IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.06.2011 CORAM: THE HONOURABLE MRS. JUSTICE R.BANUMATHI AND THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH O.S.A. No.169 of 2011 State of Tamil Nadu, represented by Principal Secretary/ Special Commissioner, Commissionerate of Integrated Child Development Services Department, Tharamani, Chennai – 113. (Cause title accepted vide order of Court dated 25.4.2011 made in M.P.No.1/2011 in OSA.SR.No.100376/2010).. Appellant/Respondent -Vs- MAAN Pharmaceuticals Ltd., 106, Harikrupa Chambers, Near National Chambers, Ashram Road, Ahmedabad, represented by its Director .. Respondent/Applicant Prayer:- Appeal against the order dated 21.9.2010, passed by the learned single Judge of this Court in A.No.6367 of 2009 in E.P.No.189 of 2007. For appellant : Mr.M.Venugopal Addl. Govt. Pleader (CS) For respondent : Mr.K.Vasu Venkat JUDGMENT V. PERIYA KARUPPIAH, J. This appeal is directed against the order passed by the learned single Judge in A.No.6367 of 2009, dated 21.9.2010, an application questioning the order of the learned Master, passed in E.P.No.189 of 2007, dated 11.6.2008. 2. The appellant was the judgment debtor and the respondent before the learned single Judge. The respondent was the Decree holder before the learned Master, seeking to execute the Award passed in his favour. https://hcservices.ecourts.gov.in/hcservices/ 3. The learned single Judge had considered the case of both parties and had interfered with the order passed by the learned Master in directing to deposit a sum of Rs.36,590/- towards the remaining E.P amount in respect of entire amount claimed by the Decree holder. 4. The learned single Judge had decided to interfere with the order of the learned Master by holding that the payment said to have been paid by the judgment debtor on the understanding reached in between them by virtue of a letter dated 18.5.2007 waiving the claim of interest over the award amount was not acted upon and therefore, he had directed the judgment debtor to pay the remaining award amount to the Decree holder. The learned single Judge had also considered that the condition imposed in paying a reduced amount leaving the interest awarded by the Arbitrator was conditional and such a condition was not complied with and therefore, the judgment debtor was liable to pay the entire amount to the Decree holder. The learned single Judge had also found that the payment made outside the Court was not recorded in accordance with Order 21 Rule 2 of the Code of Civil Procedure and therefore the said agreement reached in between the Decree holder and judgment debtor cannot be invoked in the execution proceedings and the defence of judgment debtor was liable to be disallowed. Questioning the order of the learned single Judge, the present appeal has been filed by the judgment debtor. 5. Heard Mr.M.Venugopal, learned Additional Government Pleader (CS) for the appellant/judgment debtor and Mr.Vasu Venkat, learned counsel for the respondent/Decree holder. 6. The learned Additional Government Pleader would submit in his arguments that an Award has been passed upon the disputes had in between the parties on 18.1.2007 and according to the said award, the learned Arbitrator had directed the appellant/judgment debtor to pay a sum of Rs.13,47,035/- (Rupees thirteen lakhs forty seven thousand and thirty five only) to the claimant with interest at 12% p.a on Rs.21,90,244/- from 1.11.2003 till 13.6.2006 and thereafter on the outstanding sum of Rs.13,47,035/- at the same rate from 13.6.2006 till the date of payment and also to pay interest at 11% p.a on Rs.1,05,300/- for the period from 1.11.2004 to 31.3.2006 and also a sum of Rs.96,500/- towards the cost of arbitration and incidental expenses and after the passing of the said award, both parties have negotiated and have come to a settlement on 18.5.2007, by which, the respondent/Decree holder agreed to waive interest and thereby, to accept the payment of Rs.13,47,035/- and the Arbitrator fee of Rs.96,500/- and the said total amount of Rs.14,43,535/- was payable through demand draft on or before 10th June, 2007 and one Mr.Bhat will come and obtain the draft on 10.6.2007. He would further submit that the said waiver of interest by the Decree holder https://hcservices.ecourts.gov.in/hcservices/ would bind upon him since the said substituted agreement for the amount mentioned in the award was not revoked by the Decree holder and the judgment debtor had initiated immediately to honour the said substituted agreement of paying a sum of Rs.14,43,535/-, leaving the interest directed by the Arbitrator, and the Government had passed the Government Order after undergoing various formalities only on 12.7.2007. The amount mentioned in the Government Order was paid by the judgment debtor to the Decree holder on 3.9.2007 and 4.10.2007 respectively to which the Decree holder has issued two receipts after the deducting certain amounts towards tax. He would further submit that the Decree holder did not revoke the said agreement reached in the substituted contract dated 