Calcutta High Court Dismisses Appeal Seeking Modification Of Arbitral Award Stay, Says Plea Not Appealable

The Calcutta High Court has dismissed an appeal seeking modification of the conditions of stay of an arbitral award to permit withdrawal of about Rs. 61.20 crore, holding that such orders are not appealable under Section 37 of the Arbitration Act.

The court clarified that a post-award application that does not seek protection or preservation of the subject matter cannot be treated as an interim measure appealable.

Rejecting Mackintosh Burn Limited's bid to withdraw about Rs 61.20 crore deposited as security, Justice Debangsu Basak and Justice Md. Shabbar Rashidi held that merely citing a particular provision does not determine the nature of the application and emphasised the distinction between Section 9, which deals with interim measures for protection and preservation, and Section 36, which governs stay of enforcement of an award.

The bench observed that, “If repeat application under Section 36 of the Act of 1996 when such application is confined to measures to be put in place under Section 36 of the Act of 1996 that is to say that, condition for grant of stay of the enforcement of the award impugned under Section 34 of the Act of 1996 then, such repeat application by no stretch of imagination can be classified to be one under Section 9 of the Act of 1996, sans any other details. In absence of relief being sought by an applicant for protection and preservation of the subject matter of the disputes referred to in arbitration, post the award, an application simplicitor touching on the modalities for grant of stay of enforcement of the arbitral award, cannot be treated to be an application under Section 9 of the Act of 1996.”

“In the facts and circumstances of the present case, the application of the appellant resulting in the impugned order, cannot be classified to be one under Section 9 of the Act of 1996. The impugned order is therefore a product of exercise of powers under Section 36 of the Act of 1996 which is not appealable under Section 37 of the Act of 1996”, it added.

The dispute arose from a contract dated November 20, 2008 between Mackintosh Burn Limited and Damodar Valley Corporation for the Raghunathpur Thermal Power Project.

An arbitral tribunal made an award dated October 21, 2021 for Rs.1,020,135,943.39.

Damodar Valley Corporation challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, while Mackintosh Burn Limited filed an execution application on August 3, 2023.

During the pendency of the challenge, the Commercial Court at Alipore, by order dated March 18, 2024, granted a conditional stay of the award under Section 36(2), directing deposit of 60% of the awarded amount and securing the remaining 40% by bank guarantee.

Time for compliance was extended on April 23, 2024, and compliance was recorded on June 14, 2024.

Mackintosh Burn Limited, thereafter, applied on July 30, 2024 to withdraw Rs. 61,20,81,566 from the deposited amount upon furnishing an indemnity bond or bank guarantee, which was rejected by the Commercial Court on April 1, 2025.

Aggrieved, Mackintosh Burn Limited filed an appeal under Section 13 of the Commercial Courts Act, 2015 read with Section 37 of the Arbitration and Conciliation Act, 1996, contending that the application resulting in the impugned order was one under Section 9 and therefore appealable.

It argued that, since the award had not yet been enforced, it was entitled to seek interim protection under Section 9.

Damodar Valley Corporation opposed the appeal, contending that the application related to modification of conditions of stay granted under Section 36 and could not be treated as one under Section 9.

The High Court held that the nature of the application must be determined from the reliefs sought and the context in which it was made.

Stating that there is a “world of difference” between Section 9 and Section 36, the Court held that Section 9 concerns protection and preservation of the subject matter of disputes, whereas Section 36 deals with the conditions for the grant of stay of enforcement of an arbitral award.

It held that where a court hearing a Section 34 challenge is invited to modify conditions of stay earlier granted under Section 36, such exercise remains within Section 36 and cannot be treated as one under Section 9.

Holding that the impugned order arose from the exercise of powers under Section 36 and not Section 9, the Court concluded that it was not appealable under Section 37.

It reiterated that an appeal in commercial matters lies only where the order falls within Order XLIII of the Code of Civil Procedure or Section 37 of the Arbitration Act, and since the impugned order did not satisfy this requirement, the appeal was not maintainable.

The appeal was accordingly dismissed without costs, with the Court clarifying that its observations were confined to the issue of maintainability and would not prejudice the parties in pending proceedings

For Appellant (Mackintosh Burn Limited): Advocates Jayanta Mitra, Arnab Chakraborty.

For Respondent (Damodar Valley Corporation): Advocates Suman Kr. Dutt, Dwaipayan Basu Mallick, Swarajit Dey.