Prima facie fraud and ordinary diligence govern unconditional stay of arbitral awards under contract and arbitration law.

An unconditional stay of an arbitral award under the second proviso to section 36(3) of the Arbitration and Conciliation Act, 1996 requires a prima facie showing of fraud at the threshold, and the fraud must be apparent from the record without detailed enquiry. Alleged non-disclosure did not satisfy that standard because the regulatory and High Court orders did not restrain performance of the contract, and the relevant information was accessible through the respondent's public disclosures. The alleged concealment therefore did not establish fraud under section 17 of the Contract Act, 1872, and the matter also fell within the exception to section 19 because the truth could have been discovered with ordinary diligence. Security-based stay remained the operative relief.

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Issues: Whether the petitioner was entitled to an unconditional stay of the arbitral award on the ground that the arbitration agreement and the award were induced or effected by fraud.

Analysis: The second proviso to section 36(3) of the Arbitration and Conciliation Act, 1996 requires a prima facie showing of fraud at the threshold. Fraud, for this purpose, must be apparent from the record and not require a detailed enquiry. The alleged non-disclosure by the respondent did not establish fraud because the material orders of the regulatory authority and the High Court showed no restraint on performance of the contract, and the petitioner was shown to have had access to those orders through public disclosures in the respondent's balance sheets and website. In these circumstances, the alleged concealment did not satisfy the requirements of fraud under section 17 of the Contract Act, 1872, and the petitioner's case also fell within the exception to section 19 of the Contract Act, 1872 since the truth could have been discovered with ordinary diligence.

Conclusion: The petitioner failed to make out a prima facie case of fraud for an unconditional stay of the award, though stay was granted only on terms requiring security.

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