MAYFAIR HOTELS AND RESORTS LTD., BHUBANESWAR vs KOLKATA UNIQUE HOSPITALITY LLP, SUNDERGARH
- Court
- Odisha High Court
CMP/362/2026
ODHC010139452026
2026:OHC:136
IN THE HIGH COURT OF ORISSA AT CUTTACK
CMP No.362 of 2026
CNR No-ODHC010139452026
(In the matter of an application under Article 227 of the
Constitution of India).
Petitioner (s)
….
Mayfair Hotels & Resorts Ltd.,
Bhubaneswar
-versus-
Kolkata Unique Hospitality LLP,
Sundergarh
…. Opposite Party (s)
Advocates appeared in this case through Hybrid Arrangement Mode :
For Petitioner (s) : M/s. Surya Prasad Misra, Sr. Adv.
along with associates
Mr. Sourya Sundar Das, Sr. Adv.
along with associates
Mr. Sitanshu Mohan Dwibedy,
B. Pattnaik, S. Kumar, S. Das, Advs.
For Opp. Party (s) : Mr. Sabyasachi Chaudhury, Sr. Adv.
along with associates
Mr. Swayamjit Rout, Adv.
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING: -21.08.2026
DATE OF JUDGMENT: -11.09.2026
Dr. Sanjeeb K Panigrahi, J.
1. The present CMP arises from an order dated 13.02.2026 passed by the
learned Senior Civil Judge Commercial Court Bhubaneswar in I.A.
No.01 of 2025 arising out of ARBP No.58 of 2025. Aggrieved by the
said order the Petitioner has approached this Court seeking its
modification.
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Signed by: BHABAGRAHI JHANKAR
Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
ACTUAL ATRIX OF THE ASE
I. F M C :
2. The brief facts of the case are as follows:
(i) The dispute arises out of an Operating Agreement dated
08.11.2017 executed between the opposite party (referred to in
the pleadings as "KUH", the owner of the scheduled property at
Kalimpong) and the petitioner (referred to as "Mayfair"/MHRL,
the hotel operator). The Recitals record that KUH had made
significant investment in renovating the scheduled property for
the purpose of running a hotel thereat and proposed to appoint
Mayfair as operator on an exclusive basis for a period of 25
years on a revenue-sharing basis (Recital C, page 47 of the
CMP), while Recital B records that Mayfair was already
operating the hotel at Kalimpong prior to the execution of the
Operating Agreement and prior to the property coming into the
hands of KUH. Clause 4.1 fixes the tenure at 25 years from the
date of execution, subject to earlier termination under Clause
4.2. Clause 2.9 records the parties' agreement that the
understanding shall under no circumstances be construed as a
lease or transfer of property or of any right, title or interest,
including creation or acquisition of rights under the Easement
Act, 1882. Clauses 2.2 and 2.3 govern revenue sharing, with the
sharing ratio to be mutually renegotiated on a quinquennial
basis after the first five years.
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Signed by: BHABAGRAHI JHANKAR
Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
(ii) Clause 6.2 of the Operating Agreement is the governing law and
arbitration clause. It requires the parties, in the event of a
dispute, first to attempt amicable resolution by mutual
discussion, and only where such discussions fail after ninety
days of the dispute first arising is the dispute to be referred to
arbitration. The clause names a sole arbitrator, Justice (Retd.)
B.P. Das, former Judge, Orissa High Court, provides that the
arbitration shall be governed by the Arbitration and Conciliation
Act, 1996 as amended in 2015, fixes the venue at Bhubaneswar,
makes the award final and binding subject to manifest error or
fraud, and provides that each party shall bear its own costs.
(iii) Arbitration was initiated by KUH. The sole arbitrator delivered
the award on 10.06.2025. Under the award, amounts of
Rs.1,15,00,000/- under claim item (a), Rs.10,35,000/- under claim
item (b), and Rs.38,43,00,000/- under claim items (g), (h) and (i),
aggregating Rs.39,68,35,000/-, were awarded in favour of the
claimant; and Rs.3,81,47,674/- under counter-claim no.3 together
with a direction for refund of Rs.5,59,44,004/-, aggregating
Rs.9,40,91,678/-, in favour of the respondent. The net monetary
award therefore works out to Rs.30,27,43,322/-.
(iv) In addition to the monetary component, the award contains two
further operative directions. By paragraph 153, the arbitrator
passed an award of eviction directing handover of possession of
the property in running condition within three months from the
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Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
date of the award. By paragraph 168, the arbitrator awarded
Rs.1.66 crores per month from April 2025 by way of mesne
profits / loss of profits until actual handover of possession.
Paragraph 104 of the award contains the finding that the
Operating Agreement constitutes a licence and not a lease, and
paragraph 127 contains the finding relating to termination of the
agreement upon expiry of the initial term.
(v) Mayfair challenged the award by an application under Section
34 of the Arbitration and Conciliation Act, 1996, registered as
Arb.(P) No.58 of 2025 before the Civil Judge (Senior Division),
Commercial Court, Bhubaneswar, and filed I.A. No.1 of 2025
seeking stay of enforcement of the award and of Execution Case
No.145 of 2025. Before the Commercial Court, Mayfair sought
stay either unconditionally or on such suitable conditions as the
court might impose; KUH sought that any stay be made
conditional on deposit of 100% of the awarded amount as
security.
(vi) By order dated 13.02.2026, the Commercial Court allowed the
stay petition on terms. The enforcement of the award in the form
of a money decree was stayed subject to deposit of
Rs.30,27,43,322/- by demand draft in the name of the Registrar,
Civil Courts, Khurda at Bhubaneswar within one month, to be
kept in fixed deposit in a nationalised bank at Bhubaneswar for
six months with an automatic renewal clause. The enforcement
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Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
of the award in relation to eviction was stayed subject to
payment of Rs.1.66 crores per month to the opposite party in his
bank account by the 10th day of each succeeding month,
reckoned from the date of filing of the case, i.e. 01.09.2025, till
disposal of the Section 34 application. The order further clarified
that the opposite party shall not be entitled to release of any
deposited amount in his favour till disposal of the case.
