Execution cannot alter agreed arbitral interest or entertain Usurious Loans Act objections against an unchallenged award.
An arbitral award on agreed terms that expressly fixes interest cannot have that rate reduced to 18% per annum at the execution stage by resort to Section 31(7)(b) of the Arbitration and Conciliation Act, 1996; that provision applies only where the award is silent on interest, and the execution court cannot reopen the award or substitute a different rate. Objections based on the Usurious Loans Act, 1918 also cannot be raised in execution, because that Act is confined to suits and does not permit a collateral attack on enforcement of an arbitral award. Where no Section 34 challenge is filed in time, the award remains enforceable as a decree under Section 36.
Issues: (i) whether interest stipulated in an arbitral award on agreed terms could be reduced to 18% per annum at the stage of execution by invoking Section 31(7)(b) of the Arbitration and Conciliation Act, 1996; (ii) whether objections based on the Usurious Loans Act, 1918 could be raised in execution to resist enforcement of the award.
Issue (i): whether interest stipulated in an arbitral award on agreed terms could be reduced to 18% per annum at the stage of execution by invoking Section 31(7)(b) of the Arbitration and Conciliation Act, 1996.
Analysis: Section 31(7)(b) operates where the award is silent on interest, because it provides that the sum directed to be paid shall carry interest at 18% per annum unless the award otherwise directs. Where the award expressly stipulates a different rate pursuant to the parties' settlement, that stipulation prevails. The execution court cannot substitute the contractual rate with the statutory rate or reopen the award on that ground. The proper remedy against the award was an application under Section 34 of the Act within the prescribed time.
Conclusion: The objection was rejected and the award could not be reduced to 18% per annum in execution.
Issue (ii): whether objections based on the Usurious Loans Act, 1918 could be raised in execution to resist enforcement of the award.
Analysis: Section 3 of the Usurious Loans Act, 1918 is confined to suits of the kind defined in Section 2(3) of that Act. Execution proceedings to enforce an arbitral award are not a suit, and permitting such a challenge at the execution stage would undermine the finality of the award and the scheme of the Arbitration and Conciliation Act, 1996. Once no challenge under Section 34 was filed within time, the award became enforceable under Section 36 in the same manner as a decree.
Conclusion: The Usurious Loans Act objection was not available in execution and was rejected.
Final Conclusion: The appeals failed because the award on agreed terms remained enforceable as a decree, and the execution court could not go behind it to alter interest or entertain the proposed statutory objections.
Ratio Decidendi: An arbitral award on agreed terms, if not challenged under Section 34 within the prescribed period, must be enforced under Section 36 as a decree, and execution proceedings cannot be used to vary its express terms or raise objections that the governing statute confines to suits or to a direct challenge to the award.