The Award Went Against My Company and They Have Filed for Execution: Getting a Stay Under Section 36

A stay of arbitral award under Section 36 of the Arbitration and Conciliation Act, 1996 does not come with the Section 34 petition. Since the 2015 amendment, filing a challenge "shall not by itself render that award unenforceable", so the award holder can execute the award as a decree while your petition is pending. Your company needs a separate application under Section 36(2), and the court grants the stay under Section 36(3) on conditions, almost always a deposit of a substantial part of the money awarded or security for it, having due regard to the rules for staying a money decree under the Code of Civil Procedure. The one exception is the proviso inserted in 2021: where a prima facie case is made out that the arbitration agreement, the contract or the making of the award was induced or effected by fraud or corruption, the court must stay the award unconditionally.

Part of the arbitration and dispute resolution practice at S Jain & Attorneys, Bangalore.

This guide is for the director who has just been served with an execution petition, often with a prayer to attach the company's bank accounts, while counsel is still drafting the Section 34 petition. The grounds of challenge are in our Section 34 guide, the time limit in the Section 34 limitation post, and attachment and sale in the execution of decree guide.

Does filing under Section 34 stop them from executing the award?

No. Section 36(2) says that where an application to set aside the award has been filed, "the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose". Section 36(1) makes the award enforceable under the Code of Civil Procedure "in the same manner as if it were a decree of the court" once the time for a Section 34 application has expired.

Before the 2015 Amendment Act substituted the section with effect from 23 October 2015, an award could be enforced only after a Section 34 application had been refused or the time for one had run out, which courts treated as an automatic stay. Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. (Supreme Court, 15 March 2018) held that the substituted Section 36 governs every Section 34 petition filed after 23 October 2015 and even petitions pending on that date, because execution belongs to procedure and a judgment-debtor has no vested right to resist it. Parliament's attempt to restore the automatic stay for older arbitrations through Section 87 in 2019 was struck down as manifestly arbitrary in Hindustan Construction Company Ltd. v. Union of India (27 November 2019). Once the petition is on file, the award is enforceable unless a court has stayed it.

If the execution petition arrived inside the three-month window, before any petition was filed, ask counsel whether it is premature under Section 36(1), which ties enforceability to the expiry of the time for a Section 34 application. Do not build a strategy on it: the day your own petition is filed, sub-section (2) applies.

Key takeaway. The Section 34 petition attacks the award. The Section 36(2) stay application is the only thing that stops the money leaving the company while the attack is heard, and it is decided on its own footing.

How do I apply for a stay of arbitral award under Section 36, and in which court?

You file a separate application under Section 36(2) in the court where the Section 34 petition is filed, and you file both together. Section 36(3) requires the court to record reasons in writing, so give it reasons to work with: the grounds of challenge in summary, the prima facie doubts about identifiable claims in the award, the company's finances on affidavit, and a concrete offer of deposit or security.

The court is the one defined in Section 2(1)(e): for a domestic arbitration, the principal civil court of original jurisdiction in the district. Where the subject matter is a commercial dispute of the specified value, Section 10(3) of the Commercial Courts Act, 2015 sends every application under the Arbitration Act that would ordinarily lie before the principal civil court to the Commercial Court with territorial jurisdiction over the arbitration. In Bengaluru such petitions are numbered as commercial arbitration petitions before a Commercial Court presided over by an Additional City Civil and Sessions Judge. Section 42 adds that once an application under Part I has been made in a court, "that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement", so an earlier Section 9 application by either side fixes the forum.

Order 41 Rule 5(4) of the Code allows an ex parte stay pending the hearing of the application, so ask for an interim order on the first day, put the security offer in the application, and list the executing court's next date. Pam Developments Pvt. Ltd. v. State of West Bengal (Supreme Court, 12 July 2019) shows the cost of drift: the State's stay application was dismissed in default, and within a week the executing court attached Rs 2.75 crore of the State's money lying with the Reserve Bank of India.

Deadline warning. The stay application rides on the Section 34 petition, and Section 34(3) gives three months from receipt of the award, with a further thirty days only on sufficient cause and "not thereafter". If the award arrived two months ago, the petition has to be settled now, with the stay application alongside it.

Four points to hold onto before the deposit question is opened.

What will the court make me deposit?

