and "J" of the execution application to compute interest @ 18% p.a. without notice to MCGM and an additional interest burden was sought to be imposed. This order was later set aside. MCGM meanwhile deposited Rs.14,43,06,842/- (Rs.14.43 crores) on 8th June, 2018. On 26th June, 2018, MCGM informed the applicant of the Second Deposit. Therefore, according to Mr. Deshmukh, interest would cease to run 13/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa on Rs.14.43 crores from 26th June, 2018. On 30th April 2018, the applicant sought withdrawal of the amount of Rs.36.45 crores and on 18 th July, 2018, the applicant received Rs.36.45 crores and interest. Thus, according to MCGM, the applicant has benefited from the amount deposited with interest thereon from the investment made by the registry.
22. On 25th July, 2018, the Prothonotary and Senior Master permitted the applicant to withdraw a further sum of Rs.14.43 crores, which amount the applicant received on 8th August, 2018 and therefore from the dates when the amounts were received by the applicant, MCGM cannot be burdened with interest. This is for the reason that MCGM has no lien or control over the amount once it is deposited in court and it is for the applicant to take steps and the registry to release the amount. Any delay cannot be attributed to MCGM. Mr. Deshmukh relies upon a certificate in part-satisfaction issued by the Office of the Prothonotary and Senior Master in respect of the amounts of Rs.35.61 crores and Rs.14.43 crores. In Chamber Summons No.25 of 2019, the court had asked MCGM to deposit Rs.6.73 crores by computing interest @ 18% p.a. and this deposit was made in terms of the order dated 9 th April, 2019. Thus, deposit was made within time, as directed by the court and to the knowledge of the applicant, because the applicant had not moved the court alleging non-compliance.
23. Mr. Deshmukh has contended that the execution application itself was 14/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa defective when interest @ 12% p.a. was claimed, which was later corrected to 18% p.a. by an order of the court. Moreover, there was procedural unfairness in seeking to secure the higher rate of interest without serving notice of the proposed amendment application to MCGM and it is for this reason that the order in Chamber Order-I was set aside. It is contended that MCGM cannot be blamed and it is only the applicant who is to be blamed for the delay from April 2019 to July 2019. MCGM ought not to be made liable for any further interest liability. Reliance is placed upon the fact that the applicant sought withdrawal of the sum of Rs.6.73 crores on 16th August, 2019 and was permitted to withdraw the said sum on 24th September, 2019. The applicant received Rs.6.73 crores and interest thereon, collectively Rs.6.92 crores, on 15th November, 2019. This amount became available only because MCGM had deposited it within time.
24. On 7th January, 2020, the court had permitted MCGM to deposit Rs.5.61 crores, which, according to MCGM, is in full and final settlement of the Award. The said amount was deposited and was withdrawn by the applicant on 22nd January, 2020. The above IA is filed on 25 th September, 2020 claiming that balance amount was still pending. The difference in amount, according to the written submissions filed, "is owing to difference in interest calculation i.e. the period for which the interest has accrued on respective amounts withdrawn by the applicant from time to time." 15/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa
25. Having noted rival contentions and having heard the submissions of both sides, what we have here is an Award to which all challenges have failed and as a result, MCGM is required to comply with the Award by making payments thereunder. Perusal of the Award reveals the following operative portion;
"The aforesaid awarded amounts - of INR - 16,04,75,205/- and DM 39,39,818/- [or its equivalent in Euro currency at universal rate] shall be paid by the respondent within twelve weeks from the date of the award. In the event the respondent fails to pay the sums awarded within twelve weeks from the date of the award; we award interest as per the provisions of the Arbitration and Conciliation Act, 1996."
