No Appeal Lies Against Conditional Stay Of Arbitral Award: Calcutta High Court

The Calcutta High Court has recently held that an appeal does not lie against an order granting conditional stay of an arbitral award, observing that such orders fall outside the narrow appellate framework prescribed under arbitration Act.

Section 36(2) of the Arbitration and Conciliation Act, 1996, allows a party that has challenged an arbitral award in court to seek a stay on the enforcement of that award.

A Division Bench of Justice Debangsu Basak and Justice Md. Shabbar Rashidi dismissed an appeal filed by National Insurance Company Limited against an order of a Single Judge disposing of a Section 36(2) petition by granting conditional stay of an arbitral award.

Under the order dated November 10, 2025, the Single Judge had stayed enforcement of an arbitral award dated April 28, 2023, subject to the condition that the insurer deposit the entire awarded amount of ₹1.76 crore along with interest with the Registrar, Original Side.

Rejecting the appeal as not maintainable, the Division Bench held:

“The right of appeal, so far as the parties before us are concerned, being circumscribed by Section 37 of the Act of 1996, and Section 37 of the Act of 1996 not providing any right of appeal against an order disposing of a petition under Section 36 (2) of the Act of 1996, the instant appeal is held to be not maintainable.”

The dispute arose from claims under a Standard Fire and Special Perils (Stock) Insurance Policy relating to cyclone damage, including claims arising from cyclones Fani and Amphan. By the arbitral award dated April 28, 2023, the insurer was directed to pay Rs 1,76,74,396 to Tirupati Food Products, with interest at six percent per annum in the event of failure to pay within three months.

The insurer challenged the award under Section 34 of the Arbitration Act before the Commercial Division of the High Court. During the pendency of that challenge, it sought a stay on enforcement of the award under Section 36(2). While granting the stay, the Single Judge directed deposit of the entire awarded amount with interest.

Challenging the condition, the insurer argued that Section 13 of the Commercial Courts Act, 2015 confers an independent right of appeal, and that the proviso limiting appeals cannot override the main provision. It further argued that requiring deposit of the entire awarded amount was prejudicial, and that the court could instead have accepted alternative securities such as a bank guarantee.

The respondent opposed the appeal at the threshold, arguing that appeals in arbitration matters are governed strictly by the Arbitration Act and are permissible only in the limited circumstances expressly set out under Section 37.

After exmaining both the statutes, the Division Bench held that although proceedings before the Commercial Division are governed by the Commercial Courts Act, “the maintainability of the present appeal has to be adjudged primarily on the parameters of Section 37 of the Act of 1996 as Section 13 of the Act of 2015 refers to it.”

The Court emphasised that the proviso to Section 13 “has delineated the contours within which, an appeal shall lie”, and clarified that:

“An appeal shall lie only from such orders which are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 as amended by the Act of 2015 and Section 37 of the Act of 1996.”

Reading Section 13 together with Section 21 of the Commercial Courts Act, which gives the statute overriding effect, the Bench held that these provisions “curtail the right of appeal” in commercial disputes transferred to the Commercial Division.

Stressing that the Arbitration Act is a self-contained code, the Court concluded that since Section 37 does not contemplate an appeal against orders passed under Section 36(2), such orders are not appealable.

Accordingly, the appeal and all connected applications were dismissed without any order as to costs.

For Appellant: Advocates Shib Shankar Banerjee, Dolan Dasgupta, Partha Pratim Das and Siddhartha Chamria.

For Respondent: Advocate Varun Kothari.