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2016 DIGILAW 1260 (ORI)

Indian Rare Earths Ltd. v. Unique Builder’s Ltd.

2016-12-21

A.K.RATH

body2016
JUDGMENT : Dr. A.K. Rath, J. This petition challenges the order dated 22.3.2016 passed by the learned Civil Judge (Senior Division), First Court, Cuttack in EXP No.28 of 2004. By the said order, the learned trial court rejected the application of the judgment-debtors-petitioners and held that the decree-holder is entitled to the receive award amount with 15% interest from the date of filing of Misc. Case No.117 of 1983 till the date of award i.e. 19.12.1996. 2. Petitioner no.1, which is a Government Company, entered into a works contract with the opposite party-company for structural steel and cladding work for four bulk warehouses. The work was to be completed within eighteen months from the date of the award of the work order i.e., 14.12.1979. A contract was signed between the parties wherein there was a provision for arbitration in case of dispute that may arise between the parties. Before the work completed, a dispute arose between the parties. On 21.3.1983 the opposite party filed an application under Section 8 of the Arbitration Act, 1940 before the learned Subordinate Judge, Cuttack, which was registered as Misc. Case No.117 of 1983. The matter was referred to a learned retired Judge of this Court for arbitration. On 24.6.1994 the arbitrator entered upon the reference for arbitration. The arbitrator passed the award on 19.12.1996 and directed the petitioner no.1 to pay Rs.19,55,368/- with pendente lite interest @15% per annum from the date of institution of the suit till the date of award. Thereafter the opposite party instituted T.S.No.574 of 1996 in the court of the learned Civil Judge (Senior Division), Cuttack for making the award the Rule of Court. On 29.4.2002, the award was made the Rule of the Court. Assailing the said order, the petitioners filed ARBA No.9 of 2002 before this Court. The opposite party had also filed CRP No.42 of 2002 before this Court against the said order. On 5.8.2005 this Court dismissed both ARBA no.9 of 2002 and CRP No.42 of 2002. The petitioners filed SLP (C) No.23548 of 2005 before the Hon’ble apex Court, which was subsequently converted to C.A.No.3209 of 2007. The opposite party filed SLP(C) No.3113 of 2006 before the Hon’ble apex Court, which was subsequently converted to C.A.No.3210 of 2007. Both the appeals were taken up on 10.3.2015. C.A.No.3209 of 2007 was dismissed for non-prosecution. The petitioners filed SLP (C) No.23548 of 2005 before the Hon’ble apex Court, which was subsequently converted to C.A.No.3209 of 2007. The opposite party filed SLP(C) No.3113 of 2006 before the Hon’ble apex Court, which was subsequently converted to C.A.No.3210 of 2007. Both the appeals were taken up on 10.3.2015. C.A.No.3209 of 2007 was dismissed for non-prosecution. C.A.No.3210 of 2007 was dismissed, thereby order of this Court was confirmed. While dismissing the appeal, the apex Court held as follows: “After giving our anxious consideration in the matter, we do not find any reason to interfere with the impugned order passed by the High Court holding that the grant of 15% pendent elite interest will meet the ends of justice. No direction can be issued for grant of future interest. We do not find any merit in Civil Appeal No.3210 of 2007. The same is, accordingly, dismissed. However, the appellant shall proceed to execute the decree for recovery of the Award amount together with interest as awarded by the Arbitrator.” (emphasis laid) 3. Thereafter the petitioners filed a petition under Order 21 Rule 22 read with Section 47 C.P.C. in Execution Petition No. 28 of 2004. In course of hearing, the petition filed under Order 21 Rule 22 read with Section 47 of C.P.C. was not pressed. A contention was advanced by the judgment-debtors that since the award amount had been paid, they were not liable to pay any interest. The decree-holder, on the other hand, submitted that it was entitled to 15% interest per annum from the date of institution of the suit till the date of award. The learned trial court came to hold that the decree-holder is entitled to receive the award amount with 15% interest from the date of filing of Misc. Case No.117 of 1983 till the date of award i.e., 19.12.1996. . 4. Heard Mr. N.K. Mishra, learned Senior Advocate along with Mr. Nitish Kumar Mishra, learned Advocate for the petitioners and Mr. Y. Das, learned Senior Advocate along with Mr. Somadarshan Mohanty, learned Advocate for the opposite party. 5. Mr. Mishra, learned Senior Advocate for the petitioners submitted that the award was made the Rule of Court. Since the same was challenged by both the parties, the decree could not be executed till it attained finality by the Hon’ble apex Court. The entire award amount has already been paid. Somadarshan Mohanty, learned Advocate for the opposite party. 