BEFORE THE COURT OF HON’BLE DISTRICT JUDGE,

BETUL

MJC no. 109/2020

Vijay Khandelwal ……… Applicant

Versus

Angel Broking Ltd. ……… Respondent

REPLY TO THE INTERIM APPLICATION U/S 36 (2) & (3) OF THE ARBITRATION
AND CONCILIATION ACT, 1996 READ WITH THE ARBITRATION AND
CONCILIATION (AMENDMENT) ORDINANCE 2020 FOR UNCONDITIONAL STAY
ON THE IMPLEMENTATION OF THE IMPUGNED ORDER

The Respondent humbly submits as under :-

1. Before giving para-wise reply to the above-mentioned

application, the replying Respondent wishes to submit some
preliminary objections which are significant in nature to
analyse why the application under reply deserves to be
quashed on primary examination.

PRELIMINARY OBJECTIONS

2. That the present application of the petitioner is prima facie

not maintainable as the petitioner has not mentioned, not
even touched the ground of fraud or cheating in his main
application under Section 34 of Arbitration and Conciliation
Act, 1996.
3. That the Applicant has not brought on record any material to
make out even a prima facie case of fraud or corruption on
the part of the Respondent or that the arbitral Award was
induced by fraud or corruption. Therefore, the application for
unconditional stay of operation of the Award does not fall
within the second proviso of Section 36 to seek an
unconditional stay of operation of the arbitral Award from this
Hon’ble Court. Mere bald allegations are not sufficient to
make out a prima facie case of fraud or corruption to the

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 satisfaction of the Court within the meaning of Section 36.
Further, even the para 1 of the application under reply states
that the present application is filed inter alia challenging the
jurisdiction of Tribunal and validity of Arbitration Clause.
4. That the apprehensions of the Respondent that the Applicant
may not satisfy the Award is valid and real. The Respondent
shall have difficulty in recovering the money awarded in its
favour, once the stay order is granted. It is necessary in the
interest of justice to secure the Award granted to the
Respondents and make it efficacious by providing for its
satisfaction by the Applicant who may otherwise seek to
frustrate it by adopting dilatory tactics or diluting or
alienating his property. That the Respondent has identified
immovable property held by the Applicant herein viz. 41
Jawahar Nagar, 22 ward, 26 Gram, Tam and Betul District,
K.B. Enterprises, Betul – 460 001, pending enforcement of the
Award under Section 36 of the Arbitration and Conciliation
Act, 1996. Respondent apprehends that, during the pendency
of the present challenge to the Award under section 34 of the
Act, the Applicant would dilute or alienate his property in a
determined bid to render the Award otiose.
5. That, the amended Section 36 of Arbitration and Conciliation
Act, 1996 reads as follows:-

“36. Enforcement.—(1) Where the time for making an application

to set aside the arbitral award under section 34 has expired, then, subject
to the provisions of sub-section (2), such award shall be enforced in
accordance with the provisions of the Code of Civil Procedure, 1908 (5 of
1908), in the same manner as if it were a decree of the court.

(2) Where an application to set aside the arbitral award has been filed in
the Court under section 34, the filing of such an application shall not by
itself render that award unenforceable, unless the Court grants an order
of stay of the operation of the said arbitral award in accordance with the
provisions of sub-section (3), on a separate application made for that
purpose.

(3) Upon filing of an application under sub-section (2) for stay of the
operation of the arbitral award, the Court may, subject to such conditions

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 as it may deem fit, grant stay of the operation of such award for reasons
to be recorded in writing:

Provided that the Court shall, while considering the application for grant
of stay in the case of an arbitral award for payment of money, have due
regard to the provisions for grant of stay of a money decree under the
provisions of the Code of Civil Procedure, 1908 (5 of 1908).

Provided further that where the Court is satisfied that a prima facie case
is made out,- (a) that the arbitration agreement or contract which is the
basis of the award; or (b) the making of the award, was induced or
affected by fraud or corruption, it shall stay the award unconditionally
pending disposal of the challenge under section 34 to the award.

Explanation. - For the removal of doubts, it is hereby clarified that the

above proviso shall apply to all court cases arising out of or in relation to
arbitral proceedings, irrespective of whether the arbitral or court
proceedings were commenced prior to or after the commencement of the
Arbitration and Conciliation (Amendment) Act, 2015.”