(vii) As to post-order compliance, the record discloses that Mayfair
deposited Rs.25,00,00,000/- and, by petition dated 11.03.2026,
sought acceptance of the deposit on the footing that a sum of
Rs.5,63,00,000/- remained unrefunded by KUH, which when
added to Rs.25 crores would satisfy the deposit directed. KUH
filed an application dated 20.06.2026 seeking withdrawal of the
deposited amount, which the Commercial Court rejected by
order dated 21.07.2026. Mayfair has continued to pay
Rs.38,85,000/- per month, the rate it asserts to be contractually
applicable, and states that it has thereby paid more than Rs.6
crores.
(viii) The present proceeding is a CMP invoking the power of
superintendence under Article 227 of the Constitution, directed
against the order dated 13.02.2026, and confined in substance to
the direction to pay Rs.1.66 crores per month, coupled with a
prayer to have the deposits already made accepted in
satisfaction of the first limb of the direction. Both sides have
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Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
filed written notes of submission; the opposite party's instant
note is in addition to an earlier note filed by it on 21.08.2026, and
addresses the interplay between the Arbitration and
Conciliation Act, 1996 and the Commercial Courts Act, 2015,
besides responding on merits. The Section 34 application is
stated to be proceeding on a regular basis, with Mayfair likely to
conclude its part of the hearing shortly.
II. S UBMISSIONS O N B EHALF O F T HE P ETITIONER :
3. The learned counsel for the Petitioner earnestly made the following
submissions in support of his contentions:
(i) On maintainability, the petitioner contends that recourse to
Article 227 is available because the impugned order does not fall
within the ambit of Order XLIII CPC or Section 37 of the 1996
Act, and is therefore not appealable under Section 13(1-A) of the
Commercial Courts Act, 2015. Section 8 of the Commercial
Courts Act, it is urged, bars only the entertaining of a civil
revision application or petition against an interlocutory order of
a Commercial Court; it does not and cannot restrict the
constitutional power of superintendence of the High Court
under Article 227. If the Delhi High Court decision in Ashok
1
Kumar Puri and Anr. v. S. Suncon Realtors Pvt. Ltd. is
construed as limiting Article 227 interference to orders patently
lacking inherent jurisdiction, such a construction would run
1
2021 SCC OnLine Del 5220
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Date: 19-Sep-2026 19:00:20
contrary to the very purport and language of Section 8 and
would tinker with the basic structure of the Constitution,
reliance being placed on AIR 1997 SC 1125, paragraph 79. The
petitioner further relies on the decision of this Court in Planet
2
, as having
Hospitality Services v. Hotel Suraj Palace
categorically held that petitions under Articles 226 and 227
against orders of Commercial Courts at the District Judge level
are maintainable and that the jurisdiction and powers of the
High Court are unaffected by Section 8.
(ii) On the scope of Section 36(3), the petitioner relies extensively
3
on Lifestyle Equities C.V. & Anr. v. Amazon Technologies Inc . ,
to contend that the court is vested with a wide discretionary
power both to grant stay and to impose (or not impose)
conditions. Paragraph 109 is relied on for the proposition that
stay may be granted "subject to such conditions as it may deem
fit"; paragraph 110 for the proposition that the court may
consider the merits of the award at a prima facie level in order
to decide whether a conditional stay is justified; paragraphs 111
to 113 and 120 for the proposition that an unconditional stay
may be granted in exceptional cases even where the case does
not arise under the second proviso to Section 36(3), such power
being relatable to the main part of Section 36(3); and paragraph
112 for the proposition that the power to impose conditions
2
2025 II CLR 970
3
2025 INSC 1190
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Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
includes the power not to impose them. Paragraphs 116, 119, 121
and 124 are additionally pressed into service.
(iii) The petitioner expressly clarifies that it does not seek an
unconditional stay. It states that from the inception of the CMP
it has shown willingness to comply with the first limb of the
impugned order relating to the money decree, and confines its
challenge to the second limb, namely the monthly payment of
Rs.1.66 crores, in respect of which alone stay is prayed for; and
that notwithstanding the challenge, it continues to deposit
Rs.38.85 lakhs per month and has paid over Rs.6 crores.
(iv) On the contractual foundation, the petitioner contends that the
tenure of the Operating Agreement is 25 years on an exclusive
basis, terminable only in accordance with Clause 4.2; that by
Clause 2.9 the parties excluded the operation of the Transfer of
Property Act, 1882 including lease, and of the Easement Act,
1882 including licence, and that in any event the Easement Act
does not extend to West Bengal as a codified statute; and that
since Recital B shows Mayfair was in occupation and operating
the hotel even before the property came to KUH, it cannot be
said that KUH put Mayfair into possession under the Operating
Agreement. The only dispute contemplated between the parties,
it is urged, was the quinquennial revision of revenue sharing
under Clauses 2.2 and 2.3, in respect of which Mayfair had
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Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
consistently pressed for mutual discussion for the period after
March 2023.
(v) On patent illegality going to the root of the award, the petitioner
contends that KUH failed to comply with Section 21 of the 1996
Act, that Mayfair received no notice of arbitration, and that no
document was exhibited to prove receipt, relying on Alupro
4
Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd . It is
further contended that no attempt at amicable resolution
preceded the reference, so that the condition precedent in
Clause 6.2 was not satisfied, reliance being placed on M/s
5
,
Sanjay Iron and Steel Ltd. v. Steel Authority of India and M/s
Devanshi Construction A-5 Class Contractor v. Central Public
6
Works Department .
