Overview
The Bombay High Court, in the present matter, dealt with an interim application filed in execution proceedings arising out of an arbitral award. The applicant, Unity Small Finance Bank Limited, sought enforcement of an interim order passed by the Arbitral Tribunal under Section 17 of the Arbitration and Conciliation Act, 1996, restraining the respondent from dealing with her assets, pending enforcement of the award.
The respondent had challenged the award by filing a petition under Section 34 of the Act. However, no order staying the execution of the award had been obtained from the competent court.
The High Court was therefore required to determine whether the pendency of the challenge could, by itself, prevent execution of the award and whether the interim protection granted by the tribunal should continue during the execution proceedings.
Facts of the Case
Disputes between the parties had earlier been referred to arbitration. During the proceedings, the tribunal exercised its powers under Section 17 of the Arbitration and Conciliation Act, 1996 and granted interim protection in favour of Unity Small Finance Bank Limited. The respondent was restrained from transferring, alienating or otherwise dealing with her assets so that any award ultimately passed in favour of the applicant could be effectively enforced.
After the arbitration concluded and the final award was delivered, the applicant initiated commercial execution proceedings before the Bombay High Court. It was alleged that the respondent had acted in breach of the directions granted by the tribunal. The applicant, therefore, sought continuation of the injunction and also requested the Court to direct the respondent to disclose all her assets.
The respondent opposed the application on the ground that proceedings challenging the arbitral award under Section 34 of the Act were already pending. At the same time, it was admitted before the Court that no court had granted any stay on the execution of the award.
Legal Issues
- Whether filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996, automatically stays the execution of an arbitral award.
- Whether interim measures granted under Section 17 of the Act remain enforceable during the execution proceedings.
- Whether the Court can direct disclosure of a Judgment Debtor’s assets during execution.
- Whether the injunction granted by the Arbitral Tribunal should continue in the absence of any stay against the award.
Decision
The Bombay High Court allowed the interim application and granted interim relief in favour of the applicant.
The Court held that merely filing a petition under Section 34 of the Act, does result in an automatic stay of an arbitral award. Since no competent court had stayed the execution proceedings, there was no legal impediment to enforcing either the award or the interim protection granted by the Arbitral Tribunal.
Accordingly, the Court directed the respondent to file, within four weeks, an affidavit on oath, disclosing all her assets with details of any encumbrances existing over them. A copy of the affidavit was also directed to be served upon the applicant.
The Court further ordered that the injunction granted by the Arbitral Tribunal under Section 17 would continue until further orders. As a result, the respondent remained restrained from transferring, alienating or otherwise dealing with her assets.
The decision reiterates that the filing of a challenge under Section 34 of the Act, without an order of stay from the competent court, does not prevent enforcement of an arbitral award or the interim measures granted in aid of its execution.
Case Reference: - Interim Application No. 2752 of 2026 in Commercial Execution Application (L) No. 21395 of 2025 (SJB, Before Abhay Ahuja, J.)
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