The court emphasized that the conditions for stay of an arbitral award should not differ based on whether a party is a statutory body, reinforcing the principle of equal treatment under the Arbitration Act.

JUDGMENT

Dr D.Y. Chandrachud, J.

1. Leave granted.

2. The appeal arises from an interim order dated 9 September 2024 of a Single Judge of the High Court of Judicature at Madras in A No 4236 of 2024 in Arb OP (Com Div) No 335 of 2024.

3. The respondent issued a Letter of Award for executing Capital Dredging Phase-III at Kamarajar Port to the appellant for an approximate sum of Rs 274 crores. On 12 August 2015, the parties entered into a contract for the following work to be conducted by the appellant:

a. Capital dredging of Container Berth and Multi Cargo Berths and their

b. Capital dredging of Coal Berth 3 & Coal Berth 4 and their approaches;

c. Removal of onshore boulders and transportation to the designated area;

d. Removal of offshore boulders and transportation to the designated area;

e. Removal of offshore identified debris/wrecks; and

f. Environmental monitoring.

4. These tasks were to be completed on or before 11 April 2017. Thereafter, disputes arose between the parties. The appellant invoked the arbitration agreement. The arbitral proceedings commenced and the three-member arbitral tribunal made an award on 7 March 2024 directing the respondent to:

a. Pay the appellant a sum of Rs 21,07,66,621 towards the claims that were allowed in its favour;

b. Pay the appellant interest on the amount awarded at the rate of nine per cent per annum from 15 November 2017 until the date of the award if the payment was made within three months, and, if not, at the rate of twelve per cent per annum from the date of the award till the date of payment; and

c. Pay the appellant Rs 3,20,86,405 by way of costs.

5. Both parties filed applications under Section 33 of the Arbitration and Conciliation Act 1996 (“Arbitration Act”) for correction of the award and for additional arbitral awards. The arbitral tribunal dismissed the application filed by the respondent. It allowed the application filed by the appellant only to the extent of increasing the costs awarded to it by Rs 12,00,000 to reflect the fees paid to the arbitral tribunal subsequent to the parties filing their memo of costs.

6. The respondent challenged the arbitral award under Section 34 of the Arbitration Act and moved an application for stay of execution. The High Court, by its impugned judgment and order dated 9 September 2024, granted a stay on the execution of the award conditional on the respondent furnishing a bank guarantee in the sum of Rs 21,07,66,621 within a period of eight weeks.

7. The judgment of the High Court has been assailed by the original claimant of the arbitral proceeding (i.e., the appellant in this case) whose contention is that since the award operates as a money decree under Section 36 of the Arbitration Act, the High Court was not justified in directing merely the furnishing of a bank guarantee in relation to the principal amount. The appellant contends that the respondent ought to have instead been directed to deposit the amount awarded to it as a condition for the grant of a stay on the execution of the award.

8. Mr Shyam Divan, senior counsel appearing on behalf of the appellant, has urged that: (i) A body of precedent has emerged from this Court in terms of which the sanctity of arbitration must be preserved by requiring the deposit of the amount awarded as a condition for the stay on the enforcement of the award; (ii) The amended provisions of the Arbitration Act require that while considering an application for stay of an award for the payment of money, due regard has to be had to the provisions of the Code of Civil Procedure 1908 (“CPC”); and (iii) The award of Rs 21,07,66,621 covered ten claims of which three were awarded in full and seven in part. The High Court while ordering a stay, has essentially furnished only two reasons. The first reason pertains to the question of cess, while the only other reason is that the respondent is not “a fly by operator”.

9. Mr C A Sundaram, senior counsel appearing on behalf of the respondent, submits that: (i) The amended pr