On the basis of this judgment, the distinction is that “sum adjudged” may mean the whole amount adjudicated as payable, while “principal sum adjudged” means only the principal amount adjudged, excluding the interest component unless there is a specific legal basis to merge it into principal.
Meaning of “sum adjudged”
The judgment explains this distinction indirectly by comparing Section 34 CPC with Section 31(7) of the Arbitration and Conciliation Act, 1996. It notes that Section 31(7) uses the broader word “sum”, and in Hyder Consulting that expression was understood to include the aggregate amount, namely the award amount plus pre-award interest.
So, sum adjudged is a wider expression. It can comprehend the total amount directed to be paid, including components like pre-award interest, if the statute uses broad language and the scheme permits it.
Meaning of “principal sum adjudged”
By contrast, Section 34 CPC uses the narrower phrase “principal sum adjudged.” The Supreme Court says this departure in language is of “great significance” and shows that under Section 34 the interest is payable only on the principal amount adjudged and not on the interest part of the award.
Thus, principal sum adjudged refers to the core compensation or debt amount found due. It does not automatically include earlier interest merely because that interest is also recoverable.
Why the distinction matters
This distinction matters because it controls the base on which later interest is calculated. If the law speaks of “sum adjudged,” later interest may run on the whole adjudicated amount; but if it speaks of “principal sum adjudged,” later interest runs only on the principal component.
That is why the Court held that post-award or post-decree interest cannot automatically be granted on pre-award interest also. To do that, there must be a specific statute, contract term, or express award granting interest upon interest.
Application in this case
In this case, 12% simple interest was granted for the pre-award period and 15% for the post-award period on the “amount awarded.” The claimant argued that the later 15% should run on both the compensation amount and the earlier 12% interest.
The Court rejected that argument and held that the “amount awarded” in both parts meant the same thing, namely the principal compensation amount of Rs. 21,56,745. Since there was no express direction to grant 15% on the earlier interest also, the later interest had to be confined to the principal amount awarded.
No comments:
Post a Comment