5. Mr. Mishra, learned Senior Advocate for the petitioners submitted that the award was made the Rule of Court. Since the same was challenged by both the parties, the decree could not be executed till it attained finality by the Hon’ble apex Court. The entire award amount has already been paid. No execution case has been filed after dismissal of the appeal before the Hon’ble apex Court. Misc. Case No. 117 of 1983 filed by the opposite party under Section 8 of the Arbitration Act, 1940 for appointment of Arbitrator can not be construed to be a suit. The learned trial court committed a manifest illegality in construing the same as suit. The proceedings under Section 8 of the Arbitration Act, 1940 cannot be treated as a suit. The arbitrator having entered upon a reference on 24.6.1994 and the parties having appeared in pursuance of notice, the word pendente lite can only suggest the period from the said date till the date of award i.e. 19.12.1996. The adjudication of the claim having been made only in the award dated 19.12.1996, at the most, the pendente lite interest may mean the said interregnum period only. He further submitted that the arbitrator has passed an award directing the petitioners to pay a sum of Rs.19,55,368/- with pendente lite interest at the rate of 15% per annum from the date of institution of the suit till the date of award. There was no suit in the court below. Thus, the petitioners are not liable to pay any interest. He cited the decision in the case of Orissa State Cooperative Marketing Federation Ltd. Vrs. Associated Marketing Co., AIR 1982 ORISSA 1. 6. Per contra, Mr. Y. Das, learned Senior Advocate for the opposite party submitted that the Arbitrator has awarded a sum of Rs.19,55,368/- with pendente lite interest at the rate of 15% per annum from the date of institution of the suit till the date of award. Filing of application under Section 8 of the Arbitration Act before the learned Civil Judge, Cuttack can be construed as the date of filing of the suit. The award amount was not paid. The opposite party challenged the order making the award the Rule of Court before this Court, so also the Hon’ble apex Court. Filing of application under Section 8 of the Arbitration Act before the learned Civil Judge, Cuttack can be construed as the date of filing of the suit. The award amount was not paid. The opposite party challenged the order making the award the Rule of Court before this Court, so also the Hon’ble apex Court. The Hon’ble apex Court in Civil Appeal No.3209 of 2007 held that the opposite party is entitled to 15% pendente lite interest and directed to execute the decree for recovery of the award amount. The learned trial court by a reasoned order held that the opposite party is entitled to receive the awarded amount with 15% interest from the date of filing of Misc. Case No.117 of 1983 till the date of award, i.e., 19.12.1996. He cited the decisions in the case of Puran Ram Vrs. Bhaguram and another, AIR 2008 SC 1960 and Patel Road Ways Ltd. Vrs. Birla Yamaha Ltd, AIR 2000 SC 1461 . 7. Before delving deep into the matter, it is apt to refer the decisions cited at the Bar. In the case of Puran Ram (supra), the Hon’ble Supreme Court held that the High Court ought not to have interfered with the order of the trial court when the order of the trial court was passed on sound consideration of law and facts and when it cannot be said that the order of the trial court was either without jurisdiction or perverse or arbitrary. 8. In Orissa State Cooperative Marketing Federation Ltd., (supra), this Court held that an application under Section 20 of the Arbitration Act, is really not a ‘suit’ though under the rules of procedure prescribed by this Court such applications are treated as suits. The word ‘suit’ has not been defined in the Code of Civil Procedure but the word is a term of art and ordinarily means a proceeding instituted in a Civil Court by the presentation of a plaint. In Patel Roadways Ltd. (supra), the apex Court held that the term “suit” is a generic term taking within its sweep all proceedings initiated by a party for realization of a right vested in him under law. The meaning of the term ‘suit’ also depends on the context of its user which in turn, amongst other things, depends on the Act or the rule in which it is used. 9. The meaning of the term ‘suit’ also depends on the context of its user which in turn, amongst other things, depends on the Act or the rule in which it is used. 9. In view of the authoritative pronouncement of the Hon’ble apex Court in the case of Orissa State Co-operative Marketing Federation Ltd., (supra), the inescapable conclusion is that application under Section 8 of the Arbitration Act can not be construed as suit. 10. The next question arises for consideration as to the award of pendente lite interest. The apex Court in Civil Appeal No.3209 of 2007 did not incline to interfere with the order passed by this Court and held that grant of 15% pendente lite interest will meet the ends of justice. No direction was issued for grant of future interest. Thus the opposite party is entitled to receive 15% pendente lite interest per annum on the award. 11. In view of the discussions made above, the opposite party is entitled to 15% interest on the award from the date of award i.e., 19.12.1996 till the date of payment. The order of the court below is modified accordingly. The petition is disposed of. There shall be no order as to costs.