(vi) On jurisdiction and excess of authority, the petitioner contends
that the arbitrator had no jurisdiction to pass an order of
eviction, and that the direction in paragraph 153 is without
jurisdiction and contrary to Clause 2.9, reliance being placed on
(2011) 5 SCC 532 (paragraphs 35, 36 and 39). It is urged that the
finding in paragraph 104 that the Operating Agreement
constitutes a licence is untenable given the exclusion of the
Easement Act, and that the eviction direction rests on that
finding. It is further urged that the reference, if any, could only
have concerned revenue sharing, and that by travelling beyond
4
AIRONLINE 2017 Del 81
5
ARB.P. 408/2021
6
ARBR No.28 of 2020
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Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
it the arbitrator rewrote the contract, rendering the award
7
unenforceable, reliance being placed on ONGC v. Saw Pipes ,
8
and Associate Builders v. DDA .
(vii) On procedural non-compliance, the petitioner contends that
KUH raised a plea under Section 16(2) as to the arbitrability of
Mayfair's counter-claim, and that the arbitrator, instead of
deciding that plea as mandated by Section 16(5), dealt with it
along with the award, thereby taking away Mayfair's right of
appeal. It is additionally contended that the arbitrator failed to
comply with the mandatory requirements of Sections 12(2) and
12(5) of the Act.
(viii) On the finding of termination, the petitioner contends that the
finding in paragraph 127 is perverse because termination could
occur only under Clause 4.2, and the claim statement does not
whisper a single word as to any circumstance falling within
Clause 4.2; and that paragraph 13 of the claim statement itself
contains an admission that Mayfair paid the monthly
proportionate minimum guaranteed amount from April 2022
onwards until the asserted termination upon expiry on
31.03.2023, which admission is inconsistent with any valid
termination.
(ix) On the mesne profits component specifically, the petitioner
contends that Rs.1.66 crores per month has been directed as
7
(2003) 5 SCC 705
8
(2015) 3 SCC 49
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Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
mesne profits for alleged unlawful occupation, whereas its
possession is lawful and contractually protected for 25 years, no
event of determination having either occurred or been pleaded;
and that the award is accordingly not merely patently illegal
and perverse but absurd and unenforceable, warranting stay of
that component on the strength of Lifestyle Equities (supra).
(x) On relief, the petitioner contends that the High Court, in
exercise of Article 227 read with the principles of Order XLI
Rule 5 CPC, may modify the order of the Commercial Court so
as to (i) accept the deposit of Rs.25,00,00,000/- by demand draft
together with Rs.5,63,00,000/- lying with KUH as satisfying the
directed deposit, and (ii) accept continued payment of
Rs.38,85,000/- per month in place of Rs.1,66,00,000/-, reliance
being placed on International Seaport Dredging Pvt. Ltd. v.
9
Kamarajar Port Ltd . It is further urged that since the impugned
order itself bars release of any deposited amount to KUH until
disposal, and since KUH's withdrawal application has been
rejected, the deposit of Rs.1.66 crores per month would not
enure to the benefit of anyone. In the alternative, the CMP may
be disposed of by directing the parties to cooperate in the early
disposal of the Section 34 application, with the earlier interim
order maintained until such disposal.
9
2024 SCC OnLine SC 3112
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Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
III. S UBMISSIONS O N B EHALF O F T HE OPPOSITE PARTY :
4. Per contra , the learned counsel for the Opposite Party earnestly made
the submission that the present CMP deserves to be rejected in limine.
(i) On the statutory interplay, the opposite party contends that
arbitration matters have been brought within the purview of the
Commercial Courts by virtue of Section 10 of the Commercial
Courts Act, 2015, and that the legislative intention underlying
both the 1996 Act and the 2015 Act has been to circumscribe the
jurisdiction exercisable under Article 227. It is conceded that the
jurisdiction under Article 227 cannot be and has not been
completely taken away, but urged that Parliament has intended
substantially to limit judicial interference in commercial
arbitration matters, as is evident from the language of Section 5
of the 1996 Act and Section 8 of the 2015 Act, both of which
must be given effect to, and neither of which permits judicial
interference in respect of orders passed as to security under
Section 36(3).
(ii) On the standard of interference, the opposite party contends
that a harmonious reading of Section 5 of the 1996 Act, Section 8
of the 2015 Act and the language of Article 227 makes it evident
that the High Court ought not to interfere on account of factual
findings either of the arbitrator or of the Commercial Court, and
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Date: 19-Sep-2026 19:00:20
that interference must be confined to cases of inherent lack of
jurisdiction.
(iii) On the impugned order, the opposite party contends that the
order dated 13.02.2026 is one duly passed under Section 36(3) of
the 1996 Act, and that the Commercial Court has furnished
sufficient reasons and justifications for it. For the High Court to
interfere, it would have to hold not merely that the arbitrator
committed factual errors, which is impermissible even in the
exercise of jurisdiction under Section 34, but would further have
to find errors in the reasoning of the Commercial Court; and no
ground exists for either.
(iv) On the merits of the Rs.1.66 crores component, the opposite
party contends that the arbitrator has passed an award of
eviction holding that the petitioner is not entitled to run the
hotel from the subject property, with the consequence that the
petitioner is liable to pay mesne profits. The rate, it is urged,
rests on factual findings arrived at on the basis of the evidence
of the petitioner's own witness led during the arbitration to the
effect that the petitioner was earning more than Rs.12 crores in
profit, and on the finding that the rate offered by Red Carpet
Hospitality to the opposite party is commercially sound and
congruous with the evidence and financial figures produced by
the petitioner itself during the arbitration.
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Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
(v) The opposite party contends that this is purely a factual matter
which could not even constitute a ground for setting aside the
award under Section 34, and a fortiori cannot found interference
in a proceeding under Article 227.
