The Principal Secretary vs. Tejasco Techsoft Private LTD.

Facts

The petitioners, the Principal Secretary and Commissioner of the Department of Health and Family Welfare, Government of Karnataka, are judgment debtors in Commercial Execution Petition No. 30/2023 before the 85th Additional City Civil Court, Bangalore. They filed an application seeking closure of execution proceedings, contending that the arbitral award amount of Rs. 2,41,63,787/- had been fully satisfied. The respondent, Tejasco Techsoft Private Ltd., is the decree holder. The arbitral award dated 26.08.2022 in A.C.No.130/2022 concerned the respondent's claim for interest on a sum of Rs. 6,94,91,490/-. The petitioners argued that the entire award amount, including interest, had been paid. The trial court rejected their application, leading to the present writ petition.

Held

The High Court held that the impugned order of the Commercial Court, which rejected the petitioners' application for closure of execution proceedings, was illegal, arbitrary, and contrary to the material on record. The Court reasoned that a perusal of the arbitral award clearly indicated that the interest at 18% per annum was leviable on the awarded sum of Rs. 1,49,41,622.29/- (which represented interest for the period 23.02.2018 to 09.12.2019) from 10.12.2019 until the date of payment, and not on the principal amount of Rs. 6,94,91,490/-. The petitioners had demonstrably paid the total sum of Rs. 2,41,63,787.81/-, which included the principal interest amount and the subsequent interest calculated as per the award. Therefore, the arbitral award was held to be fully satisfied. The Court set aside the impugned order and directed the Commercial Court to close the execution proceedings. However, all rival contentions in the pending Com.A.S.30/2023 were kept open.

Key Issues

1. Whether the arbitral award dated 26.08.2022 in A.C.No.130/2022 has been fully satisfied by the petitioners, as contended by them, or if there is a remaining amount due to the respondent, as held by the Commercial Court? Petitioner's arguments: The petitioners contended that they had paid a total sum of Rs. 2,41,63,787.81/- to the respondent, which fully satisfied the arbitral award. They argued that the interest at 18% per annum was leviable on the awarded sum of Rs. 1,49,41,622.29/-, not on the principal amount of Rs. 6,94,91,490/-, as determined by the Commercial Court. They relied on the operative portion of the award and paragraphs 23 to 28. Respondent's arguments: The respondent contended that the petitioners were liable to pay interest at 18% per annum from 10.12.2019 till the date of payment on the total amount of Rs. 6,94,91,490/-, not just on the calculated interest amount of Rs. 1,49,41,622.29/-.