Mohan Lal Kapoor vs Jawahar Lal Kapoor and Another

Sanjiv Khanna, J.—Subject matter of the present execution petition is the compromise award dated 26th May, 2005. As issues with regard to interpretation of the said award arise for consideration, I am reproducing the same for the sake of convenience:

True typed copy of the statement dated 20.5.2005

Statement of shri M.L. Kapoor, Shri Manas Kapoor, W/O Shri Subhash Lal kapoor and Shri J.L. Kapoor.

Parties have arrived at a settlement. Shri M.L. Kapoor and Shri Subhash Lal Kapoor hereby give up and relinquish all their rights, title and interest in the business, properties etc. in dispute including goodwill, etc. in favour of Shri J.L. Kapoor subject to the condition that Shri J.L. Kapoor pays to Shri M.L. Kapoor and Shri Subhash Lal Kapoor a total sum of rupees five crores in the manner as under: Out of the said rupees five crores the share of Shrif M.L. Kapoor will be Rs. 2,69,23,076=00. The share of Shri Subhash Lal Kapoor will be Rs. 2,30,76,923=00. First installment of total amount of rupees one crore shall be paid within twenty days from today. Three crores shall be paid within 120 days thereafter the remaining amount within three months thereafter. In case any installment is not paid in time Shri J.L. Kapoor shall be liable to pay interest at the rate of 18% per annum on the outstanding amount. In case of any document being required to carry out the letter and spirit of this settlement, the parties shall promptly execute the same. Henceforth Shri M.L. Kapoor and Shri Subhash Lal Kapoor cease to have anything to do with the business and properties forming part of these proceedings. Shri Manas Kapoor assures that he is authorized by Shri S.L. Kapoor to arrive at the settlement and to bind him. Award be passed in terms of this statement.

Sd/- Jaspal Singh 20.5.2005 (Sole Arbitrator) Sd/- Sd/- Sd/- Sd/- (J.L. Kapoor) (M.L. Kapoor) (Manas Kapoor) (Bhagat)

The present execution petition has been filed by Mr. M.L. Kapoor, who in terms of the above award was entitled to payment of Rs. 2,69,23,076/-. It is admitted case of the parties that full payment of this amount has been made by Mr. J.L. Kapoor as per details given below:

Sr. Amount of Date of Date when Period Interest Installment Release payment of @ 18% No. (in Rs.) of became due delay claimed payment as per (Days) for delay Mr. M.L. Kapoor (in Rs.) 1. 53,84,615 24.05.06 10.06.05 380 10,08,900 2. 1,61,53,846 13.12.06 08.10.05 430 34,25,509 3. 53,84,616 07.09.07 08.01.06 605 16,06,275 Total 2,69,22,077 60,40,684

Mr. M.L. Kapoor claims interest @ 18% per annum on the ground that Mr. J.L. Kapoor did not pay the installments in time. It is stated that the award itself specifically stipulated that the first installment was to be paid within 20 days from 20th May, 2005 and balance two installments as per amounts specified were to be paid within 120 days thereafter and three months after the second installment respectively. It is accordingly submitted that payment of Rs. 53,84,615/- had become due and payable as per the compromise award of 10th June, 2005, Rs. 1,61,53,846/- became due and payable on 8th October, 2005 and Rs. 53,84,616/- became due and payable on 8th January, 2006. It is admitted case of the parties that the first installment was paid on 24th May, 2006, the second installment was paid on 13th December, 2006 and the third installment was paid on 7th September, 2007.

To decide the controversy, I may note some orders passed by this Court in the present execution petition, which have been accepted by the parties. The first order dated 10th March, 2006 was passed by A.K. Sikri, J. It was contended by Mr. M.L. Kapoor that disputes relating to the company M/s Nawab Auto Engineers Private Limited alone were subject matter of reference and the arbitration award did not cover personal properties of the parties. This contention of Mr. M.L. Kapoor was rejected and it was held that all properties were taken into consideration and were subject matter of the award. The said order noted that the award was passed subsequent to a settlement between the parties and not an award wherein the merits of the rival contentions were taken into consideration. It included properties situated at NOIDA as well as Shankar Market. I may note here that this order was passed in view of the submission made on behalf of Mr. M.L. Kapoor that Mr. J.L. Kapoor had failed to make payment along with interest. The stand taken by Mr. J.L. Kapoor, on the other hand, was that Mr. M.L. Kapoor had failed to execute the documents in respect of the properties at NOIDA and Shanker Market and had wrongly and falsely claimed that only properties of the company were subject matter of the award and therefore payments were not made. I may refer to portions of the order dated 10th March, 2006 and the findings given by the learned Single Judge.

