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TMI Blog2008 (8) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... aking payment of principal amount or any part thereof, interest at 36 per cent per annum with monthly rests was payable by MLL from the date of default till the date of repayment of the deposit along with interest/overdue interest in full. Clause 5 of the Agreement which provides for interest reads as under: 5. The normal agreed rate of interest for placement of the ICD is 36% p.a., however as a special case the lender is placing the ICD at concessional rate of 21% front ended payable at quarterly rests. In case of delay or default in making payment of principal amount or any part thereof on its due date, the normal rate of interest of 36% p.a. with monthly rests shall be payable by the borrower from the date of default till the date of repayment of the ICD along with interest/overdue interest in full. 3. Appellant No. 2 Sushil Suri and Arun Suri furnished personal guarantees for repayment of the loan. In addition, Blue Coast Hotels Resorts Limited [appellant No. 3 in EFA (OS) No. 19 to 21 of 2006 and the appellant in EFA (OS) No. 4 of 2007] stood surety. 4. The disputes between the parties in relation to the repayment of the loan were referred to the sole arbitration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31(7)(b) of the Act. In other words, even if the parties agreed for a rate of interest higher than 18 per cent, the Court is at the stage of execution entitled to invoke Section 31(7)(b) and direct that the judgment debtors will not pay the interest higher than 18 per cent per annum. It is submitted that since under Section 28(1)(a) the Arbitrator was required to decide the dispute in accordance with the substantive law for the time being in force in India , the award of interest higher than 18 per cent as stipulated in Section 31(7) was liable to be interfered with even at the stage of execution. (b) The Award was not a decree under the CPC particularly since it was an Award made on the basis of a settlement. In other words, an Award by way of consent has an inferior status to that of a decree. It did not have a status higher than an Award for the purposes of Section 30(4) of the Act. (c) All objections permitted to be raised under Section 47 CPC to the execution of a decree were available to be raised in execution proceedings for the enforcement of an award under the Act. (d) under Section 3 of the Usurious Loans Act, 1918 read with Section 2(3) thereof, the Court cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that where the Award stipulates a rate of interest higher than 18 per cent per annum then it can be reduced to 18 per cent per annum by the Court at the stage of execution. Section 31(7)(b) uses the words unless the award otherwise directs. It can only mean that what is stipulated in the Award gains precedence and that the Court cannot interfere. If the Award grants a different rate of interest, then there is no question of court awarding interest at 18 per cent per annum. It is only where the Award is silent that the court can possibly invoke this clause. 14. In support of the proposition that the Award was not a decree in terms of the CPC and, therefore, could be interfered with even at the stage of execution, the learned Senior Counsel for the appellant placed considerable reliance upon the judgment of the Supreme Court in Paramjeet Singh Patheja v. ICDS Ltd. (2006) 13 SCC 322. The question that arose in the said case was whether for the purposes of the Section 9 of the Presidency Towns Insolvency Act, 1909 (`Insolvency Act'), an arbitration award could be construed to be a decree? In the said case the appellant was a guarantor of dues owed by the company which was regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Section 17 of the Arbitration Act of 1940), could be enforced, i.e. executed in the same manner as a decree. For this limited purpose of enforcement, the provisions of CPC were made available for realizing the money awarded. However, the award remained an award and did not become a decree either as defined in the CPC and much less so far the purposes of an entirely different statute such as the Insolvency Act. We therefore do not see how the judgment in Paramjeet Patheja helps the appellant. 16. In Morgan Securities Credit (P) Ltd. v. Modi Rubber Ltd. (2006) 12 SCC 642, the question was whether the Arbitration Conciliation Act, 1996 could prevail over the provisions of the SICA. That question was answered in the negative. In that case, the BIFR had not yet passed an order under Section 22(3) SICA and, therefore, it was held that the Court before whom the suit had been filed, had to proceed with the objection filed by the respondent in Section 34 of the Act. The Court added: (SCC p. 665 @ para 67) However, if the objection filed by the respondent is rejected, the question of its enforceability would come into being. Once the arbitral award having the force of a decre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest. It was further submitted that the ground on which the court could have interfered in execution was that under Section 3 of the Usurious Loans Act, 1918 read with Section 2, interest awarded should be held to be substantially unfair . 20. In the first place, it must be mentioned that Section 3 of the Usurious Loans Act is explicit that the provisions will apply to a suit which has been defined in Section 2(3) of that statute as under: 2. Definitions. (1) to (2) xxx xxx xxx (3) Suit to which this Act applies means any suit ___ (a) for the recovery of a loan made after the commencement of this Act; or (b) for the enforcement of any security taken or any agreement, whether by way of settlement of account or otherwise, made, after the commencement of this Act, in respect of any loan made either before or after the commencement of this Act; or (c) for the redemption of any security given after the commencement of this Act in respect of any loan made either before or after the commencement of this Act. 21. This court is not inclined to hold that the word suit includes execution proceedings and that even at the stage of execution, notwithstanding the decree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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