State of JandK vs Raj and Co. and Others

Hasnain Massodi, J.â€"Whether Executing Court would be acting within its jurisdiction while awarding future interest on decretal amount, is a

question that calls for an answer in the present appeal. The background facts need to be noticed in the first place. Respondent is a Construction

Company engaged in execution of construction contracts for the Government and other agencies. The respondents firm was vide allotment No.

71178-20 dated 11.09.1989, allotted contract for Construction of sewerage and Laterals at Brari Nambal, in Srinagar City with an estimated cost

of Rs. 71.79 lacs.

The work in question, though, started and completed half way could not be executed because of law and order situation in the Valley. This gave

rise to a dispute between the parties referred, with the intervention of the court under Section 20 of Jammu and Kashmir Arbitration Act, 1940, to

arbitration of Shri N.A. Gundroo, retired Chief Engineer. The arbitrator rendered award on 26.3.2000. The award was submitted to the Principal

District and Sessions Judge, Srinagar,--the court that initially referred to the arbitration (hereinafter reference court). The arbitrator awarded Rs.

7.745 lacs to the respondents as against a claim of Rs. 43.47 lacs projected by it. The arbitrator also awarded interest on the award amount at the

rate of 12% per annum from March 1997 to October 1999 i.e., the date arbitrator entered reference till the award was made. The arbitrator did

not award interest from the date award was filed till realization of the award amount. The award was made rule of the court vide order dated

24.08.2000 and the decree directed to be prepared accordingly.

The order dated 24-8-2000, was questioned in an appeal being Civil Appeal No. 99/2000. The appeal was allowed vide order dated 28th

May 2005 and the order dated 24-8-2000, set aside. The appellate court remanded the matter to learned Principal District Judge Srinagar, for

fresh consideration in light of observations made in the order. The trial court dealt with the matter afresh and again vide order dated 14.11.2007,

made award rule of the court and directed decree sheet to be prepared accordingly.

The reference court order dated 14.11. 2007, was second time sought to be questioned in an appeal. However as the appeal was time barred,

an application for condonation of delay being COD No. 73/2008 was filed alongside appeal by the present appellant. The Appellate Court took

the view that Section 5 of Jammu and Kashmir Limitation Act 1995, was not applicable in case of an appeal under Section 39 of Jammu and

Kashmir Arbitration Act and accordingly vide order dated 3-5-2008 dismissed the application. Resultantly appeal was also dismissed as time

barred. The order dated 3.5.2008 was questioned in a Special Leave Petition (Civil) before the Hon'ble Supreme Court of India. The appeal did

no succeeded and was dismissed vide order dated 09.10. 2012.

The decree holder-respondent herein, filed an execution petition on 04.12.2007. The decree holder/respondent did not restrict execution

petition to the amount awarded to the arbitrator including interest with effect from 1997 to 1999, but also sought payment of interest (future

interest) with effect from 1999 till the date of realization, least realizing that the trial court while making award rule of the court did not grant any

future interest or post award interest on the award amount.

The appellant/judgment debtor resisted execution petition inter alia on the ground that the decree holder respondent could not claim future/post

award interest as such interest was neither awarded by arbitrator nor by the reference Court. The appellant/judgment debtor insisted that the

Executing Court could not execute the decree to said extent as the reference Court in its wisdom had not award future/post award interest on the

awarded amount. Executing Court was said to have no jurisdiction to go beyond the decree and award an amount, not awarded by the trial court.

The Executing Court vide dated 03.07.2013, recorded disagreement with stand taken by the appellant/judgment debtor and awarded interest on

the award/decretal amount at the rate of 12% till March 2010 and at the rate of 6% till final realization of the award/decretal amount.

Petitioner/respondent before the Executing Court, through medium of instant petition, calls in question Executing Court order dated 03.07.2013,

on the ground that Executing Court was not competent to go beyond decree and award future or post award interest on award/decretal amount,

when such interest was nor directed to be paid by the reference court neither awarded by arbitrator while making the award rule of the court.

The writ petition is opposed on the grounds of maintainability as also that the order called in question is in accordance with law and does not

warrant any interference. The petitioner is said to have disobeyed executing court order without any plausible explanation and therefore not entitled

to the relief sought in the petition. The respondents in their reply have traced repeated failures on part of the appellant to comply with the reference

court order to justify award of future interest.

I have gone through the pleadings and record available on the file. I have heard learned counsel for the parties at length.

The arbitrator as laid down in Irrigation Department Government of Orissa v. G.C. Roy (995) 2 SCC 385 has power to grant interest:

i) From the date of dispute till the date arbitrator entered upon the reference.

ii) For the period commencing from the date of arbitrator entering upon reference till the date of making the award and

iii) For the period commencing from the date of making of the award till the date the award is made rule of the court or till the date of realization,

whichever is earlier.

