Whether once the scheme has been framed, the Courts below ought to have taken the same into consideration while dealing the objections under Section 34 and dealing with appeal under Section 37 of the Arbitration and Conciliation Act, 1996. ? Sub-section (3) of Section 22 of SICA provides for a specific power in the Board. The said provision contemplates a larger public interest. In the event an arbitral award is held to be outside the purview of sub- section (3) of Section 22 thereof, it may be difficult to frame a scheme or in a given case implement the same under SICA. SICA provides for a time-frame for all the stages of proceedings. Proviso appended thereto assumes significance in this behalf. Parliament presumed that the suspension of an award shall not be for a long period. In a given case, a party to an award may face some hardships owing to its suspension; but in such an event, it would always be open to it to bring the same to the notice of the Board. The Board under sub-section (3) of Section 22 of SICA may pass such an order or may not do so. If an order is passed by the Board, an appeal lies thereagainst. The provisions of SICA, it will bear repetition to state, have been made to seek to achieve a higher goal and, thus, the provisions of SICA would be applicable, despite Section 5 of the 1996 Act. The amount deposited with the Registry of this Court be given to the respondent/Morgan Securities & Credit Pvt. Ltd., with accrued interest.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 650/2016
MODI RUBBER LTD. APPELLANT(S)
VERSUS
MORGAN SECURITIES AND CREDIT PVT. LTD. RESPONDENT(S)
WITH
C.A. NO. 651/2016
O R D E R

  1. Heard learned senior counsel for the parties.
  2. Facts: The appellant approached respondent for grant of Inter
    Corporate Deposit. The respondent agreed to grant Rs.5 crores of
    amount as Inter Corporate Deposit. The respondent agreed to grant
    Rs.5 crore of amount as Inter Corporate Deposit with interest @ 21%
    per annum. Both the parties entered into an agreement dated
    20.03.2001. On the same date the documents like demand promissory
    note, letter of continuity and Inter Corporate Deposit receipt were
    executed in favour of Mr. V.K. Modi and Mr. B.K. Modi who were
    Directors of Modi Rubber Ltd., and they also executed deeds of
    personal guarantee in favour of the respondent. The respondent
    gave cheque of Rs.5 crores dated 20 th
    March, 2001 drawn on Housing
    1

Development Finance Corporation (HDFC) Bank Ltd., New Delhi. As
per agreement this amount was to be repaid within 90 days. The
amount was not paid back in terms of agreement instead letters
dated 17.06.2001 & 19.09.01 were written by Modi Rubber Ltd., for
extension of time for payment of amount. The respondent however
expressed its inability to give further time and asked for refund
of the Inter Corporate Deposit. The respondent thereafter wrote
letters dated 26.7.2001, 19.09.2007, 10.10.2001, 17.10.2001 and
03.12.2001 requesting for refund of amount. The cheques issued by
the appellant initially for repayment of loan were deposited by the
respondent in the account but got dishonoured. The respondent in
terms of the agreement appointed a sole arbitrator and informed the
appellant about the appointment of Arbitrator and filed a claim of
Rs.6,72,63,015/- before the Arbitrator inclusive of the interest
upto the date against the appellant. The appellant took a stand
before the Arbitrator that there was no valid arbitration agreement
between the parties and the appointment of Arbitrator was not
legally valid under the terms of agreement. However, appellant
also staked a counter claim of Rs.50 lakhs against the respondent
as cost of time spent by management and staff on the proceedings
and one crore as damages and loss of goodwill and reputation of the
appellant due to the proceedings initiated by the respondent no.3.
The learned Arbitrator after considering the evidence and
2

documents, passed an award holding that the respondent was entitled
to receive jointly and severally Rs.6,72,63,015/- upto the date of
reference and thereafter the respondent would be entitled to
interest at the contractual rate of 21% per annum from the date of
reference till the date of award and thereafter from the date of
award till payment, simple interest at the rate of 18% per annum
would be payable. However, a concession was given that if the
entire payment was made within 3 months from the date of award, the
rate of interest from the date of award till the date of payment
shall stand reduced to 12% per annum. The appellant, in the
meantime, filed an application before BIFR for declaring it as a
sick company and the proceedings before BIFR were continuing even
after passing of arbitration award.

