2008 (8) TMI 1015 - HC - Indian Laws

Summary

Issues Involved:
1. Award of Interest Higher than 18% u/s 31(7)(b) of the Arbitration and Conciliation Act, 1996.
2. Status of the Award as a Decree under CPC.
3. Objections under Section 47 CPC in Execution Proceedings.
4. Application of Usurious Loans Act, 1918.

Summary:

1. Award of Interest Higher than 18% u/s 31(7)(b) of the Arbitration and Conciliation Act, 1996:
The appellants contended that the Arbitrator could not award interest higher than 18% per annum as stipulated in Section 31(7)(b) of the Act. They argued that the Court could invoke Section 31(7)(b) at the execution stage to reduce the interest rate. However, the Court held that Section 31(7)(b) uses the words "unless the award otherwise directs," indicating that the stipulated rate in the Award gains precedence and cannot be interfered with by the Court at the execution stage.

2. Status of the Award as a Decree under CPC:
The appellants argued that the Award, being based on a settlement, did not have the status of a decree under the CPC. They relied on the Supreme Court judgment in Paramjeet Singh Patheja v. ICDS Ltd. However, the Court clarified that the said judgment was specific to the Insolvency Act and did not apply to the Arbitration and Conciliation Act, 1996. The Court emphasized that an arbitral award is enforceable as a decree under the CPC.

3. Objections under Section 47 CPC in Execution Proceedings:
The appellants contended that all objections permissible under Section 47 CPC could be raised in execution proceedings for the enforcement of an award. The Court, however, reiterated that recourse against an arbitral award could only be made by an application for setting aside the award under Section 34 of the Act within the stipulated period. Since no such application was made, the award became enforceable as a decree.

4. Application of Usurious Loans Act, 1918:
The appellants argued that under Section 3 of the Usurious Loans Act, 1918, the Court could declare the interest charged as excessive or the transaction as "substantially unfair." The Court rejected this argument, stating that the Usurious Loans Act applies to suits and not to execution proceedings. Allowing such objections at the execution stage would render every decree vulnerable, which is neither intended nor permissible.

Conclusion:
The Court dismissed the appeals, upholding the learned Single Judge's decision. The objections raised by the appellants were found to be without merit, and the Court emphasized the enforceability of the arbitral award as a decree. The appeals were dismissed with costs of Rs. 20,000/- each, to be paid by the appellants to the respondent within four weeks.