18.5.2007, but had approached the office for the payment on 13.6.2007 and however, he had filed E.P for the collection of the entire amount during the second week of July, 2007. He would further submit that the Government sanctioned the said payment as per Ex.R1, letter dated 18.5.2007 and the same was paid by the judgment debtor to the Decree holder outside the Court even during the pendency of E.P and the Decree holder even though passed two receipts, did not record such payments before the Executing Court nor intimated the Execution Court to record full satisfaction according to the substituted agreement entered in between parties to waive interest from the award amount. He would also submit that the learned Master who tried and enquired the Execution proceedings, after appraising the evidence, had come to the conclusion that the deduction for the transport charges and income tax cannot be sustained, but upheld the subsequent arrangement reached in between the parties and directed the judgment debtor to pay the deducted amounts of a sum of Rs.36,590/- into Court within a time limit and on failure, to attach the properties. He would further submit that the learned single Judge has not considered the correctness of the order passed by the learned Master and had come to the conclusion of directing the judgment debtor to deposit whole award amount invoking the provision under Order 21 Rule 2 CPC which is not applicable to the present case. He would also submit that the finding of the learned single Judge that the substituted agreement waiving the interest payable to the award amount was conditional one and the condition was not complied with by the judgment debtor and therefore, the E.P filed by the Decree holder for the entire award amount is sustainable, cannot be correct. He would further submit that the condition stated in letter dated 18.5.007 has not spoken regarding the forfeiture of the substituted arrangement, in default, of the said condition and no notice was issued by the Decree holder revoking the substituted arrangement in between the parties. Therefore, the substituted arrangement to waive the interest from the award amount alone will sustain and the order passed by the learned Master should have been ordered, sustainable. He would also submit that the Decree holder was estopped from claiming the award amount with interest after agreeing to waive the interest as per his letter. He would further submit that the conduct of the Decree holder is https://hcservices.ecourts.gov.in/hcservices/ curious to note that he did not repudiate substituted agreement by any one of the valid methods. Therefore, he would request the Court to interfere with the order passed by the learned single Judge and thereby to restore the order of the learned Master, and thus the appeal may be allowed. 7. The learned counsel for the respondent would submit in his arguments that any amount paid by the judgment debtor outside the Court shall be recorded as per the provisions of Order 21 Rule 2 CPC and the amount paid by the judgment debtor on 3.9.2007 and 4.10.2007 were not recorded as per the provisions and therefore, it cannot be considered as valid condition to comply with the subsequent agreement reached in between parties through Ex.R1. He would further submit in his arguments that he is claiming only interest payable as per the award amount and it was rightly upheld by the learned single Judge. He would further submit that the stand taken by the learned Master to accept the letter containing the substituted agreement for waiving the interest even if the period mentioned in the agreement cannot be correct as per the judgment of the learned single Judge. He would further submit that the condition to pay the award amount after waiver of interest ordered therein on or before 10.6.2007 was not complied with by the judgment debtor and therefore, the Decree holder was entitled to proceed as per the original award passed in his favour. He would further submit that the payment made by the judgment debtor as per the substituted agreement reached on 18.5.2007 was not immediately paid from the stipulated date on 10.6.2007, but it was paid belatedly on 3.9.2007 and 4.10.2007 respectively. Therefore, he would submit that the Decree holder was entitled to proceed in accordance with the Judgment directing the judgment debtor to pay the interest also. He would also cite a Judgment of the Honourable Apex Court, reported in (2000) 7 SCC 240 between LAKSHMI NARAYANAN VS. S.S.PANDIAN. He would further submit in his arguments that the condition stipulated in the letter dated 18.5.2007 (Ex.R1) was not complied with by the judgment debtor and therefore, the Decree holder is entitled to claim interest which would run to an extent of Rs.7 lakhs and the learned single Judge has rightly considered the construction of the said letter with the condition and had reversed the order passed by the learned Master and therefore, there is no infirmity in the order passed by the learned single Judge. Hence, he would also request the Court to confirm the order passed by the learned single Judge and thereby, to dismiss the appeal. 