TMI Blog2009 (7) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... ual Sub-Lease dated 4.7.1997. Out of the total consideration, first instalment representing 40% of the consideration was paid by the respondent on 10.4.1997. The second and third instalment of Rs. 65,38,29,000/- each were payable by 31.3.1998 and 31.3.1999 respectively. It was stipulated in the sub-lease that in the event of second and third instalment not being paid by due date, the respondent could pay the same along with interest of 20% per annum, within three months of the due date. It further stipulated that if payment was not made within three months of the due date, the allotment would automatically stand cancelled and in that event 50% of the amount paid upto that date would stand forfeited and the balance 50% would be refunded without interest. The second instalment was paid by the respondent along with the interest for the delayed payment. Ground rent for the period upto 31.3.1998 was also paid by it. 3. Since there was default by the respondent in payment of third instalment, the lease Agreement was cancelled and consequently the appellant, as per terms and conditions of the Agreement, refunded 50% of the total amount paid by the Respondent, amounting to Rs. 76,28,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of the Ld. Counsel for the respondent, that it represented the net principal amount due and payable to the respondent under the award and was the amount which had been deposited with it by the respondent, in terms of the agreement between the parties. It was also made clear by the appellant that deposit was being made without liability on its part, to pay future interest on that amount. The petition filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 was dismissed by this Court vide order dated 20.1.2003. The FAO filed by the appellant against that order having been dismissed by this Court on 9.11.2004, Special Leave Petition was filed before the Hon'ble Supreme Court against that order. After granting Leave to Appeal, the Hon'ble Supreme Court dismissed the Appeal filed by the appellant vide its order dated 12.2.2008, but, reduced the rate of interest, for the pre-award period, from 20% to 18% per annum. Earlier, while granting leave, the Hon'ble Supreme Court had directed the appellant to pay or deposit 50% of the balance decretal amount. Vide order dated 16.9.2006, the Hon'ble Supreme Court clarified that vide its order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own decision in Mathunni Mathai v. Hindustan Organic Chemicals Ltd (1995) 4 SCC 26 and Methraj v. Mst. Bayabai AIR 1970 SC 161, the Hon'ble Supreme Court summarised the legal principles on the subject as under: In view of what has been noticed hereinabove, we hold that the general rule of appropriation of payment towards a decretal amount is that such an amount is to be adjusted firstly strictly in accordance with the directions contained in the decree and in the absence of such direction, adjustments, be made firstly in payment of interest and costs and thereafter in payment of the principal amount. Such a principle is, however, subject to one exception, i.e. that the parties may agree to the adjustment of the payment in any other manner despite the decree. As and when such an agreement is pleaded, the onus of proving is always upon the persons pleading the agreement contrary to the general rule of the terms of the decree schedule. The provisions of Sections 59 and 61 of the Contract Act are applicable in cases where a debtor owes several distinct debts to one person and do not deal with cases in which the principal and interest are due on a single debt. 9. Thus, unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deposit of sum of Rs 89,78,84,930/- towards the principal sum. Admittedly, before withdrawing the aforesaid amount of Rs. 89,78,84,930/-, the respondent did not seek permission of the court to appropriate the sum towards interest. Admittedly, before withdrawing this amount, the respondent did not even intimate either the court or the appellant that it would be appropriating the same towards interest and not towards the principal amount due and payable to it in terms of the award. While withdrawing the amount, the respondent did not even say that it was withdrawing the same without prejudice to its right to appropriate the same towards payment of interest. 11. It has to be kept in mind that on 11.10.2002 when the appellant (Petitioner in OMP) undertook to deposit the principal sum awarded by the Arbitrator as also on 21.10.2002 when it brought to the court a cheque of Rs. 89,78,84,930/- towards payment of principal amount due and payable to the respondent in terms of the award, the objections filed by the appellant against the award were still pending. The Arbitrator had not granted compound interest to the respondent, though, he had awarded heavy interest on the principal su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Here, both the parties were represented by their respective counsels when the appellant undertook to deposit the Principal amount awarded by the Arbitrator . They continued to be represented by their respective lawyers on 21.10.2002, when the appellant brought in the court a cheque for a sum of Rs. 89,78,84,930/- and got it recorded in the proceedings that it was brought towards principal amount due and payable to the respondent in terms of the award and that this was the amount which was deposited by the respondent with it in terms of their agreement. The court specifically recorded that the deposit made by the appellant was without any liability on the part of the appellant to make payment of further interest on the aforesaid amount. When one party takes such an unequivocal stand, while depositing the amount in the court, and this happens in the presence of learned Counsels for the other party, without any protest or reservation by them and is followed by withdrawal of that amount by the respondent, without any permission from the court to appropriate the same towards interest and without even reserving its right to appropriate the same towards interest, it cannot be denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t towards payment of interest. 15. The Ld. Single Judge has directed payment to the respondent in terms of the calculation made by the respondent. The calculation made by the respondent is available on page 227 of the appeal file. We find that not only the calculation is based on appropriation of the amount of Rs. 89,78,84,930/- towards interest, the respondent has also claimed compound interest/interest on interest, though the Arbitrator has not granted compound interest to the respondent. In fact the order of Hon'ble Supreme Court dated 15.09.2006 leaves no doubt that compound interest has not been allowed to the respondent. We therefore are of the view that the calculation made by the respondent is not correct and the appellant cannot be directed to make payment as per this calculation. We have also perused the calculation of the appellant which is available on page 217 of the appeal file. Though we have not gone into the figures arrived at by the appellant, we are in agreement with the basis on which the calculation has been made by the appellant, as we find that the amount of Rs. 89,78,84,930/- has been debited towards the principal sum payable to the respondent and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the payment had been adjusted towards cost and interest and not the principal amount. As against this, in the present case, the respondent did not intimate either the court or the respondent that it would apply the amount deposited by the appellant towards the satisfaction of the interest. Moreover, in the case of ICDS Ltd., the payment was sent by the Judgement Debtor in the absence of the Decree Holder and therefore the Decree Holder had no occasion to object to the payment being made towards discharge of principal sum. On the other hand, in the present case, the deposit was made in the presence of Ld. Counsels for the respondent, without any reservation or objection from them and even while withdrawing the aforesaid amount, the respondent did not intimate either the appellant or the court that it would be applying the same towards payment of interest. 17. For the reasons given in the preceding paragraphs, we set aside the order dated 19.11.2008 passed by Learned Single Judge. A sum of Rs. 50.54 crores has been deposited by the appellant during the pendency of this appeal. The Ld. Single Judge will decide in the light of this judgment, whether any further amount is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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