/2022 INSC 0823/
     REPORTABLE 
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISIDICTION
CIVIL APPEAL NO.                   OF 2022
(Arising out of SLP(C) No. 4511 of 2021)
Sepco Electric Power Construction
Corporation ….Appellant
Versus
Power Mech Projects Ltd.            ….Respondent
WITH
CIVIL APPEAL NO                                OF 2022
(Arising out of SLP(C) No. 5322 of 2021)
J U D G M E N T
Indira Banerjee, J.
Leave granted.
2.  The   Appellant,   an   entity   incorporated   in   China   was   awarded
contracts in relation to various coal based power projects in India and the
Respondent,   a   company   incorporated   in   India   was   engaged   as   a   sub­
contractor   of   the   Appellant.   Disputes   and   differences   between   the
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Respondent   and   the   Appellant   were   referred   to   Arbitration.   Suffice   it   to
mention   that   the   Arbitration   culminated   in   an   Award   dated   17 th
  October
2017   of   approximately   Rs.   1,42,00,00,000/­   (Rupees   One   Hundred   and
Forty Two Crores) in favour of the Respondent. 
3. On   3 rd
  December   2017,   the   Appellant   filed   an   application   under
Section   34   of   the   Arbitration   and   Conciliation   Act,   1996   (hereinafter
referred to as the "Arbitration Act") being O.M.P. (COMM) No. 432 of 2017
challenging the Arbitral Award dated 17 th
 October 2017 in the Commercial
Division of the Delhi High Court, which is pending. 
4. On the same day, that is, 3 rd
  December 2017, the Appellant filed an
interim   application   being   I.A.   No.   14342   of   2017   in   the   said   O.M.P.
(COMM) No.432 of 2017 under Section 36(2) of the Arbitration Act seeking
stay of the arbitral award. 
5. After about a week, on 11 th
 December 2017, the Respondent filed an
application under Section 9 of the Arbitration Act being O.M.P. (I) (COMM)
No.   523   of   2017   in   the   High   Court,   inter   alia,   seeking   orders   on   the
Appellant to furnish security against  the amount  awarded by  the Arbitral
Tribunal.
6. On   14 th
  December   2017,   the   High   Court   issued   notice   in   the
application filed by the Respondent under Section 9 of the Arbitration Act
and directed the Appellant to file an affidavit of assets. In compliance with
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the order dated 14 th
  December 2017, the Appellant submitted its affidavit
giving details of its assets.
7. On   or   about   10 th
  May   2018,   the   Respondent   filed   an   application
being   I.A.   No.   6704   of   2018   praying   for   deposit  of  the   entire   amount   due
from   Talwandi   Sabo   Power   Corporation   Limited   (TSPL).   The   said
application   was   disposed   of   by   an   order   dated   15 th  
May   2018   with   the
observation that the Court did not see sufficient cause to allow the prayers
made by the Respondent.
8. By   an   order   dated   24 th
  July   2018,   the   High   Court   directed   the
Appellant   to   disclose   better   particulars   of   its   assets   in   India.   In   the
meanwhile, the Appellant was directed to deposit 10% of the amount in its
bank   accounts,   which   is   referred   to   in   its   affidavit   of   assets   in   the   High
Court at intervals of every 15 days.
9. Pursuant to the aforesaid order dated 24 th
  July 2018, the Appellant
filed  its  supplementary   affidavit   of  assets.  Two  days   later,  on   20 th
  August
2018, the Respondent filed an application being I.A. No. 11128 of 2018 for
directions   on   the   Respondent   to   deposit   the   awarded   amount   of   Rs.
142,41,14,499/­   (Rupees   One   Hundred   Forty­Two   Crores,   Forty   One
Lakhs,   Fourteen   Thousand,   Four   Hundred   Ninety­Nine   Only)   along   with
interest @ 12% per annum from the date of the award till realisation of the
awarded amount in the High Court.
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10. Diverse   interim   applications   were   filed   from   time   to   time.   On   20 th
March 2019, the Respondent filed another application being IA No.4259 of
2019,   seeking   orders   for   deposit   of   the   awarded   amount   of   Rs.
142,41,14,499/­ along with interest.
