Introduction
The Bombay High Court has reiterated the principles governing grant of stay to arbitral awards under Section 36 of the Arbitration and Conciliation Act, 1996. The Hon’ble Court clarifies that unconditional stay of a money award is an exception. Ordinarily, stay would be granted only upon deposit of the award amount, unless the award is shown to be egregiously perverse, patently illegal or ex facie untenable.

Facts in Brief
The dispute arose out of a Development Agreement dated 17th November 2015 under which the Petitioners were granted rights to utilise residual FSI and TDR in respect of certain plots in Pune. Disputes arose between the parties, leading to arbitration. The Arbitral Tribunal, by a majority award, directed the Petitioners to pay Rs. 7,81,18,000 with interest at 18% per annum.

The Petitioners challenged the award under Section 34 and sought stay under Section 36. The District Court granted stay subject to deposit of the entire award amount with interest.

The Petitioners challenged this condition before the High Court.

Issue for Consideration
Whether the condition requiring deposit of the entire award amount for grant of stay under Section 36 is arbitrary or whether an unconditional stay ought to have been granted.

Findings
The Court examined the scheme of Section 36 and emphasised that filing of a Section 34 application does not by itself render the award unenforceable. Stay must be specifically granted and may be subject to conditions.

The Court held that while considering such an application, the Court must have due regard to the principles governing stay of money decrees under the Code of Civil Procedure. However, such principles operate as guidance and do not displace the statutory framework of the Arbitration Act.

Relying on Pam Developments Pvt. Ltd. v. State of West Bengal, (2019) 8 SCC 112, the Court reiterated that the expression “have due regard to” indicates a guiding principle and not a rigid mandate.

The Court further relied on Lifestyle Equities C.V. v. Amazon Technologies Inc., 2025 SCC OnLine SC 2153 and observed that unconditional stay of a money decree can be granted only in exceptional cases. Such cases would involve awards that are egregiously perverse, riddled with patent illegality or ex facie untenable.

Applying these principles, the Court held that the Petitioners had failed to demonstrate any such exceptional circumstances. The findings of the Arbitral Tribunal, particularly in relation to excess construction and breach of contractual terms, were prima facie supported by the record.

The contention that the award granted damages without proof of loss was not accepted at this stage. The Court held that such issues fall within the scope of the Section 34 proceedings and cannot justify unconditional stay. The Court also noted that the Petitioners had neither demonstrated substantial loss nor furnished adequate security.

Conclusion
The High Court upheld the order of the District Court granting stay subject to deposit of the entire award amount along with interest. The judgment reiterates that in cases involving money awards, deposit of the awarded amount is the norm. Unconditional stay can be granted only in exceptional cases where the award is demonstrably perverse or patently illegal. The decision reinforces the principle that arbitral awards should not be lightly stayed without securing the award-holder¹.

By - Chaitanyaa Bhandarkar