IMPORTANT POINT
The court emphasized that conditions for staying an arbitral award must be reasonable and justified, adhering to established legal principles.

ORDER :

Alok Aradhe, CJ.

Mr. Atul Chitale, learned Senior Counsel represents Venkata Sai Krishna Ponnuru, learned counsel for the petitioner.

Mr. P. Soma Sekhara Naidu, learned counsel appears for respondent No.1.

2. With the consent of the learned counsel for the parties, the matter is heard finally.

3. In this Civil Revision Petition filed under Article 227 of the Constitution of India, the petitioner has assailed the validity of the order dated 24.01.2024 passed by the Additional Special Court in the cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad (hereinafter referred to as ‘the Commercial Court’) by which I.A.No.16 of 2022 in COP.No.28 of 2022 preferred by the petitioner under Section 36(3) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) seeking stay of enforcement of the Award dated 04.05.2021, has been allowed subject to payment of 50% of the amount of award along with interest.

4. Facts giving rise to filing of the petition briefly stated are that the petitioner was awarded the work of construction of Two Laning of Existing Hunli-Anini Road on EPC Basis in the State of Arunachal Pradesh in November, 2015, by National Highways & Infrastructure Development Corporation Limited (hereinafter referred to as ‘the employer’). Subsequently, on 09.11.2016, the petitioner and the employer entered into an Engineering, Procurement and Construction Agreement. Prior to execution of the aforesaid Agreement, letter of approval was issued in favour of the petitioner and thereafter a Sub-Contract Agreement dated 28.09.2016 was executed between the parties.

5. The dispute arose between the parties and the same was referred to the Arbitral Tribunal. The Arbitral Tribunal by an Award dated 04.05.2021 dismissed the claim made by the petitioner and allowed the counterclaim filed by respondent No.1.

6. The aforesaid Award was challenged in a proceeding under Section 34 of the Act. An application under Section 36(3) of the Act was filed seeking stay of the Award dated 04.05.2021. The Commercial Court by an order dated 24.01.2024 stayed the execution of the Award dated 04.05.2021 subject to payment of 50% of the amount awarded in the Award dated 04.05.2021. The said order is under challenge in this petition under Article 227 of the Constitution of India.

7. Learned Senior Counsel for the petitioner submits that the order dated 24.01.2024 passed by the Commercial Court is bereft of any reason and has been passed in violation of law laid down by the Supreme Court in Pam Developments Private Limited v. State of West Bengal, (2019) 8 SCC 112 so far as it pertains to the finding that the provisions of the Code of Civil Procedure (hereinafter referred to as ‘CPC’) have to be mandatorily followed mandatory, while deciding the petition under Section 36(3) of the Act. It is further submitted that the Commercial Court has not even adverted to the Award dated 04.05.2021 passed by the Arbitral Tribunal and without assigning any cogent reason, has directed the petitioner to deposit 50% of the awarded amount. It is submitted that an Award can be stayed without even imposing any condition. In support of aforesaid submissions, reliance has been placed on the decision of the Supreme Court in Pam Developments Private Limited (supra) and the two Single Bench decisions of Bombay High Court in CFM Asset Reconstruction Private Limited v. M/s.SAR Parivahan Private Limited (I.A.(L) No.6246 of 2024 in Commercial Arbitration Petition (L) No.5565 of 2024) and M/s. PFS Shipping (India) Limited v. Captain V.K. Gupta and another, 2016 SCC OnLine Bom 10048 .

8. On the other hand, learned counsel for respondent No.1 has submitted that the order of the Commercial Court is reasonable and the Commercial Court has power to impose conditions as a condition precedent to stay the Award. It is submitted that the order passed by the Commercial Court does not call for any interference in exercise of supervisory jurisdiction of this Court unde