Execution of Arbitral Award Must be Stayed Pending Expeditious Disposal of Section 34 and 36 Applications

The petitioner (All India Radio) awarded a construction contract to the respondent in 2007, which was later terminated in 2012 due to delays.

Arbitral proceedings resulted in an award dated 10.05.2014, directing the petitioner to pay approximately ₹1.81 crores plus 15% interest.

The petitioner challenged this award under Section 34 of the Arbitration & Conciliation Act, 1996 (Misc. Case No. 78 of 2017), which was dismissed for want of prosecution in 2019.

While restoration applications (Misc. Case No. 143 of 2023) were pending, the Executing Court, via the impugned order dated 02.06.2025, directed the attachment of the petitioner’s bank accounts to realize the awarded amount.

1. Whether the Executing Court was justified in attaching the bank accounts of a government undertaking while a Section 34 challenge and restoration applications were pending.

2. Whether the court should grant a stay on execution proceedings to balance the equities between the statutory rights of the judgment debtor and the finality of the arbitral award.

Section 34 of the Arbitration and Conciliation Act, 1996, regarding the setting aside of awards.

Section 36, which stipulates that filing a Section 34 application does not automatically stay an award unless a specific stay is granted by the Court.

Section 35 regarding the finality of awards.

Principle of discretionary judicial stay under Section 36(3), emphasizing that the power must be exercised proportionately considering the merits and the status of the parties.

The Court observed that while an arbitral award is generally final and binding, the petitioner’s statutory right to challenge the award under Section 34 must not be frustrated by premature execution.

The Court reasoned that the Executing Court failed to adopt a "balanced approach" by ordering attachment while restoration of the Section 34 petition was still pending.

It noted that Section 34(6) mandates the expeditious disposal of challenges (ideally within one year), but the proceedings had remained pending far longer.

The Court concluded that rather than enforcing attachment against a public body—which could disrupt public functions—the proper course was to mandate a time-bound disposal of the underlying challenge.

It directed the Principal District Judge, Patna, to resolve the pending Section 34 challenge and the Section 36 stay application within 80 working days from the receipt of the judgment, aiming to comply with the statutory mandate of Section 34(6) while protecting the petitioner’s right to judicial scrutiny of the award.