Supreme Court of India
STATE TRADING CORPORATION OF INDIA LTD. versus M/S GLOBAL STEEL HOLDING LIMITED & ORS. on 6 December 2018
[2018] 14 S.C.R. 1111
STATE TRADING CORPORATION OF INDIA LTD.
v.
M/S GLOBAL STEEL HOLDING LIMITED & ORS.
(Civil Appeal No. 11907 of 2018)
DECEMBER 06, 2018
[ABHAY MANOHAR SAPRE AND INDU MALHOTRA, JJ.]
Constitution of India: Arts 142 and 136 – Extra-ordinaryjurisdiction – Exercise of – Jurisdiction of this Court to decide thelimited issue of payment of interest where award amount has alreadybeen paid – Held: There is no legal impediment in deciding theissue of payment of interest and its rate when the parties haverequested for termination of the proceedings, and outstanding dueshave already been cleared by the respondents-judgment-debtorsduring the pendency of this appeal leaving only a limited issueregarding payment of interest – Issuance of direction to therespondents to pay interest on the principal sum of Rs. 1610 croresto the appellant-decree holder, at the rate of 8% p.a. payable fromthe date it became due – Interest.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11907of 2018.
From the Judgment and Order dated 09.03.2015 of the High Courtof Delhi at New Delhi in Execution Petition No. 337 of 2014.
With
Contempt Petition (C) Nos. 747 of 2017,1058 of 2018 and ContemptPetition (C) D. No. 24803 of 2018.
P. S.Narasimha, ASG, Dushyant Dave, Kapil Sibal, Sr.Advs., UdayGupta, Ms.Shivani Lal, Hiren Dasan, Tarkeshwar Nath, Ms.Priyanka,M. K.Tripathi, Mrs.Sarla Chandra, Amarjeet Singh, Shiv Atangal Sharma,Ms.Binu Tamta, Mrs.Anil Katiyar, Ms.Anshul Sharma, Mohit D. Ram,Gautam Mittra, Pankaj Baghla, Samar Singh Khachawa, Ms. DipaliDwivedi, Risad Medora, Lokesh Chopra, Avishkar Singhvi, Ms.Anju Jain,Hitesh Sachar, Anuj Bhandari, Advs. for the appearing parties.
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AThe Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J.
In S.L.P.(C) No.14585/2015
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1. Leave granted.
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2. This appeal is filed against the final judgment and order dated09.03.2015 passed by the Delhi High Court in Execution Petition No.337of 2014 with EA Nos.697-98 of 2014 and EA Nos.199-200 of 2015whereby the High Court has dismissed the Execution Petition and theaccompanying applications filed by appellant - STC herein on the groundCof lack of jurisdiction.
3. In order to appreciate the controversy involved in this appeal, itis necessary to set out the relevant facts hereinbelow.
4. On 04.04.2005, a tripartite agreement was entered into betweenthe appellant i.e. State Trading Corporation a Government-ownedDCorporation (hereinafter referred to as “STC”), respondent No.1 - M/sGlobal Steel Holding Ltd. (hereinafter referred to as “GSHL”),incorporated in the Isle of Man Channel Islands, and respondent No. 2 -M/s Global Steel Philippines Inc., incorporated in the Philippines(hereinafter referred to as “GSPI”). Respondent No. 3 is Mr. PramodMittal, the Chairman of the respondent nos. 1 and 2 companies, i.e.EGSHL and GSPI. The agreement was for purchase and sale ofcommodities known as - HR Coils and CR Coils.
5. Mr. Dushyant Dave, learned senior counsel appeared for theappellant – STC, while the respondents were represented by Mr. KapilSibal, Senior Advocate along with Mr. Gautam Mittra.F
6. In performance of the agreement, disputes arose between theparties, particularly with respect to the non-payment of outstanding duesto the appellant - STC. The parties, therefore, decided to settle theirdisputes by means of conciliation proceedings with the assistance oftwo Conciliators.G
7. The parties (STC, GSHL and GSPI) entered into a SettlementAgreement under Section 73 of the Arbitration and Conciliation Act,1996 (for short “the Act”) on 15.11.2011. In terms of the SettlementAgreement, the GSHL and GSPI agreed to pay a total amount of US$355,818,019.29 with interest @ 13.25% p.a. by 11.05.2012 as per para H
(D) of the Settlement Agreement to the appellant – STC, and in themanner set out in detail in clauses A to K of the Settlement Agreement.
