Even If Case Doesn't Fall Under Section 36(3) Second Proviso, Court Can Consider Whether To Grant Unconditional Stay: Bombay High Court

The Bombay High Court, in the case of CFM Asset Reconstruction Pvt. Ltd vs. SAR Parivahan Pvt. Ltd, held that even if a case does not fall under the second proviso of Section 36(3) of the Arbitration and Conciliation Act, 1996, the court can consider granting an unconditional stay of the arbitral award based on the first proviso. \r

In this case, the petitioner challenged an arbitral award that upheld a counter claim by the respondent, directing the petitioner to pay a substantial amount. The court observed that while the second proviso mandates an unconditional stay only in cases of fraud or corruption affecting the arbitration agreement or award's creation, the first proviso allows the court discretion to grant an unconditional stay in cases involving monetary awards, similar to principles governing stays of money decrees under the Civil Procedure Code, 1908. \r

The court noted that the petitioner had raised valid concerns regarding procedural irregularities and the adequacy of the valuation report supporting the award. Considering these factors, the court granted an unconditional stay of the arbitral award to prevent harm to the petitioner.\r

Case Title: CFM Asset Reconstruction Pvt. Ltd and anr vs M/s. SAR Parivahan Pvt. Ltd. And ors\r

Case Number: I.A. (L) NO.6246 OF 2024 IN COMM. ARBITRATION PETITION (L)NO.5565 OF 2024