No differential or exceptional treatment is to be given to the Government under the Arbitration and Conciliation Act, 1996 even while considering an application for grant of stay of a money decree in proceedings under Section 34 of the Act.

[Case Brief] Pam Development Private Ltd. v/s State of West Bengal

Case name Pam Development Private Ltd. v/s State of West Bengal
Case number Civil Appeal Nos. 5432 and 5433 of 2019
Court Supreme Court of India 
Bench Justice Vineet Saran
Decided on  July 12, 2019
Relevant Act/Sections Arbitration and Conciliation Act, 1996- Section 18, Section 34 and Section 36
Author of the case summary Lavanya Gupta ([email protected])

 

Brief Facts and Procedural History:

The Appellant and Respondent had entered into an agreement for a special repair programme. After the completion of work, the Appellant raised certain monetary claims against the Respondent, before the Executive Engineers of Public Works (Roads) Department. When the said claims were not paid, the Appellant filed an application before the Calcutta High Court under Section 11 of the Arbitration and Conciliation Act, 1996 (“ACA”). The High Court appointed a sole arbitrator, who awarded a sum of INR 2,87,11,553/- with interest, in the favour of Appellant. The said award was challenged by way of an application under Section 34 of the Act, by the Respondent, before the Calcutta High Court. Meanwhile, the Appellant filed an execution application before the Calcutta High Court. The Respondent then sought time to file an application for staying the award and soon filed the same, however the stay application was dismissed. On October 10, 2018, the Executing Court passed an order attaching a sum of INR 2,75,00,000/- which could be released, if prayed by Appellant, in case there was no stay of operation of award. Then, the Respondent filed a fresh application for stay of award and the same was granted in the form of an unconditional stay under Order XXVII Rule 8A of the Code of Civil Procedure (“CPC”). The said stay is challenged by the Appellant in the present case.

Issues before the Court of Law:

1) Whether or not the High Court was correct in granting an unconditional stay on the arbitral award?

Ratio of the Court:

No. A plain reading of Order XXVII Rule 8A of CPC will show that the same is only regarding security as mentioned in Order XLI Rule 5 and 6 of CPC. More importantly, CPC and ACA are two separate acts; since the ACA is a self-contained Act, the provisions of CPC will only be a guidance and will apply only insofar as they are not inconsistent with the provisions of ACA. Arbitration is an alternate dispute redressal system, meant for an early resolution of disputes and when an arbitral award is passed against the Government, and it is allowed to be automatically stayed, the very purpose of speedy resolution is defeated. Section 18 of the ACA clearly provides that parties shall be treated with equality, thus no special treatment can be given to Government in cases like the present one.

Decision Held:

No differential or exceptional treatment is to be given to the Government under the Arbitration and Conciliation Act, 1996 even while considering an application for grant of stay of a money decree in proceedings under Section 34 of the ACA. Thus, the order of the Calcutta High Court was set aside and the order of the Executing Court was restored.

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