Karnataka High Court Allows Alternate Security In Arbitral Award Execution Despite Finality Of Stay Condition

The Karnataka High Court has held in an arbitral award execution matter that courts can modify conditions imposed while granting a stay, even if such conditions have attained finality, to secure the ends of justice.

Justice H. T. Narendra Prasad observed:

“While the condition imposed earlier has attained finality, the same does not preclude this Court from moulding the relief in execution proceedings so as to secure the ends of justice, particularly when adequate alternative security is offered.”

The dispute traces back to a Memorandum of Understanding dated March 8, 2006 and a Master Agreement dated April 23, 2006 between ITI Limited and HCL Infosystems Limited, under which HCL had agreed to indemnify certain losses.

An arbitral award dated April 29, 2024, later modified on July 13, 2024, partly allowed HCL's claims and rejected ITI's counterclaims. ITI challenged the award before the Commercial Court in Bengaluru and sought a stay.

On April 19, 2025, the Court granted a stay subject to deposit of 75% of the award amount within 60 days. The condition was upheld by the High Court on August 7, 2025 and by the Supreme Court on November 21, 2025.

Execution proceedings followed. HCL moved an application under Order XXI Rule 41 of the Code of Civil Procedure seeking disclosure of ITI's assets and attachment of its bank accounts.

ITI later moved to modify the stay condition, pointing to liquidity constraints and proposing to secure the award by offering unencumbered immovable property valued at about ₹139 crore.

HCL resisted the move, maintaining that the deposit condition had already attained finality and that ITI was aware of its financial position all along.

The Court was not persuaded to reject the request outright. It allowed the application in part, permitting ITI to furnish immovable property as security for 50% of the award amount, while requiring the balance 50% to be deposited in cash within six weeks.

This arrangement came with safeguards. ITI was directed to place title documents on record, file an affidavit, and give an undertaking that the property would not be alienated or encumbered during the proceedings.

The Court also reiterated that interlocutory orders are not beyond reconsideration where circumstances warrant it.

“It is well settled that interlocutory orders are amenable to modification in appropriate cases.”, it said.

The writ petitions were partly allowed, with HCL free to proceed with execution if ITI fails to comply.

For Petitioner (ITI Limited): Advocates Uday Holla, Rithika Ravikumar.

For Respondent (HCL Infosystems Limited): Advocates K.G. Raghavan, Shailesh K.K. Kapoor.