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THE ARBITRATION AND CONCILIATION ACT, 1996
The Arbitration Act, 1940
Section 36 in THE ARBITRATION AND CONCILIATION ACT, 1996
Section 33 in The Arbitration Act, 1940
The Code Of Civil Procedure (Amendment) Act, 1956

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Delhi High Court
Global Company vs M/S. National Fertilizers Ltd. on 7 May, 1999
Equivalent citations: 81 (1999) DLT 16, 1999 (49) DRJ 660
Author: . M Sharma
Bench: D M Sharma



ORDER
 

Dr. M.K. Sharma, J.

1. The applicant has filed the present applications under Section 36 of the Arbitration and Conciliation Act read with Order 21 Rule 11 (2) CPC seeking for execution/enforcement of the award passed by the Arbitral Tribunal on 31st December, 1997 awarding an amount of US $ 1,04,000 and interest in Execution Application No.128/1998 and US $ 88,250 in Execution Application No.129/1998. I propose to dispose of both the applications by this common judgment/order.

2. Pursuant to the disputes arising between the parties, the same were referred to the Arbitral Tribunal. Admittedly, the aforesaid arbitration proceedings were governed by the provisions of the Arbitration and Conciliation Act, 1996. The Arbitral Tribunal received evidence and thereafter passed the award on 31st December, 1997 awarding a sum of US $ 1,04,000 in favour of the applicant and against the respondent with interest @ 9% p.a. from 27th December, 1995 till the date of payment or decree, whichever is earlier. In respect of the other arbitration proceedings which are the subject matter of Execution Application No.129/1998, the Arbitral Tribunal awarded a sum of US $ 88,250 in favour of the applicant and against the respondent with interest @ 9% p.a. from 27th December, 1995 till the date of payment or decree whichever is earlier. No objection has been raised by any of the parties to the aforesaid award passed by the Arbitral Tribunal seeking for setting aside the awards. Thus , the aforesaid awards have become final and binding on the parties.

3. In the execution petitions, the applicant has sought for payment of interest @ 9% p.a. from 27th December, 1995 till the date of payment in addition to the principal sum awarded by the Arbitral Tribunal. However, according to the respondent, the applicant is entitled to payment of interest from 27th December, 1995 to 31st March, 1998 i.e. the date on which period of 90 days for filing an application for setting aside the award, expired. According to the respondent, under the provisions of Section 36 of the Arbitration and Conciliation Act a fiction is created to treat the award as if it was a decree by a court. It is submitted that once a statutory fiction is created, an imaginary state of affairs are to be treated as real and all the consequences and incidents must flow as if putative state of affairs in fact existed and that a statutory fiction must be given full effect and taken to logical conclusion. The learned counsel relied upon decision of the Supreme Court in the State of Bombay vs. Pandurang Vinayak & Others . The learned counsel relying on the aforesaid preposition and the decision of the Supreme Court submitted that thus the awards in question are to be treated as decree w.e.f. 31st March, 1998 i.e. after expiry of the statutory period as per Section 34 of the Arbitration and Conciliation act, 1996. Counsel also relied upon the contents of the awards of the Arbitral Tribunal stating that interest @ 9% shall be payable till the date of payment or when a decree is passed whichever is earlier.

4. Although the awards were passed on 31st December, 1997, admittedly payment in terms of the said awards have not been made to the applicant till date. It is stated that since the awards envisage payment to the applicant in US dollars, permission shall have to be obtained from the Reserve Bank of India before such payment could be made to the applicant in foreign currency and so long that permission is not obtained, the respondent could not comply with the award passed by the Arbitral Tribunal. It is, however, contended that in spite of aforesaid position and inability of the respondent to satisfy the decree, no interest could be paid to the applicant after the awards have become decrees by applicability of the legal fiction.

The aforesaid submission of the learned counsel appearing for the respondent is refuted by the counsel appearing for the applicant contending, inter alia, that equitable justice requires that for the period of pendency of the enforcement petition, the executing court could grant interest. Counsel also relies upon the provisions of Section 36 of the Arbitration and Conciliation Act contending that in the present case the award is being sought to be executed treating the same to be a decree in view of the provisions of the Act.

