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2018 SCC OnLine Bom 540 : (2018) 4 AIR Bom R 552 : AIR 2018
(NOC 916) 319

In the High Court of Bombay

Ordinary Original Civil Jurisdiction
(BEFORE NARESH H. PATIL AND G.S. KULKARNI, JJ.)

Ecopack India Paper Cup Pvt. Ltd. … Appellant;

Versus
Sphere International … Respondent.
Appeal No. 101 of 2018 In Notice of Motion No. 2059 of 2017
Decided on March 14, 2018
Advocates who appeared in this case:
Mr. Aseem Naphade with Mr. A.P. Singh & Mr. Kaushal Amin i/b. S.K.
Srivastav & Co., for the Appellant;
Mr. Premlal Krishnan with Mr. Sankalp Anantwar i/b. Pan India Legal,
for the Respondent.
The Order of the Court was delivered by
G.S. KULKARNI, J.:— Disputes between the appellant and the
respondent are subject matter of arbitration. The appellant is the
claimant against the respondent in the arbitration proceedings. The
respondent filed a written statement to the statement of claim of the
appellant in which the respondent is stated to have made purported
admission of liability towards the respondent of an amount of Rs.
47,56,388/-. On this purported admission the Arbitral Tribunal made an
interim award dated 10 April 2017 under Section 31(6) of the
Arbitration and Conciliation Act, 1996 (for short ‘the Act’) in favour of
the appellant. Being aggrieved by the impugned interim award, the
respondent has filed a petition under Section 34 of the Act before this
Court (Arbitration Petition No. 393 of 2017). By an order dated 13
December 2017 the learned Single Judge has admitted the Section 34
petition. As mere admission of the petition would not amount to stay on
the execution of the interim arbitral award, the respondent filed Notice
of Motion no. 2039 of 2017 seeking an interim stay on the execution of
the interim award. By the impugned order dated 21 December 2017,
the learned Single Judge has allowed the said notice of motion thereby
granting unconditional stay on the execution of the impugned interim
award rendered by the arbitral tribunal. The appellant being aggrieved
by the said order has filed this appeal.
2. Learned Counsel for the appellant in assailing the impugned order
submits that the learned Single Judge ought to have ordered deposit of
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the decreetal amount considering the provisions of Section 36 of the

Act and more particularly sub-section 3 which mandates that the Court
may subject to such conditions as it may deem fit, grant stay of the
operation of the award, and the proviso to this sub-section would
stipulate that when the award is for payment of money, the Court shall
have due regard in grant of stay of a money decree to the provisions of
Civil Procedure Code, 1908. It is submitted that the provisions of Order
41 Rule 5 of the Code of Civil Procedure are imperative. It is thus
submitted that considering the said provisions the learned Single Judge
should have directed the respondent to deposit the decreetal amount.
In supporting the submissions, the learned Counsel for the appellant
has placed reliance on the decisions in (i) Sihor Nagar Palika Bureau v.
Bhabhlubhai Virabhai & Co.1; (ii) Malwa Strips Pvt. Ltd. v. Jyoti
2
Limited ; (iii) Times Global Broadcasting Co. Ltd. v. Parshuram
3
Babaram Sawant .
3. On the other hand, the learned Counsel for the respondent
submits that the learned Single Judge has appropriately considered the
factual matrix and correctly observed that the arbitral tribunal rendered
the impugned interim award, based on a solitary paragraph in the
written statement and did not at all consider the case of the respondent
as pleaded in the written statement. It is his contention that the
purported admission which is recorded in the impugned interim arbitral
award was required to be considered in the context of the entire
defence and the situation was not such that the purported admission
can be singled out so as to make an interim award on admission. In
supporting this submission, learned Counsel for the respondent has
taken us through the written statement as also the impugned Award.
4. We have heard the learned Counsel for the parties. We have also
gone through the pleadings of the parties before the Arbitral Tribunal
and the impugned interim award. We have also perused the impugned
order passed by the learned Single Judge. Having so done, we are not
persuaded to accept the contention as urged on behalf of the appellant.
At the outset we may observe that when the Court considers an
application for stay of the arbitral award for payment of money, no
doubt the Court would be required to consider the principles under the
provisions of Order 41 Rule 5, however, it cannot be overlooked that
such an order to be passed by the Court is discretionary and would be
required to be passed taking into consideration the facts and
circumstances of the case. There cannot be a straight jacket formula
that in every case the Court would impose conditions and necessarily
there has to be a deposit of decreetal amount.
5. Coming to the facts of the case, on perusal of the interim arbitral
award, we may state that the learned Single Judge has rightly observed
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that the interim arbitral award has merely considered the statement as
made on behalf of the respondent in paragraph 3(O) of the statement
of defence as the admission of liability by the respondent, and it is on
this statement, the arbitral tribunal has proceeded to make the
impugned interim award. It would be appropriate to extract the
relevant portion of the Arbitral Award which reads thus:—
“4. The counsel for the plaintiff submits that the respondent has
made an clear and unequivocal admission of liability to the tune of
Rs. 47,56,388/- in Para No. 3(O) of the statement of defence and
Para no. 23 of the counter claim.
…… …… …..
13. We find that in Para No. 3(O) of the statement of defence, it is
very clear that the respondent has made an admission of liability of
Rs. 47,56,388/-.
14. Since the respondent has made an admission of liability, we
find that the Delhi High Court Judgment is applicable to the facts of
the present case. Thus, the Plaintiff is entitled to an Interim Award
in respect of the admitted liability of the respondent, i.e. for a sum
of Rs. 47,56,388/-.”
6. As to whether the arbitral tribunal could at all have made such an
interim award, is a subject matter of consideration in the arbitration
petition which already stands admitted by the learned Single Judge. We
are also informed that now de hors the interim award, the arbitration
proceedings are in progress and the arbitral tribunal would proceed to
finally adjudicate the rival claims of the parties.
7. Apart from the above situation, in regard to the controversy in
hand, before the arbitral tribunal the respondent in opposing the
appellant's prayer for an interim award on admission, had filed its reply
asserting that, there was an amount of Rs. 2,74,07,448/- which was
payable by the appellant to the respondent after adjustment of an
amount of Rs. 47,57,389/- stated to the liability of the appellant on the
part of the respondent. This contention can be seen in paragraph 8 of
the reply which reads thus:—
“8. The Respondent further states that in fact, an amount of Rs.
3,21,64,837/- is due and payable by the Claimants to the
Respondent. By adjusting the said amount payable by the Claimants
against the amount receivable by the Claimants, an amount of Rs.
2,74,07,448/- is balance and payable by the Claimants to the
Respondent and its representatives jointly In addition to this, the
Respondent is also liable to pay an amount of Rs. 6.37,44,606/-
towards damages.”
8. A perusal of the impugned interim award would clearly show that
there is no reference whatsoever interalia of the above contention as
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urged on behalf of the respondent. The case of the respondent in the

