In C.R. No. 2473 of 2023-PUNJ HC- Pendency of objections u/s 34 of Arbitration & Conciliation Act in itself shall not operate as stay: Punjab & Haryana HC
Justice Avneesh Jhingan [16-05-2023]

Read Order: Haryana State Roads & Bridges Development Corporation Ltd. & another Vs. M/s PNC Infratech Limited and others 

Tulip Kanth

Chandigarh, May 20, 2023: While dismissing the petitioner’s contention that no condition should have been imposed as the objections under Section 34 of the Arbitration & Conciliation Act are pending, the Punjab and Haryana High Court has dismissed the revision petition against an order whereby the petitioners were granted stay subject to deposit of 100% awarded amount in the form of an FDR in the name of the court.

While referring to section 36, Justice Avneesh Jhingan stated, “On application under sub-section (3), the Court may stay operation of the arbitral award by imposing such conditions as it may deem fit. The Court shall record reasons for granting the stay. The proviso to sub-section (3) provides that while granting the stay, provisions of Civil Procedure Code have to be given due regard.”

The petitioners allotted tender to the first respondent for construction of a road. The terms and conditions provided for dispute resolution through arbitration & the proceedings initiated at the instance of first respondent culminated in an award. 

The objections filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 have been pending. On an application filed under Section 36, the stay was granted subject to deposit of the awarded amount in Court, in the shape of FDR.

The petitioner submitted that the Court  erred in directing 100% deposit of the awarded amount as objections under Section 34 of the Act were pending.

The Bench discussed Section 36 extensively and observed that as per Section 36(1) after expiry of limitation to file the application under Section 34 of the Act, subject to provisions of sub-section (2), the arbitral award shall be enforced like a decree of court in accordance with provisions of Code of Civil Procedure. 

Sub-Section 2 provides that the award shall not become unenforceable merely on filing of an application under Section 34 of the Act. The exception being the cases where the Court stays operation of the arbitral award. 

Reference was made to the judgment in M/s Malwa Strips Pvt. Ltd. v. M/s Jyoti Ltd., 2009(1) SCC (Civil)580 wherein it has been observed that while granting stay of the execution of the decree, it must take into consideration the facts and circumstances of the case before it. If a stay is granted, sufficient cause must be shown, which means that the materials on record were required to be perused and reasons are to be assigned. An exceptional case has to be made out for stay of execution of a money decree.

The Bench was of the opinion that the contention of the petitioners that no condition should have been imposed as the objections under Section 34 were pending was bereft of any merit. 

“From reading of Section 36(2) of the Act, it is clear that pendency of objections in itself shall not operate as stay. No exceptional case is made out for interference in the impugned order and for granting unconditional stay”, the Bench said while dismissing the appeal.