The disputes stemmed from a contract between the parties for curating an exhibition at the National Library, Kolkata. Following disagreements over payments, the parties took recourse to arbitration, culminating in an arbitral award in favour of Expression 360 Services. The government sought to set aside the award under Section 34 of the Arbitration and Conciliation Act while also requesting an unconditional stay, arguing that it was exempt from providing security under Order 27 Rule 8-A of the Code of Civil Procedure.
Rejecting the government’s claims, the High Court ruled that arbitration laws must be applied uniformly to private and public entities. Relying on Pam Developments Pvt. Ltd. v. State of West Bengal[1], the court emphasized that Order 27 Rule 8-A of the CPC is a remanent of the colonial era and does not absolve the government from providing security under Section 36 of the A&C Act.
The Court, therefore, rejected the argument that government entities are entitled to an automatic and unconditional stay of arbitral awards merely upon filing an application under Section 34 of the Act. It emphasised that unconditional stays are only granted in cases where the award or contract was induced by fraud or corruption, which was not established in this case. Consequently, the government entity was directed to secure the awarded amount partially in cash and partially via a bank guarantee for the stay to continue.
The court noted that arbitration is curated to provide a swift and quick resolution of disputes, therefore, if a money decree award passed against the government is allowed to be stayed unconditionally, it would defeat the very purpose of the A&C Act as the award holder would be deprived of the fruits of the award.
This judgment strengthens India’s pro-arbitration framework by ensuring that government entities are held to the same legal standards as private litigants. By requiring security for a stay, the ruling upholds the integrity of arbitral awards and promotes fairness in government contracts, ultimately fostering a more reliable dispute resolution ecosystem.