Arbitration | Unconditional Stay On Execution Of Award Only In Exceptional Cases: Supreme Court
The Supreme Court recently declined to grant an unconditional stay on the execution of the arbitral award, holding that the requirement to deposit the security amount was justified since the award was not shown to have been induced or tainted by fraud or corruption. Referring to its latest ruling in Lifestyle Equities C.V. and Another v. Amazon Technologies Inc., a bench of Justices...
The Supreme Court recently declined to grant an unconditional stay on the execution of the arbitral award, holding that the requirement to deposit the security amount was justified since the award was not shown to have been induced or tainted by fraud or corruption.
Referring to its latest ruling in Lifestyle Equities C.V. and Another v. Amazon Technologies Inc., a bench of Justices JB Pardiwala and KV Viswanathan reiterated that for the grant of an unconditional stay on the execution of an arbitral award, the following requirements need to be fulfilled, i.e.,
(i) The decree is egregiously perverse,
(ii) is riddled with patent illegalities,
(iii) is facially untenable; and/or
(iv) such other exceptional causes similar in nature.
The bench heard an appeal by M/s Popular Caterers against a Bombay High Court order that had granted an unconditional stay on the execution of a ₹4-crore arbitral award dated November 28, 2022.
The dispute arose from a 2017 MoU between Popular Caterers and Maple Leaf Enterprises LLP for catering services at Mumbai's Tulip Star Hotel, under which the caterer had paid a ₹4-crore security deposit. The arrangement collapsed within days after the Mumbai Suburban Collector barred the hotel from hosting events, and the arbitrator later directed Maple Leaf's promoters to refund the deposit with interest. When the award was challenged under Section 34, the Bombay High Court admitted the petition and granted an unconditional stay, preventing recovery of the amount and prompting Popular Caterers to move the Supreme Court.
Setting aside the High Court's decision, the bench found that the present case falls short of invoking the unconditional stay on an award execution as per the conditions laid down in Lifestyle Equities. The Bench noted that the case before it did not involve allegations of fraud or corruption, which are the specific grounds for an unconditional stay under the second proviso to Section 36(3) of the Arbitration Act. It found that the present case did not meet the high threshold of being "egregiously perverse" or "facially untenable" to warrant the exceptional relief of an unconditional stay.
“it is not even the case of the judgment-debtor, i.e., respondents before us that the making of the award was induced or effected by fraud or corruption. Even if we have to apply the general principles of CPC in the present case, the High Court should have considered the matter asking a question whether the respondents herein (award-debtors) could be said to have made out an “exceptional case” for the purpose of granting benefit of unconditional stay of the execution of the award which is in the form of a money decree.”, the court observed, adding that “the case in hand does not fall in any of the aforesaid categories so as to seek the benefit of unconditional stay of the arbitral award which is in the form of a money-decree.”
Accordingly, the appeal was allowed.
Cause Title: POPULAR CATERERS VERSUS AMEET MEHTA & ORS.
Citation : 2025 LiveLaw (SC) 1144
Appearance:
Mr. C.U., Singh, senior counsel for the appellant
Mr. Shailesh Madiyal, senior counsel for the respondent nos. 2 and 4 respectively,
Ms. Bansuri Swaraj, senior counsel appearing for the respondent no.3 and
Ms. Nina Nariman, counsel appearing for the respondent no.5, respectively.