Expect an order to deposit a large part of the sum awarded, often 75 percent or the whole amount with interest, and treat anything lower as a good result. The first proviso to Section 36(3) requires the court, for a money award, to "have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908". Those provisions are Order 41 Rule 1(3) and Rule 5. Rule 5(3) requires substantial loss, no unreasonable delay and security for the due performance of the decree. Rule 1(3) says that in an appeal against a money decree the appellant shall deposit the amount disputed or furnish such security as the court thinks fit, and Rule 5(5) says that without that deposit or security the court shall not stay execution.

Pam Developments read these into Section 36(3). "Have due regard to" makes the Code's provisions guidance, not a mandatory code, and under Order 41 Rule 5 "the Court has the power to direct for full or part deposit and/or to furnish security of the decretal amount". Order 27 Rule 8A, which exempts the government from furnishing security in appeals, does not apply to a Section 36 stay and in any event does not exempt it from a deposit, since Section 18 requires parties to be treated with equality. The court quashed an unconditional stay of an award of Rs 2.87 crore against the State and restored the executing court's attachment.

The three-judge decision in International Seaport Dredging Pvt. Ltd. v. Kamarajar Port Ltd. (24 October 2024) shows where the number now sits. The Madras High Court had stayed an award of about Rs 21 crore, with interest and costs on top, on the port furnishing a bank guarantee for the principal, reasoning that one claim of about Rs 3 crore looked doubtful and that the port was a statutory undertaking and not "a fly by operator". The Supreme Court held that the status of a party is irrelevant, that the form of security should not depend on whether the party is a government body, and that the High Court had ignored the remaining Rs 18 crore of claims. It substituted a deposit of 75 percent of the decretal amount, inclusive of interest, by a fixed date.

Karnataka follows the same line. In ITI Limited v. HCL Infosystems Limited (High Court of Karnataka, 7 August 2025) the Commercial Court at Bengaluru had stayed an award on the public sector undertaking depositing 75 percent of the award amount within sixty days. The High Court dismissed the writ against that condition, holding that "conditional stay is the default legal position", that a public sector unit gets no preferential treatment, and that there is a trend towards directing deposit of even 100 percent, citing the Supreme Court's orders in Toyo Engineering Corporation v. Indian Oil Corporation and Manish v. Godawari Marathwada Irrigation Development Corporation, the latter a full deposit while a Section 37 appeal was pending. It added that 100 percent is not an inflexible rule and that 75 percent was reasonable.

The number moves with the nature of the award. In UM Projects LLP v. Godolphine India Pvt. Ltd. (High Court of Karnataka, 5 January 2024) the Bengaluru Commercial Court stayed an award for Rs 2.60 crore with GST, interest at 18 percent and costs, together with a direction to hand over leased premises, on security of only 5 percent, with an injunction protecting the award-debtor's possession while the facts about who held the premises were sorted out. A contested possession question and a mixed award moved the number, not the standing of the party. For a plain money award, plan for 75 percent and up.

Will a bank guarantee do instead of cash?

Sometimes, and the choice is the court's, but after Kamarajar Port do not assume a guarantee will be accepted for a plain money award. Order 41 Rule 1(3) speaks of "deposit the amount disputed in the appeal or furnish such security in respect thereof as the Court may think fit", so security is within the rule, and Pam Developments confirms that the court may direct deposit "and/or" security. Against that, the Supreme Court in Kamarajar Port replaced a bank guarantee with a 75 percent cash deposit because the High Court's only reasons for accepting a guarantee were the doubtful cess claim and the status of the party, and in Sepco Electric Power Construction Corporation v. Power Mech Projects Ltd. (19 September 2022) it described Order 41 Rule 5 as providing for stay "upon furnishing of cash security".

A guarantee for part of the sum is more likely where identifiable claims look doubtful on the face of the award or part of the award is not a money claim. Price it first: it blocks credit limits for as long as the petition and any appeal run, and the bank charges commission every year. In the Sepco litigation, counsel told the Supreme Court in 2021 that a Rs 30 crore guarantee had cost about Rs 30 lakh in bank charges, after the Delhi High Court had insisted on a guarantee from a scheduled Indian bank, as the company had itself offered, in place of the one it produced from a Chinese bank's Indian branch.