Therefore, this execution petition is filed for enforcement of this part of the Award seeking a direction against Judgment Debtor No. 1 to make this payment along with interest payable under the said settlement and award. Judgment Debtor No. 1 has filed reply to the petition wherein plea taken is that under the said settlement/award, the Decree Holder was also to execute certain documents which decree-holder has not executed. Judgment Debtor No. 1 states that it is willing to make payment in accordance with the said award subject to decree-holder fulfilling his obligation therein.

x x x x

Counsel for Judgment Debtor No. 1, therefore, is right in his submission that the petitioner has to execute necessary documents like relinquishment deed etc. in favour of the respondent No. 1 in order to become entitled to get the amount under the Award. Indubitably the respondent No. 1 had even prepared draft in the sum of Rs. 53,84,615/- on 3.6.2005 being the first instalment, for payment under the settlement. However, decree holder refused to sign the necessary documents.

Contention of learned Counsel for the decree holder is that the disputes referred were only in respect of company and, therefore, neither the learned Arbitrator could enlarge the scope of reference nor was it done. His submission was that the expression that the settlement dated 20.5.2005 whereby the petitioner had relinquished his right, titled and interest in "business, properties etc. in dispute including goodwill" referred to only the business, properties and goodwill of the company in respect of which the disputes were referred. This contention would have merited consideration only if the Arbitrator had proceeded to adjudicate the disputes. However, that did not happen. In stead the parties arrived at settlement. Form the narration of facts disclosed above, it is clear that while settling the matter, parties did not stick to the scope of reference but wanted all the family disputes to be settled including in respect of aforesaid two properties situated at C-24, Sector-VIII Noida, District Gautam Budh Nagar, UP and Flat No. 16, New Central Market, Shankar Market, (Rajiv Chowk), New Delhi. If these two properties are excluded the petitioner and the respondent No. 2 would not have been entitled to the extent of amount settled and disclosed in the settlement dated 20.5.2005. When the learned Arbitrator took up the matter for settlement, parties did not restrict to the scope of settlement to disputes which were subject matter of the reference which is obvious from the facts narrate above. There was no bar in settling all the family disputes including other properties, even when not referred for arbitration.

It is, therefore, not open to the petitioner to contend that he is entitled to the sums under the Award without relinquishing his share in the properties including aforesaid two properties situated at C-24, Sector-VIII Noida, District Gautam Budh Nagar, UP and Flat No. 16, New Central Market, Shankar Market, (Rajiv Chowk), New Delhi. Since he has refused to sign those papers in order to carry out his obligation under the settlement and award, he is not entitled to the amount as claimed at this stage. While directing the judgment debtor No. 1 to make payment to the decree holder of the amount as per the Award on decree holder executing necessary documents.

The aforesaid order dated 10th March, 2006 seriously indicts Mr. M.L. Kapoor for his failure to execute necessary documents like relinquishment deed etc.; in favour of Mr. J.L. Kapoor in order to become entitled to payment under the award. The Court also notices that Mr. J.L. Kapoor had even prepared a bank draft for the first installment and the fact that Mr. M.L. Kapoor had wrongly refused to sign papers and carry out his obligations under the settlement award. Finding has been given in the said order that Mr. M.L. Kapoor was not entitled to the amounts claimed as he himself had refused to carry out his obligations. This order was not appealed against and has become final and was accepted by Mr. M.L. Kapoor.

