The Delhi High Court declined to grant an unconditional stay on an arbitral award in a matter where Italian Thai Development sought an unconditional stay under Section 36(3) of the Arbitration and Conciliation Act (hereinafter referred to as ‘the Arbitration Act’). The Court held that an unconditional stay on an award under Section 36(3) of the Arbitration Act cannot be granted unless a prima facie case is established, indicating that the award's creation is tainted by fraud.
Brief Facts of the Case:
The dispute stemmed from the engagement of Italian Thai Development and NTPC Ltd in the Main Kol Dam Hydro Electric Project situated in Bilaspur District.
The petitioner, Italian Thai Development, initially claimed Rs. 3,66,34,27,582.45 but was awarded only Rs. 1,30,23,45,512/-. This awarded sum was set off against the Rs. 299.67 Crores previously paid to the petitioner by NTPC Ltd. as an advance. As the awarded sum was less than the advance, the Arbitral Tribunal directed Italian Thai Development to refund the excess advance of Rs. 1,69,43,54,488 to NTPC Ltd.
Contentions of the Parties:
Italian Thai Development challenged the set-off and refund before the Arbitral Tribunal under Section 34 of the Arbitration Act, contending that the Tribunal exceeded its limits of reference. Subsequently, Italian Thai Development, a foreign entity with no roots in India, sought an unconditional stay under Section 36(3) of the Arbitration Act, arguing that the court possessed discretionary powers similar to those under Order XLI Rule 5 of the CPC.
In response, NTPC Ltd. argued that the power to grant unconditional stay is confined to cases involving fraud. They maintained that the Arbitral Tribunal had the authority to adjudicate on the claim of set-off and refund under Section 23(2A) of the Arbitration and Conciliation Act.
Observations of the Court:
The High Court emphasized that the power of the Court to grant unconditional stay is subject to the condition that a prima facie case of fraud is made out. The Court observed that the petitioner did not establish any such case and noted the petitioner's reluctance to deposit any part of the arbitral award, insisting on an unconditional stay.
The Court highlighted that the petitioner being a foreign entity without assets in India could have demonstrated bona fide by offering cash security. The arbitral award, achieved through due process, should only be interfered with on limited grounds available under Section 34 of the Arbitration Act.
The Decision of the Court:
The Court dismissed Italian Thai Development's application for an unconditional stay against the enforcement of the arbitral award, asserting that no case was made out for such relief.
Case Name: Italian Thai Development vs. NTPC Ltd.
Coram: Hon'ble Mr. Justice Manoj Kumar Ohri
Case No.: OMP(COMM) 343 of 2022
Advocates of the Petitioner: Mr. Narender Hooda, Sr. Advocate with Mr. Aditya Mishra, Mr. S. Lamba and Ms. Rashi C
Advocates of the Respondent: Mr. S.B. Upadhyay, Sr. Advocate with Mr Tarkeshwar Nath, Mr. Lalit Mohan, Mr. Harshit Singh and Mr. Akash Kumar
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