Unconditional stay of arbitral award requires prima facie fraud or corruption; contractual incentive claim was not treated as barred tax refund.

Section 36(3) permits an unconditional stay of an arbitral award only where a prima facie case shows that the arbitration agreement or the making of the award was induced or effected by fraud or corruption; on the materials considered, no such prima facie case was established, so unconditional stay was refused. The award was also construed as arising from contractual financial incentives under the share purchase agreement and Schedule 5, including a change-in-law clause, rather than as a simple refund of tax barred by the GST regime. The contractual character of the claim therefore remained intact on the record, although security of the awarded amount was directed and stay was granted upon furnishing such security.

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Issues: (i) Whether the petitioners had made out a prima facie case that the arbitral award was induced or effected by fraud or corruption so as to justify an unconditional stay under Section 36 of the Arbitration and Conciliation Act, 1996; (ii) Whether the award represented an impermissible refund of tax barred by the GST regime, or was a contractual entitlement to financial incentives under the share purchase agreement.

Issue (i): Whether the petitioners had made out a prima facie case that the arbitral award was induced or effected by fraud or corruption so as to justify an unconditional stay under Section 36 of the Arbitration and Conciliation Act, 1996.

Analysis: The statutory framework under Section 36(2) and the second proviso to Section 36(3) permits unconditional stay only where a prima facie case is shown that the arbitration agreement or the making of the award was induced or effected by fraud or corruption. The materials did not show any fraud attributable to the award-holder, nor did they establish that the award was procured by concealment or inducement. The Tribunal had considered the record and the parties' submissions, and the challenge was essentially directed against the Tribunal's appreciation of the contract and the legal effect of the award.

Conclusion: No prima facie case of fraud or corruption was made out. Unconditional stay was refused.

Issue (ii): Whether the award represented an impermissible refund of tax barred by the GST regime, or was a contractual entitlement to financial incentives under the share purchase agreement.

Analysis: The share purchase agreement and Schedule 5 were construed as providing contractual financial incentives, including support measured by the tax paid, with an express change-in-law clause dealing with GST. The Tribunal's view was that the claim was for promised financial benefits under contract, not a simpliciter claim for tax refund. The statutory bar against refund of tax as argued by the petitioners therefore did not displace the contractual character of the award on the record before the Court.

Conclusion: The award was treated as a contractual claim for incentives, not an impermissible tax refund.

Final Conclusion: The challenge to unconditional stay failed, but the award was not left unstayed; security of the awarded amount was directed and the award was stayed upon such security being furnished.

Ratio Decidendi: An unconditional stay of an arbitral award under Section 36(3) is warranted only on a prima facie showing that the award or the arbitration agreement was induced or effected by fraud or corruption, and a contractual incentive claim measured by tax payments is not, without more, a barred tax refund.

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