In the order dated 24th May, 2006, it is recorded that Mr. M.L. Kapoor through his counsel had handed over blank transfer deeds of shares to the counsel appearing for Mr. J.L. Kapoor. He also undertook on the said date to hand over resignation of his daughter along with affidavit that she ceases to be a Director of the company within two weeks thereof. On the said date, payment of Rs. 53,84,615/- was made to the counsel for Mr. M.L. Kapoor. Therefore, till 24th May, 2006, Mr. M.L. Kapoor certainly is not entitled to interest in view of the order dated 10th March, 2006 and the findings given therein. Even otherwise, as per Section 51 of the Contract Act, 1872, when a contract consists of reciprocal promises to be simultaneously performed, no promiser need perform his promise unless the promisee is ready and willing to perform his reciprocal promise. The compromise award specifically recorded that Mr. M.L. Kapoor shall promptly execute documents to carry out letter and spirit of the settlement in respect of the properties. Reference in this regard can also be made to Section 52 of the Indian Contract Act, 1872, which stipulates that reciprocal promises shall be performed as expressed by the contract to be performed in that order and where order is not specifically fixed; they shall be performed in the order which the nature of transaction requires.

Another Single Judge of this Court in his order dated 9th May, 2008 after examining the facts of the case, has held as under:

The order dated 24.05.2006 records that the decree holder had handed over the documents, as required, duly signed by him to the judgment debtor No. 1. Since the payment of the first instalment was itself made on 24.05.2006, there is no question of the payment of interest in respect of the first instalment. However, with regard to the second and third instalments, it is the contention of the learned Counsel for the decree holder that they, also, had become immediately payable on 24.05.2006 and as they were paid subsequently on 13.12.2006 and 07.09.2007, the judgment debtor, as per the terms of the settlement, would be liable to pay interest on the principal amounts due on account of the delayed payments @ 18% per annum. Therefore, the claim with respect to interest for the delayed payments to the extent of Rs 34,25,509/- and Rs 16,06,275/- for the second and third instalments was being claimed.

This order dated 9th May, 2008 has also not been appealed against and has been accepted by Mr. M.L. Kapoor. Thus, till 24th May 2006 the entire lapse and fault lies with Mr. M.L Kapoor and therefore he is not entitled to any interest till that date. On 24th May 2006, the first installment was paid and subsequent installments become payable as per the period stipulated in the settlement award only thereafter and not immediately.

Regarding the second and the third installments as noticed above, Rs. 1,61, 53, 846/- was paid on 13th December, 2006, whereas the first installment was paid on 24th May, 2006. The period of 120 days expired on 24th September, 2006. Similarly, the third installment was paid on 7th September, 2007 and with 24th May, 2006 as the date for payment of the first installment, then in terms of the settlement award, the third installment was due and payable on 24th December, 2006.

I again note the findings against Mr. M.L. Kapoor and his conduct as recorded in the order dated 10th March, 2006. The execution petition itself was dismissed by the said order after recording the findings. After the said order was passed, Mr. M.L. Kapoor filed an application being E.A. No. 606/2006, which is being disposed of by this order on the question of interest and for modification of the order dated 10th March, 2006 as the petition itself was dismissed by the said order. Order sheets reveal that thereafter, Mr. J.L. Kapoor had handed over several other documents which were required to be executed by Mr. M.L. Kapoor and the matter had remained pending in this Court. As immovable properties were involved, documents executed by Mr. M.L. Kapoor also required registration in the office of the Sub-Registrar to confer legal title on Mr. J.L. Kapoor. In fact, it is the case of Mr. J.L. Kapoor that Mr. S.L. Kapoor to whom a sum of Rs. 2,30,76, 923/- was to be paid, had executed necessary documents and payments were made to him within time and there was no dispute and claim for interest. It is submitted that problems arose with Mr. M.L. Kapoor because he refused to firstly execute the documents and thereafter there was always suspicion and doubt whether he would execute further documents, which may be required by the authorities and also get the relinquishment deed etc. registered in the office of the Sub-Registrar. Mr. M.L. Kapoor also raised the issue with regard to his guarantees given to the bank and wanted specific release letters. This resulted in issue of notice to the Manager, ICICI Bank for clarification whether Mr. M.L. Kapoor still continued to be a guarantor.