written statement undoubtedly was required to be considered by the
arbitral tribunal in its entirety and due consideration of the pleas as
asserted by the respondent in the written statement. There is no
reasoning whatsoever in the impugned interim award in rejecting the
respondent's case as made out in the reply opposing the interim award.
The learned Single Judge is thus correct in his observation that the
Arbitral Tribunal has not considered the entire case as pleaded by the
applicant in the written statement and that the respondents were
entitled to explain the alleged admission as made in the written
statement. Considering the facts and circumstances of the case, we are
in agreement with the learned Single Judge when it is observed that
prima facie the Arbitral Tribunal ought to have rendered a final award
after giving an opportunity to both the parties to lead evidence.
9. As regards the decisions as relied on behalf of the appellant, there
cannot be any doubt on the proposition of law as these decisions lay
down. However, in the facts and circumstances of the case, as noted
above, this is not a case where the respondent could be saddled with
an order to deposit the amounts under the interim award. Section 36 of
the Act deals with enforcement of an arbitral award. Section 36 of the
Act was amended by the Arbitration and Conciliation Act, 2015 with
effect from 23 October 2015. Sub-Section (2) of Section 36 now
provides that mere filing of an application in the Court to set aside the
arbitral award shall not by itself render the award unenforceable, unless
the Court grants an order of stay of the operation of the arbitral award
in accordance with the provisions of Sub-Section (3) of Section 36, on a
separate application made for that purpose. Sub-section (3) provides
that 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 operation of such award
for reasons to be recorded in writing”. Proviso to sub-section (3)
stipulates that the Court while considering the application for grant of
stay of an arbitral award for payment of money shall have due regard to
the provisions for grant of stay of a money decree under the provisions
of the Code of Civil Procedure 1908.
10. A bare perusal of the provisions of Section 36 shows that the
jurisdiction so conferred on the Court is a discretionary jurisdiction. The
proviso to Sub-section (3) further makes it implicit that the provisions
of Order 41 Rule 1 Sub-Rule 3 and Rule 5 would become relevant. In
exercising powers under Order 41 Rule 5 the Court exercises its
discretion and may grant a stay to the execution of a decree if
“sufficient cause” is made out and the party seeking stay satisfies the
Court that it will sustain substantial loss and inter-alia satisfies the
condition as stipulated in sub-Rule 3 of Rule 5. Thus, the under scheme
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of the provisions of Section 36 read with Order 41 Rules 1 and 5 of the

C.PC, the party opposing grant of a stay cannot assert a proposition
that it would be mandatory for the Court to impose a condition for a
stay to the execution proceedings. It is for the Court to consider the
facts and circumstances of the case and exercise its discretion either to
grant a stay to the execution of the decree or impose or not impose any
other condition, as the Court may deem appropriate. The above position
in law has been clearly recognized by the Supreme Court in Malwa
4
Strips Private Limited v. Jyoti Limited . The discretion so vested in the
Court is required to be exercised judicially and not arbitrarily and in the
interest of justice. (see Sihor Nagar Palika Bureau v. Bhabhlubhai
Virabhai & Co.. (supra). Adverting to these principles of law, the
learned Single Judge in the facts of the case, has appropriately
exercised discretion as vested with the court under the provisions of
Section 36(3) of the Act read with provisions of Order 41 Rule 5 in
passing the impugned order.
11. The appeal lacks merit. We are accordingly not inclined to
interfere with the impugned order. It is dismissed. No costs.
———
1
(2005) 4 SCC 1

2
(2009) 2 SCC 426

3
(2011) 113 (6) Bom LR 3801

4
(2009) 2 SCC 426

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