8. We have given anxious consideration to the arguments advanced on either side. 9. Indisputably, an Award was passed on the disputes had in between the parties and the Arbitrator had directed the judgment debtor to pay the outstanding amount with interest along with costs. The direction given by the Arbitrator in the award is relevant to be https://hcservices.ecourts.gov.in/hcservices/ extracted hereunder for better understanding. "49. In the result there will be an award against the respondent and in favour of the claimant in the following terms: (i) The Respondent shall pay Rs.13,47,035/- (Rupees Thirteen Lakhs Forty Seven Thousand and Thirty Five only) to the claimant with interest at 12% p.a. on Rs.21,90,244/- from 01.11.2003 till 13.06.2006 and thereafter interest at the same rate on Rs.13,47,035/- from 13.06.2006 till date of payment. (ii) the Respondent shall pay to the Claimant interest at 11% on Rs.1,05,300/- for the period from 01.11.2004 to 31.03.2006 and (iii) the respondent shall pay Rs.96,500/- (Rupees Ninety Six Thousand Five Hundred only) towards cost of Arbitral Proceedings and incidental expenses and bear its costs if any" 10. However, no execution proceedings have been filed immediately. It is further admitted by both parties that the Decree holder had agreed to waive interest as ordered by the Arbitrator payable by the judgment debtor. The said agreement reached in between the parties have been condensed in the letter dated 18.5.2007 (Ex.R1). The relevant portion is as follows:- "Ref: D.O. Letter No.8594/SW7(1) 2006-6 dtd. 10.5.2007 from the Secretary to Government, SW & NMP Dept. Chennai-9 for waiver of interest in respect of unused IFA Tablets. Your letter No.ROC.No.11855/IIMI/99 dated 14-05-3007 We are in receipt of your above letter No.11855/IIM/199 dated 14-05-2007 at 12.00 pm for negotiation. We agree to your request for waiver of interest in respect of unused IFA Tablets for maintaining cordial relationship with you subject to the following conditions: We are willing to accept Rs.13,47,035/- and Arbitrator fees of Rs.96,500/- as awarded by him on 18.01.2007. You are requested to pay the above said amount on or before 10th June 2007 by way of Demand https://hcservices.ecourts.gov.in/hcservices/ Draft in favour of Maan Pharmaceuticals Ltd., payable at Ahmedabad Rs.14,43,535/-. Mr.Bhat will call on you to obtain the draft on 10th June 2007. We request you to confirm in writing, reply to this letter on or before 27th May, 2007." 11. As per the letter written by the Decree holder to the judgment debtor, the Decree holder was willing to accept a sum of Rs.13,47,035/- and arbitration fees of Rs.96,500/- as awarded by him on 18.1.2007. The said agreement would go to show that it was entered into between the parties for maintaining cordial relationship in between them. Further, the said agreed amount in lieu of the award amount was requested to have been paid on or before 10.6.2007 by way of demand draft in favour of Decree holder. Even though it was written subject to the following conditions at top, it has been stated that one Mr.Bhat will call on the judgment debtor to obtain draft on 10.6.2007. Admittedly, the said payment has not been made on 10.6.2007. 12. However, the order passed by the learned Master would make it clear that the representative of the decree holder had visited the judgment debtor's office on 13.6.2007 to collect the said agreed amount, but it was replied by the officer in charge that payment would be made as soon as Government would pass the order. Further, the learned Master has also mentioned that the judgment debtor has taken steps to comply with the agreement reached in between them. However, E.P has been filed during the second week of July, 2007 without waiting for such payment and during the pendency of E.P, the amount as agreed in between parties had been paid on 3.9.2007 and 4.10.2007 and appropriate receipts have also been issued by the decree holder in favour of the judgment debtor. No doubt, the said amounts were not paid by the judgment debtor in the E.P., but outside the Court. If any amount has been paid towards the Decree either partly or fully, it is the duty of the Decree holder to certify the same in the E.P before the Court. As per Order 21 Rule 2 CPC, the judgment debtor is given an option to apply for the certificate in the event of the failure of the Decree holder. Fortunately, the payment of the money as per the compromise reached in between the parties was not disputed by the decree holder. Therefore, whenever it is brought to the notice of the Court and it is admitted by the decree holder regarding the payment of money, it is the duty cast upon the decree holder to certify the same. The learned Master had considered the dispute as to the quantum of the award amount, had enquired and found that the subsequent arrangement reached in between the parties on 18.5.2007 through Ex.R1 is binding upon the Decree holder and the deducted amount shall be paid by the judgment debtor to the decree