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2024 SCC OnLine Bom 758

In the High Court of Bombay

(BEFORE R.I. CHAGLA, J.)

Balmer Lawrie & Co. Ltd. … Applicant/Petitioner;

Versus
Shilpi Engineering Pvt. Ltd. … Respondent.
Interim Application (L) No. 779 of 2024 in Commercial Arbitration
Petition No. 1131 of 2018
Decided on March 1, 2024
Advocates who appeared in this case :
Mr. Shyam Kapadia a/w Mr. Sanket Singh and Iyanah Parbhoo i/by
Meraki Chambers for the Applicant/Petitioner.
Mr. Darshit Jain A/W Neeli Sandesara, Deep Dighe i/by India Law LLP
for the Respondent.
The Order of the Court was delivered by
R.I. CHAGLA, J.:— By this Interim Application, the Applicant/original
Petitioner has sought recall of the order dated 4th September 2019
passed by this Court disposing of the Commercial Notice of Motion No.
2275 of 2018 filed by the Applicant. Further relief is sought for stay on
the execution, operation and effect of the impugned Award Sharayu
th
Khot. dated 5 July 2018 passed by the Sole Arbitrator.
2. With regard to the prayer clause (a), which seeks restoration of
the Commercial Notice of Motion No. 2275 of 2018, upon a perusal of
the prior order dated 26th July 2019 passed by this Court, it is apparent
that by the said order the time for filing pleadings was only extended.
th
In the subsequent order dated 4 September 2019 reference has been
th
made to the order dated 26 July 2019 and it has been recorded that,
the Notice of Motion by that order was treated as disposed of. This
recording is on the face of it incorrect. The Notice of Motion had not
th
been disposed of. Accordingly, the order dated 4 September, 2019
passed in Notice of Motion No. 2275 of 2018 filed by the
Applicant/original Petitioner is recalled and the Notice of Motion is
restored to file.
3. Considering that there is already a prayer clause (b) in the
present Interim Application which is very same prayer in Notice of
Motion No. 2275 of 2018, there is a multiplicity of proceedings. In view
thereof, Notice of Motion No. 2275 of 2018 is disposed of.
4. It is the contention of Mr. Shyam Kapadia, the learned Counsel
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appearing for the Petitioner, that there has been a bank guarantee
furnished by the Applicant/original Petitioner as directed by the
Calcutta High Court for the entire awarded amount along with the
accrued interest. The bank guarantee is furnished in the execution
proceedings bearing EC No. 45 of 2019 filed by the Respondent herein
before the Calcutta High Court. He has submitted that upon the bank
guarantee being furnished, the execution proceedings were not
proceeded with. He has further submitted that by the present
Application, the impugned Award is sought to be stayed and this prayer
is being pressed in view of the oral directions of the Calcutta High Court
that since Section 34 Petition is pending before this Court, stay is also
to be granted by this Court.
5. Mr. Kapadia has submitted that the Applicant/original Petitioner
has raised sufficient grounds for setting aside of the arbitral Award and
which has also been re-produced in the Interim Application. However,
considering that the Applicant/original Petitioner has already furnished
a 100% bank guarantee before the Calcutta High Court, the same may
be permitted to be furnished in this Arbitration Petition.
6. Mr. Kapadia has drawn this Court's attention to the law laid down
by the Supreme Court in Pam Developments Private Limited v. State of
1
West Bengal at paragraph 20 which was in relation to an Application
for stay of an arbitral award. The Supreme Court has considered in
Section 36(3) of the Arbitration Act, as amended vide Act No. 3 of 2016
with effect from 23rd October 2016, the words “having regard to” and
the words “in accordance with” the provisions of the Civil Procedure
Code, 1908. The Supreme Court has held that these words would only
be directory as a guiding factor. Mere reference to Civil Procedure Code,
1908 in Section 36 cannot be construed in such a manner that it takes
away the power conferred in the main statute i.e. Arbitration Act itself.
It is to be taken as a general guideline, which will not make the main
provision of the Arbitration Act inapplicable. The provisions of Civil
Procedure Code, 1908 are to be followed as a guidance, whereas the
provisions of the Arbitration Act are essentially to be first applied.
Since, the Arbitration Act is a self contained Act, the provisions of the
Civil Procedure Code, 1908 will apply only insofar as the same are not
inconsistent with the spirit and provisions of the Arbitration Act.
7. Mr. Kapadia has further submitted that the Supreme Court in Toyo
Engineering Corporation v. Indian Oil Corporation Limited2 was
considering an order of conditional stay of the Award passed in an
Appeal under Section 37 from a dismissal of the Section 34 Petition and
in these circumstances, the Supreme Court held that 100% of the
awarded amount is required to be deposited for stay of the Award.
8. Mr. Kapadia has also referred to decision of the Calcutta High
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Court in Kolkata Metropolitan Development Authority v. South City

