The Allahabad High Court has reaffirmed that simply filing an appeal under Section 34 of the Arbitration and Conciliation Act, 1996 does not result in an automatic stay on the arbitral award.
A tenant challenged an eviction suit citing an arbitration clause. After the court rejected the suit, the matter went to arbitration, resulting in an award against the tenant. His objection under Section 34 was dismissed, and during this time, the property was sold. The court later directed him to pay ₹8.58 lakh, leading to the current petition before the High Court.
The Single Bench of Justice Piyush Agrawal said, “In the present case, the application under Section 34 of the Arbitration Act was filed by the petitioner in the year 2017, which is much after the enforcement of the amended Act in the year 2015, therefore, the argument of the counsel for the petitioner that merely on filing of the application under Section 34 of the Arbitration Act, against the award in question was automatically stayed, is misplaced and cannot be accepted.”
The Court referred to the Supreme Court’s decision in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. & Others (2018), which clarified that merely filing an appeal under Section 34 of the Arbitration Act does not result in an automatic stay of the arbitral award.
In this case, the arbitral award dated 19.07.2017 was neither stayed nor challenged with any substantial material, and it was ultimately upheld by the Supreme Court with no further proceedings pending. Therefore, the Court held that the contesting respondent is entitled to mesne profits, as the award was not fully complied with.
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