If the petition fails, a deposit is released to the award holder and a guarantee is invoked. Pam Developments closed with liberty to the award holder to seek release of the attached amount, and the Calcutta Full Bench passage the Supreme Court adopted there treats a deposit as a device that lets the decree holder withdraw the sum "without prejudice and subject to the result" while the challenge is heard. Ask for the order to say how the deposit will be invested and that any withdrawal before the petition is decided will be against an undertaking to restore it.

When is a stay unconditional?

Only where the court is satisfied that a prima facie case is made out that the arbitration agreement or contract which is the basis of the award, or the making of the award, "was induced or effected by fraud or corruption". The second proviso to Section 36(3) then says the court "shall stay the award unconditionally pending disposal of the challenge under section 34". The proviso was inserted by the Arbitration and Conciliation (Amendment) Act, 2021, dated 11 March 2021, with effect from 23 October 2015, and its Explanation applies it to all court cases arising out of arbitral proceedings, whenever they began.

The fraud must go to how the agreement or contract came about or how the award was made: a bribed arbitrator, a forged agreement, a contract procured by corruption. A wrong finding, an award beyond the reference or a conflict with public policy is a Section 34 ground, not a case under the proviso. The Karnataka High Court in ITI held that grounds pleaded as patent illegality and public policy did not prima facie make out fraud or corruption, and the Supreme Court in Sepco said the power to grant an unconditional stay "is not unfettered" and is subject to the second proviso. What earns the unconditional stay is particulars, pleaded in the petition itself with the material annexed, because the court will not hold an enquiry at the stay stage. A fraud plea invented for the stay application fails on the proviso and colours the whole file.

Where can the award holder execute, and can they attach my bank account first?

Anywhere in India where the company has assets, and yes, the bank account is usually the first target. In Sundaram Finance Ltd. v. Abdul Samad (Supreme Court, 15 February 2018) the court held that "the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings". Sections 38 and 39 of the Code assume a court passed the decree, and no court passes an award.

Section 60(1) of the Code lists "money" and "debts" among property liable to attachment. The balance in the company's account is a debt the bank owes it, so it is attached under Order 21 Rule 46 by a written order prohibiting the company from recovering it and the bank from paying it out until further order, and under Rule 46A the court may, on the award holder's affidavit, call on the bank as garnishee to pay the amount into court or show cause. The order bites on the bank when served, which is why the first sign of execution is often a frozen account rather than a court notice.

Section 9(1) also lets a party apply "at any time after the making of the arbitral award but before it is enforced in accordance with section 36" for an interim measure, including under clause (ii)(b) an order "securing the amount in dispute in the arbitration". In Sepco the holder filed a Section 9 application eight days after the losing party's petition and stay application, the Delhi High Court called for an affidavit of assets and finally directed a deposit of the full principal of about Rs 142 crore, and the Supreme Court held that Section 9 "confers wide power on the Court to pass orders securing the amount in dispute" after the award. Our Section 9 guide explains what such an order can contain.

The stay comes from the Section 2(1)(e) court seised of the petition, while the execution petition may be in a different city. A stay binds the executing court once communicated, so file it there with a memo the same day, and until the certified copy arrives an affidavit that the stay has been granted, the mechanism Order 41 Rule 5 itself contemplates.

What about interest running while I fight?

It keeps running, and a stay does not stop it. Section 31(7)(b) provides that a sum directed to be paid by an award carries interest, "unless the award otherwise directs", at two per cent above the current rate of interest prevalent on the date of the award, "from the date of award to the date of payment". Most awards fix their own rate: the award in Kamarajar Port carried 12 percent a year from the award if unpaid within three months, and the award in UM Projects 18 percent a year until realisation. A stay is not payment, and a petition is not payment, so every month of the challenge adds to the debt. That is why the Supreme Court in Kamarajar Port computed the 75 percent on the decretal amount "inclusive of interest", and why years of Section 34 and Section 37 proceedings can cost more in interest than the challenge could save.

Whether money deposited in court counts as payment for this purpose depends on the terms of the order. Have the order deal with the point: ask that the deposit be invested in an interest-bearing fixed deposit, that the interest earned follow the principal to whichever party succeeds, and that the award interest be treated as satisfied on the deposited portion from the date of deposit. A court may decline the last request, but an order silent on interest leaves the company paying twice, to the bank for the blocked money and to the award holder for the delay.

If the Section 34 petition fails, what next?