Order dated 23rd May, 2007 reveals that still some documents were required to be executed by Mr. M.L. Kapoor. I may also note here that Mr. M.L. Kapoor had been writing letters to Tata Motors and claiming that he was a Director of Nawab Auto Engineers Private Limited as he had not been paid full amount of Rs. 2,69,23,076/-. Mr. M.L. Kapoor in the release deed and other documents, which he was ready and willing to sign, wanted a specific clause that the said release deed would become effective upon completion of entire payment in the manner and mode as stated in the agreement, which required payment of the three stipulated installments on or before 10th June, 2005, 10th October, 2005 and 1st January, 2008. Mr. J.L. Kapoor had prepared a draft for Rs. 1,61,53,854/- dated 20th September, 2006 and a copy of the same was sent to Mr. M.L. Kapoor along with the letter dated 23rd September, 2006. It was mentioned in this letter that the covenant in the proposed release deed circulated by the Mr. M.L Kapoor that the same shall be effective in the manner and mode stated therein, was not acceptable to the financial institution and, therefore, should be deleted. This letter was replied by Mr. M.L. Kapoor stating that he was not ready and willing to execute the release deed as he has already executed the relinquishment deed. Mr. J.L. Kapoor thereafter again on 21st November, 2006 had written a letter asking Mr. M.L. Kapoor to accept the second tranche of money and at least sign release deed of one property located at NOIDA but Mr. M.L. Kapoor refused to sign the release deed and insisted on payment of the second installment. It was in these circumstances that E.A. No. 608/2006 was filed by Mr. J.L. Kapoor and upon execution of the release deed in respect of NOIDA property, payment was made on 13th December, 2006. Thus, Mr. J.L Kapoor cannot be blamed and held responsible for the said delay.

It is the case of Mr. J.L. Kapoor that due to these letters he faced considerable difficulty and problems with Tata Motors freezing their accounts etc. The terms of the settlement, award required that "in case of any document being required to carry out the letter and spirit of the settlement, the parties shall promptly execute the same". It is also the case of respondent No. 1 that he had to secure loans and facilities from banks to make the said payments of installment and in view of the stand taken by Mr. M.L. Kapoor, there were difficulties and problems. Keeping all these aspects in mind, I feel that Mr. M.L. Kapoor is not entitled to interest on Rs. 1,61,53,846/- paid to him on 13th December, 2006.

However, there is some delay in payment of the final installment after period of three months from the date of payment of the second installment, which expired on 12th March, 2007. Payment of the third installment of Rs. 53,84,616/- was only made on 7th September, 2007. It appears that during this time the Court had issued several directions to NDMC to ensure that necessary formalities are completed to transfer complete title of the Shankar Market property. With regard to the third installment, Mr. J.L. Kapoor did not prepare any bank draft for payment to Mr. M.L. Kapoor. Moreover, as per the award, the obligation of Mr. M.L. Kapoor was to only execute documents. The entire effort and exercise to get proper title transferred and recorded with NDMC obviously was with and upon Mr. J.L. Kapoor. Mr. M.L. Kapoor cannot be penalized for the delay by NDMC. It also appears that this Court had passed several orders directing the parties to appear before NDMC and there is no allegation that Mr. M.L. Kapoor intentionally or otherwise avoided signing the documents after payment of the second installment. Order dated 23rd May, 2007 reveals that on the said date the Counsel for NDMC had handed over a list of documents that were required to be executed by Mr. M.L Kapoor in favour of Mr. J.L Kapoor for the title to be perfected in favour of the latter and to be filed with the Directorate of Estates. On the said date the counsel for Mr. M.L Kapoor undertook to execute the said documents within one week of the said order.

In these circumstances, I feel that Mr. M.L. Kapoor would be entitled to interest @ 18% per annum as stipulated in the award for the period between 13th March, 2007 and 7th September, 2007 on Rs. 53,84,616/-. After calculation, the aforesaid payment will be made within a period of four weeks from today.

List the execution petition again on 8th September, 2008.