  1. The question raised is that once the scheme has been framed,
    the Courts below ought to have taken the same into consideration
    while dealing the objections under Section 34 and dealing with
    appeal under Section 37 of the Arbitration and Conciliation Act,
  2. The question has been decided with respect to the award in
    question itself by this Court inter se the parties in Morgan
    Securities & Credit (P) Ltd. v. Modi Rubber Limited, (2006) 12 SCC
    642, in which the award in question has been quoted thus:
    � 45. However, sub-section (1) of Section 22 would be
    attracted only when an award becomes a decree and, thus,
    enforceable in a court of law, albeit in the event a
    proceeding is initiated therefor. In this case, an
    3

objection to the award has been filed. It is, therefore,
yet to become a decree.

  1. The Board, however, has not passed an order under
    sub-section (3) of Section 22 of SICA. The court,
    therefore, must proceed with the objection filed by the
    respondent under Section 34 of the 1996 Act. 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 decree is
    put into execution, sub-section (1) of Section 22 of SICA
    would come in its way from being enforced. The contention
    raised by Mr Sundaram that having regard to the
    provisions of Section 5 of the 1996 Act, the Board would
    have no jurisdiction, therefore, does not seem to have
    any force.
  2. Sub-section (3) of Section 22 of SICA provides for a
    specific power in the Board. The said provision
    contemplates a larger public interest. In the event an
    arbitral award is held to be outside the purview of sub-
    section (3) of Section 22 thereof, it may be difficult to
    frame a scheme or in a given case implement the same
    under SICA. SICA provides for a time-frame for all the
    stages of proceedings. Proviso appended thereto assumes
    significance in this behalf.
  3. Parliament presumed that the suspension of an award
    shall not be for a long period. In a given case, a party
    to an award may face some hardships owing to its
    suspension; but in such an event, it would always be open
    to it to bring the same to the notice of the Board. The
    Board under sub-section (3) of Section 22 of SICA may
    pass such an order or may not do so. If an order is
    passed by the Board, an appeal lies thereagainst. The
    provisions of SICA, it will bear repetition to state,
    have been made to seek to achieve a higher goal and,
    thus, the provisions of SICA would be applicable, despite
    Section 5 of the 1996 Act.�
    This Court has dealt with the similar objections being raised
    now in paragraphs 45, 67, 68 and 69.
    4

The High Court has also made the observations in the same tune
in paragraph 7 of the order.
Thus, we find no merit in these appeals, the same stand
dismissed.

  1. The amount deposited with the Registry of this Court be given
    to the respondent/Morgan Securities & Credit Pvt. Ltd., with
    accrued interest. No costs.
    ………………………J.
    [ARUN MISHRA]
    ………………………J.
    [VINEET SARAN]
    ………………………J.
    [S. RAVINDRA BHAT]
    NEW DELHI;
    OCTOBER 01, 2019.
    5

ITEM NO.1 COURT NO.4 SECTION XIV-A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CIVIL APPEAL NO(S). 650/2016
MODI RUBBER LTD. APPELLANT(S)
VERSUS
MORGAN SECURITIES AND CREDIT PVT. LTD. RESPONDENT(S)
WITH
C.A. NO. 651/2016 (XIV-A)

Date : 01-10-2019 These matters were called on for hearing today.
CORAM :
HON’BLE MR. JUSTICE ARUN MISHRA
HON’BLE MR. JUSTICE VINEET SARAN
HON’BLE MR. JUSTICE S. RAVINDRA BHAT
For Appellant(s) Mr. Rakesh Dwivedi,Sr.Adv.
Mr. Atishi Dipankar, AOR
Mr. Rakesh Dwivedi,Sr.Adv.
Mr. Ajay K. Jain,Adv.
Mr. K.K. Mohan, AOR
Mr. Atanu Mukherjee,Adv.
Mr. Yash Karan Jain,Adv.

For Respondent(s) Mr. Dhruv Mehta,Sr.Adv.
Mr. Abhishek Puri,Adv.
Ms. Aruna Gupta, AOR
Mr. Yasharth Misra,Adv.
Mr. Vinay Juneja,Adv.
Mr. Rajesh Aggarwal, AOR
Mr. Amit Pawan, AOR

6

UPON hearing the counsel the Court made the following
O R D E R
Learned senior counsel appearing for the parties submitted
that they have no objection with respect to hearing of these
matters by this Bench (comprising Arun Mishra, Vineet Saran and S.
Ravindra Bhat, JJ).
Heard the learned counsel for the parties.
The appeals are dismissed in terms of the signed order.
Pending application(s), if any, shall stand disposed of.
(NARENDRA PRASAD) (JAGDISH CHANDER)
COURT MASTER BRANCH OFFICER
(Signed order is placed on the file)
7