Punjab and Haryana High Court Upholds Conditional Stay on Arbitral Awards Against Municipal Corporations
Statutory Corporations Can't Claim Preferential Treatment, Must Deposit Award Amounts for Stay
In a significant decision, the Punjab and Haryana High Court has reaffirmed that statutory corporations such as the Municipal Corporation of Jalandhar and Municipal Corporation Moga are not entitled to preferential treatment in arbitration proceedings compared to private entities. The court upheld the Commercial Court's decision mandating the deposit of 100% of the arbitral award amount as a condition for granting a stay on the execution of the awards.
The case stems from disputes over the implementation of Integrated Municipal Solid Waste Management Projects in Ferozepur and Jalandhar clusters. The arbitration resulted in awards amounting to Rs. 92.29 crores for Municipal Corporation Moga and Rs. 204.44 crores for Municipal Corporation Jalandhar, along with interest.
The appellants challenged the arbitral awards under Sections 34 and 36 of the Arbitration and Conciliation Act, seeking unconditional stays. However, the Commercial Court initially granted conditional stays, requiring full deposits of the award amounts in the form of Fixed Deposit Receipts (FDRs).
The High Court, led by Justice Sanjiv Berry, emphasized that arbitration proceedings do not differentiate between government entities and private parties. The court cited precedents from the Supreme Court, including the PAM Developments Private Limited v. State of West Bengal case, which clarified that government entities should not receive special treatment in arbitration proceedings.
Despite attempts by the appellants to extend the time for deposit, they failed to comply with the court's directives, leading to the dismissal of their objections. The High Court highlighted the appellants' contumacious conduct in avoiding compliance and reaffirmed the Commercial Court's authority to impose conditions for stays in line with the Civil Procedure Code.
The judgment underscores the court's commitment to ensuring that arbitral awards are enforced fairly and equitably, without undue favoritism towards government entities.
Bottom Line:
Arbitration and Conciliation Act, 1996 - A statutory corporation is not entitled to any special or preferential treatment in proceedings under Section 34 and Section 36 of the Act. Deposit of the award amount as a condition for stay of arbitral award execution is justified.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 36
Trending News
Victim can file appeal against acquittal irrespective of whether acquittal was by Trial Court or First Appellate Court
Conviction under the POCSO Act - Sentence suspended consider in a consensual love relationship
A civil dispute arising from a commercial transaction does not constitute a criminal offence of cheating
