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[Landmark Judgement] Pam Developments (P) Ltd. V. State of W.B. (2019)

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Landmark Judgment Law Insider (1)

Published on: November 30, 2023 at 19:39 IST

Court: Supreme Court of India

Citation: Pam Developments (P) Ltd. V. State of W.B. (2019) 

Honourable Supreme Court of India has held that grant of unconditional stay of the arbitration award cannot be sustained in the eye of the law. It is held that merely filing of the Appeal under aegis of Section 34 of the Arbitration and Conciliation Act, 1996 does not automatically qualifies for the stay and stay orders must be based on cogent reasons. It is held that the very purpose of quick resolution of dispute through arbitration would be defeated as the decree-holder would be fully deprived of the fruits by stay on the award on mere filing of objections under Section 34 of the Arbitration Act, 1996.

26. Arbitration proceedings are essentially alternate dispute redressal system meant for early/quick resolution of disputes and in case a money decree — award as passed by the arbitrator against the Government is allowed to be automatically stayed, the very purpose of quick resolution of dispute through arbitration would be defeated as the decree-holder would be fully deprived of the fruits of the award on mere filing of objection under Section 34 of the Arbitration Act.

The Arbitration Act is a special Act which provides for quick resolution of disputes between the parties and Section 18 of the Act makes it clear that the parties shall be treated with equality. Once the Act mandates so, there cannot be any special treatment given to the Government as a party. As such, under the scheme of the Arbitration Act, no distinction is made nor any differential treatment is to be given to the Government, while considering an application for grant of stay of a money decree in proceedings under Section 34 of the Arbitration Act.

As we have already mentioned above, the reference to CPC in Section 36 of the Arbitration Act is only to guide the court as to what conditions can be imposed, and the same have to be consistent with the provisions of the Arbitration Act.

Drafted By Abhijit Mishra