2024 (5) TMI 660 - SC - Indian Laws

Restoration of securities held by the appellant which were allegedly illegally sold by the respondent-firm - HELD THAT - The fact remains that as on 9th May, 2017, the respondent was liable to pay a sum of Rs.21,70,143/- which the respondent has not offered till date. In fact the liability of the respondent to pay the said amount of Rs.21,70,143/- was recognized by the Award made by the Appellate Arbitral Tribunal on 27th September, 2013. Therefore, to put an end to the litigation which started in 2012, considering the present age of the appellant, this is a fit case to exercise Extra Ordinary Jurisdiction of this Court under Article 142 of the Constitution of India. It is proposed to direct the respondent to pay simple interest at the rate of 12% per annum on the amount of Rs.21,70,143/- from 27th September, 2013 which is the date of the Award of the Appellate Arbitral Tribunal. The impugned judgment is modified and it is ordered by directing that the respondent shall pay a sum of Rs.21,70,143/- to the appellant along with simple interest thereon at the rate of 12% per annum with effect from 27th September, 2013 within a period of two months from today. Appeal allowed.

Summary

Issues involved: Arbitration award modification, legality of compound interest and compensation, power of courts to modify award, liability of respondent to pay awarded sum.

Summary:

Arbitration Award Modification:
A Claim Petition was filed by the appellant before the sole arbitrator for restoration of securities allegedly illegally sold by the respondent. The sole arbitrator rejected the claim. An appeal was made to the Appellate Arbitral Tribunal which directed the respondent to credit Rs.21,70,143 to the appellant's account for negligence in breaching NSE regulations.

Legality of Compound Interest and Compensation:
Both parties filed petitions under Section 34 of the Arbitration and Conciliation Act. The appellant's petition was allowed by the Additional District Judge, granting compound interest at 18% per annum and compensation of Rs.10,00,000. The High Court set aside the interest and compensation, stating courts have no power to modify awards.

Power of Courts to Modify Award:
A larger Bench was referred the issue of courts' power to modify awards. The appellant, aged 87, was awarded the sum by the Appellate Arbitral Tribunal. The respondent failed to pay the amount since May 9, 2017.

Liability of Respondent to Pay Awarded Sum:
The Supreme Court exercised its Extraordinary Jurisdiction under Article 142 of the Constitution to direct the respondent to pay the awarded sum of Rs.21,70,143 with simple interest at 12% per annum from September 27, 2013, within two months. The respondent's liability to pay was recognized by the Appellate Arbitral Tribunal's award.

In conclusion, the Court allowed the appeals, directing the respondent to pay the awarded sum with interest, and mentioned the possibility for the respondent to lift the lien for payment to the appellant.