8. The GSHL and GSPI paid some amounts pursuant to theSettlement Agreement to STC. However, they failed to ensure fullcompliance with the terms of the Settlement Agreement dated 15.11.2011and committed default in paying full payment to appellant - STC.
9. The parties therefore entered into a Further SettlementAgreement dated 17.05.2012 through the intervention of the Conciliators.
10. As per the Further Settlement Agreement dated 17.05.2012,GSHL and GSPI agreed to pay a total amount of US $ 347,737,209.68inclusive of interest at the rate of 13.50 % p.a. (Rs.1605 crores in Indiancurrency) by 10.11.2012 in the manner set out in detail in clauses (i) and(vi) of the agreement to the appellant - STC. Both the SettlementAgreement and the Further Settlement Agreement were executed byrespondent No. 3 - Mr. Pramod Mittal as Chairman of GSHL and GSPI,respectively.
11. As per Clause 12 (iv) of the Further Settlement Agreement(supra), respondent No. 3 - Mr. Pramod Mittal furnished a PersonalGuarantee dated 17.05.2012 wherein he personally guaranteed paymentof the outstanding amount payable by GSHL and GSPI to the appellant– STC in terms of the Settlement Agreement dated 15.11.2011 togetherwith interest @ 13.25% p.a. and Further Settlement Agreement dated17.05.2012. The said respondent undertook to pay the outstanding amount,and stated that the guarantee shall remain valid till the entire outstandingdues of GSHL and GSPI were fully discharged.
12. Since GSHL and GSPI failed to fulfill their complete obligationsunder the Further Settlement Agreement dated 17.05.2012, the appellant- STC herein filed an Execution Petition bearing No.337/2014 in theHigh Court of Delhi on 30.08.2014 against GSHL (R-1), GSPI (R-2)and Mr. Pramod Mittal, Chairman, GSHL(R-3) seeking to execute theSettlement Agreements dated 15.11.2011 and 17.05.2012 against all therespondents for recovery of the balance outstanding amounts due andpayable.
13. The appellant – STC, the decree holder, filed ExecutionApplications Nos. 697/2014 and 199-200/2015. Insofar as applicationNo.697/2014 was concerned, it was filed under Order 21 Rule 11 (2) ofCPC for attachment and sale of all shares and other assets of the A
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Arespondent No.1, with a further prayer for issuance of warrants of arrestagainst the Directors and Principal Officers of respondent Nos.1 and 2till realization of entire dues.
14. The Delhi High Court vide order dated 09.03.2015, dismissedthe Execution Petition along with the accompanying applications on theBground that admittedly none of the judgment-debtors is located withinthe jurisdiction of the Court. The Registered Offices of respondent Nos.1 and 2 were outside India. The Execution Petition could be entertainedby a Court within whose jurisdiction the judgment-debtors, or theirproperties were situated. That since none of them is ordinarily residentwithin the jurisdiction of the Court, the Execution Petition could not beCentertained, and was dismissed with liberty to the decree-holder toapproach the appropriate court for enforcement of the Settlement Awardin accordance with law.
15. Aggrieved by the Order dated 09.03.2015 passed by the DelhiHigh Court, the appellant - STC (Decree Holder) filed the present SpecialDLeave Petition before this Court.
16. During the pendency of the Special Leave Petition, variousOrders were passed from time-to-time directing the respondents to makepayments to STC. The details and break up of payments offered andthen made by the respondents to the appellant - STC on different datesEare mentioned in the Orders dated 19.08.2015, 21.09.2015, 14.12.2015,05.2.2016, 06.02.2017, 10.04.2017, 31.07.2017, 22.03.2018, 15.05.2018,13.08.2018, and 06.09.2018.
17. The Senior Counsel for the respondents, Mr. Kapil Sibalsubmitted that an amount of Rs. 810 crores approximately was paidFtowards the outstanding liability under the two Settlement Agreementsdated 15.11.2011 and 17.05.2012 to the appellant - STC.
18. When the matter was taken up for final hearing, the SeniorCounsel Mr. Kapil Sibal appearing for the respondents offered to depositRs. 800 crores, without prejudice to their right to prosecute the case,Gwithin 4 weeks to show their bona fides to the Court.
