Stay of money arbitral awards depends on judicial discretion; deposit is not invariably mandatory under the statutory scheme.

Section 36(3) of the Arbitration and Conciliation Act, 1996 gives the court discretion to stay an arbitral award for payment of money on such terms as it considers fit, and the proviso only requires due regard to the principles governing stay of a money decree. Order 41 Rule 5 of the Code of Civil Procedure, 1908 does not impose an inflexible rule that deposit of the decretal amount must always be ordered. The court must act judicially on the facts, including whether sufficient cause is shown and whether substantial loss is demonstrated. On the stated facts, unconditional stay was justified because the award relied on a limited purported admission without considering the full defence and counter-claim.

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Issues: Whether, in an application for stay of an arbitral award for payment of money, the court is bound to insist upon deposit of the decretal amount and whether unconditional stay could be granted on the facts of the case.

Analysis: Section 36(3) of the Arbitration and Conciliation Act, 1996 confers a discretionary power on the court to stay the operation of an award subject to such conditions as it deems fit, and the proviso only requires due regard to the principles governing stay of a money decree. The scheme of Order 41 Rule 5 of the Code of Civil Procedure, 1908 does not create an inflexible rule that a deposit must invariably be directed in every case. The court must exercise its discretion judicially on the facts and circumstances, including whether sufficient cause is shown and whether substantial loss is demonstrated. On the facts, the interim award was based only on a purported admission in one paragraph of the defence, without considering the respondent's complete stand, and the arbitral record disclosed that the respondent had set up a broader defence and counter-claim. The learned Single Judge was therefore justified in granting stay without directing deposit.

Conclusion: The requirement of deposit was not mandatory, and the order granting unconditional stay was in exercise of discretion.

Ratio Decidendi: Under Section 36(3) of the Arbitration and Conciliation Act, 1996 read with Order 41 Rule 5 of the Code of Civil Procedure, 1908, stay of a money award is governed by judicial discretion and no universal rule mandates deposit of the awarded amount in every case.

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