6. That while considering the application u/S 36 (2) and (3) of

the Act, the provisions of Order XLI Rule 1(3) and Order XVI
Rule 5 are required to be considered which reads as follows:-

“ORDER XVI RULE 1. Form of appeal. What to accompany

memorandum.

(1) Every appeal ….

(2) Contents of memorandum – The memorandum shall .…

(3) Where the appeal is against a decree for payment of

money, the appellant shall, within such time as the
Appellate Court may allow, deposit the amount
disputed in the appeal or furnish such security in
respect thereof as the Court may think fit.”

“ORDER XVI RULE 5. Stay by Appellate Court.-

(1) An appeal shall not operate as a stay of proceedings under

a decree or order appealed from except so far as the Appellate
Court may order, nor shall execution of a decree be stayed by
reason only of an appeal having been preferred from the
decree; but the Appellate Court may for sufficient cause order
stay of execution of such decree.

Explanation :- An order by the Appellate Court for the stay of

execution of the decree shall be effective from the date of the

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 communication of such order to the court to first instance, but
an affidavit sworn by the appellant, based on his personal
knowledge, stating that an order for the stay of execution of
the decree has been made by the Appellate Court shall,
pending the receipt from the Appellate Court of the order for
the stay of execution or any order to the country, be acted
upon by the court of first instance.

(2) Stay by court which passed the decree :—…..…

(3) No order for stay of execution shall be made under

sub-rule (1) or sub-rule(2) unless the court making it is
satisfied—

(a) that substantial loss may result to the party

applying for stay of execution unless the order is made;

(b) that the application has been made without

unreasonable delay; and

(c) that security has been given by the applicant for the
due performance of such decree of or as may ultimately
be binding upon him.

(4) Subject to the provisions of sub-rule (3), ………

(5) Notwithstanding anything …..…”

7. That thus, if the award is not marred by “Fraud and

Corruption” and the allegations with respect to the “Fraud
and Corruption” are established prima facie to the
satisfaction of the Court, the Court is required to consider the
application having due regard to the above mentioned
provisions of CPC, i.e. Order XVI. That the above provisions of
CPC provides that the court shall require the Appellant
(Applicant herein) to deposit the amount disputed in the
appeal or furnish such security in respect thereof as the
Court may think fit while admitting the Petition under Section
34 of Arbitration and Conciliation Act, 1996. Further, the
Rule 5 states that No Order of stay of execution shall be
granted in a money decree, until conditions as mentioned in
Rule 5 sub-clause 3 are fulfilled. That it is not the case of the
Petitioners that the conditions of Order XVI Rule 1 (3) and 5
(3) are complied and thus stay be granted. That the provisions

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 of Order XVI Rule 1(3) and 5(3) are mandatory in nature and
squarely applicable to the present case.
8. That the Petitioner has not followed or mentioned how these
conditions as mentioned above are fulfilled in his application
and thus, the application of the Petitioner is required to be
rejected on this ground alone.
9. That the present application has been filed after a delay of
one month and hence is not liable to be allowed. That further,
the present application is not attested by any affidavit of the
applicant and is required to be rejected on this ground alone.
10. That there is no balance of convenience in favour of the
Applicant and he is not entitled to any reliefs as prayed.
11. Without prejudice to what is stated above in the preliminary
objections and in addition to the same parawise reply to the
application has been given below:-

PARAWISE REPLY

12. That the contents of para 1 of the application are a matter of

record and no reply is required to the same. However, the
grounds on which the present award is challenged are denied
as being false and untrue.
13. That the contents of Para 2 of the present application are a
matter of record and no reply is required to the same.
14. That the content of Para 3 of the present application are
denied as being wrong and baseless. It is denied that the
present award is liable to be set aside, it is denied that the
grounds as mentioned in the petition under Section 34 (2) of
the Act are applicable to the facts of the matter and available
to the Applicant. It is denied that Arbitration Tribunal has
been illegally constituted. It is denied that the objection of
Applicant of jurisdiction has not been decided by the arbitral
tribunal. That the grounds re-produced by the applicant in
the said application are bad in law and do not hold any water
in the eyes of law. That the grounds in brief are illegible and
the present respondent reserves its right to reply to the same

