Arbitration and Conciliation Act, 1996: ss. 36 and 9 – Arbitration award – Interference with – On facts, award of Rs 142 cr in favour of the respondent – Challenge to, by the appellant before the High Court u/s. 34 – Same day the appellant filed interim application u/s. 36(2) seeking stay of the arbitral award – Subsequently, the respondent filed an application u/s. 9 seeking orders on the appellant to furnish security against the amount awarded – Thereafter, appellant directed to deposit 10% of the amounts in its bank accounts, at interval of every 15 days – Respondent filing another application seeking directions to the appellant to deposit the awarded amount alongwith interest – Single Judge of the High Court disposed of the application u/s. 9 alongwith the connected interim applications – Single Judge passed another order issuing notice on respondents on the application of the appellant u/s. 36(2) for stay of the award and issued directions that on deposit of the award amount, the enforcement of the award would remain stayed – Interference with – Held: Not called for – No hard and fast rule that an application made earlier in point of time must be heard before an application made later in point of time – Both the applications u/s. 9 filed by the respondent and the application for stay u/s. 36(2) filed by the appellant even though independent applications, relate to the same impugned award – Prima facie, there is an award for a huge amount of Rs. 142 crores against the appellant – Respondent has a strong case for interim relief – No cogent ground made out even prima facie, for interference with the award – High Court acted within the scope of its powers u/s.9 in passing the impugned order.
Dismissing the appeals, the Court
HELD: 1.1 There is no hard and fast rule that an application made earlier in point of time must be heard before an application made later in point of time. Both the applications under Section 9 of the Arbitration and Conciliation Act, 1996 filed by the respondent and the application for stay u/s. 36(2) filed by the appellant relate to the same impugned award. Even though, the applications may be independent applications, there are common factors required to be considered for both the applications of the respondent under Section 9 and the application of the Appellant under Section 36(2). The jurisdiction of this Court under Section
9 is wide. A party may apply to a Court for interim measures before the commencement of Arbitral proceedings, during Arbitral proceedings or at any time after the making of the Arbitral Award, but before it is enforced in accordance with Section 36 of the Arbitration Act. Section 9 expressly empowers the Court to pass orders securing the amount in dispute in the arbitration and/or any interim measure or protection as may appear to the Court to be just and convenient. For grant of interim relief under Section 9, the Court would have to consider the prima facie case, whether the balance of convenience is in favour of interim relief as prayed for being granted and whether the applicant has approached the court with reasonable expedition. In this case, prima facie there is an award for a huge amount of Rs. 142 Crores against the appellant. The respondent has a strong case for interim relief. [Para 21-25][352-A-F]
1.2 The grounds for interference with an award is restricted. Even before this Court, the Appellant has not been able to advert to any cogent and glaring error which goes to the root of the award. The contention of the award being opposed to the public policy of India, is devoid of any particulars whatsoever. [Para 26][352-F-G]
1.3 Under Section 36, where the time for making an application to set aside arbitral award has expired, the award might be enforced in accordance with the provisions of the CPC in the same manner as it were a decree of the Court. Section 36(2) makes it clear that filing an application for setting aside of an award under Section 34 is not to render the award unenforceable, unless the Court expressly grants an order of stay of operation of the arbitral award in accordance with the provisions of subsection (3) of Section 36, on a separate application made for that purpose. Once an application under sub-section (2) of Section 36 is filed for stay of operation of the arbitral award, the Court might subject to such conditions as it may deem fit, grant stay of the operation of such award, for reasons to be recorded in writing. The Court is empowered to impose such conditions as it might deem fit and may grant stay of operation of the award subject to furnishing of security covering entire amount of the award including interest. The proviso to Section 36(3), makes it clear that while considering an application for grant of stay in the case of an arbitral award for payment of money, due regard has to be given to the provisions for grant of stay of a money decree under the provisions of the CPC. The proviso to Section 36(3) further stipulates that where the Court is satisfied that a prima facie case is made out that (a) the arbitration agreement or contract which is the basis of the award or, (b) the making of the award was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge u/s. 34 of the award. [Para 27-30][352-G-H; 353-A-E]
1.4 There is an award of Rs. 142 Crores in favour of the respondent. No cogent ground has been made out even prima facie, for interference with the impugned award. Order 41 Rule 5 of the CPC provides for stay of decree upon furnishing of cash security. The High Court acted within the scope of its powers under Section 9 in passing the impugned judgment and order. Thus, there is no ground at all to interfere. However, the High Court is requested to dispose of the pending applications of the appellant u/s. 34 for setting aside the award as expeditiously as possible. [Para 35-37][355-E-F]
Ajay Singh & Ors. v. Kal Airways Private Limited and Ors. (2017) SCC Online Del 8934; Jagdish Ahuja & Anr. v. Cupino Limited (2020) SCC Online Bom 849; Valentine Maritime Ltd. v. Kreuz Subsea Pte Ltd. & Anr. (2021) SCC Online Bom 75 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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