11. By a judgment and order dated 17 th
  February 2020, a Single Judge
of   the   High   Court   disposed   of   the   application   filed   by   the   Respondent
under   Section   9   of   the   Arbitration   Act   being   O.M.P   (I)   (COMM)   No.523   of
2017 along  with connected interim applications. The operative part of the
judgment and order dated 17 th
 February 2020 is set out hereinbelow:­
"32. While it is true that in some of the orders shown by the learned
senior   counsel   for   the   petitioner,   co­ordinate   Benches   of   this   Court
have   been   directing   a   deposit   of   50%,   but   going   by   the   recent
judgments  of the  Supreme  Court  as well as  the facts  of the  present
case, I am of the opinion that the petitioner must deposit 100% of the
awarded   amount   of   Rs.142   Crores   (principal   amount)   to   secure   the
respondent.
33.   Since   the   petitioner   has   already   furnished   BG   of   Rs.30   Crores
and   has   deposited   a   further   amount   of   Rs.2.74   Crores,   the   said
amount   would   be   adjusted   and   the   balance   amount   from   Rs.142
Crores   will   be   deposited   by   the   petitioner   with   the   Registry   of   this
Court  within   a  period   of   four   weeks   from   today.   With   the   aforesaid
directions,   the   present   petition   is   hereby   disposed   of  along   with   all
the pending applications."
12. On   that   same   day,   that   is,   17 th
  February   2020,   the   Single   Bench
passed   another   order   directing   notice   be   issued   on   respondents   on   the
application of the Appellant  under  Section 36(2) of the Arbitration Act for
stay of the award. The Court directed that, on deposit of Rs.142 Crores, as
earlier directed in the application of the Respondent under Section 9 of the
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Arbitration Act, within four weeks, the enforcement of the award dated 17 th
October 2017 would remain stayed.
13. Mr.   K.   V.   Viswanathan,   appearing   on   behalf   of   the   Appellant
submitted that  the  Appellant’s  application for  stay  under  Section  36(2) of
the   Arbitration   Act   had   been   filed   before   the   Respondent   filed   its
application   for   interim   relief   under   Section   9   of   the   said   Act.   The
application  of   the   Appellant   having   been  filed  earlier,   orders   ought   not   to
have   been   passed   on  the   application   of   the  Respondent   for   interim  relief,
without first considering the Appellant’s application for stay.
14. Mr. Viswanathan pointed out  that  the High Court had, by  clubbing
the   order   in   the   Appellant’s   application   under   Section   36(2)   of   the
Arbitration Act, with the order in the application of the Respondent under
Section   9   of   the   said   Act,   deprived   the   Appellant   of   its   legal   remedy   of
appeal   against   any   order   passed   under   Section   9,   since   an   order   under
Section 36 is not appealable.  Had the later application filed under Section
9   not   been   clubbed   with   the   earlier   application   filed   by   the   Appellant
under   Section   36(2),   the   Appellant   could   have   filed   an  intra   court   appeal
from the order under Section 9 of the Arbitration Act.
15. Mr.   Viswanathan   argued   that   sub­section   (3)   of   Section   36   enables
the   court   to   grant   stay   of   operation   of   the   Award.   The   Court   cannot,
however,   stay   an   award   for   the   asking.   An   award   can   only   be   stayed   for
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reasons to be recorded in writing. Moreover, for grant of stay in the case of
an arbitral award for payment of money, the Court is to have due regard to
the  provisions   for   grant   of   stay   in  a  money   decree   under  the   provision   of
the CPC.
16. The   power   under   sub­section   (3)   of   Section   36   to   grant   stay   of   an
award is coupled with the duty to impose conditions which could include
the condition of securing the award by deposit in Court, of the amount of
the Award. It may be true as argued by Mr. Vishwanathan that the Court
may   not   impose   condition   for   stay,   if   it   deems   appropriate   not   to   do   so.
The   power   of   Court   to   grant   unconditional   stay   of   an   Award   is   not
unfettered. The  power  of  unconditional stay  is  subject  to the condition in
the second proviso that is:­
The Court is satisfied that a  prima facie  is made out that ­
(i) the arbitration agreement or contract which is the 
basis  of the award; or
(ii) the making of the award, was induced or effected by 
fraud or corruption. 
17. Mr.   Viswanathan   submitted   that   while   the   grant   for   stay   may   be
discretionary but the exercise of such power is mandatory. The exercise of
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discretion requires  ex facie  consideration of the merits of the challenge and
therefore a review of the award which regrettably has not been done.
