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2022 (9) TMI 894 - SC - Indian LawsValidity of Arbitral Award - seeking grant of stay of Award - section 36 of Arbitration and Conciliation Act, 1996 - seeking to furnish security against the amount awarded by the Arbitral Tribunal u/s 9 of the Act - HELD THAT - 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 - Section 9 of the Arbitration Act confers wide power on the Court to pass orders securing the amount in dispute in arbitration, whether before the commencement of the Arbitral proceedings, during the Arbitral proceedings or at any time after making of the arbitral award, but before its enforcement in accordance with Section 36 of the Arbitration Act. All that the Court is required to see is, whether the applicant for interim measure has a good 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. It is not in dispute that 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. There are no ground at all to interfere. The Appeals are dismissed - the High Court is requested to dispose of the pending applications of the Appellant under Section 34 for setting aside the award as expeditiously as possible, preferably within 3 months from the date of communication of this judgment and order.
Issues Involved:
1. Challenge to the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. 2. Application for stay of the arbitral award under Section 36(2) of the Arbitration Act. 3. Application for interim relief under Section 9 of the Arbitration Act. 4. Jurisdiction and powers of the Court under Sections 9 and 36 of the Arbitration Act. 5. Principles guiding the grant of interim relief and stay of arbitral awards. Detailed Analysis: 1. Challenge to the Arbitral Award: The Appellant, a Chinese entity, was awarded contracts for coal-based power projects in India, with the Respondent, an Indian company, as a subcontractor. Disputes led to arbitration, culminating in an award of approximately Rs. 142 Crores in favor of the Respondent on 17th October 2017. The Appellant challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, by filing O.M.P. (COMM) No. 432 of 2017 in the Delhi High Court on 3rd December 2017. 2. Application for Stay of the Arbitral Award: Simultaneously, the Appellant filed an interim application under Section 36(2) of the Arbitration Act seeking a stay of the arbitral award. The High Court directed that the enforcement of the award would remain stayed upon the Appellant depositing Rs. 142 Crores. 3. Application for Interim Relief: The Respondent filed an application under Section 9 of the Arbitration Act, seeking orders for the Appellant to furnish security against the awarded amount. The High Court issued notices and directed the Appellant to disclose its assets and deposit 10% of the amount in its bank accounts. 4. Jurisdiction and Powers of the Court: The Court has broad jurisdiction under Section 9 to pass orders securing the amount in dispute in arbitration. Section 36(2) states that filing an application to set aside the award does not render it unenforceable unless the Court grants a stay. Section 36(3) allows the Court to impose conditions for the stay, including the deposit of the awarded amount. 5. Principles Guiding Interim Relief and Stay: The Court must consider the prima facie case, balance of convenience, and whether the applicant approached the Court with reasonable expedition. The High Court found a strong prima facie case for the Respondent, given the award of Rs. 142 Crores. The Court emphasized that the grounds for interference with an award are restricted and that no cogent error was demonstrated by the Appellant. Judgment: The Supreme Court upheld the High Court's decision, emphasizing that the High Court acted within its powers under Section 9 in securing the awarded amount. The Court noted that the Appellant failed to demonstrate any prima facie grounds for interference with the award. The Appeals were dismissed, and the High Court was requested to expedite the disposal of the Appellant's pending application under Section 34 within three months. Conclusion: The Supreme Court's judgment reinforces the principle that the Court's powers under Sections 9 and 36 of the Arbitration Act are broad and should be exercised judiciously to ensure the efficacy of arbitration as a dispute resolution mechanism. The judgment underscores the importance of securing the awarded amount to protect the interests of the award creditor while balancing the procedural rights of the award debtor.
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