26. In view of the above, the principal amount is required to be paid over with interest @ 18% p.a. from the date the twelve weeks' period expired. The interest rate controversy having been laid to the rest by the order dated 8 th July 2019 passed in Chamber Order-I, the exercise is limited to computation of the amounts payable towards interest. The Award contemplates payment in Indian Rupees and Deutsche Marks. Mercifully, we are not faced with an exchange rate variation and disputes relating to such variations. The parties do not dispute that the Rupee Value of DM 39,39,818/- translates to Rs.16,43,16,892/-. The principal amount was thus crystallized at Rs.32,47,95,197/- costs were quantified at Rs.20 lakhs. Thus, the total amount payable as on date of the decree was Rs.32,67,95,197/- (Rs.32.67 16/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa crores), out of which Rs.32.47 crores would entail interest liability at 18% p.a. under section 37(7) (b) of the Arbitration & Conciliation Act. The interest rate having been held to be 18% p.a., it is not necessary to revisit the consequences of order passed on Chamber Order-I. The applicant has computed interest on the Indian Rupee and DM element separately in columns "G" and "J" of the Execution Application, which read as follows :-
Interest @ 10% p.a. Total Principal Amount [Till 1.9.2016] Claims Awarded [As of 1.9.2016] [Rs.] (Date of Filing of E.A.) [Rs.] [Rs.] INR Claims 16,04,78,205/- 8,87,95,009/- 24,92,73,214/-
DM claims [after conversion 16,43,16,892/- 9,09,19,012/- 25,52,35,904/-
into INR] Total 32,47,95,197 17,97,14,021/- 50,65,09,118/-
27. To my mind, it is not necessary to delve into intricate computations to consider part payments made in installments. Interest is payable on Rs.32.47 crores @ 18% p.a. The Arbitration and Conciliation Act, 1996 provides for execution of an Award as if they were decrees of the court, thereby making provisions of order XXI of the Code of Civil Procedure, 1908 applicable. It will be useful to reproduce the relevant extract from Order XXI of the CPC.
"1. Modes of paying money under decree : -17/36
IAL-8959-20 (COMEX-35-17)(f) wadhwa (1) All money, payable under a decree shall be paid as follows, namely-
(a) by deposit into the Court whose duty it is to
execute the decree, or sent to that Court by
postal money order or through a bank; or
(b) out of Court, to the decree-holder by postal
money order or through a bank or by any
other mode wherein payment is evidenced in
writing; or
(c) otherwise, as the Court which made the
decree, directs.
(2) Where any payment is made under clause (a) or
clause (c) of the sub-rule (1), the judgment-debtor shall give notice thereof to the decree-holder either through the Court or directly to him by registered post, acknowledgment due.
(3) Where money is paid by postal money order or through a bank under clause (a) or clause (b) of sub-rule (1), the money order or payment through bank, as the case may be, shall accurately state the following particulars, namely:-
(a) the number of the original suit;
(b) the names of the parties or where there are
more than two plaintiffs or more than two
defendants, as the case may be, the names of
the first two plaintiffs and the first two
defendants;
(c) how the money remitted is to be adjusted,
that is to say, whether it is towards the
principal, interest or costs;
(d) the number of the execution case of the
Court, where such case is pending; and
18/36
IAL-8959-20 (COMEX-35-17)(f)
wadhwa
(e) the name and address of the payer.
(4) On any amount paid under clause (a) or clause (c)
of sub-rule (1), interest, if any, shall cease to run from the date of service of the notice referred to in sub-rule (2).
(5) On any amount paid under clause (b) of sub-rule (1), interest, ;If any, shall cease to run from the date of such payment:
Provided that, where the decree-holder refuses to accept the postal money order or payment through a bank, interest shall cease to run from. the date on which the money was tendered to him, or where he avoids acceptance of the postal money order or payment through bank, interest shall cease to run from the date on which the money would have been tendered to him in the ordinary course of business of the postal authorities or the bank, as the case may be."
28. Analysis of Order XXI and the Rules thereunder reveal that Rule 1 deals with "Modes of Paying Money under Decree" which are as follows;
"Sub-rule (1) mandates payment by;
(a) Deposit of the sum into the court obliged to execute a decree OR by sending to the court the amount by postal money order or through a bank. Rule 1 provides for All money payable to be deposit and therefore payment contemplated is of principal amount and interest and costs. Till the entire amount is paid as on date of the last 19/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa payment, the obligation to deposit in court continues so also the obligation to pay interest, if any, awarded at the rate specified.