An appeal under Section 37(1)(c), which lies from an order "setting aside or refusing to set aside an arbitral award under section 34" to the court that hears appeals from original decrees of the court that passed the order. For a petition dismissed by a Commercial Court in Bengaluru, that is the High Court of Karnataka. Section 37(3) bars a second appeal but preserves the right to approach the Supreme Court.

There is no automatic stay in the appeal either: Manish v. Godawari Marathwada was a direction to deposit the full award while a Section 37 appeal was pending, and the deposit already made is released to the award holder on dismissal unless the appellate court stays that release, on terms. One trap belongs here. Section 37 lists the appealable orders "and from no others", and an order granting or refusing a stay under Section 36(3) is not on the list. The Karnataka challenges to deposit conditions in 2024 and 2025 were writ petitions under Articles 226 and 227, and the High Court declined to interfere with the Commercial Court's discretion in both.

Is the position different for an MSME award?

Yes, and it is harder. Where the award was made by a Micro and Small Enterprises Facilitation Council, or by an institution to which the Council referred the dispute, Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 provides that no application for setting aside the award "shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court". Its proviso adds that pending the application the court "shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose". The 75 percent is a precondition to the challenge being entertained at all, not a condition of stay. The supplier's side of that regime is in our MSMED recovery guide.

What should the company do this week?

The sequence assumes an award received about two months ago, a petition still in draft, and an execution petition already served.

1. Fix the date the signed award was received and calendar three months from it under Section 34(3). Treat the further thirty days as an emergency reserve, not a plan.
2. Have the execution petition and any Section 9 application read the same day: the court, the assets named, whether a garnishee notice has gone to the bank, and the next date.
3. File the Section 34 petition and the Section 36(2) stay application together in the Section 2(1)(e) court, after the prior notice required by Section 34(5), and seek an interim stay on the first hearing, before the executing court's next date.
4. Decide the offer before the hearing. Work out what the company can deposit in cash and what a guarantee would cost and block, and put a specific offer in the application.
5. Plead any fraud case in the petition itself, with particulars and documents. If there is none, do not manufacture one.
6. Identify the payroll and statutory dues accounts, and do not move funds or assets out of the company after service. Transfers at that stage invite the executing court's disclosure and arrest procedures and destroy the case for a discretionary stay.
7. Take the stay order to the executing court the same day, with a certified copy or an affidavit that the stay has been granted, and ask for the attachment to be lifted or held in abeyance on compliance.
8. Open a settlement channel with the deposit figure in hand. A discounted payment now, against withdrawal of the execution, is measured against deposit plus post-award interest plus years of proceedings, and often wins that comparison.

The four facts that decide the company's next month, restated.

Mistakes companies make

The first is waiting for the Section 34 hearing to deal with the stay. The petition can take a year or more to be heard, and the execution petition will not wait for it. The second is arguing for an unconditional stay without a fraud case, which wastes the hearing and marks the file. The third is moving money after service of the execution petition, which turns a civil deposit question into a disclosure and arrest enquiry. The fourth is reading the award for the principal and skipping the interest clause, then discovering at the hearing that the 75 percent is computed on both. The fifth, for public sector and government-linked companies, is assuming a leniency that Pam Developments, Kamarajar Port and ITI have all refused.

What I tell a board at the first meeting is that the stay application is not where the case is won. Where these applications actually turn is on three things: whether the petition shows a prima facie doubt about specific claims rather than a general grievance, whether the company arrives with a credible offer of deposit or security instead of a plea of hardship, and whether the interest and settlement arithmetic has been done before the hearing rather than after it. The judge has a few pages of statute, a line of Supreme Court decisions that all point the same way, and no appetite to read the award. The application that respects that and offers a number is the one that gets an order the company can live with.

Common mistake. Treating the deposit as the end of the exposure. The deposited money earns whatever the court's investment order gives it, while the award interest keeps running at the award's own rate on the whole sum until payment. Plan the challenge on the principal alone and, two years later, the interest has eaten the saving.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

For the challenge itself, the deposit negotiation and the execution defence, see our arbitration and dispute resolution practice and our corporate and commercial practice.

• Setting Aside an Arbitral Award Under Section 34
• Execution of Decree in India: How to Actually Recover Money After Winning (2026)
• Section 9 Arbitration Interim Relief: What It Is and How to Use It