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Issues: Whether the petitioner had made out a prima facie case that the arbitral award was induced or affected by fraud or corruption so as to justify unconditional stay under Section 36 of the Arbitration and Conciliation Act, 1996.
Analysis: The application was considered under Section 36(2) and Section 36(3) of the Arbitration and Conciliation Act, 1996, with the second proviso requiring the Court to be prima facie satisfied that the making of the award was induced or affected by fraud or corruption. The challenge was directed not to the arbitration agreement itself, but to the manner in which the award was made and the conduct of the arbitrator. The Court found that both sides had been given opportunity to place documents, that the arbitral record did not support a denial of fair hearing, and that the petitioner had not established deliberate suppression, concealment, or unethical conduct amounting to fraud or corruption. Mere criticism of the arbitral findings, or an alleged erroneous interpretation of the contract and GST component, was held insufficient to satisfy the higher threshold required for unconditional stay.
Conclusion: The petitioner failed to establish prima facie fraud or corruption, and unconditional stay of the award was refused. A conditional stay was granted on furnishing security for the awarded sum.
Ratio Decidendi: Unconditional stay of an arbitral award under the second proviso to Section 36(3) of the Arbitration and Conciliation Act, 1996 can be granted only on a prima facie showing that the making of the award was induced or affected by fraud or corruption, and mere allegations of erroneous appreciation of evidence or contract terms do not meet that threshold.
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