Court May Direct Deposit Of 100% Of Awarded Amount Before Granting Stay U/S 36(3) Arbitration Act: Orissa High Court

The Orissa High Court held that directing a 100% deposit of the awarded amount as a pre-condition for granting stay under section 36(3) of the Arbitration and Conciliation Act, 1996 (Act) is legally valid and consistent with the settled jurisprudence of the Supreme Court. Dr. Justice Sanjeeb K. Panigrahi held that “where the arbitral award is in the nature of a money decree, a direction to deposit 100% of the awarded sum is neither punitive nor excessive but serves to secure the award-holder's interest pending adjudication.” Background: The dispute arose out of a contract between the Director, Land Records & Surveys (State of Odisha) and Sylvesa Infotech Pvt. Ltd.(Respondent) for the installation of computer systems, peripherals, and compactors for 113 Modern Record Rooms across the State. Due to delays and breaches, the State terminated the contract and blacklisted the contractor. The blacklisting order was quashed by the High Court stating that it was issued without notice. After renewed correspondences and partial reinstatement of the work, the contractor demanded ₹108.01 crores. The matter was ultimately referred to arbitration. The arbitral tribunal awarded ₹7,46,45,227/- to Sylvesa Infotech Pvt. Ltd along with 10% interest. The State challenged the award under section 34 of the Act. The High Court stayed the award subject to the requirement of full deposit of the awarded amount. Aggrieved, the State had filed the writ petition. The petitioner submitted that the 100% deposit condition was onerous and arbitrary especially when the award was being assailed under section 34 of the Act. It was further submitted that the impugned order lacked reasons as it merely reproduced the prayer made by the award holder without considering financial hardship or balance of convenience. Per contra, the Respondent submitted that the Commercial Court rightfully exercised its discretionary powers under section 36(3) balancing equities and protecting award holder's interest. It was further submitted that since the award is a money decree, as per the Supreme Court's judgments full deposit of the awarded amount is required before granting stay. Findings: The court at the outset held that although section 8 of the Commercial Courts Act bars revision or petitions against interlocutory orders of the Commercial Courts, it cannot abridge the constitutional courts' power under Article 226/227 of the Indian Constitution. It held that “Section 8 cannot operate as an absolute bar to the exercise of the power of judicial review. The supervisory jurisdiction of the High Court, being a basic feature of the Constitution, remains untrammelled.” The court examined the post 2015 amendment position of section 36 stating that filing of a petition under section 34 does not automatically stop the enforcement of an arbitral award. A separate application for seeking stay has to be filed and the court may impose conditions such as deposit of the awarded amount. The court held that “a domestic arbitral award remains executable as a decree unless stayed by the court. The discretion to impose conditions ensures that the award-holder's rights are not rendered illusory during pendency of challenge.” Referring to the Supreme Court's judgments in Srei Infrastructure Finance Ltd and Manish, the court held that the position that emerges from the above jurisprudence is that the court upheld the directions of 100% deposit or substantial portion thereof before hearing the petition under section 34 of the Act. It held that “where the arbitral award is in the nature of a money decree, a direction to deposit 100% of the awarded sum is neither punitive nor excessive but serves to secure the award-holder's interest pending adjudication.” The court further held that the jurisdiction of the writ court is merely supervisory, not appellate and therefore it cannot reappraise the discretion and substitute its own view for that of the Commercial Court. It held that “the High Court's power under Article 227 is confined to correcting jurisdictional errors and patent perversities. Reappraisal of facts or substitution of judicial discretion does not fall within its scope.” The court expressed displeasure at the State's misleading submission that the stay was denied when in fact it had been granted conditionally. The court held that “Litigants must approach the Court with candour and accuracy. Misrepresentation of facts to gain tactical advantage undermines the sanctity of judicial proceedings.” Accordingly, the present petition was dismissed. Case Title: Director, Land Records & Surveys Govt. of Odisha & Anr.-versus- Sylvesa Infotech Pvt. Ltd. Case Number: W.P.(C) No.21111 of 2025 along with W.P.(C) No.24348 of 2024 Judgment Date: 10/10/2025 Click Here To Read/Download The Order

Court May Direct Deposit Of 100% Of Awarded Amount Before Granting Stay U/S 36(3) Arbitration Act: Orissa High Court

Mohd Malik Chauhan

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Court May Direct Deposit Of 100% Of Awarded Amount Before Granting Stay U/S 36(3) Arbitration Act: Orissa High Court

Mohd Malik Chauhan

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Mohd Malik Chauhan

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