The court ruled that unconditional stays of arbitral awards must be supported by exceptional circumstances like fraud or illegality, emphasizing the need for prima facie evidence of error.

ORDER :

1. Leave granted.

2. These appeals arise from the common judgment and order passed by the High Court of Judicature at Bombay dated 22.01.2025 in Interim Application (L) No. 8589 of 2023 filed in Commercial Arbitration (L) Petition No. 7842 of 2023 with Interim Application (L) No. 8941 of 2023 in Commercial Arbitration (L) Petition No. 7800 of 2023 with Interim Application (L) No. 7149 of 2024 in Commercial Arbitration (L) Petition No. 8421 of 2023, respectively, by which the Interim Applications filed by the Award Debtors i.e. the respondents before us came to be allowed, and an unconditional stay of execution of the Arbitral Award dated 28.11.2022 as corrected by the corrigendum dated 19.12.2022 came to be granted till the final disposal of the Arbitration Petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Act 1996”).

3. It appears from the materials on record that the appellant herein is a partnership firm engaged in the business of catering. The respondent no. 6-Maple Leaf Enterprises is a Limited Liability Partnership (LLP). The parties entered into an agreement dated 25.05.2017.

4. The promoters Mr.Drunal Shailesh Mody, Mr. Yogesh Mansukhlal Popat, Mr. Bhargav Nagindas Patel, Mr. Surendra Narayan Poojary and Mr. Ameet Mehta, respectively in their capacity as the promoters of Maple Leaf Enterprises (LLP) entered into a memorandum of understanding with M/s. Popular Caterers, i.e. the appellant herein before us.

5. The Memorandum of Understanding arrived at between the parties in writing is dated 25.05.2017.

6. It appears prima facie that Maple Leaf Enterprises (LLP) was desirous of availing the services of the appellant firm for the purpose of providing pure vegetarian food (catering service) for the events that may be held at the Tulip Star Hotel, located at Juhu Tara Road, Juhu, Mumbai.

7. In accordance with the terms of the Memorandum of Understanding, the appellant was to pay Rs. 8,00,00,000/- (Rs. Eight crore only) towards adjustable interest free security deposit.

8. It is not in dispute that the appellant paid Rs. 4,00,00,000/- (Rs. Four Crore only) towards security deposit and the same was received by the respondent No. 6-herein, i.e. Maple Leaf Enterprises.

9. Before, the balance amount of Rs. 4 crore could be paid, disputes cropped up between the parties as early as 08-06-2017 i.e. barely within 12 days from the signing of the MoU.

10. At this stage, it is relevant to note that disputes cropped up because the State authorities prohibited the Tulip Star Hotel from organising any event at their place. In other words, a notice was served to the Hotel Tulip Star by the Mumbai Suburban Collector directing the hotel management to stop renting out their plot for functions.

11. In such circumstances, referred to above, the appellant herein was left with no option but to invoke arbitration.

12. An Arbitrator came to be appointed by the High Court vide order dated 11.11.2019 passed in Arbitration Petition No. 1150 of 2018 and Arbitration Application No. 349 of 2019 respectively.

13. The Arbitrator ultimately passed an award dated 28.11.2022. The operative part of it reads thus:

“(A) The Respondent Nos.1 to 5 are jointly and severally directed to pay to the Claimant the principal sum of Rs. 4,00,00,000/- along with interest thereon at 9.00% p.a. from 21.06.2017 till date of the award.

(B) The Respondent Nos.1 to 5 are jointly and severally directed to pay further interest at 9.00% p.a. on the principal sum of Rs. 4,00,00,000/- from date of the award till payment and/or realization.

(C) The Counter Claim of the Respondent No. 6 stands rejected.

(D) The Respondents are directed to jointly and severally pay to the Claimant a sum of Rs. 19,18,675/- towards costs of arbitration.”

14. On 19.12.2022 few errors in the award came to be rectified and a corrigendum was accordingly issued.

15. The respondents herein, having suffered an arbitral award of Rs. 4 crore with interest @ 9% per annum from the