Delhi High Court
Ece Industries vs Delhi Power Supply Co on 28 April, 2025
Author: Jasmeet Singh
Bench: Jasmeet Singh
`
$~13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 28.04.2025
+ EX.P. 47/2004 &EX.APPL.(OS) 9/2025
ECE INDUSTRIES .....Decree Holder
Through: Mr. Rohit Mahajan, Adv.
versus
DELHI POWER SUPPLY CO. .....Judgement Debtor
Through: Mr. Shreesh Pathak, Adv. for R-1 & 2.
Mr. Sunil Fernandes, Sr. Adv. for
BSESwith Ms. Diksha Dadu & Ms.
Simran Khorana, Advs. for R-3 and 4.
Mr. Gauav Gupta, Sr. Manager (C).
Mr. Meet Malhotra, Sr. Adv. with Mr.
P. Deepshah, Mr. Kartik Sharma, Ms.
Palar, Mr. Ravi Shankar & Mr.
Harshvender, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
: JASMEET SINGH, J (ORAL)
1. This is a petition filed under Section 36 of the Arbitration and Conciliation Act, 1996, seeking enforcement of the Arbitral Award dated 09.04.2002 in the matter of arbitration between E.C.E Industries and Delhi Vidyut Board.
2. The Execution petition has been pending in this Court for the last 21 years.
Digitally Signed EX.P. 47/2004 Page 1 of 15By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 `
3. The Arbitral Award has awarded the following sums in favour of the decree holder:
4. AboutRs.2.01 crores have been paid by judgment debtors nos.1 and 2.
5. When the matter came up for hearing before this Court on 16.11.2022, this Court recorded as under:
"1. The award under execution dated 09.04.2002 was Digitally Signed EX.P. 47/2004 Page 2 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` passed in arbitration between the decree holder- ECE Industries, and Delhi Vidyut Board ["DVB"]. The award was in the sum of Rs 1,40,18,612.84/- alongwith interest @18% p.a. from the date payment became due until the date of payment.
2. A difficulty in the execution of the award has arisen due to the subsequent transfer of the undertaking of DVB to the judgment debtor Nos. 3, 4 and 5. Judgment debtor Nos. 3 and 4 were impleaded by an order of the Court dated 02.04.2007, and the judgment debtor No.5 was impleaded by an order dated 17.11.2017. The order dated 17.11.2017 was affirmed by the Division Bench vide an order dated 18.04.2018 in EFA(OS) 4/2018, albeit with the clarification that the liability of judgment debtor No. 5 is a question for consideration in these execution proceedings.
3. By a subsequent order dated 11.04.2019, the Court directed the parties to file calculation sheets and submissions as to which of the judgment debtors would be liable to clear the decretal dues of the decree holder. Parties were thereafter referred to mediation but the mediation was unsuccessful. The order dated 11.04.2019, however, has not been complied with.
4. The judgement debtor Nos. 3, 4 and 5 do not dispute that they would be liable to the decree holder for the debts of DVB, but join issue as to the allocation of the liability amongst themselves. It is also their contention that the Digitally Signed EX.P. 47/2004 Page 3 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` decretal dues have, in fact, been paid in full. Before dealing with the question of allocation of liability between the judgment debtor Nos. 3, 4 and 5, it is, therefore, necessary to determine the amount still due under the award. For this purpose, the decree holder is directed to file within two weeks, a computation of the amount which it still claims as due and payable under the award.
5. As far as the allocation of the liability between the judgment debtor Nos. 3, 4 and 5 are concerned, they are directed to work out an arrangement amongst themselves. The decree holder's dues ought not be held up by the executing court, resolving conflicts between the judgment debtors as to their inter se allocation of liability.
6. They are also directed to place on record documents in support of their contention that the decretal dues have been settled in full, and will also place on record the manner in which the decretal dues would be satisfied by them, subject to any adjustment which may be required between them in independent proceedings. Affidavits be filed within four weeks.
......"
6. The said order has not been challenged and has attained finality.
7. For the said reasons, it is clear that it is judgment debtors no.3, 4 and 5 who have to pay the balance amount, if any, due under the arbitral award.