(b) The Second mode of payment is for the decree-holder to make payment out of court directly to the Judgment Creditor through postal money order or through a bank or through other modes where the payment is recorded in writing with all particulars listed in Sub-Rule 3 of Rule 1. This provides for a direct payment without the intervention or involvement of the court or its registry.
(c) The Third mode is payment in accordance with the directions of the court which made the decree. The court which made the decree may be different from the executing court. Thus, it is necessary that the executing court keeps in mind the directions in this behalf by the court which made the decree, if the executing court is different.
29. Order XXI Rule 1(2) and Rule 1(3) deal with situations where payments are made by deposit into court or sent via postal money order or paid through a bank or as the court, which made the decree, directed. Sub- rule (2) of Rule (1) provides for the judgment-debtor to give notice of the deposit directly to the judgment-creditor by registered post, acknowledgment 20/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa due, or, through the court, if such deposit or payment is made by the Second or Third modes as aforesaid.
30. Sub-rule (3) of Rule 1 applies to payments to the court by money order or through bank or direct payment out of court under clause (b) of sub-rule (1). In such cases, particulars of the suit number, names of the parties, the order of appropriation, viz. whether the payment is towards interest, costs or principal amount or a combination of them, case number and the name of the payer, is required to be so communicated. These are the particulars which a judgment-debtor is obliged to provide in such communication. One must bear in mind the provisions of sub-rule (2) of Rule 1 is mandatory viz. "the judgment debtor shall give notice". Therefore, in the case at hand, MCGM's contentions that it need not have issued notice because the applicant was appearing in the court and had entered appearance and was aware of the proceedings is of no consequence. It lacks merit. This brings me to consider the main defences of MCGM.
31. The first submission is that the applicant is seeking to take undue advantage because MCGM did not inform it in writing about the amount deposited in court. Thus, there is an admission on behalf of MCGM that a notice, as contemplated under sub-rule (2) of Rule 1 of Order XXI of the CPC was not issued. There is an explanation offered by MCGM to the effect that notice was not given as the applicant was represented in court in the appeal, 21/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa where time bound directions were given to deposit the amount under the Award. MCGM had acted in compliance with those directions and therefore the applicant had constructive knowledge. This contention in my view, will be of no assistance inasmuch as time bound directions would have an outer date. The applicant cannot be expected to know when exactly a deposit is made, unless a notice to that effect under Order XXI Rule 1(2) is issued. This is normally done by the Advocate for the appellant intimating the decree- holder of a deposit being made in pursuance of the order of the court. In fact, Order XXI Rule 1(2) casts a duty to notify the decree-holder in writing of a deposit being made. Constructive knowledge, as suggested by the MCGM, cannot be an alternative for a specific provision of the CPC, which mandates issuance of notice. The words used in sub-rule (2) of Rule 1 of Order XXI are "......judgment-debtor shall give notice thereof to the decree-holder either through the court or directly to him by registered post, acknowledgment due". To contend that the applicant was aware of the order passed in the appeal and would therefore be aware that a deposit may be made in future does not constitute intimation by notice that payment had in fact been made on a particular date. That too would be relevant if the entire principal sum and interest due had been deposited. In the instant case, it is evident that MCGM had not deposited entire decretal amount, but appears to have miscalculated the amount to be deposited.
32. The second contention of MCGM is that, on 18th April, 2018, the 22/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa Prothonotary and Senior Master had rejected the applicant's request for withdrawal of the part amount deposited by MCGM on account of Special Leave Petition filed by MCGM challenging the order dated 22 nd December 2017. MCGM could not be blamed for the outcome/delay and if the applicant was aggrieved, it could have adopted a suitable remedy. According to MCGM, upon deposit of Rs.35.61 crores, the applicant cannot seek interest on that amount for the period from the date of the application till actual receipt of the amount and that the claim for interest can only be on the shortfall or balance amount. This contention is also merely stated to be rejected since the applicant could have appropriated the amount, if the withdrawal was permitted, but the MCGM had opposed withdrawal since it had filed a Special Leave Petition challenging the order dated 22 nd December, 2017. MCGM thus was seeking to exercise control over the amount deposited by preventing the applicant from withdrawing the same, thereby resisting the execution. It is not a case where MCGM was submitting to an order of the Court and was complying with the Award.
