Bombay High Court
Walter Bau - Ag (Il) vs Municipal Corporation Of Greater ... on 23 April, 2019
Author: G.S. Patel
Bench: G.S. Patel
7-CHSCD25-19.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM CHAMBER SUMMONS NO. 25 OF 2019
IN
CHAMBER ORDER NO. 972 OF 2018
IN
COMM EXECUTION APPLICATION NO. 35 OF 2017
Municipal Corporation of Greater Mumbai ...Applicant
In the matter between
Walter Bau Ag (IL) ...Claimant/
Award Holder
Versus
Municipal Corporation of Greater Mumbai ...Respondent
Mr Gaurang Mehta, with Mr Javed Gaya, Vidya Chaudhari, Sneha Shukla and Mona Malvade, i/b Chambers of Javed Gaya, for the Claimant/Award Holder.
Mr Yashodeep Deshmukh, with Ms Vaidehi Deshmukh and Mr RY Sirsikar, for the MCGM.
Mr Gore, Executive Engineer (MSDP) present.
Mr Gaitonde, Assistant Engineer (MSDP) present.
CORAM: G.S. PATEL, J
DATED: 23rd April 2019
PC:-
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23rd April 2019
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7-CHSCD25-19.DOC
1. This is a Chamber Summons by the MCGM. I have previously allowed an amendment. It was originally directed against an order of 16th October 2018 made by the Additional Prothonotary and Senior Master in Chamber Order No. 972 of 2018. That was a mistake and Mr Deshmukh has instructions to state that that challenge is not pressed simply because the order of 16th October 2018 was one by which Mr Ketan Trivedi, the Additional Prothonotary and Senior Master, allowed the Execution Application to be amended to give credit for the amount paid by then by the MCGM towards the decretal claim. The order of 16th October 2018 is thus one that is in the interests of MCGM to retain.
2. Pursuant to leave I granted the Chamber Summons was amended on 29th March 2019 and it now includes a challenge to an earlier order of a now retired Additional Prothonotary and Senior Master made on 18th April 2018 in Chamber Order (L) No. 419 of 2018. A few facts may be relevant. The arbitration was in regard to a civil works contract. The arbitral proceedings date back to 2013. There was an majority award of 6th August 2013 and then an additional award of 23rd October 2013.
3. Challenge Petitions by the MCGM failed. The dispute is in regard to the rate of interest awarded. The majority award of August 2013 said that if the MCGM did not pay the amount awarded within 12 weeks, interest would be computed as per the provisions of Arbitration and Conciliation Act 1996. The additional award of 23rd October 2013 modified the total amounts awarded allowing for a foreign exchange conversion rate. This also said that if the amount was not paid within 12 weeks, interest would be as per the Page 2 of 6 23rd April 2019 ::: Uploaded on - 24/04/2019 ::: Downloaded on - 25/04/2019 04:21:12 ::: 7-CHSCD25-19.DOC provisions of the Arbitration Act. The dispute is because of the amendment to Arbitration Act. Prior to 2015, amended Section 31(7)(b) provided for interest at 18% per annum. The Decree Holder claims that it is governed by this rate of interest. In the present Execution Application No. 35 of 2017, the Decree Holder did not initially claim interest at this rate. It claimed interest only at 12% per annum from 24th August 2016. I note that there are some payments made by the MCGM, with deposited amounts withdrawn, but that again is not my immediate concern. I have by a previous order required the MCGM to deposit without prejudice the amount that according to it would be payable, some of it the balance on the basis of interest computed at 12% per annum and the balance on the claim for interest at 18% per annum. A revised statement tendered by Mr Deshmukh for the MCGM today is that what has been deposited is in excess and that the earlier statement was an incorrect computation.
4. The question today is not whether the Decree Holder is entitled to interest at 18% per annum, but only about the manner in which its Chamber Summons for amendment to include this claim came to be allowed. The Decree Holder filed a Chamber Order (L) No. 419 of 2018. It is separately compiled. The Chamber Order sought amendment of columns G and G of the Decree Holder's Execution Application No. 35 of 2013. Paragraph 2 of the impugned order made on 18th April 2018 says that by the amendment sought the Decree Holder was seeking to add an interest amount. The order then observes that according to the Affidavit in Support because of certain mistakes or deficiencies, the correct interest amount remained to be mentioned. There was a further justification Page 3 of 6 23rd April 2019 ::: Uploaded on - 24/04/2019 ::: Downloaded on - 25/04/2019 04:21:12 ::: 7-CHSCD25-19.DOC provided in paragraphs 7 and 8 of the Affidavit in Support. Then there is a mention of portions that the Decree Holder sought to delete, and a statement that the Execution Application was pending. On this basis the Chamber Order was straightway allowed.
