Arbitration and Conciliation Act 1996 – ss.36, 34 – Arbitral award – Stay on enforcement – Dispute between parties – Invocation of arbitration agreement – Arbitral award passed directing the respondent to pay the appellant certain sum with 9% interest which would be increased to 12% p.a. if not paid within three months and certain amount as costs – Applications u/s.33 for correction of the award by both the parties – Arbitral tribunal dismissed the application filed by the respondent, however allowed the application filed by the appellant – Respondent challenged the arbitral award u/s.34 and moved an application for stay of execution – High Court granted a stay on the execution of the award conditional on the respondent furnishing a bank guarantee – Correctness: Held: Law qua arbitration proceedings, cannot be any different merely because of the status of the respondent as a statutory undertaking – High Court ought not to have based its decision on the condition for the grant of stay on the status of the respondent as a statutory authority – Arbitration Act is a self-contained code, it does not distinguish between governmental and private entities – Hence, the decision of the Court cannot be influenced by the position of the party before it and whether it is a fly-by-night operator – In the absence of any provision of law, it would be inappropriate for courts to apply this standard while adjudicating the conditions upon which a stay of an award may be granted – Similarly, the form of security required to be furnished should not depend on whether a party is a statutory or other governmental body or a private entity – Governmental entities must be treated in a similar fashion to private parties insofar as proceedings under the Arbitration Act are concerned, except where otherwise indicated by law – Parties have entered into commercial transactions with full awareness of the implications of compliance and non-compliance with the concerned contracts and the consequences which would visit them in law – Thus, the submission that the High Court was correct in directing the respondent to furnish bank guarantees in relation to the amount awarded because it is a statutory body, rejected – Under Ord. XLI r.5 CPC, the Court has the power to direct full or part deposit and/or the furnishing of security in respect of the decretal amount–Thus, order of the High Court to be modified – Respondent to deposit an amount quantified at 75% of the decretal amount, inclusive of interest, on or before the stipulated date before the High Court – Conditional on the deposit of the said amount, there shall be a stay on the enforcement of the arbitral award. [Paras 12, 15, 17]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain 2021 SCC OnLine SC 3455. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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