West Bengal Industrial Development Corporation Ltd. vs Tata Motors Limited

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This is an application filed under Section 36(2) of the Arbitration and Conciliation Act, 1996, by the award-debtor, West Bengal Industrial Development Corporation Ltd. (WBIDC), seeking stay of an arbitral award dated October 30, 2023, passed by a three-member Arbitral Tribunal in favour of Tata Motors Limited for an aggregate sum of Rs. 765.78 crores along with interest at 11% per annum. The disputes arose in connection with allotment of land for setting up a car manufacturing unit. The applicant simultaneously challenged the award under Section 34 of the Arbitration Act and sought unconditional stay on the ground that the award was induced by fraud or corruption.

The applicant alleged post-award discovery of bias on the part of the presiding arbitrator, who was alleged to have attended car-launching programmes of Tata Motors on multiple occasions during the pendency of the arbitration proceedings, despite declaring at the commencement meeting that none of the arbitrators had any interest in or connection with any party. The applicant sought impleadment of the said arbitrator, which was dismissed by the High Court, and a Special Leave Petition against that dismissal was also dismissed by the Supreme Court in August 2025.

The principal question before the Court was whether the applicant could establish a prima facie case of fraud or corruption so as to entitle it to unconditional stay under the proviso to Section 36(3) of the Arbitration and Conciliation Act, 1996, and the extent to which the Court should have regard to the provisions of Order XLI Rule 5 of the Code of Civil Procedure, 1908, when considering a stay of a money award in arbitration proceedings.

Catchwords: arbitration stay of award Section 36 Arbitration and Conciliation Act 1996 money award unconditional stay fraud bias arbitrator impartiality disclosure Section 34 Order XLI Rule 5 CPC land allotment dispute car manufacturing unit