5. I have given my thoughtful consideration to the rival submissions of the learned counsel appearing for the parties. I have also minutely perused the contents of the awards passed by the Arbitral Tribunal in respect of payment of interest. In this connection, reference may be made to the contents of the award of the Arbitral Tribunal as recorded in paragraph No.46. The findings of the Arbitral Tribunal are recorded in the said paragraph in the following manner:-

"We, therefore, hold that the Global Company is entitled to recover the amount of the P.G.Bond of US $ 1,04,000. The Global Company is also entitled to interest at the rate of 9% p.a. as claimed from 27.12.1995 till payment or passing of the decree by the court whichever is earlier."

6. A perusal of the contents of the awards of the Arbitral Tribunal makes it crystal clear that the award with regard to payment of interest was made by the Arbitral Tribunal treating the case to be one under the old Arbitration Act for only under the old Arbitration Act there was provision for making the award a rule of the court and passing of a decree by the court. The language used by the Arbitral Tribunal in the aforesaid part of the awards in the arbitration proceedings makes it crystal clear that the Arbitral Tribunal proceeded to make orders regarding payments of interest treating it to be a case under the old Arbitration Act for the old Arbitration Act also provided power to the court to grant interest from the date of the decree till payment as envisaged under Section 29 of the old Arbitration Act.

7. Counsel for the respondent submitted that although there could be error on the part of the Arbitral Tribunal in passing the aforesaid award that interest shall be payable from 27.12.95 only till 31.3.98 for the executing court cannot re-write the award passed by the arbitral tribunal by allowing payment of interest to the applicant till the date of actual payment. It is true that this court cannot rewrite the award and/ or modify the award of the arbitrator or of the Arbitral Tribunal.

Provisions of Section 33 of the Arbitration and Conciliation Act have also been brought to my notice, which enables a party to seek for correction and / or interpretation of the award when it provides that a party with notice to the other party, may request the Arbitral Tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award. There is also a provision in the same Section that a party , with notice to the other party and if so agreed by the parties, may request the Arbitral Tribunal to give an interpretation of a specific point or part of the award. The Arbitral Tribunal has also been given the power to consider the request for interpretation or correction of typographical error or any other error of similar nature if the same is found to be justified , within 30 days from the date of receipt of request and the said interpretation shall form part of the arbitral award. No such request was made by the applicant although the said remedy was available to the applicant. It is the settled position of law that the executing court has the power and jurisdiction to interpret a decree if the same is found to be vague and uncertain. In this connection , reference may be made to a decision of Supreme Court in Topan Mal Chota Mal vs Kundo Mal Ganga Mal & Others wherein it was held by the Supreme Court that in order to give full effect to the contents of the decree, the court may interpret the decree in order to give full effect to the said decree. However, a specific provision has been incorporated in the new Arbitration and Conciliation Act giving power to the Arbitral Tribunal itself to give interpretation on a specific point or a part of the award and/or to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award. The applicant, if so desired could have sought for and obtained interpretation of the awards and/or could have obtained rectification of mistake or error ,if any, in the awards in terms of Section 31 of the Act . Besides, that part of the awards , appears to be an error or mistake than being vague and uncertain . As no steps were taken by the applicant to proceed under Section 33 of the new Arbitration Act, , therefore, in my considered opinion, this court cannot assume the power and jurisdiction to interpret the award or correct the mistake or error as sought for by the applicant. By legal fiction an award could be enforced as a decree on expiry of a period of 90 days which is the period of limitation prescribed for filing an application for setting aside an award. The awards passed by the Arbitral Tribunal could be enforced immediately thereafter on expiry of the aforesaid period of 90 days. In that view of the matter and in terms of the awards of the Arbitral Tribunal, I hold that interest @ 9% p.a. is payable by the respondent to the applicant w.e.f.27th December, 1995 till 31st March, 1998.

8. Counsel for the respondent states that application for payment of the awarded amount along with interest to the applicant in foreign currency has already been made to the Reserve Bank of India seeking for their permission and that another 15 days time may be given to the respondent to make the said payment, within which period there is likelihood of obtaining such permission. In that view of the matter I grant 15 days' time to the respondent to make payment of the entire awarded amount along with interest, in foreign currency, to the applicant which is also agreed to by the learned counsel appearing for the petitioner. In terms of the aforesaid order, both the execution petitions stand disposed of with costs to the decree holder. Consequently, the OMP seeking for interim order, also stands disposed of.