Andaman And Nicobar Islands vs M/S Hcl Infotech Limited ... Opposite ...

1. This application under Article 227 of the Constitution of India

is at the instance of the Award Debtor and is directed against an

order dated June 27, 2025 passed by the learned District Judge,

Andaman and Nicobar Islands at Port Blair in Other Suit No.7 of

2024.

2. By the order impugned, the application under section 36(2) of

the Arbitration and Conciliation Act, 1996 (for short "1996 Act") stood

rejected.

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3. The petitioner filed an application under section 34 of the 1996

Act challenging the arbitral award dated July 16, 2024 which was

subsequently rectified by an award dated October 04, 2024 passed

in an arbitration proceeding between the Administration of Andaman

and Nicobar Islands vs. M/s HCL Infotech Limited. The said

application under section 34 of the 1996 Act was registered as Other

Suit No.7 of 2024.

4. The petitioner filed an application under section 36(2) of the

1996 Act in Other Suit Nno.7 of 2024 praying for stay of operation of

the aforesaid arbitral award.

5. The learned District Judge rejected the application under

section 36(2) of the 1996 Act on the ground that since no execution

case is pending before that Court, the question of staying of execution

of the award does not arise and such petition should be filed only in

the execution case.

6. Mr.Kumar, the learned advocate appearing for the petitioner

submits that mere filing of an application under section 34 of the

1996 Act does not operate as a stay of operation of the arbitral

award.

7. In support of his contention that the application under section

36(2) of the 1996 Act can be filed before the District Court where the

application under section 34 of the 1996 Act is pending, Mr. Kumar,

places reliance upon a decision of the Hon'ble Supreme Court in the 3 2025:CHC-PB:76

case of International Seaport Dredging Pvt Ltd. vs. Kamarajar

Port Limited reported at 2024 INSC 827.

8. The learned advocate appearing for the opposite party submits

that in the meantime, the award has already been put into execution

given rise to OMP(Enf)(COMM) 60/2025 and the same is pending

before the Delhi High Court. The learned advocate further submits

that the arbitral award directed payment of money by the petitioner

to the opposite party. By placing reliance upon the provision of sub-

section (3) of Section 36 of the 1996 Act, the learned advocate

appearing for the opposite party submits that the provision laid down

under Order XLI Rule 5 of the Code of Civil Procedure shall squarely

apply for passing an order of stay of an arbitral award directing

payment of money.

9. Heard learned advocate appearing for the parties and perused

the materials placed.

10. It appears from the submissions made by the learned advocate

for the opposite party that the award has already been put into

execution and the execution case is pending.

11. Sub-section (2) of Section 36 of the 1996 Act states that 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 4 2025:CHC-PB:76

accordance with the provision of sub-section (3) on a separate

application made for that purpose.

12. On a bare reading of the provision laid down under section

36(2) of the 1996 Act, this Court is of the considered view that a

separate application for stay of operation of the arbitral award shall

have to be filed.

13. The expression "court" used in second limb of sub-section (2)

of Section 36 would necessarily imply the court where an application

under section 34 of the 1996 Act is pending.

14. Thus, this Court holds that the Court where an application

under section 34 of the 1996 Act for setting aside the arbitral award

is pending has jurisdiction to entertain an application for stay of

operation of the arbitral award.

15. To the mind of this Court, the learned District Judge failed to

interpret the provision of sub-section (2) of Section 36 of the 1996 Act

correctly. For such reason, this Court is inclined to interfere with the

order impugned.

16. Sub-section (3) of Section 36 states that 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. Proviso thereto states that the Court shall, while

considering the application for grant of stay in the case of arbitral

award for payment of money, have due regard to the provisions for 5 2025:CHC-PB:76

grant of stay of a money decree under the provision of the Code of

Civil Procedure, 1908.

17. The issue whether an exceptional treatment should be given to

the government while considering the application for stay under

section 36 filed by the government in proceedings under section 34

of the Arbitration Act fell for consideration before the Hon'ble

Supreme Court in Pam Developments Private Limited vs. State of

West Bengal reported at (2019) 8 SCC 112.

18. The Hon'ble Supreme Court in the said decision, after noting

that section 36 of the 1996 Act uses the expression "having regard to"

the provisions of Code of Civil Procedure and not "in accordance with"

the provisions of Code of Civil Procedure and in the latter case it

would have been mandatory but in the form as mentioned in Section

36(3) of the Arbitration Act, it would only be directory or a guiding

factor.

19. The Hon'ble Supreme Court observed that 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 Acts mandates so, there

cannot be any special treatment given to the government as a party.

20. The Hon'ble Supreme Court observed that 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 6 2025:CHC-PB:76

application for grant of stay of money decree in proceeding under

Section 34 of the Arbitration Act.

21. The aforesaid proposition of law laid down in Pam

Developments Private Limited (supra) was reiterated by the

Hon'ble Supreme Court in International Seaport Dredging Pvt.Ltd

(Supra). The Hon'ble Supreme Court in International Seaport

Dredging Pvt.Ltd (Supra), after noting that the Arbitration Act does

not distinguish between the governmental and private entities held

that decision of the Court on the condition for grant of stay would not

depend upon the status and position of the party before the Court

but on a subjective assessment is to be made as to whether the party

is reliable or trustworthy. It is further held that the form of security

required to be furnished should not depend on whether a party is a

statutory or other governmental body or a private entity and that

government entities must be treated in a similar fashion to private

parties insofar as proceedings under the Arbitration Act is concerned

except where otherwise indicted by law as the parties have entered

into commercial transaction with full awareness of the implications of

compliance and non-compliance with the concerned contracts and

the consequences which will visit them in law.

22. The learned advocate appearing for the opposite parties would

contend that the petitioner be directed to deposit the entire amount

as indicated in the award as a condition for grant of stay of operation

of the arbitral award.

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23. Since the learned District Judge rejected the application under

section 36(2) of the 1996 Act not on merits but only on the ground

that it lacks jurisdiction to entertain such application, this Court is

not inclined to decide the application under section 36(2) of the 1996

Act on merits at this stage.

24. For all the reasons as aforesaid, the order impugned stands set

aside. The application under section 36(2) of the 1996 Act filed by the

petitioner before the learned District Judge in Other Suit No.7 of

2024 stands restored to the file of the learned District Judge, A & N

Islands at Port Blair with a direction upon the learned District Judge

to take up the hearing of the said application on merits after giving

an opportunity to the opposite party to file an objection thereto and

to dispose of the same by passing a reasoned order as expeditiously

as possible in accordance with law.

25. At this stage, learned advocate appearing for the opposite party

submits that 2nd January, 2026 is the date fixed before the learned

District Judge for final hearing of the application under section 34 of

the 1996 Act.

26. The learned advocate for the opposite party submits that the

learned District Judge be directed to dispose of the application under

section 34 of the 1996 Act as expeditiously as possible without

granting any unnecessary adjournments and the opposite party

undertakes that it will not proceed with the execution case in the

meantime.

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27. This Court is not inclined to pass any order to such effect but

leaves the opposite party free to make such a prayer before the

learned District Judge. If such a prayer is made, the learned District

Judge shall consider such prayer in accordance with law.

28. With the above observations and directions, CO/64/2025

stands disposed of by requesting the learned District Judge to

dispose of the pending interlocutory applications as well as the

application under section 34 of the 1996 Act as expeditiously as

possible without granting any unnecessary adjournments to either of

the parties.

29. Urgent Photostat certified copy of this judgment, if applied for,

shall be granted to the parties as expeditiously as possible, upon

compliance of all formalities.

( HIRANMAY BHATTACHARYYA, J. )