Summary
An arbitral award of about Rs. 142 crore was made in favour of Power Mech, an Indian sub-contractor, against SEPCO, a Chinese contractor on Indian power projects. SEPCO challenged it under Section 34 and applied for stay under Section 36(2), and Power Mech then applied under Section 9 for security. The Delhi High Court decided the Section 9 application first and directed SEPCO to deposit the full Rs. 142 crore principal. Enforcement was stayed on that deposit. The Supreme Court dismissed SEPCO's appeals. No rule requires the earlier application to be heard first, and the two applications share common considerations. Section 9 empowers securing the amount in dispute after an award, guided by but not bound by Orders 38 and 39 CPC. With a large award and no cogent prima facie ground against it, the deposit order was within power.
Issues
- Whether the High Court could decide the award-holder's later Section 9 application before the award-debtor's earlier Section 36(2) stay application
- Whether the High Court could direct deposit of the entire principal awarded as an interim measure under Section 9 after the award, pending the Section 34 challenge
Provisions considered
- Section 9(1)(ii)(b) and (e), Arbitration and Conciliation Act, 1996After the award and before its enforcement, the court may secure the amount in dispute or grant any just and convenient interim measure. Prima facie case, balance of convenience and promptness are the tests, and CPC principles guide without binding. (¶¶ 20, 23, 24, 31, 32, 33, 34, 36)
- Section 36(2) and (3) with provisos, Arbitration and Conciliation Act, 1996Filing a Section 34 challenge does not stay the award. A stay may be granted on conditions, including security for the full amount, with regard to CPC provisions on stay of money decrees. Unconditional stay requires a prima facie case of fraud or corruption. (¶¶ 16, 19, 27, 28, 29, 30)
- Order 41 Rule 5, Code of Civil Procedure, 1908Stay of a money decree on furnishing cash security supported the direction to deposit the awarded amount. (¶ 36)
Held
- There is no hard and fast rule that an application filed earlier must be heard before one filed later. The Section 9 and Section 36(2) applications related to the same award and involved common considerations. (¶¶ 21, 22, 23)
- Section 9 confers wide power to secure the amount in dispute even after the award, subject to a prima facie case, balance of convenience and reasonable expedition. The CPC's principles on interlocutory relief, including Orders 38 and 39, guide the court, but their text does not bind it. (¶¶ 24, 25, 31, 32, 33, 34)
- Grounds for interfering with an award are restricted. The plea that the award was opposed to public policy lacked any particulars, and the Supreme Court will not reappraise the evidence before the tribunal in an appeal under Article 136. With an award of Rs. 142 crore and no cogent prima facie ground against it, the deposit direction was within the High Court's powers. (¶¶ 18, 25, 26, 35, 36)
- A stay of a money award under Section 36(3) is coupled with power to impose conditions such as security for the entire amount. Unconditional stay is available only on a prima facie case of fraud or corruption in the agreement or the making of the award. (¶¶ 16, 28, 30)
Result
Appeals dismissed. The direction to deposit the awarded principal as security was upheld, and the High Court was requested to decide the Section 34 petitions preferably within three months.