Himachal Pradesh High Court Excludes Automatic Stay Period From Limitation For Execution Of Arbitral Award

The Himachal Pradesh High Court has held that an execution petition filed in 2025 to enforce a 2012 arbitral award was within limitation.

It held that the period during which the award was deemed to be automatically stayed under the law then prevailing had to be excluded while calculating limitation.

Justice Jyotsna Rewal Dua observed, “In the instant case, objections under Section 34 of the Act were preferred by the respondent-Judgment Debtor within the prescribed limitation period. Therefore, even though no separate application had been moved by the judgment debtor seeking stay of the arbitral award impugned therein, yet by virtue of the law laid down in the aforesaid decisions, there was deemed construction of automatic stay of award on the filing of petition under Section 34 of the Act. Such construction suspended the period of limitation from the date of the award i.e. 20.03.2012.”

The award was passed by the Sole Arbitrator on March 20, 2012. The judgment debtor filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 on June 16, 2012.

Section 34 provides a mechanism to challenge an arbitral award before a court. The execution petition was filed on May 23, 2025.

The judgment debtor argued that Article 136 of the Limitation Act, 1963 provides a 12-year period for executing a decree. According to the judgment debtor, this period had expired on March 19, 2024, when calculated from the date of the award.

The argument relied on the Supreme Court's decision in Hindustan Construction Company Limited v. Union of India (2020).

The Supreme Court held that its earlier decisions in National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd. and Fiza Developers and Inter-Trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. were incorrect to the extent that they treated an award as automatically stayed merely because a Section 34 challenge had been filed.

The petitioner relied on the legal position prevailing when the Section 34 challenge was filed in 2012. At that time, National Aluminium and Fiza Developers had applied the principle of automatic stay when Section 34 objections were filed within the prescribed period.

The high court accepted this position for calculating limitation. It observed that although no separate stay application had been filed, the law prevailing in 2012 resulted in a deemed automatic stay of the award.

Section 36 was subsequently amended, with the amendment coming into force from October 23, 2015. The amended provision clarified that merely filing a Section 34 challenge would not make an award unenforceable. A stay order from the court was required.

The high court noted that the Supreme Court later held in Hindustan Construction Company that the earlier interpretation providing for automatic stay was incorrect. For the present limitation question, however, the high court held that the legal position prevailing when the Section 34 challenge was filed in 2012 had to be taken into account.

It therefore held that limitation was “arrested” from March 20, 2012 until October 23, 2015. Excluding this period brought the execution petition within the 12-year limitation period.

The high court also relied on the Supreme Court's 2022 decision in In Re: Cognizance for Extension of Limitation. The Supreme Court had directed exclusion of the period from March 15, 2020 to February 28, 2022 while computing limitation in judicial and quasi-judicial proceedings.

The high court observed that even if only this COVID-19 period were excluded, the execution petition would still be within limitation.

It rejected the judgment debtor's objection that the execution petition was barred by limitation. The court granted the judgment debtor a final three-week opportunity to comply with the arbitral award by depositing the awarded amount in the Registry.