(vi) On the posture of the present proceeding, the opposite party
contends that the High Court is not hearing the Section 34
application; that the award remains subsisting as on date; that
the award itself directs payment of Rs.1.66 crores to the opposite
party; and that the Commercial Court passed the order under
Section 36(3) on the basis of the reasonable mesne profits
already determined by the arbitrator.
(vii) On the petitioner's alternative rate, the opposite party contends
that the petitioner cannot seek to pay the old contractual rate
after having suffered an award of eviction; that the petitioner
earned Rs.12 crores in profits as on 2023–24, a figure which
would be considerably higher today; and that the petitioner
cannot be permitted to continue enjoying such profits after an
award of eviction has gone against it.
(viii) On the alleged non-consideration of approximately Rs.5 crores
in computing the amount refundable by the opposite party, it is
contended that this can only be adjudicated in the Section 34
proceeding and not in a proceeding under Article 227; and that
in any event there is no miscalculation or infirmity in the award,
which will be demonstrated in the Section 34 proceeding.
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Date: 19-Sep-2026 19:00:20
(ix) On Lifestyle Equities (supra), the opposite party contends that
the petitioner's reliance is misconceived, since that decision was
not dealing with a prayer for stay of operation of an arbitral
award, and the Supreme Court itself clarified that the litigation
had nothing to do with Section 36 of the 1996 Act, reference
being made to paragraphs 95 and 123. It is further urged that the
Commercial Court did consider the judgment and passed a
reasoned order dealing with it. In view of the above, the CMP is
said to be liable to be dismissed.
IV. A NALYSIS O F T HE O RDER OF THE C OURT B ELOW :
5.
The learned Trial Court made the following observations:
(i) The Commercial Court began by setting out the competing
positions on the stay application: the petitioner's case that it had
a fair chance of success in the Section 34 proceeding such that
non-stay of the award would render the proceeding infructuous,
and that stay be granted on any suitable condition and/or
unconditionally; and the opposite party's objection that any stay
be made conditional on deposit of 100% of the awarded amount
as security.
(ii) The court then set out the contents of the award in quantified
terms, recording the individual heads (Rs.1,15,00,000/- under
claim item (a), Rs.10,35,000/- under item (b), Rs.38,43,00,000/-
under items (g), (h) and (i)), the aggregate of Rs.39,68,35,000/-,
the counter-claim figure of Rs.3,81,47,674/- and the refund of
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Rs.5,59,44,004/- aggregating Rs.9,40,91,678/-, and the resultant
net figure of Rs.30,27,43,322/-. It separately noted the eviction
direction in paragraph 153 and the mesne profits/loss of profits
direction in paragraph 168 at Rs.1.66 crores per month from
April 2025 until actual handover.
(iii) The court extracted Section 36 of the 1996 Act in full, including
sub-section (3), the first proviso requiring due regard to the
provisions for grant of stay of a money decree under the CPC in
the case of an award for payment of money, the second proviso
mandating unconditional stay where a prima facie case of fraud
or corruption is made out, and the Explanation to the second
proviso.
(iv) The court recorded the fair submission of the learned Senior
Counsel for the petitioner that the second proviso to Section
36(3) was not being relied upon, and recorded the consequent
position that there was no pleading from the petitioner's side
that the arbitration agreement or contract forming the basis of
the award, or the making of the award, was induced or effected
by fraud or corruption. It simultaneously recorded that the
petitioner nevertheless claimed entitlement to unconditional
stay on the strength of Lifestyle Equities (supra), and that the
argument advanced in support was that the arbitrator's findings
on termination upon expiry of the initial term due to failure of
consideration were patently illegal, that the findings were based
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on no evidence, and that the arbitrator had no jurisdiction to
pass an award of eviction.
(v) The court identified the applicable test through two decisions.
From Lifestyle Equities (supra) it extracted the lodestar for
bringing a case within the category of an "exceptional case"
warranting unconditional stay of execution of a money decree,
namely that the decree is egregiously perverse, is riddled with
patent illegalities, is facially untenable, and/or suffers from other
exceptional causes similar in nature. It then reproduced Popular
10
Caterers v. Ameet Mehta & Ors . , which restates the same four-
fold test and adds that it must be established “more than prima
facie”. The decisions cited by the opposite party,
including Power Mech Projects Ltd. v. Sepco Electric Power
11
Construction Corporation , were recorded as having been
relied upon, but were not separately discussed in the reasoning.
(vi) On the claim to unconditional stay, the court made two findings
in sequence. First, it deemed it fit not to comment on the merits
of the award at that stage. Second, it recorded that on going
through the entire award it was of the opinion that the case did
not fall within any of the categories laid down in Lifestyle
Equities , and held that the petitioner was therefore not entitled to
an unconditional stay of an arbitral award which is in the form
of a money decree.
10
2025 INSC 1354
11
2020 SCC OnLine Del 2049
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(vii) On the grant of stay itself, the court reasoned that since the
Section 34 application had already been filed, the award would
be rendered susceptible to execution and the setting-aside
application could become infructuous if the opposite party took
steps to realise the awarded amount; and that it was therefore
necessary to grant stay till disposal of the Section 34 application.
The considerations it expressly enumerated for fixing the
quantum of security were the settled position of law, the
character of the award as a money decree, the economic status of
both parties, and the commercial nature of the dispute. On that
basis it directed security for 100% of the awarded amount.
(viii) The operative direction is structured in two distinct limbs
corresponding to the two distinct components of the award. For
the money-decree component, the condition is a one-time
deposit of Rs.30,27,43,322/- by demand draft in favour of the
Registrar, Civil Courts, Khurda at Bhubaneswar within one
month, to be held in fixed deposit in a nationalised bank for six
months with an automatic renewal clause. For the eviction
component, the condition is payment of Rs.1.66 crores per
month directly into the opposite party's bank account by the
10th of each succeeding month, reckoned from 01.09.2025, the
date of filing of the Section 34 case, till its disposal. The court
then added a clarification applying to the deposited amount,
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Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20
namely that the opposite party shall not be entitled to release of
any deposited amount in its favour till disposal of the case.