33. The third contention of MCGM is that an amendment was carried out behind its back by seeking to enhance the rate of interest from 12% to 18%. This order was subsequently set aside. To my mind, the amendment having been permitted and the rate of interest subsequently having been confirmed by the court vide order dated 8th July, 2019 this submission is of no assistance to oppose the present application.
23/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa
34. The next contention is that on 8th June, 2018, MCGM deposited a further sum of Rs.14.43 crores and that therefore interest should have stopped accruing on the said amount. It is contended that on 18 th July, 2018, the applicant has received an amount of Rs.36,45,63,461/- along with interest on Rs.35.61 crores and therefore the applicant cannot seek interest from the date of the application till actual receipt of the amount since it had received interest on the amount deposited in court and invested in the bank. This contention also, in my view, cannot assist the respondent. As stated earlier, once interest is computed till the date of the last part payment, the applicant would be entitled to appropriate all remittances made in accordance with Order XXI of the CPC.
35. It is the settled law that payments will be first appropriated as directed in the decree, and, if not so directed, payments shall be first appropriated towards interests and costs and thereafter the balance towards the principal sum. Upon every payment being received, the applicant would be entitled to first appropriate the same towards interest on overdue principal and to that extent, the principal sum has not been adjusted by an earlier payment. Costs in the present case was restricted to Rs.20 lakhs and therefore would have been adjusted very early in the stage of payment. Subsequent payments however would have to be appropriated first towards interest and then the balance principal sum.
36. In my view, it is not possible to accept the contention of MCGM that 24/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa no interest would be payable on the balance principal sum and that the entire sum of Rs.35.61 crores would not carry any further interest. In my view, out of Rs.36,45,63,461/- received, the applicant would be entitled to adjust all overdue interest up-to-date of receipt of payment upto 18th July, 2018 @ 18% p.a. The balance amount would be adjusted towards the principal sum. Post-adjustment, the balance if any or the principal sum would again bear interest @ 18% p.a. from 19th July, 2018. In this manner till the entire principal sum is paid, along with interest till the last date of payment, the applicant would be entitled to execute the decree / Award till it is satisfied completely. MCGM's contention that interest ceases to run on the dates when the payments were received by the applicant and the context in which it is made is not sustainable.
37. The fourth contention of MCGM is that MCGM should not be made liable for interest on amounts deposited irrespective of dates when the amounts were actually received by the applicant from the court, since it has no control or lien over the money. This contention is also rejected for the reason that interest would continue to accrue till final payment is made.
38. It is not possible to accept MCGM's contention that it would have no liability to pay interest after the deposits were made, as has been done in the instant case. This contention seems to be that interest would cease to run on part amounts deposited by MCGM from time to time. This, in my view, is a 25/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa fallacious contention. Cessation of interest is provided for in sub-rule (4) of Rule 1 of Order XXI of the CPC and it says that any amount paid under clauses (a) or (c) of sub-rule (1), interest would cease to run from the date of service of the notice referred to in sub-rule(2). In order that this provision to take effect, there must be a notice issued as contemplated under sub-rule (2) of Rule 1.
39. In the instant case, MCGM has contended that no notice was required since the applicant was represented in court and it had constructive knowledge of the deposit. This, in my view, is not tenable. The applicant had no manner of knowing the exact date when the amount was deposited and in any event, I am of the view that the provisions of Order XXI Rule 1 of the CPC does not contemplate deposit in parts. It contemplates all money payable under a decree and that would include principal sum, interest thereon, if any, and costs. It is not in contemplation under Rule 1 of Order XXI that judgment-debtor would pay the decretal amount in installments, if the decree does not provide so. In other words, unless there is a decree providing for payment of the decretal sum in installments, the entire amount would be payable on a given date along with interest. Merely because MCGM has sought to deposit the amounts in installments, initially based on an erroneous computation and thereafter rectifying the same and depositing the correct amount, which according to it was due, will not relieve it of liability to pay interest for the period for which the entire principal sum, interest and costs 26/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa had not been secured by a payment into court as per Rule 1(1) or by direct payment.
