Case Note & Summary
The petitioner, Reliance Securities Limited, filed an Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking a stay on the operation of an arbitral award dated 18 August 2010 passed by the National Stock Exchange (NSE) arbitrator. The petition was filed pending the disposal of a Section 34 petition (Arbitration Petition No. 90 of 2011) which had already been admitted by the same court. The respondents were Mr. Badrinath M. Bodhai and others. The court heard both sides and considered the submissions. The petitioner argued that the award should be stayed relying on a SEBI letter dated 9 July 1999 and a SEBI circular dated 11 August 2010, which prescribed that stock exchanges should debit the award amount from the member's security deposit and keep it in a separate account, and only pay the awardee after confirming no appeal is filed or in accordance with court orders. The court, however, held that the Section 9 petition had become infructuous. It reasoned that under Section 36 of the Arbitration Act, an award becomes enforceable only after the time for making a Section 34 application has expired or such application has been refused. Since the Section 34 petition was already pending and admitted, the award was not yet enforceable. The court also noted that even after disposal of the Section 34 petition, an appeal under Section 37 is available, so the award does not attain finality until all remedies are exhausted. Therefore, there was no need for interim relief under Section 9. The court dismissed the petition as infructuous, without prejudice to the petitioner's rights in the pending Section 34 proceedings.
Headnote
A) Arbitration Law - Interim Measures - Section 9 of Arbitration and Conciliation Act, 1996 - Maintainability - Petition under Section 9 for stay of arbitral award held infructuous when Section 34 petition is pending - Court held that once a Section 34 petition is admitted, the award is not enforceable under Section 36 until the petition is refused or time expires; thus, no interim relief under Section 9 is necessary (Paras 2-3). B) Arbitration Law - Enforcement of Award - Section 36 of Arbitration and Conciliation Act, 1996 - Condition Precedent - Award becomes enforceable only after Section 34 application is refused or time for making such application has expired - Court noted that even after disposal of Section 34 petition, remedy of appeal under Section 37 exists; therefore, award does not attain finality until all remedies are exhausted (Para 2). C) Securities Law - SEBI Circulars - Arbitration Awards - SEBI letter dated 9th July 1999 and circular dated 11.08.2010 - Procedure for debiting award amount from member's account - Court observed that SEBI circulars require stock exchange to keep amount in separate account pending court orders if appeal is filed; however, these circulars do not affect the statutory scheme under the Arbitration Act (Paras 4-5).
Issue of Consideration
Whether a petition under Section 9 of the Arbitration and Conciliation Act, 1996 for stay of operation of an arbitral award is maintainable when a Section 34 petition to set aside the award is already pending before the court.
Final Decision
The court dismissed the Arbitration Petition as infructuous, holding that since the Section 34 petition was pending and admitted, the award was not enforceable under Section 36, and thus no interim relief under Section 9 was necessary. The dismissal was without prejudice to the petitioner's rights in the pending Section 34 proceedings.
Law Points
- Section 9 of Arbitration and Conciliation Act
- 1996 cannot be used to stay enforcement of an arbitral award when a Section 34 petition is pending
- award becomes enforceable only after Section 34 application is refused or time expires
- SEBI circulars do not override statutory scheme.
