Supreme Court - Daily Orders
B. Radhakrishna vs M/S. Maharashtra Apex Corporation Ltd. on 11 April, 2017
Author: Chief Justice
Bench: Chief Justice, D.Y. Chandrachud, Sanjay Kishan Kaul
1
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4753 OF 2007
B. Radhakrishna ..Appellant
versus
M/s Maharashtra Apex Corporation Limited ..Respondent
O R D E R
1. While issuing notice on 04.07.2006, this Court directed as under:
“Delay condoned.
Issue notice limited on the question of interest. Meanwhile, execution of the award is stayed.”
2. A perusal of the above order reveals, that the adjudication in the instant appeal would be limited to the interest payable, on the amount determined by the arbitrator. The award of the arbitrator dated 17.07.1999 held as under:
“I have carefully examined and gone through all the documents produced. I am satisfied that the petitioner's claim is true and correct and is substantiated by oral and documentary evidence. Hence, I hold on point no.1 that the petitioner has proved the claim put forth as above and hence the amount claimed is correct and due and the arbitrator is validly appointed and an award has to be passed in favour of the petitioner as follows and in the result I pass the following award:
(A) That the respondents jointly and severally Signature Not Verified shall pay to the petitioner Rs.99,463/- as claimed Digitally signed by PARVEEN KUMAR Date: 2017.04.18 by the petitioner with future interest at 36% per 17:44:48 IST Reason: annum from 9.2.1999 till payment.
(B) That the respondents jointly and severally shall pay to the petitioner Rs.1,596/- towards the costs of the arbitration.2
The total value of the reliefs granted under this award is Rs.1,01,059/- and as such it is engrossed on N.J.Stamp paper of the value of Rs.285/- as per Section 11 of the Karnataka Stamp Act as amended.” A perusal of the determination rendered by the arbitrator reveals, that interest at the rate of 36 per cent per annum, would be payable from the date of default, namely, from 9.2.1999, till the liability stood discharged.
3. When the afore-stated award came to be assailed before the District Judge, Udupi, under Section 34 of the Arbitration & Conciliation Act, 1996, the District Judge, Udupi, reduced the amount as well as the interest payable. The operative portion of the order of the District Judge, Udupi, dated 18.12.2002 is being extracted hereunder:
“Petitioner and Vasudeva Gowda and K. Dasappa Gowda shall pay in a sum of Rs.48,000/- jointly and severally with interest at 15% p.a. thereon from 9.2.99 till the date of passing of award by the Arbitrator and thereafter at the rate of 18% p.a. thereon till realization together with the costs of Arbitration Proceedings of Rs.1,596/-.” It is apparent from the above, that while the principal amount came to be reduced to Rs.48,000/- (from Rs.1,01,059/-), the rate of interest came to be reduced to 15% per annum (from 36% per annum).
4. A challenge was again raised by the respondent, as also, by the appellant before the High Court of Karnataka at Bangalore (hereinafter referred to as the 'High Court'). The challenge came to be disposed of by the High Court, through two separate orders, both dated 18.01.2006. It would be pertinent to mention, that on the subject of interest, the High Court restored the order passed 3 by the arbitrator on 17.07.1999, and set aside, the order passed by the appellate authority dated 18.12.2002. In other words, the High Court concluded, that interest would be payable at the rate of 36% per annum.
5. As already noticed hereinabove, the sole issue pertains to interest payable by the appellant to the respondent, on the defaulted amount. On the instant issue, clause 3 of the conditions of Hire Purchase Agreement, dated 15.04.1997, is relevant. Clause 3 of the Hire Purchase Agreement, is reproduced below:
“3. The Hirer agrees to pay the Owners compensation at the rate of 3 per cent per month or at such rates as may be determined by the owner from time to time on the amount of any sum overdue including initial hire any sum of taxes fees, penalties, duties, insurance premium, repairs and supplies which may become due from the Hirer to Owners as provided herein to recover possession of the equipment/item and to determine this Agreement on default of payment of any of the hire.” (emphasis is ours) A perusal of the Hire Purchase Agreement, voluntarily entered into between the parties, reveals that the hirer, namely the appellant, agreed to pay the owner (namely, the respondent), compensation at the rate of 3 per cent per month, calculated in the manner expressed in the Hire Purchase Agreement. The parties had mutually and voluntarily agreed to pay interest at the rate of 36 per cent per annum. So far as the question posed for determination by this Court, while issuing notice is concerned, the same can be determined without much difficulty, by referring to section 31(7) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Arbitration Act'). The same is extracted hereunder:4
“31(7)(a) Unless otherwise agreed by the parties, where and insofar as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of the award, from the date of award to the date of payment.
Explanation – The expression “current rate of interest” shall have the same meaning as assigned to it under clause 9b) of section 2 of the Interest Act, 1978(14 of 1978).” (emphasis is ours) It is apparent that Section 31(7)(a) of the Arbitration Act provides for interest, separately for the pre-award period, and independently for the post-award period. The question of determining an alternative rate of interest for the pre-award period has been left to the arbitrator, subject to one condition, namely, that the parties have not accepted an agreed rate of interest, in the contract itself. Insofar as the instant hire purchase agreement, dated 15.04.1997, is concerned, the parties mutually agreed to interest at the rate of 36% per annum. This being the admitted position, we are of the view, that the arbitral award requiring the appellant to pay interest at the rate of 36% per annum, was fully justified, and was in consonance with law.
6. For the reasons recorded above, we also hereby uphold the 5 impugned order passed by the High Court (dated 18.01.2006), setting aside the order of the appellate authority, and restoring the award of the arbitrator, granting interest at the rate of 36% per annum.
7. With reference to the payment of interest after the rendering of the award dated 17.07.1999, we are of the view, that the ends of justice would be met, if the post-award interest is ordered to be paid, at the rate of 18% per annum. Ordered accordingly.
8. Disposed of in the aforesaid terms.
…....................CJI [JAGDISH SINGH KHEHAR] …......................J. [Dr. D.Y. CHANDRACHUD] NEW DELHI; …......................J. APRIL 11, 2017. [SANJAY KISHAN KAUL] 6 ITEM NO.104 COURT NO.1 SECTION IVA S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Civil Appeal No(s). 4753/2007 B. RADHAKRISHNA Appellant(s) VERSUS M/S. MAHARASHTRA APEX CORPORATION LTD. Respondent(s) Date : 11/04/2017 This appeal was called on for hearing today. CORAM :
HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE SANJAY KISHAN KAUL For Appellant(s) Mr. Chinmay Deshpande, Adv.
Mr. Amjid Maqbool, Adv.
for Mr. V. N. Raghupathy,AOR For Respondent(s) Mr. S. N. Bhat,Adv.
Mr. D.P. Chaturvedi, Adv.
UPON hearing the counsel the Court made the following O R D E R The appeal stands disposed of in terms of the signed order.
(Renuka Sadana) (Parveen Kumar)
Assistant Registrar AR-cum-PS
[signed order is placed on the file]