(ix) As regards the reasoning underlying the second limb, the order
records the figure of Rs.1.66 crores per month as having been
awarded by the arbitrator under paragraph 168 of the award,
and adopts that figure as the condition for staying the eviction
direction. The order does not contain a separate discussion
assigning reasons for the adoption of that rate as the measure of
the condition, distinct from the reasons recorded for the 100%
security on the money component. Correspondingly, the two
limbs differ in treatment: the money component is secured by a
deposit in court that is expressly non-releasable, while the
eviction component is secured by direct periodic payment into
the opposite party's account, to which the non-release
clarification is not in terms extended.
V. C OURT S R EASONING AND A NALYSIS :
’
6.
Heard learned counsel for the parties and perused the material on
record.
7. The present petition concerns the conditions imposed while staying
enforcement of the arbitral award dated 10.06.2025. The validity of
that award remains pending consideration in ARBP No.58 of 2025
under Section 34 of the Arbitration and Conciliation Act, 1996. The
questions arising for determination are:
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i. whether the challenge to the conditions of stay warrants
interference under Article 227 of the Constitution;
ii. whether the direction to deposit Rs.30,27,43,322 requires
modification in view of the deposit already made and the
further credit claimed by the petitioner;
iii. whether the monthly condition of Rs.1.66 crore, including its
amount, commencement and mode of payment, represents a
lawful exercise of discretion under Section 36; and
iv. what consequential safeguards are necessary concerning
adjustment, withdrawal, restitution and default.
8.
Section 8 of the Commercial Courts Act, 2015 restricts challenges to
interlocutory orders of Commercial Courts through civil revision
applications or petitions. Section 5 of the Arbitration and Conciliation
Act, 1996 similarly reflects the legislative policy of limited judicial
intervention in arbitration matters. These provisions do not extinguish
the constitutional power of superintendence under Article 227. Their
object must, however, inform the restraint with which that power is
exercised. The existence of constitutional jurisdiction does not entitle a
party to obtain a further examination of every interlocutory decision.
12
9. In Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd . , ,
the Supreme Court emphasised the restricted scope of interference
under Article 227 in matters governed by the Arbitration Act. The
relevant excerpts are produced below:
12
(2020) 15 SCC 706
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“This being the case, there is no doubt whatsoever that if
petitions were to be filed under Articles 226/227 of the
Constitution against orders passed in appeals under Section
37, the entire arbitral process would be derailed and would
not come to fruition for many years. At the same time, we
cannot forget that Article 227 is a constitutional provision
which remains untouched by the non-obstante clause of
Section 5 of the Act. In these circumstances, what is
important to note is that though petitions can be filed under
Article 227 against judgments allowing or dismissing first
appeals under Section 37 of the Act, yet the High Court
would be extremely circumspect in interfering with the
same, taking into account the statutory policy as
adumbrated by us herein above so that interference is
restricted to orders that are passed which are patently
lacking in inherent jurisdiction.”
10. In Bhaven Construction v. Executive Engineer, Sardar Sarovar
13
Narmada Nigam Ltd . , the Court reiterated that interference outside
the statutory framework must remain exceptional. These decisions
require the Court to distinguish a defect warranting supervisory
correction from an alleged error that falls within the ordinary exercise
of statutory discretion .
11. This Court considered the availability of supervisory jurisdiction
against an order under Section 36 in Planet Hospitality Services v.
14
Hotel Suraj Palace . The availability of that jurisdiction must
nevertheless be distinguished from the justification for exercising it in
a particular case .
13
Civil Appeal No.14665 of 2015
14
W.P.(C) No.7044 of 2025
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15
12. The decision in Ashok Kumar Puri v. S. Suncon Realtors Pvt. Ltd . ,
also emphasises restraint in entertaining challenges to interlocutory
orders of Commercial Courts. The present petition must therefore be
examined by reference to the nature of the alleged defect in the
conditions imposed.
13. An order granting stay subject to conditions under Section 36(3) is not
included among the orders appealable under Section 37 of the
Arbitration Act. The absence of an appeal does not, by itself, establish
a ground for interference under Article 227 or enlarge the scope of
supervisory review. The petitioner must demonstrate an exceptional
infirmity in the exercise of jurisdiction or discretion. Article 227
cannot be employed merely to obtain a different assessment of the
terms on which stay ought to have been granted.
14. The inquiry in the present proceeding is accordingly confined to the
legality of the Commercial Court’s exercise of discretion. This Court
will not reassess the evidence to determine whether the award should
be sustained under Section 34. It must nevertheless examine whether
the impugned conditions disclose a defect of the character warranting
supervisory correction. That examination requires consideration of the
reasons given for the conditions, the material to which those reasons
relate and the consequences of their operation.
15. Section 36(2) makes it clear that filing an application under Section 34
does not, by itself, render an arbitral award unenforceable. Stay
requires a separate application and an order under Section 36(3). That
15
CM(M) No.610 of 2021
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provision authorises the Court to impose appropriate conditions for
reasons recorded in writing. In the case of an award for payment of
money, the first proviso requires due regard to the provisions
governing stay of a money decree under the Code of Civil Procedure .
16
16. In , the
Pam Developments Pvt. Ltd. v. State of West Bengal
Supreme Court explained that the provisions of the Code provide
guidance while the power conferred by the Arbitration Act remains
controlling. The Court held as follows:
“In our view, in the present context, the phrase used is
‘having regard to’ the provisions of CPC and not ‘in
accordance with” the provisions of CPC. In the latter case,
it would have been mandatory, but in the form as mentioned
in Rule 36(3) of the Arbitration Act, it would only be
directory or as a guiding factor. Mere reference to CPC in
the said Section 36 cannot be construed in such a manner
that it takes away the power conferred in the main statute
(i.e. Arbitration Act) itself. It is to be taken as a general
guideline, which will not make the main provision of the
Arbitration Act inapplicable. The provisions of CPC are to
be followed as a guidance, whereas the provisions of the
Arbitration Act are essentially to be first applied. Since, the
Arbitration Act is a self contained Act, the provisions of the
CPC will apply only insofar as the same are not
inconsistent with the spirit and provisions of the
Arbitration Act.”