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 in the reply to the main petition and no reply is required to be
given for the decision of this application.
15. That the content of Para 4, 5 and 6 are illegible and
unreadable in the copy provided to the Respondent and the
Respondent reserves its rights to reply to the same on receipt
of proper copy of the same.
16. That the content of Para 7 of the present application are
absolutely baseless and false and do not disclose any cause of
action for this application under Section 36 second proviso.
That the reasons mentioned in this para are replied herein:-

A. That the contents of this ground -I are denied. That there

is no RAC (Regional Arbitration Centre of NCDEX) at
Indore, hence the tribunal was constituted at Mumbai,
hence this ground is baseless. That detailed reply to this
ground shall be field in the reply to main petition and
the Respondent reserves its rights to the same.
B. That the contents of this ground-II are denied. It is
denied that the tribunal has not decided this issue, the
arbitral tribunal has in detail discussed the applicant’s
objection to jurisdiction and non-stamping of agreement
and validity of arbitration clause. That detailed reply to
this ground shall be field in the reply to main petition
and the respondent reserves its rights to the same.

17. That the content of Para 8 of the present application are

wrong, baseless, hence are denied as alleged. It is wrong and
denied that because the said award is passed without valid
arbitration agreement or without jurisdiction at Mumbai RNC,
fraud can be assumed. Further, even if one assumes that the
same were done even then, the award does not suffer from
fraud or corruption and no allegation to that respect can be
claimed by the petitioner. That the interpretation offered by
the Petitioner to this ground does not hold water in the eyes
of law and is required to be rejected outrightly.

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17. That the content of Para 9 of the present application are
vehemently denied as being false, untrue and baseless. It is
wrong and denied that the application of the applicant has
any bonafide. That the present application has been field only
to deny the Respondents any efficacious remedy to execute
the award and to frustrate the award by adopting dilatory
tactics or diluting or alienating his property during the time
that this petition under Section 34 is pending. That further,
no harm or prejudice would be caused to the Petitioner if he
is asked to provide security or deposit the Decretal or part of
Decretal amount. That the provisions of the seeking security
or deposit of decretal amount are provided for safeguarding
the interest of Decree-holder and to prevent misuse of
pendency of Sec. 34 Application.
18. That the hon’ble Supreme Court has in the case of M/s
Malwa Strips Pvt. Ltd. vs. M/s Jyoti Ltd. AIR 2009 SC 1581
has held with reference to staying of money decrees that :-

“Even if the said provision is not mandatory, the purpose for

which such a provision has been inserted should be taken into
consideration. An exceptional case has to be made out for stay of
execution of a money decree. The Parliamentary intent should have been
given effect to. The High Court has not said that any exceptional case has
been made out. It did not arrive at the conclusion that it would cause
undue hardship to the respondent if the ordinary rule to direct payment
of the decreetal amount or a part of it and/or directly through the
judgment debtor to secure the payment of the decreetal amount is
granted. A strong case should be made out for passing an order of stay
of execution of the decree in its entirety.”

19. That money decrees cannot be stayed without cause and only
in exceptional cases they can be stayed. That the Petitioner
has failed to build any exceptional case for stay and hence the
same is required to be rejected.

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20. That the hon’ble Calcutta High Court has in the matter of
West Bengal Power Development Corporation vs. Dongfang
Electric Corp. printed in AIR 2017 Cal. 297 held that:-

“By amendment of Section 36 of the Arbitration and Conciliation Act, a

party challenging an award has to deposit with the registry of the court
the awarded amount or secure it to the satisfaction of the court, as a
condition precedent to obtain stay thereof, pending the setting aside
application, which condition was absent prior to the amendment. This is
certainly an alteration of the conditions under which such an application
was heard prior to the amendment, when stay was automatic on filing of
a valid setting aside application.”

21. Thus, no order of stay can be passed in favour of Petitioner,

let alone an unconditional one.

PRAYER
Hence, it is prayed the application under reply be dismissed
with costs.
Place - Betul

Date: - 07.12.2020 Respondent

Through Counsel
Alkesh Agrawal

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