40. If the entire sum under the Award, interest and costs was deposited in lumpsum on a given date, in my view, interest would cease to run upon notice being issued under sub-rule (2) of Rule 1 of Order XXI of the CPC or if notice is waived or a judgment-debtor is able to show in the facts of the given case that the applicant- judgment creditor was aware that the entire decretal sum, interest and cost had been so deposited in court or had been paid over directly under the provisions of sub-rule (1)(b) of Rule 1 Order XXI of CPC.
41. MCGM's contention that once the amount is deposited it had not control over it and that it ceded control to the applicant is of no avail since clearly at every stage the MCGM had contested the right of the applicant to receive the amount under the Award. In the initial stages it challenged the award by filing petition under Section 34. Having failed to have the award set aside it proceeded to file an appeal under section 37. It resisted withdrawal of the amounts by the applicant and thereafter filed an SLP. Upon failure of the challenge, the award became final and the MCGM was left with no alternative but to let the amounts be withdrawn. At this stage it was necessary for the MCGM to ensure that the entire decretal sum with interests and costs after giving credit for the part payments was deposited and available for withdrawal on a given date and that the applicants had notice of the same. 27/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa Failing such notice either as contemplated under Order XXI Rule 1 Sub Rule (2) it would be MCGM's obligation to ensure that the applicant was made aware of the availability of these amounts with the Court so as to enable the applicant to withdraw the same. Absent such a notice, it would not be possible to accept the contention of the applicant, or contention of the MCGM that interest liability had ceased upon deposit of funds. It is also necessary to observe that if an applicant-judgment creditor has had the benefit of interest accruing on a sum deposited by the judgment debtor it was then obvious that the liability of the MCGM would reduce or cease depending on the rate of interest awarded, but absent such a notice it would be necessary for the MCGM to bear liability for interest. While MCGM has accepted the decision of the court, the delay in deciding the interest rate issue is attributed to an error on the part of the applicant in claiming a lower rate of interest and procedural unfairness in not having given notice of the proposed amendment to the execution application to claim the higher rate of interest.
42. In my view MCGM cannot claim any mileage from such delays. MCGM should have known that the interest rate payable was 18% was it intending to honor the award it would have remitted the entire sum awarded along with interest at 18% and issued notice forthwith under Order XXI Rule 1 (2). This it did not do but it chose to contest the award at every stage and continues to so contest interest liability. The contention of MCGM that time which had gone by between April 2019 and July, 2019 during which period 28/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa the interest rate was clarified cannot be attributed to MCGM and hence it seeks to be excused from liability to pay interest for the differential between 12% and 18 %. This in my view is once again a contention which cannot be accepted since at all times a judgment debtor and in the present case MCGM would have been aware of the award and its consequence. The award clearly directs payment of interest 18%. In the present case therefore liability to pay interest at 18% accrued right from the inception. Merely because the applicant erroneously claimed interest @ 12% and thereafter sought amendment and carried out the amendment would not enable the corporation to avoid liability to pay interest. As stated earlier, it is necessary for the executing court to ensure that the amount of interest computed till the entire principal sum and interest and costs are paid or deposited in court as provided under Order XXI.
43. The Supreme Court in the case of Bharat Heavy Electricals Ltd vs R.S.Avtar Singh & Co.1 has laid down the principles of appropriation for the principal amount and interest are as follows :
a) The general rule of appropriation towards a decretal amount was that such an amount was to be adjusted strictly in accordance with the directions contained in the decree and in the absence of such directions adjustments be made firstly towards payment of interest and cost and thereafter towards payment of the principal amount subject, of course, to any agreement between the parties.
b) The legislative intent in enacting sub-rules 4 and 5 is clear 1 (2013) 1 SCC 243 29/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa to the pointer that interest should cease to run on the deposit made by the judgment debtor and notice given or on the amount being tendered outside the Court in the manner provided in Order XXI Rule 1 sub-clause (b).
c) If the payment made by the judgment debtor falls short of the decreed amount, the decree holder will be entitled to apply the general rule of appropriation by appropriating the amount deposited towards the interest, then towards cost and finally towards the principal amount due under the decree.
d) Thereafter, no further interest would run on the sum appropriated towards the principal. In other words if a part of the principal amount has been paid along with interest due thereon as on the date of issuance of notice of deposit interest on that part of the principal sum will cease to run thereafter.
e) In cases where there is a shortfall in deposit of the principal amount, the decree holder would be entitled to adjust interest and cost first and the balance towards the principal and beyond that the decree holder cannot seek to reopen the entire transaction and proceed to recalculate the interest on the whole of the principal amount and seek for re-
appropriation.
