When a petition under Section 34 of the Arbitration and Conciliation Act, 1996, along with a stay application under Section 36(2), is pending, the Court must decide the stay application expeditiously. Execution may be conditionally stayed pending such consideration, subject to deposit of part of the decretal amount.---NH Road

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Arbitration and Conciliation Act, 1996 – Section 34 – Challenge to arbitral award – Stay application pending – Court must decide expeditiously – Para 9–11

Section 36(2) – Award enforceable unless stayed – Filing of stay application requires judicial consideration without undue delay – Para 9

Execution proceedings – Conditional stay – Deposit of 1/3rd amount – Equitable balancing of rights – Para 11

Withdrawal of deposited amount – Refused where enhanced portion alone under challenge – Para 12

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FACTUAL BACKGROUND

• Award dated 21.08.2013 passed by Competent Authority under Section 3(a) of the National Highways Act, 1956.

• 1st respondent sought enhancement before Arbitrator under Section 3G(5).

• Arbitral Award dated 29.06.2019 enhanced compensation for land acquisition for NH-16 (old NH-5).

• Petitioner (National Highways Authority of India) filed A.O.P. No.35 of 2021 under Section 34 challenging arbitral award along with stay application.

• Stay application remained pending.

• Meanwhile, respondent initiated E.P. No.1324 of 2021.

• Executing Court proceeded with execution, observing no stay was granted.

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ISSUE

Whether execution of arbitral award should proceed when a Section 34 petition and stay application remain pending without adjudication?

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COURT’S ANALYSIS

I. Legal Position under Section 36(2)

• Arbitral award is executable as a decree unless stayed.

• Mere filing of Section 34 petition does not operate as automatic stay.

• However, once a stay application is filed, it must be decided expeditiously.

Failure to adjudicate stay application while permitting execution may render Section 34 proceedings nugatory.

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II. Balancing of Equities

Court held:

• Rights of award-holder must be protected.

• Challenge under Section 34 must not become illusory.

Hence, conditional interim protection justified.

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DIRECTIONS

1. Principal District Judge, Krishna at Machilipatnam directed to decide stay application in A.O.P. No.35 of 2021 within four weeks.

2. Execution proceedings stayed till disposal of stay application.

3. Stay subject to deposit of 1/3rd of the execution amount within two weeks.

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Withdrawal of 1/3rd Amount

• Respondent sought permission to withdraw deposited amount.

• Court declined.

• Reason:

  • Original compensation already received.

  • Only enhanced amount under arbitral award under challenge.

  • Section 34 proceedings pending.

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RATIO DECIDENDI

Although an arbitral award is executable unless stayed under Section 36(2) of the Arbitration and Conciliation Act, 1996, when a stay application is filed along with a Section 34 petition, the Court must decide such application expeditiously. Pending such decision, execution may be conditionally stayed to balance equities, subject to partial deposit of the awarded amount.