IE Infra Pvt. Ltd. Vs Brahmi Constructions Pvt. Ltd. (Karnataka High Court)
Summary: The Karnataka High Court, in IE Infra Pvt. Ltd. Vs Brahmi Constructions Pvt. Ltd., considered a writ petition challenging the Commercial Court’s condition for staying enforcement of an arbitral award. The petitioner had initiated proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 in Com.A.P. No. 33/2026, and sought interim protection under Section 36(2). The Commercial Court directed deposit of 50% of the award amount within 15 days as a prerequisite for stay. The petitioner challenged the condition under Articles 226 and 227 of the Constitution.
The petitioner argued that the award suffered from patent perversity and serious legal infirmities, and that an unconditional stay was justified. Reliance was placed on Lifestyle Equities C.V. vs. Amazon Technologies Inc., 2025 SCC OnLine SC 2153. It was submitted that the arbitrator’s findings were unsupported by cogent evidence and contrary to the claimant’s documents. The petitioner therefore sought interference with the Commercial Court’s direction requiring deposit of half the award amount.
Justice Sachin Shankar Magadum held that Article 227 confers limited supervisory jurisdiction and does not permit the High Court to sit in appeal over a subordinate court’s discretionary interim order. The Commercial Court had examined the award and the grounds for stay before deciding that protection should be conditional. As the exercise of discretion was not shown to be arbitrary or perverse, the High Court declined to remove the 50% deposit requirement or grant an unconditional stay.
However, the High Court found the 15-day compliance period unreasonable and onerous, particularly because the condition governed the continuation of interim protection. It held that a party must receive reasonable time to fulfil a deposit condition, lest the protection become ineffective. Accordingly, the writ petition was partly allowed and the time for depositing 50% of the award amount was extended to eight weeks from receipt of a certified copy of the order. The Commercial Court’s order remained unchanged in all other respects.
Cases Discussed
- Lifestyle Equities C.V. vs. Amazon Technologies Inc., 2025 SCC OnLine SC 2153 — cited by the petitioner in support of an unconditional stay.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
he petitioner, being aggrieved by the money award/decree passed by the learned Arbitrator, has instituted proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, “the Act”) in Com.A.P.No.33/2026 before the jurisdictional Commercial Court. In the said proceedings, the petitioner has also filed an interlocutory application under Section 36(2) of the Act seeking stay of the operation and enforcement of the arbitral award. The Commercial Court, upon consideration of the material on record and the nature of the award, while exercising its judicial discretion, has formed an opinion that though the petitioner is entitled to an order of interim protection, such relief cannot be granted unconditionally. Consequently, by the impugned order, the Commercial Court has directed the petitioner to deposit 50% of the award amount within a period of fifteen (15) days as a condition precedent for grant of stay. The said conditional order is called in question in the present writ petition.
2. Learned counsel for the petitioner, reiterating the grounds urged in the writ petition, vehemently contends that the arbitral award suffers from patent perversity and is vitiated by serious legal infirmities. It is submitted that the findings recorded by the learned Arbitrator are not supported by any cogent evidence and are contrary to the documents placed on record by the original claimant. Placing reliance on the judgment of the Hon’ble Apex Court in Lifestyle Equities C.V. vs. Amazon Technologies Inc.1, it is contended that in cases where the award is ex facie perverse and suffers from patent illegality, the Court is justified in granting an unconditional stay without imposing onerous conditions. On these grounds, it is argued that the Commercial Court has erred in directing deposit of 50% of the award amount and that the impugned order warrants interference.
3. Having given anxious consideration to the submissions made by the learned counsel for the petitioner and upon perusal of the material on record, this Court is not inclined to accede to the principal contention advanced on behalf of the petitioner. The scope of interference under Article 227 of the Constitution of India is limited and supervisory in nature. This Court does not sit in appeal over the discretionary orders passed by the Courts below. If the Commercial Court, upon consideration of the arbitral award and the grounds urged in the application under Section 36(2) of the Act, has exercised its discretion in imposing a condition while granting stay, this Court would be slow to interfere with such exercise of discretion unless the same is shown to be arbitrary or perverse.
4. In the present case, the Commercial Court has exercised its discretion judiciously and has not found the case to be fit for grant of an unconditional stay. Therefore, the discretion so exercised does not call for interference.
5. However, this Court finds substance in the contention of the petitioner insofar as the timeline stipulated by the Commercial Court for compliance of the condition is concerned. Directing the petitioner to deposit 50% of the award amount within a short period of fifteen (15) days appears to be unreasonable and onerous, particularly when such condition is imposed as a prerequisite for continuation of interim protection. The object of granting an interim order would stand defeated if the condition imposed is incapable of reasonable compliance. The Commercial Court, while imposing such condition, ought to have granted reasonable time to enable the petitioner to comply with the same. Further, it is relevant to note that the original claimant has not yet been served with notice in the present proceedings. Therefore, without disturbing the discretion exercised by the Commercial Court in imposing the condition, this Court deems it appropriate to modify the timeline granted for compliance.
6. In view of the above discussion, the writ petition deserves to be allowed in part, limited to modification of the time granted for deposit.
ORDER
i. The writ petition is allowed in part.
ii. The petitioner shall deposit 50% of the award amount within a period of eight (8) weeks from the date of receipt of a certified copy of this order.
iii. In all other respects, the order passed by the Commercial Court stands unaltered.
Notes:
1 2025 SCC Online SC 2153
