Stay of arbitral proceedings refused where a validating statute remained operative and contractual disputes were still undecided.

Pending reconsideration of a validating statute by a larger Bench of the Supreme Court did not, by itself, justify staying arbitral proceedings under section 9 of the Arbitration and Conciliation Act, 1996. The High Court noted that the validating statute had not been stayed and that the existing judgment upholding its validity continued to operate. It also observed that the arbitral tribunal still had to decide the claim for reimbursement of cess, along with the respondent's defences on limitation and contractual liability. On that basis, the request to halt the arbitration was rejected.

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Issues: Whether arbitral proceedings could be stayed under section 9 of the Arbitration and Conciliation Act, 1996 merely because the validity of the validating statute was pending consideration before a larger Bench of the Supreme Court.

Analysis: The request for stay was examined in the context of a claim for reimbursement of cess under the contract. The Court noted that the arbitral tribunal still had to decide the respondent's claim and the petitioner's defences, including limitation and contractual liability. It further noted that the validating statute had not been stayed and that the existing decision upholding its validity continued to operate. In these circumstances, the mere pendency of a larger Bench reference did not justify halting the arbitration.

Conclusion: The prayer for stay of arbitral proceedings was rejected.

Ratio Decidendi: Pending reconsideration of a validating statute by a larger Bench does not, by itself, warrant stay of arbitral proceedings when the existing judgment upholding the statute remains operative and the parties' contractual issues are yet to be adjudicated.

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