H.P.Housing & Urban Devt.Auth.& Anr vs Ranjit Singh Rana

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2751 OF 2012 [ARISING OUT OF S.L.P. (C) NO. 26581 OF 2009]

H.P.HOUSING & URBAN DEVT.AUTH.& ANR. ... APPELLANT(s)

Versus

RANJIT SINGH RANA ... RESPONDENT(s)

J U D G M E N T

R.M. LODHA,J.

Leave granted.

2. Pursuant to the agreement between the parties

being agreement No. 11 of 1989-90 concerning

construction of residential complex at Shimla, certain

disputes arose. As per the terms of the contract, the

Arbitrator was appointed to adjudicate the claims of

the respondent and counter-claims of the appellants.

On August 12, 1998, the Arbitrator passed the award.

Aggrieved thereby, the appellants filed objections

under Section 34(3) of the Arbitrator and Conciliation

Act, 1996 (for short "the Act"). The objections were

accepted by the High Court to the extent that the

reasons were not given by the Arbitrator and,

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accordingly, the matter was sent back to the

Arbitrator for giving reasons in support of the award.

3. After remand, the Arbitrator considered the

matter and passed the award on February 14, 2001.

The appellants filed objections against the award dated

February 14, 2001. They also deposited the entire

amount due under the award before the High Court on May

24, 2001. The objections filed by the appellants were

ultimately rejected by the single Judge of the High

Court on February 26, 2008. Against this order, intra-

court appeal is said to be pending. The respondent,

however, started execution of the Award dated February

14, 2001 by filing Execution Petition on August 12,

2008. The appellants filed objections to the Execution

Petition.

4. The question before the High Court was whether

the respondent was entitled to interest @ 18% p.a.

from the date of the award dated February 14, 2001 till

the date of actual payment to the respondent.

5. The High Court considered the diverse provisions

of the Act including Section 31(7)(a) and (b) of the

Act and few decisions of this Court and ultimately held

that the respondent was entitled to post-award interest

@ 18% p.a. from the date of the award till the date of

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the actual payment. It is this order which is in

appeal before us.

6. There is no dispute that the entire amount due

under the Award dated February 14, 2001 was deposited

by the appellants before the High Court on May 24,

2001. The question that arises for determination

before us is, whether deposit of the entire award

amount by the appellants on May 24, 2001 into the High

Court amounts to payment to the respondent and the

appellants liability to pay interest @ 18% p.a. from

the date of the award ceased from that date.

7. Section 31(7)(a) and (b) of the Act reads as

under:

"31(7) (a) Unless otherwise agreed by the parties, where and in so far 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 eighteen per centum per annum from the date of the award to the date of payment."

8. The above provision has been recently considered

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by this Court in State of Haryana and others vs. S.L.

Arora and Company (2010)3 SCC 690. This Court held as

under:

"........In a nutshell, in regard to pre-award period, interest has to be awarded as specified in the contract and in the absence of contract, as per discretion of the Arbitral Tribunal. On the other hand, in retard to the post-award period, interest is payable as per the discretion of the Arbitral Tribunal and in the absence of exercise of such discretion, at a mandatory statutory rate of 18% per annum."

This Court further observed in para 24.6 as under:

".........but if the award is silent in regard to the interest from the date of award, or does not specify the rate of interest from the date of award, then the party in whose favour an award for money has been made, will be entitled to interest at 18% per annum from the date of award. He may claim the said amount in execution even though there is no reference to any post-award interest in the award. Even if the pre-award interest is at much lower rate, if the award is silent in regard to post-award interest, the claimant will be entitled to post- award interest at the higher rate of 18% per annum.

9. Learned counsel for the parties are ad idem that

the Arbitrator has not exercised any discretion in the

matter pertaining to the interest for the post-award

period. Obviously, in absence thereof, by virtue of

Section 31(7)(b) of the Act, the award would carry

interest @ 18% p.a. from the date of the award till

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the date of payment. Whether May 24, 2001 when the

entire award amount was deposited by the appellants

into the High Court is the date of payment ?

10. Payment is not defined in the Act. The Concise

Oxford English Dictionary (Tenth Edition-revised)

defines 'payment' '1. the action of paying or the

process of being paid. 2. an amount paid or payable'.

Webster Comprehensive Dictionary (International

Edition) Volume two defines 'payment' '1. the act of

paying. 2 Pay; requital; recompense.' The Law Laxicon,

2nd Edition reprint by P. Ramanatha Aiyar, inter alia,

states 'payment is defined to be the act of paying, or

that which is paid; discharge of a debt, obligation or

duty; satisfaction of claim; recompense; the

fulfillment of a promise or the performance of an

agreement; the discharge in money of a sum due.'

11. The word 'payment' may have different meaning in

different context but in the context of Section

37(1)(b); it means extinguishment of liability arising

under the award. It signifies satisfaction of the

award. The deposit of the award amount into the Court

is nothing but a payment to the credit of the decree-

holder. In this view, once the award amount was

deposited by the appellants before the High Court on

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May 24, 2001, the liability of post-award interest from

May 24, 2001 ceased. The High Court, thus, was not

right in directing the appellants to pay the interest @

18% p.a. beyond May 24, 2001.

12. The appeal is, accordingly, allowed in part. The

impugned order of the High Court is modified and it is

directed that the appellants shall be liable to pay

interest @ 18% p.a. for the post-award period from the

date of award until May 24, 2001. After May 24, 2001,

the appellants are not liable to pay any interest on

the award amount under Section 37(1)(b) of the Act.

13. We are informed by Mr. Y. Prabhakara Rao, learned

counsel for the appellants that the amount as per the

impugned order dated March 5, 2009 was deposited by

the appellants which has been withdrawn by the

respondent. In light of this, we observe that the

High Court shall now re-determine the amount due and

payable to the respondent under the award and the post-

award interest as indicated above. The excess amount,

if withdrawn by the respondent shall be refunded to the

appellants within two months of re-determination by

the High Court.

14. No costs.

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.....................J. (R.M. LODHA)

.....................J. (H.L. GOKHALE)

NEW DELHI MARCH 12, 2012.

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