Executing Court Cannot Impose Onerous Conditions For Release Of Arbitral Award Without Stay: Punjab & Haryana High Court

The Punjab and Haryana High Court has set aside a condition imposed by an executing court that required an award-holder to furnish a bank guarantee to obtain release of an arbitral award amount.

The court held that no such condition can be imposed by the executing court in the absence of any interim stay.

A bench of Justice Jasgurpreet Singh Puri held that once objections to an arbitral award are dismissed and no interim order is granted in appeal, the executing court is bound to execute the award in full.

“In the absence of any interim order in appeal, the learned Executing Court is required to execute the decree without imposing any such onerous condition,” the Court observed.

Aggarwal Sons had secured an arbitral award in its favour. The Union of India and others challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, but the objections were dismissed. An appeal filed thereafter remained pending before the High Court, without any interim stay.

During execution proceedings, the Additional District Judge, Chandigarh, by an order dated October 3, 2025, directed release of the deposited amount to the award-holder. It however ordered that such amount can be released only upon furnishing a bank guarantee equivalent to the amount.

Aggrieved by this condition, Aggarwal Sons approached the High Court by filing a civil revision petition under Article 227 of the Constitution.

The firm argued that in the absence of any interim order, the executing court could not go beyond the award or impose additional conditions.

When queried by the court, counsel for the Union of India was unable to controvert the petitioner's submissions.

The court noted that it was undisputed that the award had attained finality after dismissal of objections and that no interim order had been passed in appeal.

In these circumstances, it held that the executing court could not have imposed the onerous condition of furnishing a bank guarantee.

Allowing the revision petition, the High Court set aside the condition imposed by the Additional District Judge to the extent it required the petitioner to furnish a bank guarantee for release of the amount.

For Petitioner: Advocates Aman Kashyap, Aarush Kashyap and Alka Kashyap 

For Respondents: Advocate Neha Sharma