P.K. Singh vs M/S. S.N. Kanungo & Ors

referred to sole arbitration of Mr. O.P. Goel. The

arbitrator made his Award on March 22, 1999 and

directed the Andaman and Nicobar Administration

to pay to the respondent a sum of Rs.2,81,83,305/-

(Rupees two crores eighty one lacs, eighty three

thousand, three hundred and five only) with 12%

interest per annum from the date of withholding of

the amount of Rs.41,42,000/- (Rupees forty one

lacs forty two thousand only) till the date of

payment.

3. Feeling aggrieved, the Union of India, through the

Executive Engineer, Andaman and Nicobar Public 3

Works Department, filed an application under

Section 34 of the Arbitration and Conciliation Act,

1996 on 17th June, 1999 for setting aside the

Award. By judgment dated 29.9.2000 the learned

District Judge, Andaman and Nicobar Island, Port

Blair, dismissed the application with cost of

Rs.500/-. Thereupon, Union of India, through the

Executive Engineer, preferred an appeal, i.e., FAT

No. 4220 of 2001, before the High Court at

Calcutta. The Division Bench of the High Court

dismissed the appeal by judgment dated 26.2.2001.

However, the High Court clarified that the claim No.

4 of the Award dated 22.3.1999 would stand

modified and the respondent-contractor would be

entitled to interest @ 12% per annum from the date

of reference of the dispute to arbitration till the date

of payment of the said amount.

4. Thereafter, the appellant, who is Executive

Engineer, Construction Division II, APWD, South 4

Andaman, addressed a letter to the Superintending

Engineer, Construction Circle No. 1, Andaman

Public Works Department, on 5.3.2001 giving

details of the financial implication of the Award

dated 22.3.1999. The appellant received a letter

dated March 30, 2001 from the Executive Engineer

(PLG), CE's Office, APWD, Port Blair stating that the

principal component of the Award might be released

to the agency, i.e., the respondent herein,

immediately. The appellant thereupon wrote a letter

dated 30.3.2001 to the Chief Engineer, APWD

requesting that the acceptance of the Award should

be communicated with details regarding

amount/principal component to be paid. It was

also mentioned in the said letter that for delay, if

any, in payment of the amount, he would not be

responsible. The appellant thereafter addressed

another letter on the same day to the respondent

requesting it to intimate its acceptance of the Award

amount to Rs.2,81,83,305/- in full and final 5

settlement of its claim. The respondent thereupon

replied by a letter dated 30.3.2001 to the appellant

that it was not willing to accept the amount stated

in the aforesaid letter. The appellant, therefore,

wrote another letter on 30.3.2001 to the respondent

informing that the principal component of the

Award of Rs.2,81,83,305/- would be released on the

same day and requested the respondent to reconcile

with the appellant for mutual understanding about

payment of interest. The respondent wrote a letter

to the appellant on March 31, 2001 mentioning that

it was willing to accept the principal amount of the

Award "at present" but the remaining amount of the

interest etc. should be released within a fortnight.

Thereupon, the appellant addressed a letter dated

2.4.2001 to the Chief Engineer, APWD, Port Blair,

forwarding a copy of the letter received by him from

the respondent and pointed out that the respondent

was unwilling to accept the amount of the Award

without interest. The appellant addressed another 6

letter dated 2.4.2001 to the Chief Engineer

informing him about the changed stand of the

respondent regarding its willingness to accept the

principal component of the Award and requested

him to communicate the decision regarding

payment of interest without further delay.

5. The respondent filed Contempt Application No. 010

of 2001 in the month of April, 2001 under Section

14 of the Contempt of Courts Act, 1971 complaining

about willful and deliberate violation of the

judgment and decree dated February 26, 2001

passed in First Appeal T. No. 4220 of 2001. The

High Court issued notice to the respondent. On

notice being served, the appellant filed a reply

denying that there was willful and deliberate breach

of the decree passed by the court. By impugned

judgment the Division Bench of the High Court at

Calcutta, Circuit Bench at Port Blair, found the

respondent guilty of contempt of court and while 7

accepting the unconditional apology of the

appellant, imposed cost of Rs.200 GSM upon him to

be paid within a week. This judgment has given rise

to the instant appeal.

6. This Court has heard the learned counsel for the

appellant and considered the documents forming

part of the instant appeal.