8. Subsequently, this Court vide order dated 30.11.2023 recorded as Digitally Signed EX.P. 47/2004 Page 4 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` under:
"2. At this stage, learned counsels for the parties propose that a chartered accountant be appointed in the matter who shall look into the calculations of both the sides and propose the name of Mr. Ujjwal Agrawal, Chartered Accountant. Leamed counsels for the judgment debtors submit that fee ofthe Chartered Accountant so appointed be fixed at Rs. 1 lakh, which shall be paid by the judgement debtors subject to further orders.
3. Accordingly, in view of the joint request, Mr. Ujjwal Agrawal is appointed as Chartered Accountant in the matter, whose details are as follows:-
M/s Ujjwal Agrawal & Co.
198/15, Ramesh Market, East ofKailash, New Delhi -110065.
Mobile No. 9810324726, 011-43305777 Mail: ujjwal@ujjwalagrawal. Com
4. Let the parties appear before Mr. Agrawal at the first instance on 16.12.2023. The Chartered Accountant shall file his report before the next date of hearing"
9. Pursuant to the said order, the Chartered Accountant appointed by this Court, with consent of parties on 30.11.2023, gave his report on 11.08.2024. It would be relevant to point out certain portions of the report and the same is reproduced below:
"I. Executive Summary Digitally Signed EX.P. 47/2004 Page 5 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` This report presents two independent calculations of the total amount related to the dispute between the DISCOMs and ECE Industries Limited (the Decree Holder) as of July 31, 2024. The results from these calculations indicate differing outcomes: one shows the amount payable byDISCOMs to ECE Industries, while the other suggests theamount receivable by DISCOMs fromECEIndustries.
The calculations are conducted in accordance with the directives of the Delhi High Court, which appointed M/s Ujjwal Agrawal & Co, Chartered Accountants, to address ambiguities in the interest calculations related to outstanding dues.
....
Key Findings:
1. Calculation 1 (Table 1): The total amount payable by DISCOMs is INR 1,72,19,568. This calculation includes the principal amount of INR 1,13,23,676 and accruedinterest of INR 2,60,54,363, offset by payments totalling INR 2,01,58,471.
2.Calculation2(Table 2): Another interpretation suggestsa different approach to calculating the amount payable, leading to a balance amount of INR 1,03,41,739 payableby ECE Industries TO DISCOMs. This interpretation considers the INR 50,41,000 (amount kept under abeyance starting from a later stage, resulting in a Digitally Signed EX.P. 47/2004 Page 6 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` different total."
10. Thereafter, the Chartered Accountant provided two options in his report, being, Table 1 and Table 2, which reads as under:
Digitally Signed EX.P. 47/2004 Page 7 of 15By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` Digitally Signed EX.P. 47/2004 Page 8 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 `
11. As per the Table 1, the amount due and payable by judgment debtor nos.3, 4 and 5 comes to Rs.1,72,19,568/- and as per Table 2, the amount due and payable by the decree holder to judgment debtor nos.3, 4 and 5 is Rs.1,03,41,739/- The difference in the amount(s) is primarily on the interest component of Rs.50,41,000/-, which was kept in abeyance from the date of Award.
12. The decree holder as well as the judgment debtors no.3, 4 and 5 have filed their objections to the report of the Chartered Accountant.The primary objection of the judgment debtor nos.3, 4 and 5 to the report of the Chartered Accountant is:-
"D. Misapplication of Interest Period: The imposition of 18% interest on Rs. 50,41,000/- (Fifty Lacs Forty-One Thousand only) from 01.08.1997 is in direct conflict with the arbitration award dated 09.04.2002. The award explicitly states that the amount would become due "after 180 days of the award if the respondent does not opt for arbitration concerning POs other than TE- 922, 923, and 928."
