The Court emphasized the limited scope of challenge against an award under the Act and balanced the equities between the parties in granting or modifying the order.

ORDER :

Ravi Krishan Kapur, J.

By an order dated 23 December, 2021 (the order), this Court while disposing an application under Section 36(2) of the Arbitration and Conciliation Act, 1996 (the Act) seeking stay of an award dated 21 December, 2019 (the award), had inter-alia directed the following:

17. For the foregoing reasons, I am of the view that since the award is a money award for approximately Rs.898 crores, I direct that there shall be a stay of the award subject to the condition that the petitioner deposit 50% of the awarded amount of Rs.898 crores by way of cash security or its equivalent to the satisfaction of the Registrar Original Side, High Court at Calcutta. Upon such deposit being made, the Registrar Original Side is directed to make a fixed deposit of the said amount with any nationalised bank and keep the same renewed till the disposal of the application under section 34 of the Act or until further orders of Court. The remaining 50% of the awarded amount of Rs.898 crores be secured by way of bank guarantee(s) of a nationalised bank by the petitioner to the satisfaction of the Registrar Original Side, High Court. The aforesaid exercise is to be completed within a period of four weeks from the date of this order. In the event security as directed above is furnished, there shall be stay of execution of the award till the disposal of AP 40 of 2020.

2. Being aggrieved by the order, both parties i.e. the award debtor and the award holder had filed separate Special Leave Petitions. By a common order dated 28 January, 2022, both the Special Leave Petitions were dismissed as follows:

SLP (C) No.505/2022:

This Special Leave Petition filed by Damodar Valley Corporation is dismissed, as we see no reason to interfere with the order passed by the High Court. Pending application(s), if any, shall stand disposed of.

However, the petitioner is at liberty to approach the High Court for alteration of the order.

SLP (C) No.935/2022:

Mr. Shyam Divan learned senior counsel for the petitioner, seeks permission to withdraw this Special Leave Petition, with liberty to pursue the applications filed before the High Court for variation/ modification of the impugned order.

Permission granted.

The Special Leave Petition is, accordingly, dismissed as withdrawn.

3. In this background, the parties seek modification of the order. Admittedly, neither of the parties had argued any of the points raised in either of the applications at the time of passing of the order. Thus, all the points urged by the parties are new points both in law and on facts.

GA 7 OF 2022

4. In this application, the award debtor seeks modification of the order to the extent that, the award debtor be permitted to deposit only 50% of the entire awarded amount i.e. Rs.449 crores, by furnishing a bank guarantee for Rs.337 crores and the remaining amount of Rs.112 crores by way of cash security. The award debtor also prays for time to furnish the same by 31 May, 2022.

5. The primary ground on which the award debtor seeks modification is one of financial stringency. It is contended that the award debtor is facing a liquidity crunch. It is further alleged that the award debtor has limited access to cash and most of the cash has been earmarked towards different financing activities i.e. interest on loans and repayment of loans. Furthermore, the award debtor has a very high debt ratio which has compelled the award debtor to borrow more money from the market. There are also trade receivables which are yet to be recovered. The amount lying in the sinking fund is not available in liquid form. Furthermore, any reliance based on the CARE Report for the year ending 2020-21 is misplaced since the Report for the year ending 2021-22 shows that the rating of the award debtor has fallen from AAA to A (-). The award debtor also cites COVID-19 due to which the award debtor has suffered severe financial crisis. There is also an underlying theme in the petition of the award debtor performing a socio-economic