19. Accordingly, on 31.10.2018, the following Order was passed:
“Mr. Kapil Sibal, learned senior counsel appearing forrespondent No. 2 in SLP (Civil) No. 14585/2015, during thecourse of hearing, states that without prejudice to the right H
to prosecute the case, they are prepared to deposit the sum ofRs. 800,00,00,000/- (Rupees Eight Hundred Crores) withinthe period of 4 weeks from today.
Let them so deposit.
It is made clear that non-payment of the amount will be viewedseriously.”
20. That on 29.11.2018, the Senior Counsel for the respondentsbrought Demand Drafts for Rs.810 crores in favour of the Decree Holder– STC. The matter was posted for hearing on 04.12.2018.
21. When the matter was taken up for hearing on 04.12.2018, theDemand Drafts for Rs. 800 crores were directed to be handed over tothe Court Master in a sealed envelope.
22. With the payment of Rs. 800 crores on 04.12.2018, therespondents have till date deposited an amount of Rs.1610 croresapproximately in INR in discharge of their liability.
23. As a consequence, the entire liability of the respondents till10.11.2012 would stand discharged.
24. The issue which now only remains for resolution is the interestpayable from 10.11.2012 onwards. The interest payable on theoutstanding amounts was left to be determined by the Court, by thesenior counsel appearing for both the parties.
25. At this juncture, we consider it appropriate to place on recordour appreciation of the valuable assistance provided by both the seniorcounsel, Mr. DA Dave and Mr. Kapil Sibal in enabling the parties toresolve the disputes. The senior counsel addressed the myriad legal issueswhich arose in the case with clarity, persuasiveness, lucidity and industry.
26. Learned senior counsel for the respondents submitted thateven though the question with respect to payment of interest pendentelite, and the rate of interest, was not the subject-matter of the originalproceeding, it was prayed that this Court may give a quietus to the longpendency of this litigation by passing appropriate orders.
27. Both the senior counsel prayed that this Court, in exercise ofits jurisdiction under Articles 136 and 142 of the Constitution, exerciseits extraordinary jurisdiction to determine the amount payable towardsinterest, and the period within which it should be paid.
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A28. Having heard the learned senior counsel for the parties, andon perusal of the record, we are of the considered opinion that it is notnecessary to decide the various legal issues arising in the case whichwere ably presented by both the learned senior counsel in support oftheir case on the question of jurisdiction of the Delhi High Court inentertaining and deciding the Execution Petition filed by the appellant.B
29. Since the parties have requested for termination of theseproceedings finally in this appeal itself, and secondly, the outstandingdues have already been cleared by the respondents during the pendencyof this appeal though late leaving only a limited controversy alive regardingpayment of interest, we are of the considered opinion that there is noClegal impediment in deciding the issue of payment of interest and its ratein this appeal finally to give quietus to this litigation.
30. Having given our anxious consideration to all theaforementioned factors, we are of the view that the respondents areliable to pay Interest on the principal sum of Rs.1610 crores to the appellantDat rate of 8% per annum payable from 10.11.2012, i.e. when the entirepayment became due.
31. We direct that:
(i) The Demand Drafts for Rs. 800 crores (Rupees EightEHundred Crores) furnished by the respondents, be handedover to STC - Decree Holder;
(ii) A lump-sum amount of Rs.600 crores (Rupees Six HundredCrores) worked out on the basis of 8% S.I. per annum(rounded off) be paid by the respondents to the appellanttowards full and final satisfaction of the amounts due underFthe Settlement Agreement dated 15.11.2011, and FurtherSettlement Agreement dated 17.05.2012.
(iii) The amount of Rs.600 crores be paid by the respondents toSTC towards interest in 12 weeks from the date of thisOrder.
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(iv) Upon payment of the said amount by 28.02.2019, all claimsarising out of the two Settlement Agreements (supra), wouldstand finally settled, and put a complete closure to all pendingproceedings of any nature whatsoever, between the parties,wherever filed and/or pending against each other.H
(v) If, however, the amount of Rs. 600 crores awarded towardsinterest is not paid on or before 28.02.2019, it would amountto contempt of the Order passed by this Court, and it wouldbe open to the appellant to take appropriate action againstthe respondents in accordance with law for non-compliance.
32. In light of the foregoing discussion and the directions, the appeal,along with all pending applications, stand disposed of. The contemptpetitions are also disposed of accordingly.
Nidhi Jain
Mattersz disposed of.
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