No Automatic Stay Of Award Merely On Filing Of Application U/S.34 Of Arbitration & Conciliation Act: Allahabad High Court

The petition before the High Court was filed under Article 227 for quashing the order passed by the Executing Court / Commercial Court in an Execution Case.

The Single Bench of Justice Piyush Agrawal said, “In the present case, the application under Section 34 of the Arbitration Act was filed by the petitioner in the year 2017, which is much after the enforcement of the amended Act in the year 2015, therefore, the argument of the counsel for the petitioner that merely on filing of the application under Section 34 of the Arbitration Act, against the award in question was automatically stayed, is misplaced and cannot be accepted.”

Reference was made to the judgment of the Apex Court in Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. and others (2018) wherein it has been held that no automatic stay of the award would lie just because of filing an appeal under Section 34 of the Arbitration Act.

Advocate Abhishek Kumar represented the Petitioner while Advocate Ishir Sripat represented the Respondent.

Factual Background

The petitioner is a tenant of the ground floor of the building in an industrial plot. There was a dispute between the plaintiff-petitioner and defendant-respondent about the payment of rent. The defendant-respondent filed a case for eviction of the plaintiff-petitioner. In the said suit, the petitioner filed an application for rejection of plaint under Order 7 Rule 11 CPC on the ground that since there was an arbitration clause in the rent agreement between the parties, as such, the dispute was required to be decided by the Arbitrator alone.

The Additional Sessions Judge rejected the plaint of the respondent. Thereafter, the respondent filed an Arbitration petition before the sole Arbitrator for the same relief. Thereafter, the Arbitrator allowed the claim of the respondent vide an award against which the petitioner filed an objection under Section 34 of the Arbitration and Conciliation Act, 1996 before the Commercial Court but the same was rejected.

During the pendency of the objection filed by the petitioner under Section 34, the first respondent sold the property in question to the second respondent. The Petitioner’s suit for cancellation of the sale deed was rejected. The said order was challenged by the petitioner, which was admitted. In the Execution Case, the decree holder moved an application which was objected to by the petitioner, but the court allowed the application filed by the contesting respondent by the impugned order, and the judgment debtor/ petitioner was directed to make a payment of Rs 8,58,795. Hence, the petition was filed before the High Court.

Reasoning

Referring to the judgments of the Apex Court in Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. and others ( 2018) and M/s Shree Vishnu Constructions. Vs. The Engineer in Chief Military Engineering Services and others (2023), the Bench explained how the Apex Court has categorically held that the proceedings under Sections 34 and 36 of the Arbitration Act are Court proceedings and any proceeding commenced after the amendment came into force will be prospective in nature.

The Bench noticed that the application under Section 34 of the Arbitration Act was filed by the petitioner in the year 2017, which was much after the enforcement of the amended Act in the year 2015. Thus, the Bench discarded the argument of the petitioner that merely on filing of the application under Section 34 of the Arbitration Act, the award in question automatically stayed.

Noticing that the petitioner had not vacated the premises in question within 30 days from the date of passing the award and further the petitioner had not brought any material on record to show that the award was stayed by any of the competent Court, therefore, the Bench held that contesting first respondent was entitled for mesne profits.

Finding no ground for interference, the Bench dismissed the Petition.

Cause Title: M/s LR Print Solutions v. M/s Exflo Sanitation Pvt Ltd. and 2 others (Neutral Citation: 2025:AHC:44024)

Appearance:

Petitioner: Advocates Abhishek Kumar, Ishwar Kumar Upadhyay

Respondent: Advocate Ishir Sripat

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