17. The discretion under Section 36 must therefore be exercised with
reference to the circumstances of the case. The requirement of security
protects the award holder against the consequences of deferred
16
(2019) 8 SCC 112
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enforcement, while the amount and form of that security require a
reasoned determination.
18. A direction securing the entire awarded amount is not impermissible
merely because the award is under challenge. Equally, full cash
deposit does not follow automatically from the absence of an
allegation of fraud or corruption. In International Seaport Dredging
17
Pvt. Ltd. v. Kamarajar Port Ltd . , the Supreme Court recognised the
discretion to require deposit of the whole or part of the amount and/or
appropriate security. The choice must be justified by relevant
considerations. In Director, Land Records & Surveys, Government of
18
Odisha v. Sylvesa Infotech Pvt. Ltd . , decided on 10.10.2025, this
Court also recognised that the conditions and their extent depend
upon the circumstances of the particular case.
19. The second proviso to Section 36(3) requires an unconditional stay
where the statutory conditions concerning fraud or corruption are
prima facie established. The discussion in Lifestyle Equities (supra)
arose from a stay of an ordinary money decree. Its observations must
be read in that context and with the subsequent decision in Popular
19
Caterers v. Ameet Mehta . In the latter case, the Supreme Court
considered an unconditional stay of an arbitral award and examined
whether an exceptional case had been established, while cautioning
17
2024 INSC 827
18
W.P.(C) No.21111 of 2025 with W.P.(C) No.24348 of 2024
19
2025 INSC 1354
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against a detailed determination of matters belonging to the Section 34
proceeding.
20. The petitioner expressly confines its prayer to modification of the
conditions of stay and does not seek an unconditional stay. It is
therefore unnecessary to determine the full scope of the discretion to
grant unconditional stay outside the second proviso to Section 36(3).
No finding is recorded on the availability of such relief in the present
case. The issues requiring determination concern the amount, form
and operation of the conditions actually imposed.
21. Consideration of an application under Section 36 may require a
provisional examination of the challenge sufficient to decide the
application and its terms. Such consideration must remain distinct
from final adjudication under Section 34. The decision in Sepco
Electric Power Construction Corporation v. Power Mech Projects
20
Ltd . , decided on 19.09.2022, illustrates that distinction. A court does
not necessarily prejudge the Section 34 proceeding merely because it
considers the nature of the objections while deciding the terms of stay.
22. The petitioner’s objection that the Commercial Court declined to
comment upon the merits but subsequently referred to the award
must be examined in that light. A statement reserving final
determination of the merits is not inconsistent with the limited
consideration necessary to decide interim protection. The material
question is whether the conditions imposed are supported by reasons
20
2022 SCC OnLine SC 1243
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appropriate to that limited inquiry. Their validity cannot be
determined merely by isolating expressions used in the impugned
order.
23. The first condition requires deposit of Rs.30,27,43,322 before the
Commercial Court. The amount is to remain invested in a fixed
deposit, and the impugned order prohibits its release to the opposite
party during the pendency of the Section 34 proceeding. The opposite
party’s subsequent application for withdrawal was rejected on
21.07.2026. The condition thus preserves the amount under the control
of the Court. Its character as security is not displaced merely because
the amount directed to be deposited corresponds to the monetary
liability determined under the award.
24. The sum of Rs.30,27,43,322 is the amount directed by the Commercial
Court to be deposited as security pending determination of the
challenge under Section 34. While imposing that condition, the
Commercial Court took into account the monetary nature of the
award, the commercial character of the dispute and the economic
standing of the parties. The amount is to remain invested in an
interest-bearing fixed deposit under the control of the Court, and its
release to the opposite party is prohibited during the pendency of the
proceeding. These safeguards preserve the corpus without placing it
at the disposal of the award holder. The requirement of deposit
cannot, therefore, be treated as execution of the award merely because
it secures the amount directed under the impugned order. The
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objection that the condition itself amounts to enforcement does not
establish a ground for supervisory interference. The correctness of the
amount to be secured must nevertheless be examined separately, with
reference to the adjustments recognised in the award and payments
already appropriated towards the same liability.
25. The further claim for credit of Rs.5,63,00,000 stands on a different
footing. The petitioner contends that this amount remains refundable
because the Arbitrator failed to account for payments made by it. The
opposite party disputes that claim and its quantification. A disputed
claim requiring adjudication cannot, merely on the petitioner’s
assertion, be treated as satisfaction of an obligation to make a court
deposit. The refusal to grant that credit for the present purpose does
not determine the petitioner’s entitlement to pursue the contention in
the Section 34 proceeding.
26. The petitioner has deposited Rs.25,00,00,000. The balance against the
stipulated security of Rs.30,27,43,322 is Rs.5,27,43,322. The deposit
already made shall be taken into account, and the petitioner shall have
eight weeks to deposit the balance, subject to the directions contained
below. It is unnecessary, for granting that time, to characterise the
earlier conduct of the petitioner as either bona fide or otherwise.
27. The condition relating to the monetary award must be distinguished
from the recurring condition attached to continued possession. The
former secures an identified accrued liability. The latter addresses the
consequences of the petitioner retaining possession while enforcement
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of the direction for delivery of possession remains stayed. Separate
conditions may therefore be imposed for these purposes, provided
that their computation does not require the petitioner to secure or
discharge the same liability twice.
