The Amendment to Section 36 clarifies there is no automatic stay of arbitral awards upon filing a Section 34 application, affecting the calculation of limitation periods for enforcement.

JUDGMENT :

Sunita Agarwal, C.J., D.N.Ray, J.

1. The petitioner herein seeks to invoke the extraordinary supervisory jurisdiction of the High Court under Article 227 of the Constitution of India to set aside the order dated 29.09.2025 passed by the Commercial Court, City Civil Court, Ahmedabad in Execution Petition No.84 of 2024.

2. The only ground of challenge to the said order pressed before us, is that the execution case filed on 06.12.2024 was barred by limitation. It was argued that the execution petition preferred by the respondent for enforcement of the arbitral award dated 17.01.2009 is time barred under Article 136 of the Limitation Act’ 1963, which prescribed the period of limitation of 12 years for execution / enforcement of the decree / arbitral award.

3. The contention is that the Executing court has relied upon an overruled judgment of National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd., [(2004) 1 SCC 540], and has erroneously applied the principle of “automatic stay of award” to suspend the period of limitation from the date of award, i.e. from 17.01.2009 to the date of amendment of Section 36 of the Arbitration and Conciliation Act’ 1996, i.e. 23.10.2015.

4. The contention is that though prior to the amendment of Section 36 by the amendment of 2015, the legal position, as held in NALCO (supra) was that with the filing of the application under Section 34 of the Arbitration and Conciliation Act’ 1996 (for short, “the Act’ 1996”), there would be an automatic stay of the award affecting its enforceability under Section 36. However, a clarification was brought by insertion of sub-section (2) in Section 36 providing that the filing of application under Section 34 shall not by itself render the award unenforceable, i.e. there would not be automatic stay of the enforcement of the award under Section 36.

5. To substantiate the said contention, Mr. H. S. Tolia, the learned Senior Counsel for the petitioner would vehemently argue that the position of law as to the automatic stay of the arbitral award with the filing of Section 34 application, has further been explained in Hindustan Construction Co. Ltd. v. Union of India , [ (2020) 17 SCC 324 ], the judgment delivered on 27.11.2019.

6. Placing paragraph Nos. ‘34’ to ‘41’ of the decision in HCCL (supra), it was contended that a three Judges Bench of the Apex Court has declared therein that the judgments in NALCO (supra) and Fiza Developers & Inter-Trade (P) Ltd. v. Amci (India) (P) Ltd., [ (2009) 17 SCC 796 ] have laid down the law incorrectly, inasmuch as, even the unamended Section 36 did not contemplate for automatic stay.

7. It was held therein by the Apex Court that to read unamended Section 36 to state that an award when challenged under Section 34 becomes unexecutable merely by virtue of such challenge being made because of the language of Section 36, is plainly incorrect. The reading Section 35 with Section 36 (unamended) makes it clear that Section 36 was enacted for different purpose and it merely provided that enforcement of the final award will be under the Code of Civil Procedure, 1905, in the same manner as if it were a decree of the Court. To read Section 36 as inferring something negative, namely, that where the time for making an application under Section 34 has not