3
Projects (Kolkata) Ltd. , wherein the Calcutta High Court had referred
to the decision of the Supreme Court in Pam Developments Private
Limited (supra), and taken the view that principles for grant of stay
under Section 37 of the Arbitration Act, are not attracted and cannot be
applied under Section 36(3) of the Arbitration Act, 1996 as in Section
36(3), the Court is still considering a challenge under Section 34 of the
Arbitration Act, 1996 to the Award while under Section 37 of the Act of
1996, the challenge had resulted in a decree of the Court. The Calcutta
High Court had in these circumstances, considered it appropriate to
order furnishing of security for stay of the Award. He has submitted
that the decision of Calcutta High Court has been upheld by the
Supreme Court in order dated 15th July 2022, wherein the Supreme
Court has held that the direction of the Calcutta High Court to the
Petitioner to deposit the entire awarded amount by way of cash security
or its equivalent to the satisfaction of the Registrar, Original Side is
absolutely in consonance with the relevant provisions of the Civil
Procedure Code, 1908 as well as Section 36(3) of the Arbitration Act.
9. Mr. Kapadia has submitted that the factors to be taken into
consideration by the Court while exercising discretion under Section 36
(3) of the Arbitration Act are different than in an Appeal under Section
37 of the Arbitration Act wherein the Court has already rejected the
Section 34 Petition and the Award has become a decree of the Court.
He has submitted that in view of the Petitioner having already furnished
100% bank guarantee before the Calcutta High Court, the same may be
allowed to be furnished in these proceedings and which would secured
the Award as contemplated under Section 36(3) of the Arbitration
Petition.
10. Mr. Darshit Jain, the learned Counsel appearing for the
Respondent has submitted that there is no distinction in the exercise of
discretion of a Court considering an Application under Section 36(3)
from that exercised by a Court considering a stay in an Appeal under
Section 37 of the Arbitration Act. Further, this distinction finds no place
in the relevant provisions of the Arbitration Act. He has submitted that
th
in the second paragraph of the Supreme Court order dated 15 July
2022 in Kolkata Metropolitan Development Authority (supra), the
Supreme Court has noted that the Petitioner had thereafter, in
compliance, deposited the entire awarded amount and the application
submitted by the Claimant for withdrawal was pending before the Court
and hence the impugned order was not interfered with.
11. Mr. Jain has also relied upon the decision of the Delhi High Court
in Power Mech Projects Ltd. v. Sepco Electric Power Construction
Corporation4, wherein the Delhi High Court has referred to the Supreme
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Court decisions in Srei Infrastructure Finance Limited v. Candor

5
Gurgaon Two Developers and Projects Pvt. Ltd. and Manish v. Godawari
6
Marathwada Irrigation Development Corporation , wherein the Supreme
Court had directed 100% deposit of the awarded amount. The Delhi
High Court has in that case held that in the view of the recent decisions
of the Supreme Court, and though co-ordinate Benches of the Delhi
High Court have been directing deposit of 50%, the Petitioner must
deposit 100% of the awarded amount to secure the Respondent.
12. Mr. Jain has accordingly, submitted that it is in the interest of
justice to direct the deposit of 100% of the awarded amount, where the
Award is in the nature of money decree and stay of the impugned
Award has been sought.
13. Having considered these submissions, the Court in an
Application under Section 36(3) of the Arbitration Act exercises its
discretion in granting a stay of the impugned Award. Whether to
impose conditions and to what extent is dependent upon the facts and
circumstances of each case. In the present case, this Court finds that
there are no circumstances brought to the notice of this Court that the
Respondent is in any manner facing financial hardship for depositing
the awarded amount. The mere fact that the Petitioner had furnished a
bank guarantee in the execution proceedings before Calcutta High
Court, would not be a relevant factor to be taken into account whilst
exercising this Court's discretion under Section 36(3) of the Arbitration
Act in imposing conditions for grant of stay of the impugned Award.
14. The decisions which have been relied upon by the Counsel for
both the sides and which have been adverted to, makes clear that the
Supreme Court has taken a consistent stand that where the Award is in
the nature of money decree, there is a requirement for deposit of 100%
of the awarded amount for grant of stay. I do not find any distinction in
applications for stay under Section 36(3) and under Section 37 for
different parameters to be applied in exercise of discretion by the Court
in imposing conditions for grant stay. There is nothing in both the
provisions for taking such a view. Further, a liberal view is not
contemplated under Section 36(3) of the Arbitration Act whilst
imposing the conditions for stay of the Award.
15. I am not inclined to follow the reasoning of the Calcutta High
Court in Kolkata Metropolitan Development Authority (supra), wherein
the Single Judge has drawn such distinction in the principles of grant of
stay under Section 37 of the Arbitration Act which he has held is not
attracted and cannot be applied under Section 36(3) of the Arbitration
Act. This on the premise that in an Application under Section 36(3) of
the Arbitration Act, the Court is still considering a challenge under
Section 34 of the Arbitration Act, 1996 to the Award while under
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Section 37 of the Act of 1996, the challenge has resulted in a decree of

the Court.
16. Once an Award is passed by the learned Arbitrator, till it is
stayed, the Award is in the form of the decree and can be executed in
that form by the Executing Court and thus, whether the Section 34
Petition has been dismissed or it is yet to be considered, the same
parameters would apply for stay of the Award.
17. Thus, I do not find any merit in the submissions of Mr. Kapadia
that this Court should in the present case exercise discretion liberally
by allowing the Petitioner to furnish the bank guarantee rather than
depositing the awarded amount.
18. Accordingly, I grant stay to the execution, operation and effect
of the impugned Award dated 5th July 2018 passed by the Sole
Arbitrator, subject to the Petitioner depositing the awarded amount
with interest as determined by the Sole Arbitrator on the date of such
determination within a period of six weeks from the date of this order.
19. The Respondent is at liberty to file an application for withdrawal
of the awarded amount with interest as and when deposited and which
application shall be considered on its own merits.
20. Interim Application is accordingly, disposed of.
21. Needless to state that in view of this order, the Petitioner shall
apply in the Calcutta High Court where the execution proceedings have
been filed for withdrawal of the bank guarantee. This would be subject
to the Petitioner depositing the awarded amount with interest in this
Court.
———
1
(2019) 8 SCC 112

2
Civil Appeal Nos. 4549-4550 of 2021

3
IA GA 1 of 2020 and A.P. No. 351 of 2020

4
2020 SCC OnLine Del 2049 order dtd 17.02.2020

5
SLP (C) No(s). 20895-20897/2018

6
Special Leave to Appeal (C) Nos. 11760-11761-2018 order dtd 16.07.2018

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