28. The practical effect of the conditions must also be considered together.
The obligation to make good the balance security operates alongside
the current monthly deposit and any instalments towards
accumulated arrears. The amount of arrears cannot be assumed
merely by multiplying a monthly differential without verifying the
applicable period and payments already made. A settled account and
specified due dates are necessary both for meaningful compliance by
the petitioner and for enforcement of the conditions by the opposite
party.
29. The power to impose reasonable terms for continued occupation
pending a challenge to an order for possession is recognised in Atma
21
Ram Properties (P) Ltd. v. Federal Motors (P) Ltd . That decision
arose under rent-control legislation. Its relevance here lies in the
principle that the party obtaining protection against delivery of
possession may be required to compensate for the resulting
deprivation suffered by the successful party. The Court held as
follows:
“Experience shows that the principal consideration which
prevails with the appellate Court is that in spite of the
appeal having been entertained for hearing by the appellate
21
(2005) 1 SCC 705
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Court, the appellant may not be deprived of the fruits of his
success in the event of the appeal being allowed. This
consideration is pitted and weighed against the other
paramount consideration: why should a party having
succeeded from the Court below be deprived of the fruits of
the decree or order in his hands merely because the defeated
party has chosen to invoke the jurisdiction of a superior
forum.”
30. Applying that principle does not require this Court to determine
whether the Operating Agreement creates a tenancy or to decide the
validity of its termination.
22
31. In State of Maharashtra v. Super Max International Pvt. Ltd . , the
Supreme Court recognised that occupation charges imposed as a
condition of stay may exceed the contractual rent, while requiring
restraint against an excessive, fanciful or punitive amount. The
assessment in the award is consequently a relevant consideration, but
it does not dispense with examination of the Commercial Court’s
exercise of discretion in adopting that assessment as a condition of
stay.
32. The opposite party relies upon paragraph 168 of the award and the
material at pages 422 to 424 of the paper book to support the monthly
figure of Rs.1.66 crore. According to the opposite party, that material
establishes the profitability of the hotel and supports the commercial
viability of the offer made by Red Carpet Hospitality. The petitioner
disputes the reliance upon that offer and refers to its financial
22
(2009) 9 SCC 772
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statements at Annexure-7 series. The assessment contained in the
award provides a relevant basis for considering the terms of
continued occupation. Its adoption as a condition of stay must
nevertheless be supported by reasons addressing the material
objections to that condition. In particular, the hotel’s reported profit
and the consideration offered by a prospective operator cannot be
treated as interchangeable financial measures without examining their
respective basis. The recurring obligation must also be considered
together with the corpus deposit and the instalments towards arrears.
Retention of the monthly amount in court protects its availability for
restitution, but does not, by itself, answer the objection concerning its
quantum. The limited inquiry under Article 227 is whether the
Commercial Court’s exercise of discretion discloses an exceptional
infirmity warranting correction; the correctness of the award’s
ultimate assessment remains for determination under Section 34.
33. The objection concerning duplication requires identification of the
liabilities and periods covered by the two conditions. The sum of
Rs.30,27,43,322 is the corpus directed to be secured against the
monetary liability determined under the award. The monthly
payment of Rs.1.66 crore is imposed as a condition for staying
enforcement of the direction for delivery of possession. The impugned
order computes that recurring obligation from 01.09.2025, being the
date of institution of the Section 34 proceeding. The existence of these
distinct purposes does not, without examining the award’s
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computation, establish that the amounts concern wholly separate
periods or heads. Before settling the arrears, the Commercial Court
shall therefore identify the liability secured by the corpus, its relevant
periods, and any continuing occupation charges already included in
that computation. It shall separately account for payments made by
the petitioner, including payments at the rate of Rs.38,85,000 per
month, and ascertain whether those payments have already been
adjusted against any awarded liability. Credit shall be allowed against
the corresponding period and head only once. The resulting account
shall ensure that neither the security requirement nor the computation
of arrears duplicates an amount already accounted for against the
same liability.
34. The destination of the monthly payment raises a further question.
Retention of the monetary corpus in court and payment of occupation
charges to the opposite party do not necessarily proceed on
inconsistent premises, since the obligations may serve different
purposes. Nor is a direction permitting payment or withdrawal
inherently beyond the power exercised under Section 36. The
arrangement must, however, address the consequences of the
petitioner succeeding in the pending challenge.
35. Super Max International (supra) explains that the amount exceeding
contractual rent should ordinarily remain deposited in court during
the challenge. Where interim payment to the landlord is considered
appropriate, protective terms should secure prompt repayment if the
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challenge succeeds. That principle assists in determining suitable
safeguards here, without treating the disputed Operating Agreement
as a lease. Court deposit, coupled with liberty to seek release upon
appropriate security, enables the Commercial Court to consider the
opposite party’s claim to interim receipt while preserving effective
restitution.
36. The power to order restitution is not confined to the express terms of
23
Section 144 CPC. In South Eastern Coalfields Ltd. v. State of M.P . ,
the Supreme Court explained the obligation to restore a benefit
obtained through an interim order when the subsequent
determination warrants restoration.
24
37. In Kavita Trehan v. Balsara Hygiene Products Ltd. , it recognised the
Court’s inherent jurisdiction to grant restitution where justice requires
it. Any consequential refund must nevertheless correspond to the
actual result and the liabilities that survive. Setting aside a part of the
award cannot, without that examination, require repayment of every
amount deposited or received.
38. Under the impugned arrangement, the recurring monthly amount is
payable directly to the opposite party without security for its return.
The substantial and continuing nature of that obligation makes the
treatment of the payments upon disposal of the Section 34 proceeding
a material consideration. The absence of any corresponding protection
leaves the consequences of an adverse determination against the
23
(2003) 8 SCC 648
24
(1994) 5 SCC 380
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recipient unaddressed. In the circumstances of this case, that omission
warrants limited correction in the exercise of supervisory jurisdiction.