Moreover, the Ld. CA overlooked the specific language of the arbitral award dated 09.04.2002, where the Ld. Arbitrator awarded interest related to items No. 4 & 4a from 180 days after the award if the parties did not pursue further dispute resolution. It is critical to recognize that the obligation to pay Rs. 50,41,000/- (Fifty Lacs Forty-One Thousand only) arose after the respondents did not initiate separate arbitration within 180 days of the award date, i.e., 09.04.2002. It is unfathomable that interest could start accruing from 1997 Digitally Signed EX.P. 47/2004 Page 9 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` when the principal only became payable after the 180-day period elapsed. Interest should only accrue once the principal is due and remains unpaid. The Ld. CA failed to recognize this key point and went beyond the terms of the award while calculating the amounts in Table No. 1. The Ld. CA wrongly calculated interest starting from 01.08.1997 without any documentary support, making the calculation under Table No. 1 unreliable and subject to rejection. The Ld. CA should have exercised greater care and based the calculation on the directions set forth in the award and the guidance from the Hon'ble High Court, resulting in a more accurate conclusion when preparing Table No. 2."
13. I am unable to agree with the objections of the judgment debtor nos.3, 4 and 5.
14. Their objections is that the pre-award interest on Rs.50,41,000/- would start from 180 days after the date of the Award dated 09.04.2002.
15. The summary of the Award clearly shows that the amount of Rs.50,41,000/- has been directed to be kept in abeyance under two heads, namely:
S. No. Heading Amount due
1. Late repair of transformers against other Rs. 21,30,000/-
POs
2. For supply of deficient transformers Rs. 29,11,000/-
against other POs
16. The judgment debtor(s) were permitted to initiate arbitration Digitally Signed EX.P. 47/2004 Page 10 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` proceedings within 180 days of the award to quantify the said amount, which could have been to their entitlement on account of repair of transformers not done by the decree holders and for deficient transformers supplied by the decree holder.
17. Admittedly, the judgment debtor(s) did not initiate any arbitration proceedings to crystallise the amount which could have been due and payable to them out of the said amount of Rs.50,41,000/-
18. In this regard, the reasoning has been given by the learned Arbitrator at para 11.6.1 and para 11.6.3 of the Arbitral Award, which reads as under:
"11.6.1 Transformers yet to be repaired Replacement of four transformers supplied by the Claimant for purchase order not referred to arbitration is a clear liability. 4 such transformers are yet to be repaired 2-630 kVA and 2-1000 kVA. I hold that the respondent is entitled to withhold an amount of Rs. 13,99,852 being the 100 percent cost of these transformers till new ones replace them. On receipt of the replacements the payments shall be released with interest and the defective transformers returned.
......
11.6.3 Supply of deficient transformers The liability towards supply of deficient transformers against purchase orders other than those referred to arbitration is a delicate task in the absence of data produced. It is however true that levying penalty on all the transformers supplied since 1981 against large I number Digitally Signed EX.P. 47/2004 Page 11 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` of purchase orders on the basis of sample checking of transformers conducted now is stretching the imagination of rather too far. This is more so because in the absence of records it is not even known if the provision of maximum current density of 2.5 Amps per square mm. exists in all the old purchase orders not referred to arbitration and as even the purchase order details against which many of the transformers have been supplied are not available. No appreciable notice was given to the Claimant for the large amount of counter claim before the arbitration started. The counterclaim is also not supported by proper documentation.
A definite claim has however been raised for Rs. 56.81 lakhs based on the checking done by the committee as mentioned above and the details are on record. Out of this, an amount of Rs. 27.70 lakhs has been awarded against the purchase orders referred to arbitration. I therefore hold that the balance amount of Rs. 29.11 lakhs with interest be kept in abeyance under the same conditions as in the case of clause 11.6.2 above.
The total amount to be kept in abeyance pending proper assessment of liability of the Claimant shall therefore 21.30 + 29.11 = 50.41 lakhs with interest."
19. A combined reading of the said shows that Rs.50,41,000/- was due and payable to the decree holder as on the date of the award, but was kept in Digitally Signed EX.P. 47/2004 Page 12 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` abeyance for the judgment debtor(s) to crystallise their entitlement and thereafter, set off their entitlement from the said amount of Rs.50,41,000/-. No proceedings were initiated by judgment debtor (s) to crystallise their entitlement on account of late repair of transformers and towards supply of deficient transformers.
