The main legal point established in the judgment is that the unamended Section 36 of the Arbitration and Conciliation Act does not provide for automatic stay of the award pending the application under Section 34. The clarificatory nature of the amended Section 36 was emphasized, restating the position that the unamended Section 36 does not stand in the way of the law as to grant of stay of a money decree under the provisions of the CPC.

ORDER :

Prakash Shrivastava, J.

1. By this petition filed under Article 227 of the Constitution, the petitioners have challenged the order dated 05.01.2021 whereby the petitioners' application being IA No. 02/2020 for stay of execution of the arbitral award has been rejected.

2. The brief facts are that the Arbitrator was appointed under Section 11(6) of the Arbitration and Conciliation Act (hereinafter referred to as 'the Act') and on conclusion of the arbitration proceedings, the Arbitrator had passed the award dated 07.09.2014. The petitioners being aggrieved with the said award have filed the application under Section 34 of the Act. In the meanwhile, the respondent had filed the application under Order 21 Rule 11 of the CPC for execution of the award wherein notices were issued to the petitioners and after entering appearance in the execution proceedings, petitioners had filed the application under Order 21 Rule 99 and 101 read with Section 151 of the CPC on 23.12.2020 with a prayer to keep the execution proceedings in abeyance or stayed till the petitioners' application under Section 34 of the Act is decided. The Executing Court by the impugned order dated 05.01.2021 has rejected the said application.

3. Learned counsel appearing for the petitioners submits that the executing court has committed an error in rejecting the petitioners' application without appreciating the correct legal position. He has submitted that in the present case, unamended Section 36 of the Act will apply and there will be automatic stay of the award pending the application under Section 34 of the Act.

4. Learned counsel for the respondent has opposed the prayer and has submitted that as per the interpretation which has been given by the Supreme Court, unamended Section 36 of the Act does not provide for automatic stay and that in view of the amendment in 2015 made in Section 36 of the Act, there is no automatic stay of the impugned award on filing the application under Section 34 of the Act.

5. I have heard the learned counsel for the parties and perused the record.

6. In the present case, the award has been passed on 07.09.2014. The unamended Section 36 as it stood at the time of passing of the award reads as under:

"36. Enforcement. - Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court."

7. Section 36 of the Act was amended by Arbitration & Conciliation (Amendment) Act, 2015. The amended provision clarifies that where an application to set aside the arbitral award is made under Section 34, the filing of such application itself would not render the award unenforceable unless the appropriate orders are passed by the Court granting stay of the operation of the award in terms of sub-section (3) thereof. Sub-section (3) provides for grant of stay of the award after recording reasons and subject to such conditions as the court deems fit.

8. By virtue of Section 87 as introduced by the Arbitration & Conciliation (Amendment) Act, 2019, it has been provided that the Amendment Act of 2015 will not apply to arbitral proceedings commenced before the commencement of Amendment Act of 2015 and court proceedings arising out of or in relation to such arbitral proceedings whether commenced prior or after the commencement of the Amendment Act.

9. The Supreme Court in the matter of National Aluminum Company Ltd. (NALCO) vs. Pressteel & Fabrications (P) Ltd. reported in AIR 2005 SC 1514 had considered the unamended Section 34 and taking note of the language of the provision held that an award when challenged under Section 34 within the time stipulated therein becomes unexecutable but while holding so it was expressed that such a provision defeats the very object of alternate dispute resolution system. In Fiza Developers and Inter-trade