The correction shall be confined to the custody and release of the
monthly deposits, together with the accounting and restitution
necessary to give effect to the ultimate determination.
39. The monthly amount shall therefore be deposited before the
Commercial Court and invested pending further orders. The opposite
party may seek release of the monthly deposits, in whole or in part,
upon providing security for repayment with interest. Such an
application shall be considered after hearing the petitioner and by
reference to the circumstances then shown. The petitioner shall also be
permitted to discharge the verified arrears in six monthly instalments
in addition to the current monthly deposits. These directions preserve
the recurring obligation while providing an ascertainable schedule for
compliance and protection against duplicate recovery.
40. The petitioner’s objections concerning notice under Section 21,
disclosure and eligibility under Section 12, the treatment of the plea
under Section 16, compliance with the contractual provision for
amicable resolution, and the Arbitrator’s jurisdiction to direct delivery
of possession remain for determination in the Section 34 proceeding.
No conclusion on their merits is necessary for the present disposition.
The Commercial Court shall decide those objections independently,
uninfluenced by observations made in this judgment or in the
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impugned order for the limited purpose of determining the conditions
of stay.
VI. C ONCLUSION :
41. For the reasons stated above, the Civil Miscellaneous Petition is
allowed in part . The order dated 13.02.2026 passed in I.A. No.1 of
2025 arising out of ARBP No.58 of 2025 is modified in the following
terms:
i. The direction requiring security of Rs.30,27,43,322 is maintained.
The petitioner’s prayer to treat its disputed claim of
Rs.5,63,00,000 as satisfaction of that requirement is rejected for
the purpose of the present application. Its contentions
concerning that claim in the Section 34 proceeding are left open.
ii. The sum of Rs.25,00,00,000 already deposited shall be credited
towards the security directed above. The petitioner shall deposit
the balance of Rs.5,27,43,322 before the Commercial Court
within eight weeks from today.
iii. The corpus secured under clauses (i) and (ii) shall remain
invested in an interest-bearing fixed deposit with a nationalised
bank, with automatic renewal. The restriction upon withdrawal
of that corpus during the pendency of ARBP No.58 of 2025 shall
continue.
iv. The monthly rate of Rs.1,66,00,000 is maintained. The direction
requiring its payment directly to the opposite party is modified.
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Beginning with the calendar month in which this judgment is
delivered, the petitioner shall deposit the monthly amount
before the Commercial Court by the tenth day of the succeeding
month. The deposits shall be invested in an interest-bearing
fixed deposit with automatic renewal.
v. The Commercial Court shall ascertain the arrears for the period
commencing on 01.09.2025 and ending with the calendar month
immediately preceding this judgment, consistently with the
findings recorded above and the applicable interim orders. Both
parties shall file statements of account, supported by the
relevant payment and deposit records, within two weeks from
today. After hearing them, the Commercial Court shall settle the
account expeditiously, identifying the amount payable for each
month, the payments or deposits already made, and the
adjustments already allowed. No payment shall be credited
twice, and no liability already secured under the corpus shall be
duplicated in the arrears. The arrears so determined shall be
deposited in six equal consecutive monthly instalments. The
first instalment shall be payable by the tenth day of the month
following settlement of the account, and the remaining
instalments by the tenth day of each succeeding month. These
instalments shall be payable in addition to the current monthly
deposits under clause (iv).
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vi. The opposite party may apply for release, in whole or in part, of
the monthly deposits and arrears deposited under clauses (iv)
and (v). The Commercial Court shall consider the application
after hearing the petitioner. Any release shall be supported by
reasons and secured by an undertaking to repay, together with
such security as the Commercial Court considers sufficient to
cover the amount released and the interest that may become
payable. The security shall remain effective until the
corresponding liability to make restitution is discharged or the
Court otherwise directs. This liberty does not extend to
withdrawal of the corpus protected under clause (iii).
vii. All deposits, accrued interest and amounts released shall remain
subject to the result of ARBP No.58 of 2025 and any further
order of the competent appellate court. Upon disposal, the
Commercial Court shall, after hearing the parties and
accounting for sums already paid, withdrawn or adjusted, direct
release, appropriation or restitution to the extent warranted by
the result. Where only part of the award is set aside, the
consequential directions shall distinguish the affected liability
from any liability that survives. Any order for repayment shall
specify the amount, applicable interest and time for compliance.
viii. Failure to deposit the balance within the period prescribed in
clause (ii), or default in any two consecutive monthly deposits
under clause (iv), or any two consecutive arrears instalments
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under clause (v), shall cause the stay of enforcement of both the
monetary and possession directions to cease to operate. Before
permitting execution on that basis, the Commercial Court shall
verify the alleged default after giving the petitioner an
opportunity to produce proof of compliance. Such verification
shall not reopen the conditions prescribed by this judgment.
Upon the default being established, the opposite party may
proceed with Execution Case No.145 of 2025 in accordance with
law.
ix. Subject to compliance with these directions, the stay shall
remain operative during the periods allowed for depositing the
balance and paying the arrears, and thereafter during the
pendency of the Section 34 proceeding. The time granted for
compliance shall not, by itself, be treated as a default.
x. The Commercial Court shall endeavour to dispose of ARBP
No.58 of 2025 within six months from today. Both parties shall
cooperate and avoid unnecessary adjournments. Disposal of
that proceeding shall bring future monthly deposits under this
order to an end, subject to any further judicial order. Accrued
obligations and consequential questions of accounting, release
and restitution shall be dealt with consistently with the result.
xi. Nothing in this judgment shall be construed as a determination
of the validity of the award dated 10.06.2025 or of any ground
raised under Section 34. All such contentions are left open.
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42. Interim order, if any, passed earlier stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
th
Dated the 11 September, 2026 /
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Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Designation: AR-Cum-Sr. Secretary
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 19-Sep-2026 19:00:20