Award-Holder Can't Be Denied Withdrawal Of Amount Deposited Pursuant To Stay Merely Because Award Debtor May Succeed In Appeal: Telangana HC

The Telangana High Court bench of Justice Moushumi Bhattacharya and Justice B.R. Madhusudhan Raohas has held that the award holder can be allowed to withdraw the amount deposited by the award debtor in pursuance of stay on the execution of the award. The award holder cannot be prohibited from withdrawing the amount only on the ground that the award debtor may succeed in the appeal under section 37 of the Arbitration and Conciliation Act, 1996. Brief Facts: The Civil Revision Petition (CRP) arises out of a docket order dated 10.03.2025 passed by the Commercial Court in an application filed by the Award-holder for withdrawing an amount of Rs.1,18,50,000/- deposited by the Award-debtor. After hearing both parties, the Commercial Court on 10.03.2025 allowed the Award-holder to withdraw the amount deposited by the respondent, subject to furnishing a bank guarantee. This deposit was made in compliance with the order dated 05.12.2024 passed by a Co-ordinate Bench in C.O.M.C.A. No.36 of 2024—an appeal filed by the respondent challenging the rejection of its Section 34 application under the Arbitration and Conciliation Act, 1996. The Co-ordinate Bench had directed the respondent to deposit 50% of the Award amount for a stay on execution, granting the Award-holder liberty to seek withdrawal. The docket order dated 10.03.2025, challenged in the present CRP, permitted the petitioner/Award-holder to withdraw the amount deposited by the respondent, subject to furnishing a bank guarantee of an equivalent amount along with an undertaking for the withdrawn sum. The Petitioner submitted that the petitioner is facing great difficulty in arranging for a bank guarantee of an equivalent amount since the bank is insisting on a 100% margin for the bank guarantee. It is not necessary for an Award-holder to furnish a bank guarantee for withdrawing the security put in by the Award-debtor. In reply, the Respondent submitted that furnishing of a bank guarantee for the amount withdrawn is necessary in the event the Respondent succeeds in the Appeal filed under section 37 of the 1996 Act. The court noted that the petitioner, who was the claimant in the arbitration, was awarded approximately ₹2.38 crores. The respondent's application to set aside the Award was dismissed, following which it filed an appeal before the Co-ordinate Bench. The Co-ordinate Bench stayed execution of the Award on the condition that the respondent deposit 50% of the awarded amount, i.e., ₹1,18,50,000. It further noted that as it stands, the Award-holder has not received the benefit of the Award dated 19.09.2017, even after nearly 8 years, due to the stay on its execution. Despite the respondent depositing ₹1,18,50,000 (50% of the Award amount), the Award-holder has not been allowed to withdraw any portion of it. The court further observed that the Award-holder now seeks permission to withdraw ₹59,25,000 (25% of the Award amount) and is willing to furnish security for the remaining 25%, effectively seeking access to only half of the deposited amount while securing the balance. The court concluded that “the Award-holder is certainly entitled under the 1996 Act to enjoy the fruits of the Award particularly when the execution thereof has been stayed. There is no finding by any Court that the Award-debtor faces a real risk of the amount not being made good by the Award-holder if the Award-debtor were to succeed in the section 37 Appeal.” Accordingly, the present application was disposed of. Case Title: M/s Excel Constructions vs M/s Bharat Biotech International Ltd Case Number: I.A.NO.1 OF 2025 IN/AND CIVIL REVISION PETITION NO.1620 OF 2025 Judgment Date: 09/06/2025 Dr. P. Bhaskara Mohan, learned counsel appearing for the petitioner. Mr. A. Venkatesh, learned Senior Counsel representing Mr. G. Kalyan Chakravarthy, learned counsel for the respondent.Click Here To Read/Download Order

Award-Holder Can't Be Denied Withdrawal Of Amount Deposited Pursuant To Stay Merely Because Award Debtor May Succeed In Appeal: Telangana HC

Mohd Malik Chauhan

Tags