The second proviso to section 36(3) of the Arbitration and Conciliation Act, 1996 requires a prima facie case to be made out by the award-debtor and the Court being satisfied of the case made out that the arbitration agreement/contract or the making of the award was induced or effected by fraud or corruption.

JUDGMENT :

Moushumi Bhattacharya, J.

1. The petitioner seeks unconditional stay of the operation of an Award dated 22nd April, 2019. By the said Award, the learned Arbitrator directed the petitioner (respondent in the arbitration) to pay Rs. 13.06 crores (approx) to the respondent in respect of the claims made by the respondent in the arbitration.

2. The prayer for unconditional stay of the impugned Award is on the ground of the second proviso to section 36(3) of The Arbitration and Conciliation Act, 1996, which empowers the Court to unconditionally stay an award where the Court is satisfied, prima facie, that the making of the award was induced or effected by fraud or corruption.

3. According to learned counsel appearing for the petitioner, the manner in which the impugned Award was made fits in within the requirements of the second proviso to section 36(3) which contemplates unconditional stay of an award.

Facts urged by the petitioner for unconditional stay of the Award

4. According to counsel, two of the claims of the respondent (claimant in the arbitration) were adjudicated on the basis of an internal note-sheet which recorded inter alia that the respondent had executed approximately Rs. 87.6% of the work which translated to Rs. 18.26 crores. Counsel submits that several of the claims were awarded on the basis of the note-sheet which constitutes about 70% of the awarded sum. Counsel places documents to show that the internal note-sheet was taken on record in the arbitration proceedings in a manner which would fall under the fraud and corruption exception contained in the second proviso to section 36(3). Counsel submits that the document was disallowed from being tendered during the cross-examination of the claimant’s witness but was taken on record after conclusion of arguments. Counsel submits that although the petitioner was given leave to file its written objection to the internal note, the impugned Award does not deal with such objection. Counsel submits that the document could only have been admitted as evidence after being duly proved under the provisions of the Indian Evidence Act, 1872. According to counsel, the facts in the present case would support the prayer for unconditional stay of the Award.

The respondent’s/claimant’s objection to the prayer for unconditional stay

5. Learned counsel appearing for the respondent/claimant in the arbitration urges that the petitioner has not made out any case for unconditional stay of the Award. Counsel submits that the petitioner had concealed the document despite the claimant making several requests to the petitioner to disclose the original document which was all along in the possession of the petitioner. Counsel submits that the question of fraud can only come in where a party had knowingly suppressed a document to the detriment of the other; whereas in the present case the petitioner (respondent in the arbitration) has suppressed the document. It is also submitted that the petitioner has not disputed the contents of the documents or alleged that the document is a manufactured document. It is further submitted that the petitioner had also been given an opportunity to file its objection to the documents/note-sheet which was considered by the arbitrator made the award. Counsel submits that none of the facts placed would substantiate the petitioner’s claim of the Award being vitiated by either fraud or corruption.

The second proviso to section 36(3) of the 1996 Act

6. Section 36 of the Act deals with enforcement and enables an award-holder to enforce an award in accordance with the provisions of The Code of Civil Procedure, 1908 as a decree of Court. Section 36(2) requires the Court to grant an order of stay of the operation of the arbitral award on an application being made for such and clarifies that the mere filing of an application for setting aside of the award under section 34 will not render the award unenforceable. Section 36(3) empowers the Court to stay the operation of the