State Of West Bengal vs Tapas Kumar Hazra

The Court : In this application under Section 36(3) of the Arbitration and Conciliation Act, 1996, as amended by Act 3 of 2016(in short "the Act of 1996"), the petitioner, State of West Bengal has prayed for stay of operation of the arbitral award dated September 2, 2011 made by the sole Arbitrator.

Admittedly, the petitioner filed an application, A.P. No. 1036 of 2011 for setting aside of the arbitral award within three months from the date of its receipt and the said application has already been admitted. As per the unamended provision of Section 36 of the Act of 1996 with the admission of the application, A.P. No. 212 of 2010 the enforceability of the arbitral award remained stayed.

However, in view of the decision of the Supreme Court in the case of Board of Control for Cricket of India - vs - Kochi Cricket Association, reported in AIR 2018 SC 1549 with regard to the effect of incorporation of sub-section (3) to Section 36 of the Act of 1996, the petitioner has approached this Court for obtaining stay of operation of the arbitral award.

Mr. Sen, learned Senior Advocate appearing for the petitioner pressed for an order of unconditional stay of operation of the arbitral award. He submitted that admittedly the petitioner is the State of West Bengal, "the Government" as defined in Rule (8-B) of order XXVII of the Code of Civil Procedure (in short, "the Code") and, as such, the provisions contained in Rule (8-A) of order XXVII of the Code is applicable to the petitioner, exempting it to fulfil the conditions under Order XLI Rule 5(5) of the Code. Consequently, the Proviso to sub-section (3) of Section 36 of the Act of 1996 is also not applicable against the petitioner. It was argued for the petitioner that in the judgment dated September 05, 2018 passed in GA 1903 of 2018 with AP 112 of 2016 (Union of India -vs- Pam Development Pvt. Ltd.), this Court has already held that in spite of incorporation of sub-section (3) to Section 36 of the Act of 1996, the petitioner being the State Government is entitled to obtain unconditional stay of operation of the impugned arbitral award. Mr. Sen further submitted that the respondent in the said application, GA 1903 of 2018 with AP 112 of 2016, challenged the said judgment dated September 05, 2018, by filling a Special Leave Petition being SLP (C) No. 25765, before the Supreme Court. However, by an order dated December 03, 2018 the Supreme Court rejected the said application. Urging these facts, the petitioner pressed in an order directing unconditional stay of operation of the impugned award made by the Arbitrator dated January 21, 2010.

On the other hand, Mr. Dasgupta appearing for the respondent (the award holder) submitted that in the absence of any application for execution of the arbitral award and the petitioner not explaining the prejudice it would suffer, if required to deposit or secure the awarded amount before this Court the petitioner is not entitled to obtain an unconditinal stay of operation of the impugned award. It was submitted that it is a fact that by the order dated December 3, 2018 the Supreme Court dismissed the Special Leave Petition filed against the judgment dated September 5, 2008 passed by this Court in G.A. Np. 1903 of 2018 with A.P. No. 112 of 2016, but the said order does not decide anything. However, learned Counsel appearing for the respondent was unable to draw the attention of this Court to any authority to indicate as to why the interpretation of the provisions of the Rules (8-A) and (8-B) of Order XXVII of the Code, read with Order XLI Rule 5(5) of the same Code and Section 36(3) of the Act of 1996 as rendered by this Court in the said judgment dated December 3, 2018 is not correct.

For the reasons as aforesaid, I am unable to convince myself to accept arguments advanced by the respondents for not allowing the prayer of the petitioner in this application.

In view of the provisions contained in Rules (8-A) and (8-B) of Order XLI, read with sub-rule (5) of Rule 5 of Order XLI of the Code, I find that the petitioner is exempted from the rigours of the provisions of sub-section (3) of Section 36 of the Act of 1996.

Accordingly, there shall be an order directing unconditional stay of operation of the impugned award dated September 2, 2011 made by the sole Arbitrator, till disposal of the application, A.P. No. 1036 of 2011.

With the above directions, G.A. No.2520 of 2018 stands disposed of.

Let the application, A.P. No. 1036 of 2011 appear in the monthly list of February, 2019 for hearing.