20. It is not the case that the amount of Rs.50,41,000/- was not the entitlement of the decree holder at the date of passing of the award.
21. For the said reasons, Table 1 of the Chartered Accountant is accepted and it is directed that the amount of Rs.1,72,19,568/- till 31.07.2024 is due and payable to the decree holder and shall be paid.
22. In case, the amount of Rs.1,72,19,568/- is paid within four weeks from today, Mr. Mahajan, learned counsel states that he shall not claim any interest on this amount from 31.07.2024 till date. However, in case, the amount is not paid, further interest will be claimed.
23. As regards, the entitlement as to who is to make the payment, the judgment debtors no.1 and 2 have filed an affidavit dated 22.11.2006, wherein it has been stated as under:
"4. Vide order dt. 16.10.06 the Hon'ble Court was pleased to direct that
(a) Judgement debtors to make a complete disclosure as to the A companies whom distribution transformers which are the subject matter of the Arbitration proceedings were transferred pursuant to the Transfer Scheme of July 2002.
(b) The judgement debtors also to disclose the date on which such transfer of the distribution transformers were effected and also the companies to whom the liability in respect of these distribution Digitally Signed EX.P. 47/2004 Page 13 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39 ` transformers has been transferred.
5. In answer to the above said directions it is humbly submitted that
a) The transfer scheme came into effect on 1st July 2002, the date of transfer.
b) The complete details of GP failed transformers and its transfer to the Distribution Companies are as under:
S. S. No. of Capacity of PO Order Location No Transformer Transformer 1 84108 630KVA TE-928/ 587 Prem Nagar No. 2 dt. 16.9.96 (Central Circle) (BSES Yamuna Power Ltd).
2 84275 400KVA TE-92 ChameliDevi
3/ 682 Mandir (East
dt. Circle)(BSES
27.9.96 Yamuna Power
Ltd).
3 84266 400KVA TE-923/ 682 West Circle
dt.27.9.96 (BSES Rajdhani
PowerLtd).
4 84164 630KVA TE-928/ 587 West Circle
dt. (BSESRajdhani
16.9.96 PowerLtd).
5 67053 1000KVA TE-629/ 273 South Circle
dt. (BSES
9.5.89 Rajdhani
Power Ltd).
6 67207 2000KVA TE-629/ 273 East Circle
dt. (BSES Yamuna
29.5.89 PowerLtd).
7 75827 630KVA TE-772/ 158 West Circle
dt. (BSES Rajdhani
7.5.92 PowerLtd).
8 74621 630KVA TE-660/A/ West Circle
1717dt. (BSES Rajdhani
Digitally Signed EX.P. 47/2004 Page 14 of 15
By:DEEPANSHU MALASI
Signing Date:09.05.2025
11:20:39
`
14.02.91 Power Ltd).
9 84145 630KVA TE-928/ West Circle
587 dt. (BSES Rajdhani
16.9.96 Power Ltd).
10 84125 630KVA TE-928/ West Circle
587 dt. (BSES Rajdhani
16.9.96 Power Ltd).
24. A perusal of the same shows that all the transformers-in-question were within the custody and control of judgment debtor nos.3 and 4. i.e. BSES Yamuna Power Limited and BSES Rajdhani Power Limited. Hence, the liability to pay the said amount is of judgment debtor nos.3 and 4.
25. In case, judgment debtor nos. 3 and 4 are of the view that there are amounts which are to be paid by judgment debtor nos. 5 as well, they are entitled to initiate appropriate legal proceedings in this regard, in accordance with law, against judgment debtor no.5.
26. With these observations, the petition is disposed of.
JASMEET SINGH, J APRIL 28, 2025/pk (Corrected and released on 05.05.2025) Click here to check corrigendum, if any Digitally Signed EX.P. 47/2004 Page 15 of 15 By:DEEPANSHU MALASI Signing Date:09.05.2025 11:20:39