Award Holder U/S 36 Of Arbitration Act Entitled To Be Secured Of Entire Award Value: Calcutta High Court
[23 June 2022] The Calcutta High Court observed that an award holder has the statutory safeguard under Section 36 of the Arbitration and Conciliation Act, 1996 (Act) to secure the entire arbitral award amount even during the pendency of an application for setting aside of the award and that such a security must be real and not illusionary or insignificant.
Justice Shekhar B. Saraf was adjudicating upon a petition filed under Section 34 of the Act along with an application under Section 36 (2) of the Act praying for stay of the award passed by the arbitral tribunal on December 27, 2021.
As per the award, the petitioner was directed to pay pendent-lite and future interest at the rate of 9% simple interest per annum from the date of award till the date of payment. However, the pendent-lite interest would apply to the awarded amount in case the same was not paid within three months commencing from the date of the award. The Arbitral Tribunal also awarded a sum of Rs. 25,00,000 towards reimbursement of litigation and arbitral costs. Dismissing the contention of the petitioner that the land in possession of the respondent must be considered as sufficient security under Section 36 of the Act, the Court underscored, “Lastly, it is my view that the amended Section 36 of the Act, provides for securing the award holder for the entirety of the award value. It should also be noted that the security must be real and not illusionary or insignificant. Thus, the argument by the senior counsel appearing for the petitioner that the land in possession of the respondent must be considered as sufficient security under Section 36 does not hold water. The land offered for the purpose of security is part of the dispute between the parties. Furthermore, no document has been placed before this court to indicate that the value of the land would cover the entirety of the award. Ergo, the same cannot be accepted for securing the interest of the award holder.”