18. The   Appellant   has   unsuccessfully   made   an   attempt   to   evaluate   the
impugned   award   to   demonstrate   that   the   award   is   against   the
fundamental   policy   of   India.   It   is   contended   that   no   documents   were
produced during the arbitration proceedings. It is not for this Court to sit
in appeal over the impugned award at this stage while deciding an appeal
under Article 136 of the Constitution of India and examine the adequacy of
the evidence before the Arbitral Tribunal.
19. Section 36 of the Arbitration Act Provides:­
" 36.   Enforcement. — (1)   Where   the   time   for   making   an   application   to
set   aside   the   arbitral   award   under   Section   34   has   expired,   then,
subject   to   the   provisions   of   sub­section   (2),   such   award   shall   be
enforced   in   accordance   with   the   provisions   of   the   Code   of   Civil
Procedure,   1908   (5   of   1908),   in   the   same   manner   as   if   it   were   a
decree of the court.
(2) Where   an   application   to   set   aside   the   arbitral
award has been filed in the court under Section 34, the filing of
such   an   application   shall   not   by   itself   render   that   award
unenforceable,   unless   the   court   grants   an   order   of   stay   of   the
operation   of   the   said   arbitral   award   in   accordance   with   the
provisions of sub­section (3), on a separate application made for
that purpose.
(3) Upon   filing   of   an   application   under   sub   section   (2)
for   stay   of   the   operation   of   the   arbitral   award,   the   court   may,
subject   to   such   conditions   as   it   may   deem   fit,   grant   stay   of   the
operation of such award for reasons to be recorded in writing:
Provided   that   the   court   shall,   while   considering   the   application   for
grant of stay in the case of an arbitral award for payment of money,
have   due   regard   to   the   provisions   for   grant   of   stay   of   a   money
decree under the  provisions of the  Code  of Civil  Procedure,  1908 (5
of 1908).
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Provided further that where the Court is satisfied that a prima facie
case is made out that,—
(a) the arbitration agreement or contract which is the basis of the
award; or
(b) the making of the award,
was induced or effected by fraud or corruption, it shall stay the
award unconditionally pending disposal of the challenge under
Section 34 to the award.
Explanation.—For   the   removal   of   doubts,   it   is   hereby   clarified   that
the   above   proviso   shall   apply   to  all   court   cases   arising   out   of   or   in
relation   to   arbitral   proceedings,   irrespective   of   whether   the   arbitral
or   court   proceedings   were   commenced   prior   to   or   after   the
commencement of the Arbitration and Conciliation (Amendment) Act,
2015."
20.  On the other hand, Section 9 of the Act provides the amendment as
follows:­
"9. Interim measures, etc. by Court. —  (1) A party may, before or during
arbitral   proceedings   or   at   any   time   after   the   making   of   the   arbitral
award but before it is enforced in accordance with Section 36, apply
to a Court:—
(i) for   the   appointment   of   a   guardian   for   a   minor   or   a   person   of
unsound mind for the purposes of arbitral proceedings; or
(ii)   for   an   interim   measure   of   protection   in   respect   of   any   of   the
following matters, namely:—
(a) the preservation, interim custody or sale of any goods which are
the subject­matter of the arbitration agreement:
(b) securing the amount in dispute in the arbitration:
(c) the detention, preservation or inspection of any property or thing
which is the subject­matter of the dispute in arbitration, or as to
which   any   question   may   arise   therein   and   authorising   for   any
of the aforesaid purposes any person to enter upon any land or
building   in   the   possession   of   any   party,   or   authorising   any
samples   to   be   taken   or   any   observation   to   be   made,   or
experiment to be tried, which may be necessary or expedient for
the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such   other   interim   measure   of   protection  as   may   appear   to  the
Court   to   be   just   and   convenient,   and   the   Court   shall   have   the
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same power for making orders as it has for the purpose of, and
in relation to, any proceedings before it.
(2) Where, before the commencement of the arbitral proceedings, a court
passes   an   order   for   any   interim   measure   of   protection   under   sub­
section   (1),   the   arbitral   proceedings   shall   be   commenced   within   a
period   of   ninety   days   from   the   date   of   such   order   or   within   such
further time as the court may determine.
(3) Once the arbitral tribunal has been constituted, the court shall not
entertain an application under sub­section (1), unless the court
finds that circumstances exist which may not render the remedy 
provided under Section 17 efficacious."
