No dual rate of Interest in Arbitration Awards



By Azeez Nazar Sabri

In a recent Judgment Supreme Court has held that the rate of the interest for pre and post award period should be uniform. Court further held that there can’t be a uniform rate of interest for INR and EUR components. Supreme court passed this landmark judgment in the matter of Vedanta Ltd. Vs Shenzen Shandong Nuclear Power Construction Co. Ltd ( SSNCPL). ( SLP (Civil) No. 25819 of 2018).

Facts:
On 22nd May, 2018, the Appellant ( Vendanta Ltd) and respondent (SSNPCL)entered into four inter related contracts for construction of 210 MW Co- Generation Power Plant.  Each of four contracts contained an arbitration clause. Certain disputed arose between the parties, which resulted in the termination of the EPC Contracts by SSNCPL and arbitration was invoked by the respondent (SSNPCL).

The arbitral Tribunal passed a detailed Award dated 09.11.2017, wherein the Tribunal awarded interest on the awarded sum @ 9% from the date of institution of the arbitration proceedings provided the awarded amount is paid/ deposited within 120 days of the award.  Tribunal further awarded post award interest @ 15% till dated of realization of awarded amount if amount is not paid within 120 days. Further tribunal awarded a uniform rate of interest on both the components of Award i.e. the amounts payable in INR and EUR.           
Aggrieved by the said Award Appellant (Vedanta) filed objections under section 34 of the Arbitration and Conciliation Act before Delhi High Court. Objections were rejected by High Court vide its order dated 12.02.2008.
Against the said order of single judge, appellant filed an appeal before a Division Bench of Delhi High Court under section 37 of the said Act. The said appeal was also dismissed on 30.08.2018.
Aggrieved by the judgment of the Division Bench, the Appellant filed SLP. 

Judgment/observations
The dual rate of Interest awarded by Arbitral Tribunal seems to be unjustified. The award of a much higher rate of Interest after 120 days is arbitrary, since the Award debtor is entitled to challenge the award within a maximum period of 120 days as provided by section 34( 3) of the 1996 Arbitration Act. If the award- debtor is made liable to pay a higher rate of interest after 120 days, it would foreclose or seriously affect his statutory right to challenge the Award by filing objections under section 34 of the said Act.

The imposition of a higher rate of interest @ 15% post 120 days is exorbitant, from an economic standpoint, and has no co- relation with the prevailing contemporary international rates of interest. The Award- debtor cannot be subject to a penal rates of Interest, either during the period when he is entitled to exercise the statutory right to challenge the Award, before a Court of law, or later. Furthermore, the arbitral tribunal has not given any reason for imposing a 15% rate of interest post 120 days. 

The award of interest @ 9% on the Euro component of the Claim is unjustified and unwarranted. The levy of such a high rate of interest on a claim made in a foreign currency would result in the Claimant being awarded compensation, contrary to the conditions stipulated in the contract. A uniform rate of interest for INR and EUR would therefore not be justified. The rate of 9% interest on the INR component awarded by the Tribunal will remain undisturbed. However, with respect to the EUR component, the award debtor will be liable to pay interest at the LIBOR rate + 3 percentage points prevailing on the date of the Award. Post award period Interest @ 15% stand deleted.   

Email: azeez_nazar@rediffmail.com


Victim can file an appeal against the acquittal of accused



By Azeez Nazar Sabri

In a far reaching and landmark judgment in the matter of Mallikarjun Kodagali ( Dead) represented through Legal Representatives Versus State of Karnataka & Ors. ( Criminal Appeal Nos. 1281-82 of 2018) Supreme Court has held that victim of a crime has right to appeal against the order of acquittal without apply for leave to appeal against the order of acquittal. 

The appellant ( Kodagali- represented by his legal representatives after his death) was victim of an attack on the night of February, 2009. He lodged a First Information Report ( FIR) with the police and after investigations, necessary proceedings were taken before the District and Sessions Judge, Bagalkot against the accused persons under several sections of the Indian Penal Code (IPC).

The District and Session Judge, Bagalkot acquitted the accused by a judgment and order dated 28th October, 2013.Aggrieved by the order of Session Court Kodagali preferred an appeal in the High Court. The appeal was filed under Section 372 of the Cr.P.C, but the same was dismissed as not maintainable by a judgment and order dated 10th June, 2014. It was held by the High Court that proviso to Section 372 of the Cr. P.C  came into the statute book with effect from 31st December,2009 but the incident had occurred well before that date. Therefore, the appeal was not maintainable. 

Kodagali then preferred another appeal in the High Court being Criminal Appeal No. 100119 of 2014. This appeal was filed under the provisions of Section 378( 4) of the Cr.P.C. By a judgment and order dated 04th July, 2014 the High Court held that the appeal was not maintainable. The view taken by the High Court was on a plain reading of Section 378 (4) of the Cr. P.C, namely that the appeal was not filed in a case instituted upon a complaint before a Magistrate. Thereafter, Kodagali filed appeal in the Supreme Court.
The contention of the victim was that he has been left with no remedy against the acquittal of the accused. His submission was that one of the accused is member of legislative assemble and it is for this reason that the State did not challenge the acquittal. 

The substantial questions before Supreme Court were:
1.       Whether a “Victim” as defined in the Cr.P.C. has a right of appeal in view of the proviso to section 372 of the Cr. P.C against an order of acquittal in a case where the alleged offence took place prior to December, 2009 but the order of acquittal was passed by the Trial Court after 31st December, 2009?

2.       Whether the “Victim” must apply for leave to appeal against the order of acquittal?

The answer to first question is YES. The answer to second question is NO. Meaning thereby the Victim can file an appeal against the acquittal of the accused without seeking leave to appeal.    

Email : azeez_nazar@rediffmail.com

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