M/s. Indo Pacific Projects Ltd. vs Chairman, Nagpur Improvement Trust & Anr.

Heard. Rule. Rule made returnable forthwith. Heard finally with the consent of learned counsel appearing for the parties.

The present petition challenges common order passed below Exhibit-4 and Exhibit-9 in Arbitration Case No.87 of 2025, the order being passed on 16^th February, 2026 by the District Judge-15, Nagpur.

Facts, as can be seen from the petition, are as under :

On 24.11.2004, an agreement was executed between the petitioner and the respondents Trust, pursuant to a tender floated for the development of a multiplex and commercial entertainment complex at Wardhaman Nagar, Nagpur, on Build, Operate and Transfer (BOT) basis.

On 20^th June, 2020 arbitration was invoked by the petitioner in terms of Clause 19.1 of the agreement dated 24.11.2004 due to alleged breaches committed by the respondents. Accordingly, Arbitration Reference bearing No. 03 of 2022 was instituted before the Arbitral Tribunal.

In the arbitration proceedings which ensued, the petitioner filed its Statement of Claim, as also the respondents filed their Statement of Defence. On 19.07.2024, the Arbitral Tribunal passed an Award in favour of the petitioner, thereby awarding an amount of Rs. 44.72 crores with interest thereon.

Being aggrieved by the said, the respondents herein filed an arbitration appeal/application under Section 34 of the Arbitration and Conciliation Act, 1996, bearing Arbitration Case No. 87 of 2025, challenging the said award. In the said proceedings, the respondents herein filed an application at Exhibit-4 under Section 36(3) of the Arbitration and Conciliation Act, seeking stay on the enforcement of the Award.

The petitioners herein filed a reply to the said application and also filed an application at Exhibit-9 seeking direction to deposit the decretal amount awarded under the arbitral award.

The District Judge-15 passed impugned order on 16.02.2026 below both the applications i.e Exhibit 4 and Exhibit 9, granting stay to the enforcement of the Award subject to the furnishing of bank guarantee and also disposed of the application at Exhibit 9. The said common order is challenged in the present petition.

I have heard Mr. S.K. Mishra, learned Senior Advocate for the petitioner and Mr. C.S. Kaptan, learned Senior Advocate for the respondents.

It is the primary contention of the learned Senior Advocate for the petitioner that the order of granting stay to the impugned Award on a condition of providing bank security or guarantee is totally unsustainable in law. He would submit that, firstly, no pleadings of either fraud or corruption, as contemplated under Section 36(3) of the Arbitration and Conciliation Act, were made in the application seeking stay of the impugned award.

He would also submit that the condition for stay regarding deposit of bank guarantee is directly in the teeth of the judgment of the Hon'ble Apex Court in International Seaport Dredging Private Limited v. Kamarajar Port Limited, reported in 2024 SCC OnLine SC 3112.

He would also submit that the District Judge has terribly erred in reaching to a conclusion that only because the respondent herein is a creature of the statute or public authority, that would not give it a leverage to the said authority from depositing the money in the Court than bank guarantee in lieu thereof. He would submit that only because the respondent is a public body and has made an averment that it is ready to give security, cannot ipso facto clothe it with a right to do so, and it is obligatory upon the Court to direct it to deposit amount as awarded by the Tribunal. He would therefore submit that the order of directing security to be furnished is contrary to the said judgment of the Hon'ble Court referred to supra. He relies on the following judgments :

Per contra, Mr. C.S. Kaptan, learned Senior Advocate for the respondents opposed the contentions of the learned Senior Advocate for the petitioner. He would extensively take me through the impugned Award and states that the learned Arbitrator has grossly erred in awarding the amount of Rs.44/- crores to the petitioner. By pointing me out certain deficiencies in the Award, it is the submission of the learned Senior Advocate for the respondents that the Arbitrator has severely transgressed its jurisdiction and has in fact awarded claim which was even not claimed by the claimant i.e. the petitioner herein, in the arbitration. He relies on the following judgments :

In the light of these facts, I have considered the contentions canvassed by the learned counsels for the respective parties. I have also gone through the impugned Award as also the impugned order.