21. There   is   no   hard   and   fast   rule   that   an   application   made   earlier   in
point   of   time   must   be   heard   before   an   application   made   later   in   point   of
time.
22. Both   the   applications   under   Section   9   filed   by   the   Respondent   and
the application for stay under Section 36(2) filed by the Appellant relate to
the same impugned award.
23. Even   though,   the   applications   may   be   independent   applications,
there   are   common   factors   required   to   be   considered   for   both   the
applications of the Respondent under Section 9 and the application of the
Appellant under Section 36(2). The jurisdiction of this Court under Section
9   is   wide.   A   party   may   apply   to   a   Court   for   interim   measures   before   the
commencement   of   Arbitral   proceedings,   during   Arbitral   proceedings   or   at
any time after the making of the Arbitral Award, but before it is enforced in
accordance with Section 36 of the Arbitration Act.
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24. Section 9 expressly empowers the Court to pass orders securing the
amount   in   dispute   in   the   arbitration   and/or   any   interim   measure   or
protection as may appear to the Court to be just and convenient.
25. For grant of interim relief under Section 9, the Court would have to
consider   the   prima   facie   case.   In   this   case,   prima   facie   there   is   an   award
for   a   huge   amount   of   Rs.   142   Crores   against   the   Appellant.     The
Respondent has a strong case for interim relief.
26. It   is   settled   law   that   grounds   for   interference   with   an   award   is
restricted.     Even   before   this   Court,   the   Appellant   has   not   been   able   to
advert to any cogent and glaring error which goes to the root of the award.
The contention of the award being opposed to the public policy of India, is
devoid of any particulars whatsoever.
27. Under   Section   36,   where   the   time   for   making   an   application   to   set
aside   arbitral   award   has   expired,   the   award   might   be   enforced   in
accordance with the provisions of the CPC in the same manner as it were a
decree of the Court. Section 36(2) makes it clear that filing an application
for setting aside of an award under Section 34 is not to render the award
unenforceable,   unless   the   Court   expressly   grants   an   order   of   stay   of
operation   of   the   arbitral   award   in   accordance   with   the   provisions   of   sub­
section (3) of Section 36, on a separate application made for that purpose.
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28. Once   an   application   under   sub­section   (2)   of   Section   36   is   filed   for
stay   of   operation   of   the   arbitral   award,   the   Court   might   subject   to   such
conditions   as   it   may   deem   fit,   grant   stay   of   the   operation   of   such   award,
for   reasons   to   be   recorded   in   writing.   The   Court   is   empowered   to   impose
such conditions as it might deem fit and may grant stay of operation of the
award   subject   to   furnishing   of   security   covering   entire   amount   of   the
award including interest.
29. The   proviso   to   Section   36(3)   of   the   Arbitration   Act,   makes   it   clear
that   while   considering   an   application   for   grant   of   stay   in   the   case   of   an
arbitral   award   for   payment   of   money,   due   regard   has   to   be   given   to   the
provisions for grant of stay of a money decree under the provisions of the
CPC.
30. The proviso to Section 36(3) further stipulates that where the Court
is   satisfied   that   a   prima   facie   case   is   made   out   that   (a)   the   arbitration
agreement or contract which is the basis of the award or, (b) the making of
the award was induced or effected by fraud or corruption, it shall stay the
award unconditionally pending disposal of the challenge under Section 34
of the award.
31. In   Ajay Singh & Ors . v.  Kal Airways Private Limited and Ors. 1
 
the Delhi High Court correctly held :
1 1  2017 SCC Online Del 8934
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"...Section   9   grants   wide   powers   to   the   courts   in   fashioning   an
appropriate   interim   order,   is   apparent   from   its   text.   Nevertheless,
what the authorities stress is that the exercise of such power should
be   principled,   premised   on   some   known   guidelines   ­   therefore,   the
analogy of Orders 38 and 39. Equally, the court should not find itself
unduly bound by the text of those provisions rather it is to follow the
underlying principles..."
32.  In  Jagdish Ahuja & Anr.  v.  Cupino Limited 2
,  the Bombay High Court
correctly summarised the law in Paragraph 6 extracted hereinbelow:­" 6 .
