2002 (2) TMI 1332 - SC - Indian Laws

Summary

Issues:
1. Validity of award of interest pendente lite.
2. Application for review under Section 114 of the Code of Civil Procedure.
3. Entitlement to future interest on the decretal amount.
4. Interpretation of the decree and entitlement to interest on the decree.
5. Effect of the order dated 29th October 1990 on the rights of the parties.
6. Application of res judicata in the context of future interest.

Issue 1: Validity of award of interest pendente lite
The dispute centered around the right of the respondent to claim interest, as awarded by the arbitrators. The High Court confirmed the decree with the modification that the interest granted during the pendency of arbitration was deleted. The appellant challenged this decision before the Supreme Court, which rejected the special leave petition. Eventually, the appellant paid the decretal amount to the respondents.

Issue 2: Application for review under Section 114 of the Code of Civil Procedure
The respondents filed an application for review, claiming that the Court had not granted future interest on the decretal amount in the original order. However, the application was dismissed by the Court on the grounds that the order had intentionally chosen not to grant any interest to the respondents on the decretal amount. The respondents did not challenge this decision or prefer an appeal.

Issue 3: Entitlement to future interest on the decretal amount
In execution of the decree, the respondents claimed interest on the decretal amount. The Executing Court dismissed the execution petition, stating that no future interest was payable on the decree, as decided in the order dated 29th October 1990. However, the High Court, in revision, held that the respondents were entitled to claim interest on the decretal amount based on the arbitrators' award and the decree passed in accordance with it.

Issue 4: Interpretation of the decree and entitlement to interest on the decree
The Supreme Court analyzed the interpretation of the decree and the entitlement to interest on the decree. The Court noted that the respondents had proceeded on the understanding that interest was awarded only up to the date of the decree. The Court highlighted that the respondents did not challenge the interpretation of the decree earlier, and the interpretation was considered final inter partes.

Issue 5: Effect of the order dated 29th October 1990 on the rights of the parties
The Court emphasized that the order dated 29th October 1990 had settled the issue of future interest, and the respondents were barred by res judicata from reopening it. The High Court's decision to grant future interest was deemed erroneous, as the interpretation of the decree was already finalized.

Issue 6: Application of res judicata in the context of future interest
The Court held that the respondents' acceptance of the interpretation of the decree and their failure to challenge it or prefer an appeal rendered the interpretation final inter partes. The application of res judicata was crucial in determining the rights of the parties regarding future interest.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's decision, emphasizing the finality of the interpretation of the decree and the application of res judicata in determining the entitlement to future interest.