44. The ratio of that judgment is that a claimant such as the applicant can seek to apply the rule of appropriation in respect of the amount received first towards interest and costs and then towards principal, unless the decree directs otherwise. In the present case the award is straightforward. It directs payment of principal sum in Indian Rupees and DM and it also specifies the amount of costs. Thus the applicants approach in having appropriated interest 30/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa upto date of payments made and thereafter adjusting it towards principal would be in order. In the course of deciding BHEL (supra) the Supreme Court made reference to the earlier decisions of the Constitution bench in the case of Gurpreet Singh vs. Union of India2 and Central Bank of India and Ravindra and Ors.3 Gurpreet Singh concerned itself with not only Order XXI Rule 1 but also Order XXIV and appropriation of amounts paid at the pre decretal stage. We are here considering the liability of the MCGM under an award, its attempt to stall the enforcement of the award and in the process submitting to a direction of the appeal court directing deposit thereafter upon the appeal failing, it continued to challenge the award by filing an SLP. At all stages thus the MCGM resisted payment of the sum awarded. The intention of the MCGM was thus clear. It was not inclined to comply with the award and hence demonstrated its unwillingness to deposit the amount in the Court in compliance with the decree. Order XXI sets out the rules how a decree may be enforced. It not only provides for the positive steps to be taken by a successful decree holder, but also affords an opportunity to a judgment debtor to satisfy the claim by payment into Court and thereby bringing to end the attempt at enforcement by a judgment creditor. MCGM had deposited the entire amount awarded along with interest upon the Section 34 petition failing it 2 (2006) 8 SCC 457 3 (2001) 1 SCC 367 31/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa would be still liable to pay interest on the decretal amount awarded till date of disposal of the section 34 petition. It would also have to then give notice of the fact of deposit as contemplated in Order XXI Rule 1(2). This has not been done in the instant case. MCGM's attempt to contend that it was entitled to an order of cessation of interest under Order XXI Rule 1(4) is untenable.
45. In my view, nothing on record indicates that the deposits were made in accordance with the CPC or the Bombay High Court (Original Side) Rules. The receipts issued by the registry also indicate that the deposits were made pursuant to orders passed in the appeal. No special notice of the deposits was given to the applicant despite an express requirement to do so under the provisions of Order XXI Rule-1 Sub-Rule (2) of the CPC. The first and the second deposits were not made in execution proceedings at all, but were made pursuant to Commercial Appeal (Lodging) No.92 of 2017. The Third and the Fourth Deposits were made in Chamber Summons No.25 of 2019 in Chamber Order-I, which clearly indicate that deposits were not made towards the Award but pursuant to orders of the court. It is pertinent to mention that the first deposit was itself made to the Appeal. MCGM also resisted withdrawal of the amounts by the applicant, which acts do not indicate compliance of the Award. It is once again pursuant to 32/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa orders of the court, that amounts were allowed to be withdrawn and therefore interest cannot cease to run.
46. The principles laid down by the Supreme Court in BHEL (supra) have also been reiterated in various other judgments including those relied upon by the applicants. One of the earliest is to be found in the Supreme Courts' judgment in the case of P.S.L. Ramanathan Chettiar & Ors. vs. O.R.M.P.R.M. Ramanathan Chettiar 4. Paragraph 12 of that judgment is relevant and is reproduced below :
"12. On principle, it appears to us that the facts of a judgment-debtor's depositing a sum in court to purchase peace by way of stay of execution of the decree on terms that the decree-holder can draw it out on furnishing security, does not pass title to the money to the decree-holder. He can if he likes take the money out in terms of the order; but so long as he does not do it, there is nothing to prevent the judgment debtor from taking it out by furnishing other security, say, of immovable property, if the court allows him to do so and on his losing the appeal putting the decretal amount in court in terms of Order 21 Rule 1 CPC in satisfaction of the decree.