7. From the facts mentioned above, it is evident that,

after Award of the arbitrator was confirmed by

Division Bench of the Calcutta High Court, the

appellant had made an attempt to adjust the decree

in terms of Order XXI Rule 2 of Code of Civil

Procedure by requesting the respondent to accept

the principal amount and waive the interest

awarded thereon. The contents of the two letters

written by the appellant to the respondent do not

show that any attempt was made by the appellant

to sit in appeal over the judgment of the High Court. 8

Those two letters do not indicate that the appellant

had criticized the High Court for awarding interest

in favour of the respondent. The record would

indicate that within the framework of law, the

appellant had made an attempt to persuade the

respondent to forego claim relating to interest.

Order XXI Rule 2 of Code of Civil Procedure relates

to the payment of amount to a decree holder out of

court and inter alia provides that when any wrong

payment under a decree of any other kind is paid

out of court to the decree holder, the decree holder

has to certify payment made as required by the said

Rule. An agreement, which extinguishes the decree

as such in whole or in part and results in the

satisfaction of the decree in respect of the particular

relief or reliefs granted by the decree, is an

`adjustment' within the meaning of this Rule. It is

open to the parties to enter into a contract or

compromise with reference to their rights under the

decree. If the contract or the compromise amounts 9

to an `adjustment' of the decree, it must be recorded

under this Rule and unless so recorded cannot be

recognized by the executing court. Adjustment is

not the same as satisfaction of the decree but is

some method of settling decree which is not

provided for in the decree itself. The right of the

judgment debtor to make an attempt to adjust the

decree is independent and cannot be treated as

contempt of court. Having regard to the interest of

the department concerned, the appellant had

addressed letters to the respondent to adjust the

Award. The letters for adjustment of Award could

not have been treated as contempt of court within

the meaning of the provisions of the Contempt of

Courts Act, 1971. The tenor of letters do not

indicate that there was any willful disobedience on

the part of the appellant in not complying with the

judgment of the High Court.

10

8. Even if it is assumed for the sake of argument that

writing of the letter dated 30.3.2001 amounts to

contempt, this Court finds that the two letters dated

30.3.2001 and 2.4.2001 addressed by the appellant

to the Chief Engineer, APWD, Port Blair, indicate

that the appellant had taken all possible steps to

comply with the Award confirmed by the High

Court. According to the High Court, asking the

respondent to accept only the principal amount vide

letter dated 30.3.2001 amounts to violation of the

judgment of the High Court. Having held so, the

High Court proceeded to examine the question

whether the violation of judgment of the High Court

would amount to the contempt of court. The High

Court also considered the question whether

violation of judgment by the appellant was willful

and deliberate. The High Court noticed that after

addressing letter dated 30.3.2001, another letter on

the same day was addressed by the appellant

inviting the respondent for negotiation with 11

reference to the rate of interest payable to the

respondent and concluded that even if previous

letter amounted to violation of the judgment of the

court, the appellant did not do so willfully and

deliberately. Though the High Court ostensibly

proceeded to examine the question whether

violation of the judgment of the High Court would

amount to contempt of court, the said question is

neither determined nor answered one way or the

other. The error of law committed by the High

Court is that without answering the question

whether the violation of the judgment amounts to

the contempt of court, the High Court presumed

that the violation of the judgment amounts to

contempt of court and proceeded to examine the

question whether the violation of judgment was

willful or deliberate. After reaching the conclusion

that the violation is neither willful nor deliberate,

the High Court should have at once dropped the

contempt proceedings and could not have accepted 12

the unconditional apology tendered by the appellant

nor could have imposed cost on the appellant. In

any view of the matter, the High Court, after

accepting the unconditional apology tendered by the

appellant, should not have imposed cost on the

appellant for negligence and reckless manner in

which it had allegedly acted in the instant case.

9. Further, the High Court itself came to the

conclusion that a letter being written by the

Executive Engineer would not amount to willful and

deliberate disobedience of the decree of the court.

10. On the facts and in the circumstances of the case,

this Court is of the opinion that the judgment

impugned cannot be sustained and is liable to be

set aside.

11. For the foregoing reasons, the appeal succeeds. The

impugned judgment is set aside. The cost, if any,

recovered from the appellant be refunded to him.

The appeal stands, accordingly, disposed of. 13

12. There shall be no order as to costs.

....................................J. [J.M. Panchal]

....................................J. [Dr. B.S. Chauhan] New Delhi;

February 18, 2010.