Much emphasis has been laid by the learned counsel for the petitioner on the judgment of International Seaport, as referred to supra. It is his specific contention that the said judgment is delivered by three Hon'ble Judges of the Hon'ble Apex Court, in which it is unequivocally stated that there is no leverage vested in the District Court to direct furnishing of bank guarantee or security. It is contended by the learned Senior Advocate for the respondent that in view of that judgment, the only discretion which is left with the District Court while deciding an application under Section 36 is as to the quantum of amount to be deposited. He would therefore submit that the said judgment, being of the three Hon'ble Judges, will have a binding nature over all the other judgments.

To rival this, the learned counsel for the respondents, Mr. Kaptan, would heavily rely on the judgment of (2026) 3 SCC 641 (Lifestyle Equities C.V. and Another v. Amazon Technologies Inc), to state that the entire scheme of Section 36 of the Arbitration Act has been exhaustively dealt with in the said judgment. By taking this argument further, he would state that even though the matter in Lifestyle Equities was arising of a civil suit, the various contingencies as spelt out therein have been followed in the judgment of Popular Caterers v. Ameet Mehta and Others, reported in 2025 SCC OnLine SC 3334, which was a case of arbitration. He would therefore submit that even though it is concluded that the propositions in Lifestyle would not be applicable in the context of the fact that the said judgment was on a backdrop of a civil suit, the said position is made clear in the subsequent judgment of Popular Caterers.

It is therefore the submission of the learned Senior Advocate for the petititoner that there is no perversity or jurisdictional error which would warrant interference in writ jurisdiction.

Even a perfunctory glance at the impugned order would reveal that there are no reasons, much less which can be said to be legally justifiable one, to arrive at a conclusion as has been done by the District Court. As far as reasoning part is concerned, it has only referred to various judgments in para 8 and 9 which are cited by the respective parties. However, after para 10 onwards, it has not even cared to differentiate or assess or evaluate the ratio of the said judgments as to its applicability or non-applicability to the case in hand.

Even though not required at this stage, it has unnecessarily ventured to give a finding of limitation, as has been rightly pointed out by the learned counsel for the petitioner. While deciding an application seeking enforcement or stay of the Award, the only inquiry which is expected of the District Judge is regarding a prima facie case or a balance of convenience or an irreparable loss. There is not even a cursory reference to the said well-settled aspects to be considered while deciding the application for stay. The District Judge has not taken pains to discuss the true context and purport of Section 36 of the Arbitration and Conciliation Act and has recorded a cursory finding that only because the respondent herein is a public body, deposit of money would not be essential.

Even though the judgment of the Hon'ble Apex Court reported in International Seaport, as referred to supra, and other judgments were cited, the same have not been even perfunctorily discussed or deciphered.

In my considered opinion the reasoning apart from it being slipshod in nature cannot be said to be justifiable in law. Most of the part of the impugned order is exhausted in recording the pleadings of the parties without there being any aspect of how the said pleadings or the relevant case laws are to be made applicable or non-applicable to the case in hand.

The only reasoning which is found in the impugned order is regarding the hardship to be caused to both sides. The District Court has recorded a finding that only because hardship is caused, and the respondent being a statutory body or a public body, order of security will serve the purpose. In my considered opinion, the reasoning cannot be said to be as is required in an order of such importance.

As I have already stated supra, the impugned order is slipshod in nature inasmuch as it dedicates most of its text in referring to the various cases cited by the respective parties. However, as already stated by me, it severely fails to differentiate those cases on the touchstone of the case in hand.

In my considered opinion, therefore, without commenting on the merits of the matter, the order needs to be quashed and set aside with a specific direction to the District Judge to decide the application afresh, since the order concerned does not spell out any application of mind by the said District Judge to the various propositions of law cited by the respective parties.

In that view of the matter, following order is passed :