Legal Question in Civil Litigation in India

1> A Civil Suit 222/89 emerged due to dispute between us (a partnership firm), the contractor, and the UP Irrigation Department.

The arbitration was appointed who made their award on 28 May 92.

The award had three basic components �

(1) Release of Bank Guarantees, invoked by the department and subsequently stayed (Rs.2,63,435/=).

(2) Release of funds minus deductions, totaling to = Rs.2,05,668/=.

(3) Interest upto 27 May 92 on amount of withheld bank guarantees as well as on amount of releasable funds calculated to be Rs.43,331/=.

A Total of Rs.5,12,434/=. (2,63,435 + 2,05,668 + 43,331)

(4) It also permitted further interest on Rs.4,69,103/= (Rs.2,63,435/= + 2,05,668/=) @ 6% p.a. from the date of award (28 May 92) to date of payment or decree of award whichever earlier.

Deptt. Challenged the award and on 13 Jan 95, the Civil Judge ordered � �Award dated 28.05.92 is accepted and is made rule of court the Suit is decreed ----- in terms of award which shall be made part of the decree.�

(In the meantime, in 1993, firm closed due to dispute in partnership. In 2000, the firm was dissolved, & I became proprietor with assets and liability).

Deptt. appealed in High Court, Allahabad/Case shifted to Nainital.

On 4 August 2004 � the order was passed as follows �

�By efflux of time, the appeal has been rendered infructuous as stated by learned counsel for the appellants. The appeal is dismissed as such.�

On 26.08.2008

We finally filed for execution claiming �

(1) Release of bank guarantees which were not released so far in absence of clear order from courts. (worth Rs.2,63, 435).

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(2) Release of our money + Interest as calculated by arbitrator.

(Rs.2,05,668 + Rs.43,331)

(3) Payment of further interest @ 6% upto date of the filing execution both on the pending amount plus on the bank guarantees. (Rs.2,63,435 + 2,05,668).

* The OP objected to paying interest on the bank guarantee, even the portion calculated and merged in the amount calculated by arbitrator (Rs.43,331) and any future interest on the releasable cash beyond the date of decree 13 Jan 1995.

We maintained that we have the cost involved on stayed bank guarantee of about 3% p.a. And few Crores worth of property is pledged with bank for want of release order of bank guarantee and hence we should get the interest on bank guarantee as permitted by arbitrator. Execution court summoned bankers and confirmed this issue as well.

The Civil Court Roorkee during execution petition passed an interim order released the bank guarantees in 2009 so as to give us partial relief.

The department went to higher court and practically withdraw their appeal without contesting. Nowhere in the lower court or in high court they objected to payment of interest on the amount of bank guarantees.

We are confused in absence of proper legal advices.

Our question is

Can we get interest on releasable money upto date or upto 2004, and also can we get interest on the bank guarantees as permitted by arbitrator?

The hourable court is asking for any citations to help us beyond the date of decree??

We seek your opinion and citations.

With regards,

Mrs. Anju Kumar

Prop.

New Engineering Enterprises

B-18, Industrial Estate

Roorkee � 247 667 (Uttarakhand)

Mobile Ph. 94-120-71989, 95-4888-6888

Email: [email protected]


Asked on 11/13/09, 6:39 am

1 Answer from Attorneys

RAJIV GUPTA (Cell: +91 9811284735) [email protected]

i need to go through the order and decree passed by the court and only then i would be able to opine whether you are entitled to the interest till the date of the decree or till the realization of decretal amount. prima facie, you are entitled to interest till the date your decretal amount is not realised. however, a conclusive opinion can only be given after going through the relevant documents.

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Answered on 11/13/09, 6:54 am


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