  As   far   as   Section   9   of  the   Act   is   concerned,   it   cannot   be   said
that   this   court,   while   considering   a   relief   thereunder,   is   strictly
bound by the provisions of Order 38 Rule 5. As held by our Courts,
the   scope   of   Section   9   of   the   Act   is   very   broad;   the   court   has   a
discretion to grant thereunder a wide range of interim measures of
protection  "as  may  appear  to  the  court to  be just and  convenient",
though   such   discretion   has   to   be   exercised   judiciously   and   not
arbitrarily.   The   court   is,   no   doubt,   guided   by   the   principles   which
civil   courts   ordinarily   employ   for   considering   interim   relief,
particularly,   Order   39   Rules   1   and   2   and   Order   38   Rule   5;   the
court,   however,   is   not   unduly   bound   by   their   texts.   As   this   court
held   in   Nimbus   Communications   Limited   v.   Board   of   Control   for
Cricket   in   India   (Per   D.Y.   Chandrachud   J,   as   the   learned   Judge
then   was),   the   court,   whilst   exercising   power   under   Section   9,
"must have due regard to the underlying purpose of the conferment
of   the   power   under   the   court   which   is   to   promote   the   efficacy   of
arbitration   as   a   form   of   dispute   resolution."   The   learned   Judge
further observed as follows:
"Just as on the one hand the exercise of the power under
Section 9 cannot be carried out in an uncharted territory
ignoring the basic principles of procedural law contained
in   the   Code   of   Civil   Procedure   1908,   the   rigors   of   every
procedural provision in the Code of Civil Procedure 1908
cannot   be   put   into   place   to   defeat   the   grant   of   relief
which would subserve the paramount interests of justice.
A   balance   has   to   be   drawn   between   the   two
considerations in the facts of each case."
2  2  2020 SCC Online Bom 849
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33.   In   Valentine   Maritime   Ltd.   v.   Kreuz   Subsea   Pte   Ltd.   &   Anr. 3
,
the Bombay High Court held :­
“ 96.   This court held that just as on the one hand the exercise of the
power   under   Section   9   cannot   be   carried   out   in   an   uncharted
territory  ignoring the  basic principles of  procedural law contained in
the   Code   of   Civil   Procedure,   1908,   the   rigors   of   every   procedural
provision   in   the   Code   of   Civil   Procedure,   1908   cannot   be   put   into
place   to   defeat   the   grant   of   relief   which   would   sub­serve   the
paramount  interests   of  justice.   A   balance  has  to  be  drawn   between
the  two  considerations  in  the  facts  of  each   case.   The  principles  laid
down   in   the   Code   of   Civil   Procedure,   1908   for   the   grant   of
interlocutory   remedies   must   furnish   a   guide   to   the   Court   when   it
determines   an   application   under   Section   9   of   the   Arbitration   and
Conciliation   Act,   1996.   The   underlying   basis   of   Order   38   Rule   5
therefore   has   to   be   borne   in   mind   while   deciding   an   application
under Section 9(ii)(b) of the Arbitration Act.”
34.  Section 9 of the Arbitration Act confers wide power on the Court to
pass orders securing the amount in dispute in arbitration, whether before
the   commencement   of   the   Arbitral   proceedings,   during   the   Arbitral
proceedings or at any time after making of the arbitral award, but before
its   enforcement   in   accordance   with   Section   36   of   the   Arbitration   Act.   All
that   the   Court   is   required   to   see   is,   whether   the   applicant   for   interim
measure has a good   prima facie   case, whether the balance of convenience
is in favour of interim relief as prayed for being granted and whether  the
applicant has approached the court with reasonable expedition.
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35. It   is   not   in   dispute   that   there   is   an   award   of   Rs.   142   Crores   in
favour   of   the   Respondent.     No   cogent   ground   has   been   made   out   even
prima facie,  for interference with the impugned award.
36. Order   41   Rule   5   of   the   CPC   provides   for   stay   of   decree   upon
furnishing of cash security.   The High Court acted within the scope of its
powers under Section 9 in passing the impugned judgment and order.
37. We   find   no   ground   at   all   to   interfere.   The   Appeals   are   dismissed.
We,   however,   request   the   High   Court   to   dispose   of   the   pending
applications of the Appellant under Section 34 for setting aside the award
as expeditiously  as possible, preferably  within 3 months from the date of
communication of this judgment and order.
…………………………………,J.
                                   [ INDIRA BANERJEE ]
…………………………………,J.
            [ KRISHNA MURARI ]
NEW DELHI;
SEPTEMBER   19, 2022.
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