47. In the context of the present case it is clear that the MCGM had deposited initial amount of Rs. 32.47 crores not in an effort to make payment and satisfy the award but only by way of purchasing peace and seeking stay of execution as sought. As held by the Supreme Court in the Case of 4 (1968) 3 SCR 367 33/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa Ramanathan Chettiar (supra) title in the money did not pass to the applicant. All along the Corporation resisted execution. It sought stay of the execution of the award. It continued its challenge right upto the apex court and thus prevented the applicant from appropriating monies at every stage. Interest therefore continued to run throughout. In Ramanathan Chettiar (supra) the Supreme Court was faced with the situation which led it to observe that the real effect of deposit of money in court was to put the money beyond the reach of the parties in that case pending disposal of the appeal and that the decree holder could withdraw the money only on furnishing security. The security could be proceeded against by the judgment debtor in case he succeeded in the appeal. In the present case the situation is slightly different. The challenge failed and there was no occasion for the applicant to furnish security. This principle laid down in Ramanathan Chettiar (supra) has been followed subsequently in other judgments which Mr. Mehta has relied upon.
48. The facts at hand are amenable to a straightforward and simple application of Order XXI Rule 1 and in my view it is not necessary to delve deeper into the facts of other cases. In the present case the dues have to be computed upto the date of the last payment. When one computes interest at that rate the applicant must give credit for all amounts received in that process it would first appropriate the first payment of Rs. 32.47 crores towards interest on the decretal sum of Rs.32,47,95,197/-. The balance was then available for appropriation of costs. Thus after deduction of interest on 34/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa Rs.32.47 crores a sum of Rs. 20 lakhs would be appropriated towards costs. The balance would then be applied towards the principal sum remaining. After adjusting balance towards the principal of Rs.32,47,95,197/- the balance unpaid principal would once again attract interest liability @ 18% p.a. and in this manner interest would continue to run till further part payments were adjusted towards interest till date of part payment and thereafter towards principal. This process will go on till the entire principal sum and interest are paid. This is an aspect which will require application of mind in computation and in my view considering the relief sought in the interim application I am not inclined to direct payment of the sum of Rs.1,19,29,570/- claimed unless a detailed analysis and computation is carried out. Suffice it to say that computation of the amount is best left to the registry and in that respect I am of the view that the following order will serve the ends of justice.
49. In view of the above, I pass the following order;
(i) The Insolvency Registrar presently In charge of execution department shall verify the computation of the decretal balance provided by the applicants and in the event of any discrepancy shall call for a meeting at which the MCGM shall also be heard before certifying the exact balance due. Upon such certification, the matter shall be placed before this court.
35/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa
(ii) Liberty to apply.
50. After this order was passed, Mr. Deshmukh fairly states on instructions, that the computation of the balance decretal sum has set out in Exhibit 'P' to the IA is arithmetically accurate and that it is not necessary to refer the matter to the execution department for computation. He further states that the Corporation is willing to pay the amount provided the amount of Rs.1,19,29,570/- is accepted in full and final settlement if payment is made on or before 30th September, 2021. Mr. Mehta on instructions is agreeable to accept Rs.1,19,29,570/- in full and final settlement provided he receives the remittance or demand draft for the said amount before close of banking hours on 30th September, 2021. In that view of the matter, list the application for recording compliance on 5th October, 2021.
51. It is made clear that Mr. Mehta has agreed to accept this amount in full and final settlement only if the amount is paid by 30 th September, 2021 as otherwise the applicants are entitled to further interest as per Exhibit 'P' and prayer (a) since the interest is computed only upto 21st September, 2020.
52. All parties shall act on a copy of this order digitally signed by the Personal Assistant of this Court.
(A.K. MENON, J.) 36/36 IAL-8959-20 (COMEX-35-17)(f) wadhwa