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TMI Blog2024 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... that statute. It noted that the arbitral tribunal had, however, rendered an award in which it directed the respondent to pay the appellant this amount, which had already been paid by the respondent to the appellant. The High Court granted a stay on the operation of the award subject to the respondent furnishing a bank guarantee for the principal amount awarded to the appellant, i.e. Rs 21,07,66,621. It held that it was not inclined to issue orders in relation to the interest and the costs awarded to the appellant because the petitioner is not a fly-by operator and is a statutory undertaking. The law qua arbitration proceedings cannot be any different merely because of the status of the respondent as a statutory undertaking. The High Court was in error in not even prima facie considering the fact that apart from the issue of cess, there was an arbitral award in favour of the appellant in regard to other claims as well. Further, the 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. The Arbitration Act is a self-contained code it does not distinguish between governmental and private entitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant interest on the amount awarded at the rate of nine per cent per annum from 15 November 2017 until the date of the award if the payment was made within three months, and, if not, at the rate of twelve per cent per annum from the date of the award till the date of payment; and c. Pay the appellant Rs 3,20,86,405 by way of costs. 5. Both parties filed applications under Section 33 of the Arbitration and Conciliation Act 1996 Arbitration Act for correction of the award and for additional arbitral awards. The arbitral tribunal dismissed the application filed by the respondent. It allowed the application filed by the appellant only to the extent of increasing the costs awarded to it by Rs 12,00,000 to reflect the fees paid to the arbitral tribunal subsequent to the parties filing their memo of costs. 6. The respondent challenged the arbitral award under Section 34 of the Arbitration Act and moved an application for stay of execution. The High Court, by its impugned judgment and order dated 9 September 2024, granted a stay on the execution of the award conditional on the respondent furnishing a bank guarantee in the sum of Rs 21,07,66,621 within a period of eight weeks. 7. The ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication shall not, by itself, render that award unenforceable, unless the Court grants a stay on the enforcement of the arbitral award in terms of sub-section (3). The provision indicates that a separate application must be made for this purpose. Sub-section (3) of Section 36 stipulates that where such an application has been filed, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of the award for reasons to be recorded in writing. Following the amendments brought about by the Arbitration and Conciliation (Amendment) Act 2015, the first proviso to sub-section (3) stipulates that the Court shall, while considering an application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions related to the grant of stay of a money decree under the CPC. The second proviso provides for a situation in which the Court may grant unconditional stay. Section 36(3) and its provisos are reproduced below: 36. Enforcement (3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the remaining claims is approximately Rs 18 crore. 12. The High Court granted a stay on the operation of the award subject to the respondent furnishing a bank guarantee for the principal amount awarded to the appellant, i.e. Rs 21,07,66,621. It held that it was not inclined to issue orders in relation to the interest and the costs awarded to the appellant because the petitioner is not a fly-by operator and is a statutory undertaking. The law qua arbitration proceedings, in our view, cannot be any different merely because of the status of the respondent as a statutory undertaking. 13. In this regard, it is necessary to advert to a decision of a two-Judge Bench of this Court in Pam Developments Private Limited v State of West Bengal (2019) 8 SCC 112 where it was observed: 20. In our view, in the present context, the phrase used is having regard to the provisions of CPC and not in accordance with the provisions of CPC. In the latter case, it would have been mandatory, but in the form as mentioned in Rule 36(3) of the Arbitration Act, it would only be directory or as a guiding factor. Mere reference to CPC in the said Section 36 cannot be construed in such a manner that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. ( emphasis supplied ) 15. Bearing in mind the above principles, we are of the view that the High Court was in error in not even prima facie considering the fact that apart from the issue of cess, there was an arbitral award in favour of the appellant in regard to other claims as well. Further, the 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. The 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. Moreover, an assessment as to whether a party is reliable or trustworthy is subjective. Many private entities, too, may rely on the size of their undertaking, its success, public image, or other factors to argue that they are not fly-by-night operators. In the absence of any provision of law in this regard, 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 furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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