If you have lost an arbitration and plan to challenge the award under Section 34, you need to know one thing at once: filing the challenge does not stop the award from being enforced. Since the 2015 amendment, Section 36(2) says plainly that the award does not become unenforceable just because a challenge is pending. The award holder can start execution the next day unless the court grants a stay on a separate application.
This page is for award debtors: businesses, borrowers, government bodies and others who intend to challenge an award and need to protect their assets meanwhile. In short: file a stay application with the Section 34 petition; expect the court to ask for a deposit or security for money awards; offer security in a form you can manage, such as a bank guarantee or property; and argue for an unconditional stay only if you have real evidence that the award was induced by fraud or corruption.
Planning the stay early avoids the shock of an account attachment while your challenge is waiting to be heard.
हिंदी में सारांश
अगर आप आरà¥à¤¬à¤¿à¤Ÿà¥à¤°à¥‡à¤¶à¤¨ हार गठहैं और धारा 34 के तहत अवॉरà¥à¤¡ को चà¥à¤¨à¥Œà¤¤à¥€ देना चाहते हैं, तो याद रखें: चà¥à¤¨à¥Œà¤¤à¥€ दायर करने से अवॉरà¥à¤¡ का पालन अपने आप नहीं रà¥à¤•à¤¤à¤¾à¥¤ धारा 36(2) के अनà¥à¤¸à¤¾à¤°, अवॉरà¥à¤¡ धारक तà¥à¤°à¤‚त अमल (execution) शà¥à¤°à¥‚ कर सकता है, जब तक अदालत अलग आवेदन पर सà¥à¤Ÿà¥‡ न दे। पैसे वाले अवॉरà¥à¤¡ पर अदालत आम तौर पर रक़म जमा करने या बैंक गारंटी जैसी सà¥à¤°à¤•à¥à¤·à¤¾ देने की शरà¥à¤¤ लगाती है। बिना शरà¥à¤¤ सà¥à¤Ÿà¥‡ केवल तà¤à¥€ मिलता है जब पहली नज़र में लगे कि अवॉरà¥à¤¡ धोखाधड़ी या à¤à¥à¤°à¤·à¥à¤Ÿà¤¾à¤šà¤¾à¤° से हासिल किया गया था। इसलिठसà¥à¤Ÿà¥‡ का आवेदन धारा 34 याचिका के साथ ही दायर करें।
Is this your situation?
- You have lost an arbitration and want to challenge the award
- The award holder has threatened execution or attachment
- An execution petition has already been filed against you
- You cannot pay the full award amount into court at once
- You believe the award was obtained by fraud or bribery
- The award orders you to do something other than pay money
- A one-sided award was passed against you without proper notice
How a stay works
No automatic stay
A pending Section 34 petition does not stop enforcement (Section 36(2)).
Separate application
You must apply specifically for a stay (Section 36(2)).
Conditions
The court may impose conditions it thinks fit, with written reasons (Section 36(3)).
Money awards
The court must have regard to the CPC rules for stay of money decrees, usually deposit or security.
Fraud or corruption
Unconditional stay if, on a first look, the award or the contract was induced by fraud or corruption.
Non-money awards
Conditions tailored to the order, such as undertakings or preserving assets.
The deposit question
For money awards, the proviso to Section 36(3) tells the court to have due regard to the provisions for grant of stay of a money decree under the Code of Civil Procedure. Under Order XLI Rule 5 of the CPC, a stay of a money decree is ordinarily granted on deposit of the decretal amount or on furnishing security. Courts apply the same approach to arbitral awards.
In practice, courts often direct deposit of the full awarded amount, sometimes with interest up to the date of the order, or a substantial part of it, such as 50% or 75%, with security for the rest. The court looks at the strength of the challenge as it appears at the first hearing, the financial position of the parties, and whether there is a real risk that the award debtor will be unable to pay if the challenge fails. In Pam Developments v State of West Bengal (2019), the Supreme Court held that government bodies are not exempt and should normally be required to deposit.
A strong challenge does not usually lead to an unconditional stay, but it can lead to a lower deposit or a more flexible form of security.
How we apply for a stay
Review the award quickly
Identify the strongest Section 34 grounds and the amount at stake, including interest.
Decide what security you can offer
Cash deposit, bank guarantee, fixed deposit receipt, or charge over property.
Draft the stay application
Set out the grounds of challenge in brief, the harm that execution would cause, and the security offered.
File with the Section 34 petition
Ask for urgent listing if execution has started or is threatened.
Argue the first hearing
Seek interim protection until the stay application is decided.
Comply on time
Deposit or furnish security within the time fixed, or ask for an extension before it expires.
Defend any withdrawal application
Ask that withdrawal by the award holder be allowed only against proper security.
