Order Requiring Deposit Of Entire Arbitral Award For Stay Not Appealable: Rajasthan High Court

The Rajasthan High Court has held that an order directing a party to deposit the entire arbitral award amount as a condition for staying enforcement of the award is not appealable under the Arbitration and Conciliation Act, 1996.

Holding that Section 13 of the Commercial Courts Act, 2015, does not create an independent right of appeal, the bench observed, "As an upshot, we hold that an order passed under Section 36(3), whether granting stay unconditionally, conditionally, or refusing it, is not appealable under Section 37 of the Arbitration Act, and Section 13 of the Commercial Courts Act, 2015 confers no independent right of appeal against it."

A Division Bench of Justice Arun Monga and Justice Maneesh Sharma delivered the ruling while dismissing as not maintainable an appeal filed by Rajasthan State Warehousing Corporation.

The corporation had challenged an order of the commercial court granting a stay on enforcement of the arbitral award subject to the condition that it deposit the entire awarded amount.

The dispute arose from a contract agreement dated June 25, 2020, for the joint operation and management of warehouses on a revenue-sharing basis under the Public-Private Partnership (PPP) model.

After disputes arose between the parties, the matter was referred to arbitration. Following the arbitral award, the corporation challenged it under Section 34 of the Arbitration and Conciliation Act and sought a stay on its enforcement. The commercial court granted the stay subject to the corporation depositing the entire awarded amount.

Before the high court, the corporation argued that the commercial court had mechanically imposed the condition of a 100% deposit without considering the merits of its Section 34 challenge, the financial burden on a government undertaking, or less onerous alternatives such as a bank guarantee.

Holding that the appeal was not maintainable, the bench said the Arbitration and Conciliation Act is a self-contained code governing arbitration, including appeals.

It held that Section 37 exhaustively lists appealable orders. Those are limited to orders refusing to refer parties to arbitration under Section 8, granting or refusing interim measures under Section 9, and setting aside or refusing to set aside an arbitral award under Section 34.

A conditional stay order under Section 36(3) does not fall within any of those categories. Section 13 of the Commercial Courts Act, the bench said, cannot be used to create an independent right of appeal where the Arbitration Act does not provide one.

The bench observed, "Section 37 opens with the words "an appeal shall lie from the following orders (and from no others)", language that is not merely enumerative but deliberately exclusionary. Parliament has thus not simply listed appealable orders; it has affirmatively barred appeals from everything else."

Relying on Kandla Export Corporation v. OCI Corporation, the bench reiterated that Section 13 of the Commercial Courts Act cannot enlarge the appellate remedies available under the Arbitration Act.

It added that permitting appeals against orders passed under Section 36(3) would introduce another layer of interlocutory litigation and defeat the objective of speedy enforcement of arbitral awards with minimal judicial intervention.

The high court dismissed the appeal as not maintainable. It clarified, however, that the corporation remained free to pursue other remedies available in law, including proceedings under Article 227 of the Constitution or, where permissible, while challenging the final order under Section 34.

The bench also clarified that it had expressed no opinion on the merits of the challenge to the deposit condition.

For Respondent (Origo Commodities India Private Limited): Advocates Suhail Sehgal, Raghvendra Singh for Susshil Daga.