SC: For staying arbitral award, govt. not to be given exceptional treatment

The Hon’ble Supreme Court, on 12thJuly 2019, in the matter of Pam Developments Private Ltd. v. State of West Bengal observed that there is no exceptional treatment to be given to the Government while considering the application for stay under Section 36 filed by the Government in proceedings under Section 34 of the Arbitration Act.

The Hon’ble Supreme Court observed that:

The phrase “have due regard to” would only mean that the provisions are to be taken into consideration, and not that they are mandatory.(Para 17)

Where the phrase “in accordance with” is used, it would mean that the provisions are mandatory. (This inference has been drawn on the basis of Para 18)

Mere reference to CPC in the said Section 36 of the Arbitration Act cannot be construed in such a manner that it takes away the power conferred in the main statute (i.e. Arbitration Act) itself. It is to be taken as a general guideline, which will not make the main provision of the Arbitration Act inapplicable. The provisions of CPC are to be followed as a guidance, whereas the provisions of the Arbitration Act are essentially to be first applied. (Para 18)

Since, the Arbitration Act is a self­ contained Act, the provisions of the CPC will apply only insofar as the same are not inconsistent with the spirit and provisions of the Arbitration Act. (Para 18)

Order XXVII Rule 8A of CPC does not provide that the decretal amount cannot be required to be deposited in the appeal against a money decree.(This inference has been drawn on the basis of Para 20)

Arbitration proceedings are essentially alternate dispute redressal system meant for early/quick resolution of disputes and in case a money decree award as passed by the Arbitrator against the Government is allowed to be automatically stayed, the very purpose of quick resolution of dispute through arbitration would be defeated as the decree holder would be fully deprived of the fruits of the award on mere filing of objection under Section 34 of the Arbitration Act. The Arbitration Act is a special Act which provides for quick resolution of disputes between the parties and Section 18 of the Act makes it clear that the parties shall be treated with equality. Once the Act mandates so, there cannot be any special treatment given to the Government as a party. (Para 24)

As such, under the scheme of the Arbitration Act, no distinction is made nor any differential treatment is to be given to the Government, while considering an application for grant of stay of a money decree in proceedings under Section 34 of the Arbitration Act. (Para 24)

The reference to CPC in Section 36 of the Arbitration Act is only to guide the Court as to what conditions can be imposed, and the same have to be consistent with the provisions of the Arbitration Act. (Para 24)

It may be true that the CPC provides for a differential treatment to the Government in certain cases, but the same may not be so applicable while considering a case against the Government under the Arbitration Act. (Para 25)

There is no exceptional treatment to be given to the Government while considering the application for stay under Section 36 filed by the Government in proceedings under Section 34 of the Arbitration Act. (Para 26)

Rule 8A of CPC only provides exemption from furnishing security, which would not restrict the Court from directing deposit of the awarded amount and part thereof. (Para 27)

Copy of judgement: Judgement_12-Jul-2019

-Tushar Kaushik

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