Time and typical cost range
Our fees are agreed in writing at the start, stage by stage, and are not linked to the outcome.
| Step | Usual time | Cost |
|---|---|---|
| Review of award and grounds | 1 to 2 weeks | Our fee |
| Filing petition and stay application | With the Section 34 petition | Court fee; our fee |
| First hearing and interim protection | Days to weeks | Our fee |
| Order on stay | First few hearings | Deposit or security as ordered |
| Bank guarantee | As ordered | Bank commission, usually 1% to 3% a year |
| Appeal against stay order | 60 days under Section 37 | Our fee |
Documents needed
The award
- Signed award and date of receipt
- Arbitral record relied on for the challenge
Financial position
- Recent accounts and bank statements
- Details of assets that can be offered as security
- Sanction letter or draft from your bank for a guarantee
Execution
- Any execution petition, notices or attachment orders
- Correspondence with the award holder
Forms of security and when they suit
| Security | Suits | Points to note |
|---|---|---|
| Cash deposit in court | Smaller awards; government bodies | Award holder may withdraw against security |
| Bank guarantee | Companies with banking limits | Annual cost; must be kept renewed |
| Fixed deposit receipt in court's name | Parties with surplus funds | Interest continues to accrue |
| Charge over immovable property | Asset-rich, cash-poor parties | Valuation and title documents needed |
| Corporate or personal guarantee | Rarely accepted alone | Usually only with other security |
| Undertaking not to sell assets | Non-money awards | Breach may be contempt |
The fraud and corruption exception
The second proviso to Section 36(3), inserted by the 2021 amendment with effect from 23 October 2015, says that where the court is satisfied that a case on a first look is made out that the arbitration agreement or contract which is the basis of the award, or the making of the award, was induced or effected by fraud or corruption, it shall stay the award unconditionally pending the Section 34 challenge.
This exception is narrow. Courts expect specific, credible material: for example, evidence that the arbitrator had an undisclosed financial relationship with a party, that a key document was forged, or that the contract was obtained by bribery. A general allegation that the award is wrong, or that the other side lied in evidence, does not qualify. Where the exception is invoked without real material, courts can treat it as an attempt to avoid deposit and impose costs.
Stay of non-money awards
Some awards order a party to do something other than pay: transfer shares, hand over property, perform a contract, or stop using a trademark. For these, the court has wider discretion on conditions. It may stay the award on an undertaking to keep the property or shares as they are, to maintain accounts, or to pay an amount for use and occupation while the challenge is heard. The aim is to protect the award holder if the challenge fails, without forcing the award debtor to perform an obligation that may later be set aside.
Execution already started
If the award holder has already filed for execution, perhaps in a different court where your bank accounts are, the execution court will usually proceed unless the Section 34 court has stayed the award. You cannot ask the execution court itself to stay the award on the merits; that is for the Section 34 court. So move the stay application urgently, and inform the execution court of the pending application. Some execution courts will adjourn briefly if a stay hearing is imminent, but they are not bound to.
Once a stay is granted, file the order in the execution court and ask for any attachment to be lifted on furnishing the security ordered.
Laws that apply
Enforcement as a decree; no automatic stay; conditions; fraud and corruption proviso.
Principles for stay of money decrees, applied to arbitral awards.
The challenge on which the stay depends.
Appeal against orders setting aside or refusing to set aside an award; orders on stay are not separately listed as appealable.
The automatic-stay provision added in 2019 was struck down in Hindustan Construction Co v Union of India (2019).
A bank guarantee instead of cash
Here's a made-up example. A Noida electronics distributor lost an arbitration and was ordered to pay ₹2.8 crore to a former supplier. It had good grounds to argue that the tribunal had awarded a penalty the contract did not allow, but it did not have ₹2.8 crore in cash to deposit.
We filed the Section 34 petition with a stay application, offering a bank guarantee for the full amount from the distributor's bank, against its existing working capital limits, instead of cash. The supplier argued for a cash deposit so that it could withdraw it. The court accepted the bank guarantee, noting that the distributor was a running business with assets in India, and stayed the award on that condition.
The distributor kept its working capital intact while the challenge was heard. When the court later set aside the penalty portion of about ₹90 lakh, the guarantee was reduced accordingly.
How we work
We are a litigation and advisory practice led by Advocate BK Singh, with offices in Dwarka (New Delhi) and Vaishali (Ghaziabad). This is what you can expect:
- Speed: stay applications filed with the petition, and urgent listing where execution is threatened.
- Practical security: we help you offer security your business can actually provide.
- Honest advice: we tell you if the fraud exception is not realistic.
- Coordination: with the execution court and your bank.