5. Everything that could possibly go wrong with this procedure did. The Judgment Debtor MCGM was given no notice and was not served with the Chamber Order at all. At the very least, seeing that the Judgment Debtor would now face an additional claim of interest an extra 6% per annum on a sizeable amount, part of it in foreign exchange, the Judgment Debtor was entitled to notice. In my view it was also entitled to oppose and to certainly to file an Affidavit in Reply as also to be heard. By 18th April 2018, in fact, as the revised computations show, the MCGM had made some payment. This was on 17th January 2018, when an amount of nearly Rs.36 crores was paid into Court. This was computed at 12% per annum but did not constitute the full amount even at that rate. There is a dispute as to whether this was paid according to the first majority award or on the claim in the Execution Application but that again matters little.
6. I am not impressed by Mr Mehta's submission that the MCGM's conduct after the Additional Prothonotary allowed this ex parte amendment will justify the continuance of his order. I do not see how the Additional Prothonotary could have done in a Chamber Order that which a Judge could not have done in a Chamber Summons i.e. decide something like this without a minimal opportunity to the other side to respond. When a party asserts that it has made a mistake and seeks to rectify that mistake, but that proposed amendment has the effect of imposing a significant Page 4 of 6 23rd April 2019 ::: Uploaded on - 24/04/2019 ::: Downloaded on - 25/04/2019 04:21:12 ::: 7-CHSCD25-19.DOC liability on the other side, then every principle of law, procedure and justice, apart from common sense, dictates the other side must be given an opportunity of being heard. Indeed, one of Mr Deshmukh's contentions goes straight to the heart of it, for he says that having sought execution at 12% per annum, and having taken without protest or demur or qualification the amount MCGM deposited and which could not have been computed at any higher rate, the Decree Holder is estopped by its conduct and in equity from now seeking any additional interest. Against the Decree Holder there is in operation now an estoppel by record and an estoppel in pais. This, he submits, and in my view completely correctly, is an argument that the MCGM could and would have taken had it been given notice. Whether it is to be accepted or not is another matter, but MCGM cannot be shut out from raising it. That the MCGM later sought a copy of the amendment is wholly irrelevant. The MCGM was given no opportunity of being heard before the amendment was allowed; and that is sufficient reason to allow this Chamber Summons and direct the deletion of the amendment for higher interest.
7. Mr Deshmukh is correct in his submissions that there was a complete failure of due procedure according to law. I may note that under Rule 133 of the High Court (Original Side) Rules, had the MCGM been served, apart from being entitled to a reply and to argue, it could also have told the Prothonotary that it wanted to have the matter decided by the Court and the Chamber Order would have had to be referred to Court for decision. Even this opportunity was denied to the MCGM.
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8. In my view the order of 18th April 2018 to the extent that it allows an amendment to claim a higher rate of interest cannot be sustained. Accordingly the Chamber Summons is made absolute in terms of prayer clause (a)(1) so far as the interest rate amendment is concerned. The order of 18th April 2018 is quashed and set aside to that extent. However, only to avoid confusion, rather than directing an amendment to undo the amendment and further corrections I will presently only direct that until further orders there will be no further steps in execution, and the 18th April 2018 amendment, though not physically deleted from the record, is disallowed.
9. Mr Deshmukh submits that the Chamber Order (L) No. 419 of 2018 be restored to file and be heard on merits. This is reasonable. Mr Mehta agrees. Chamber Order (L) No. 419 of 2018 is restored to file. It is forthwith withdrawn to Court. The MCGM will file and serve its Affidavit in Reply to the Chamber Order on or before 7th June 2019. Affidavit in Rejoinder, if any, to be filed and served on or before 21st June 2019.
10. The Chamber Summons will be listed for hearing and final disposal on 25th June 2019. All further proceedings in execution are stayed until 28th June 2019.
11. The amount deposited is to be invested until further orders.
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