holder. https://hcservices.ecourts.gov.in/hcservices/ 13. According to the learned single Judge, the said payment ought to have been recorded under Order 21 Rule 2 CPC. Otherwise, the subsequent arrangement in beween the parties cannot be considered. On a careful perusal of the provisions of Order 21 Rule 2 CPC, it does not prohibit the recording of the payments made during the pendency of the execution proceedings under Order 21 Rule 1 CPC. Certainly, the payments made by the judgment debtor on 3.9.2007 and 4.10.2007 were during the pendency of the execution proceedings out of Court. There is no dispute that those amounts should be recorded as paid towards the amount payable to the decree holder in E.P. Therefore, there cannot be any bar from recording the payments made by the judgment debtor to the decree holder out of Court by virtue of provisions of Order 21 Rule 2 CPC. The only point that has to be seen is whether the compromise reached in between the parties on 18.5.007 is binding upon the parties and whether the decree holder is entitled to claim the entire award amount even after the waiver of interest made by him in the said letter. The reliance placed by the learned counsel for the respondent in (2000) 7 SCC 240 between LAKSHMI NARAYANAN VS. S.S.PANDIAN, a Judgment of the Honourable Apex Court is in respect of Order 21 Rule 2 CPC. The said provisions were considered by the learned Master and he has given a finding that the subsequent agreement waiving the interest will hold good. However, the learned single Judge had come to the conclusion that the said agreement waiving the interest was dated 18.5.2007 and condition was not complied with and therefore it is not binding upon the parties and therefore the original award amount has to be paid. 14. On a careful perusal of the said letter dated 18.5.2007, we are at loss to find any condition to repudiate the said agreement of payment of award amount leaving the interest, if not paid within the said time limit. 15. We already discussed that the person from the decree holder had visited the judgment debtor's office for the demand draft containing compromise amount on 13.6.2007, which would show that the said waiver of interest by the decree holder/Respondent, was alive even after 10.6.2007. Admittedly, there was no notice issued by the decree holder to the respondent rejecting or repudiating the agreement of waiver of interest reached in between the parties in letter dated 18.5.2007. The E.P was filed for the entire award amount, including interest and it was not laid by the decree holder only for interest as submitted by the learned counsel for the respondent/decree holder. 16. It is curious for us to find that the amount paid on 3.9.2007 and 4.10.2007 during the pendency of the Execution Petition were received by the Decree holder "not under protest". No such endorsement has been made in the said receipts. We happened to see that it has been endorsed "interest was not paid and not as per award amount". Having agreed for the receipt of the award amount https://hcservices.ecourts.gov.in/hcservices/ less interest ordered by the Arbitrator, the decree holder cannot go over to the original right to recover the money under the award when there was no reservation in the letter dated 18.5.2007 (Ex.R1). It is only a substituted agreement without any reservation and therefore the Decree holder is entitled to get the money only in accordance with the letter dated 18.5.2007. 17. Apart from that, we could see that the judgment debtor/Government had acted immediately on the arrangement reached in between the parties through Ex.R1 to issue a Government Order and accordingly, orders have been passed on 12.7.2007 and amounts were paid on 3.9.2007 and 4.10.2007 respectively. After the finding of the learned Master that the amount towards tax and other transport charges were against the agreement reached in between the parties in Ex.R1. The judgment debtor/Government had acted promptly to pay the directed amount of Rs.36,590/- through Government Order dated 7.7.2008. 18. Therefore, we are of the considered view that the order passed by the learned Master was perfectly in order and the interference caused by the learned single Judge is quite contrary to the understanding reached in between the parties. Therefore, we are of the view that the order passed by the learned single Judge is not in accordance with law and therefore it is liable to be interfered and set aside. 19. For the reasons stated by us in the earlier paragraphs, the judgment and decree passed by the learned single Judge is set aside and the order of the learned Master is restored and thus the appeal is allowed. There is no order as to costs. Vks Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar https://hcservices.ecourts.gov.in/hcservices/ To The Sub Assistant Registrar, Original Side, High Court, Madras. + 1 cc to Mr. K. Vasuvenkat, Advocate SR No.35518 + 1 cc to Additional Government Pleader, SR No.35609 VSV(CO) SR/29.6.2011 Judgment in O.S.A. No.169 of 2011 https://hcservices.ecourts.gov.in/hcservices/