- Written fee terms: agreed stage by stage, never linked to the outcome.
Mistakes with stays
- Assuming the Section 34 petition stops enforcement
- Filing the stay application weeks after the petition
- Missing the deposit deadline
- Invoking fraud without specific evidence
- Letting a bank guarantee lapse during the challenge
- Ignoring an execution petition in another court
How the court weighs a stay application
At the first hearing, the court will not decide the challenge, but it will form a first impression of it. Courts look at whether the grounds raised are substantial or merely an attempt to re-argue the facts, whether the amount awarded is large compared with the award debtor's resources, whether the award debtor is a running business with assets in India or a party that could move assets out of reach, and whether the award holder is likely to be able to repay if the challenge succeeds and it has withdrawn the deposit.
A clear stay application addresses each of these. It sets out the two or three strongest grounds in a paragraph each, gives a short picture of the business and its assets, and proposes security that protects the award holder. Courts are more willing to accept flexible security when the award debtor has shown it is serious about protecting the award holder.
Partial stays
Where the challenge is directed at only part of the award, for example a head of damages, interest, or a penalty, the court may stay only that part and require payment or deposit of the rest. Award debtors sometimes find it useful to concede the undisputed part at the outset. Doing so improves credibility, reduces interest, and makes the court more willing to stay the disputed part on easier conditions.
After Gayatri Balasamy (2025), where the court can sever and set aside a part of the award, this approach fits well with the way the challenge itself is likely to be decided.
Stays in loan arbitration awards
Many awards against individuals arise from loan arbitrations started by banks and non-banking finance companies. Borrowers and guarantors often learn of the award only when an execution notice arrives. If the award was passed one-sided, without proper notice, or by an arbitrator appointed by the lender alone, the challenge may have strong grounds after Perkins Eastman (2019) and CORE (2024). See one-sided arbitration award.
In these cases, the stay application should explain the defects in the appointment and notice, and offer security that is realistic for an individual: for example, a deposit of part of the amount, or an undertaking not to sell a property. Courts have granted stays on modest conditions where the defect in the appointment is obvious, though each case depends on its facts.
Keeping security in place
If the court accepts a bank guarantee, it will usually require it to be valid for a fixed period and renewed until the challenge is decided, with a clause that the guarantee can be invoked if it is not renewed before expiry. Diarise the renewal dates. A lapsed guarantee can lead to the stay being vacated and execution proceeding, and courts are unsympathetic to explanations that the bank forgot.
Where security is a charge over property, file the title documents, a valuation report and a declaration that the property is free from other charges. The court may direct that the property not be sold or further mortgaged without its permission.
After the challenge is decided
If the Section 34 petition is dismissed, the stay ends with it, and the award holder can withdraw any deposit and enforce the rest. If you plan to appeal under Section 37, ask the appellate court for a fresh stay quickly, and be ready to keep the security in place; there is no automatic continuation.
If the award is set aside in full, the deposit or security is released to you, and any amount withdrawn by the award holder must be returned, usually from the security it furnished. If the award is set aside only in part, the security is adjusted to the amount that remains payable.
Stay of foreign awards
Foreign awards are enforced under Part II of the Act, not Section 36. The court hearing the enforcement petition decides objections under Section 48, and if the award has been challenged in the courts of the seat, Section 48(3) allows the Indian court to adjourn the enforcement decision and order the party resisting enforcement to give suitable security. See foreign award enforcement.
Frequently Asked Questions
Does filing a Section 34 petition stay the award?
No. You need a separate stay application and a court order.
Will I have to deposit the full award amount?
Often the full amount or a substantial part, but courts can accept a bank guarantee or other security.
Can I get a stay without any deposit?
Only if a case on a first look is made out that the award or contract was induced by fraud or corruption.
Are government bodies required to deposit?
Yes. They are not exempt (Pam Developments, 2019).
Can the award holder withdraw my deposit?
Often yes, against security, so that it can be repaid if your challenge succeeds.
What if I cannot deposit in time?
Apply for an extension before the deadline; if you do not comply, the stay may lapse.
Does interest continue during a stay?
Yes. Post-award interest continues unless the award is set aside or modified.
Can I appeal against a stay order?
Section 37 does not list stay orders as appealable, so further remedies are limited. Argue the stay well the first time.
Can a non-money award be stayed?
Yes, on conditions such as undertakings to preserve property or shares.
What happens to the deposit if I win?
It is returned to you, usually with any interest it has earned.
Lost an arbitration and worried about enforcement?
Send us the award today. We will file the challenge and a stay application together, with security you can manage.
This page gives general information about arbitration and dispute law in India as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. Time limits, fees and court rules change, and the right step depends on your own contract, dates and documents, so take advice before acting.
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