In the present case, the arbitrator has awarded interest from March 1997 to October 1999 and quantified it as Rs. 2.75 lacs. The period

between March 1997 to October 1999 represents the period with effect from the date arbitrator entered upon the reference till the award was

made. The arbitrator, therefore, did not award any interest from the date of dispute till he entered upon the reference, as also from the date of

award till the award was made rule of the court, or till the date of realization, whichever was earlier.

The respondent had a cause to lay an application under appropriate provision of Jammu and Kashmir Arbitration Act to complain that award

of interest for the period between date dispute arise between the parties and the date arbitrator entered upon reference as also from the date of

award till the award was made rule of the court or till final realization of the award amount whichever was earlier, was unjustifiably denied to it. The

respondent as record would reveal did not file any such application. It instead asked the award to be made rule of the court. The award was made

rule of the court overruling the objections filed by the present petitioner. The petitioner not satisfied with the order dated 24th August 2012,

whereby the award was made rule of the court preferred an appeal. The appeal was allowed, matter remanded to the reference court for fresh

consideration. The award was again made rule of the court vide order dated 14.11.2007. Further challenge to the Order dated 14.11.2007,

before this court and the Apex Court failed. The reference court neither in order dated 24.8.2000 nor in its order dated 24.8.2007, awarded post

award or future interest on the award amount.

The respondent again had a cause to question the order dated 24.8.2000, and order dated 14.8.2007, in appeal on the ground that the

reference court while making award rule of the court had ignored to allow post award/decree or future interest on the award/decretal amount. The

respondent did not file any such appeal against the aforementioned orders. It needs to be pointed out that the reference court would have been

within its powers to allow interest on the award amount from the date of award till the date of final realization of the award/decretal amount and

denial of interest ought to have prompted respondent/decree holder to file an appeal against the order making award rule of the court.

The question arises as to whether the Executing Court against the above backdrop was within its jurisdiction to allow interest on the

award/decretal amount from the date of award till the date of its final realization. The answer is an emphatic No. It is well settled that the Executing

Court cannot go beyond decree or re-write decree for reasons howsoever, valid and convincing. The Executing Court has to execute the decree

as it is without reopening the issues to be dealt with by the trial or reference court. Whether post award interest was to be granted on the award

amount was an issue to be determined by the arbitrator and thereafter by the reference court making award rule of the court and passing decree in

terms of the award. The question therefore, fell outside the domain of the Executing Court. In Coal Linker Vs. Coal India Ltd., , the arbitrator

while passing award granted interest for the period:

i) From the date of dispute till he entered upon the reference.

ii) From the date he entered upon reference till the date of making the award.

The arbitrator did not award interest from the date of award till the award was made rule of the court or till the date of realization. The Executing

Court awarded the interest for the post award period. The court while referring to law laid down in G.C. Roy's case (Supra) as also

Visakhapatnam Municipal Corporation v. K.C. Satyanarayana & Co. (1995) 2 SCC 385, held the Executing Court to have gone beyond its

jurisdiction. The Court held:

Admittedly, in the instant case interest has been granted by the arbitrator in the award for the first two periods. But interest has not been

granted by the arbitrator in the award for the last period. As noted above, the appellant awarded herein, filed an application under Section 17 of

the Act for pronouncing a judgment in terms of the ward. So there is no scope for the executing court to go beyond the award and grant interest

for the post-award period which was not granted in the award. Here the executing court has gone beyond the award and thus had gone beyond its

jurisdiction and passed a decree which thus becomes a nullity.

Similarly the law laid down in State of Orissa Vs. B.N. Agarwalla, etc., ,

The trial/reference court, even where the arbitrator has awarded interest from the date of award till the date of payment, may disallow interest from

the date of decree or determine a different rate at which the interest is to be paid or confirm the grant of interest as awarded in the award. This

would include the power to award interest for the post award period, where no such interest has been awarded by the arbitrator or where the

arbitrator has allowed interest on the awarded amount from the date dispute arose between the parties till the date he entered upon the reference

or from the later date till the award was made.

The Court while making award rule of the court is normally to award interest for future or post award/decree interest till the realization of the

amount. Failure on part of the reference court to award post award/decree interest or future interest may very well be taken as an error in the

decree. The decree holder or the party in whose favour award is rendered and later award is made rule of the court may in such case lay an

application under Section 152 CPC for correction of the decree. The other option available to the court as already pointed out is to make

application in this behalf before the reference court, before award is made rule of the court or file an appeal against the decree on the ground that

the interest has been unjustifiably denied by the reference court.

In the present case, the respondent/decree holder, has availed neither of the remedies available to it under law. The Executing Court, in the

circumstances lacked jurisdiction to go beyond the decree and allow interest on the award amount. The order impugned in the present petition is

therefore without any jurisdiction and liable to be set aside. For the reasons discussed above, the petition is allowed and order dated 24-8-2000,

set aside.