Section 36 of the Arbitration Act: Enforcing an Arbitral Award in India

Section 36(1) of the Arbitration and Conciliation Act 1996 provides that once the time for making an application to set aside an arbitral award under Section 34 has expired, the award is enforced in accordance with the Code of Civil Procedure 1908 in the same manner as if it were a decree of the court. Since the 2015 amendment, merely filing a Section 34 petition no longer suspends enforcement — Section 36(2) says in terms that the filing "shall not by itself render that award unenforceable", and a stay has to be obtained on a separate application under Section 36(3), which the court may grant subject to such conditions as it thinks fit and only for reasons recorded in writing. The single situation in which a court must stay the award unconditionally is where a prima facie case of fraud or corruption is made out under the second proviso to Section 36(3).

That shift in the default position is the most consequential change to award enforcement in India since the 1996 Act came into force. It converted a challenge from a free suspension into a contested application in which the losing party generally has to put money or security on the table to hold enforcement off. This note sets out what Section 36 says, how the stay application works, what the fraud proviso requires, how the award is actually executed under Order XXI of the Code, and where the execution petition may be filed.

What does Section 36 actually say?

The section as it now stands has three sub-sections.

Section 36(1) — where the time for making a Section 34 application has expired, then, subject to sub-section (2), the award "shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court".

Section 36(2) — where a Section 34 application has been filed, the filing of that application shall not by itself render the award unenforceable, unless the court grants an order of stay of the operation of the award in accordance with sub-section (3), on a separate application made for that purpose.

Section 36(3) — upon filing of an application under sub-section (2), the court may, subject to such conditions as it may deem fit, grant stay of the operation of the award, for reasons to be recorded in writing. Two provisos follow. The first requires the court, in the case of an award for payment of money, to have due regard to the provisions for grant of stay of a money decree under the Code of Civil Procedure. The second, inserted later, deals with fraud and corruption and is discussed below.

Three points of construction follow from that language and are worth fixing before anything else.

First, the fiction in sub-section (1) is confined to enforcement. The award is not converted into a decree; it is enforced as if it were one. Nothing in the 1996 Act corresponds to Section 17 of the Arbitration Act 1940, under which the award had to be filed in court and a decree passed in its terms before execution could begin. Under the present Act the award holder goes straight to execution.

Second, the word in sub-section (2) is "unenforceable", not "invalid". A pending Section 34 petition leaves the award fully operative unless and until a court orders otherwise.

Third, sub-section (3) contains two distinct requirements that are frequently collapsed into one — reasons in writing, and conditions. A stay order that records no reasons, or that imposes no condition at all in a money award without explaining why none is warranted, is vulnerable on its face.

When does the time for a Section 34 application expire?

Section 34(3) fixes the period. An application to set aside may not be made after three months have elapsed from the date on which the party making it received the arbitral award, or, where a request under Section 33 for correction or interpretation was made, from the date that request was disposed of by the tribunal. The proviso permits the court, on sufficient cause shown, to entertain the application within a further period of thirty days — "but not thereafter".

Two consequences follow. For the award debtor the outer limit is hard: the thirty-day extension is discretionary, and nothing lies beyond it. For the award holder, the "expiry" contemplated by Section 36(1) is best treated as three months plus the condonable thirty days, because an execution filed on day ninety-one may meet a condonation application filed on day one hundred and ten. Receipt runs from delivery of the signed copy of the award under Section 31(5), not from the date the award was signed.

Where a petition has in fact been filed, Section 36(2) governs, and the enforcement court's question is not whether time has expired but whether a stay order exists. Section 34(6) states that such an application is to be disposed of expeditiously, and in any event within one year from the date on which the notice referred to in Section 34(5) is served on the other party; that is the timeline the section sets, and it is frequently not achieved on the docket.

Why did the 2015 amendment matter so much?

Because it reversed the default.

Section 36 as originally enacted read that where the time for making a Section 34 application had expired, "or such application having been made, it has been refused", the award should be enforced as if it were a decree. On that language, enforcement simply could not begin while a Section 34 application was alive. The provision was accordingly construed as producing an automatic suspension of enforcement on the mere filing of a challenge — a consequence the courts themselves described as unfortunate, but as flowing inescapably from the words the legislature had used.

The commercial effect was predictable. A Section 34 petition became the cheapest interim relief available anywhere in Indian litigation: filing fees bought a suspension of the award for as long as the petition took to decide, with no security, no deposit and no reasoned judicial order. The Arbitration and Conciliation (Amendment) Act 2015, in force from 23 October 2015, substituted the section and removed the words that produced that result.

The practical burden also moved. Under the old section the award holder had to wait; under the new one the award debtor has to apply, persuade and usually secure.

How does a court decide a stay application under Section 36(3)?

The discretion is real but structured. The first proviso directs the court, in a money award, to have "due regard" to the provisions for grant of stay of a money decree in the Code of Civil Procedure. Those provisions are principally Order XLI Rule 5 and Order XLI Rule 1(3). Rule 5 permits the appellate court to stay execution where substantial loss may result unless the order is made, where the application has been made without unreasonable delay, and where security has been given by the applicant for the due performance of the decree. Rule 1(3) requires an appellant against a money decree to deposit the disputed amount or furnish such security in respect of it as the court thinks fit.

The phrase "due regard" is doing careful work. It imports the CPC as a guide rather than as a straitjacket. On that footing it has been held that a State Government resisting an arbitral award cannot claim the exemption from furnishing security that Order XXVII Rule 8A of the Code gives to the Government in a suit. The Code is to be given due regard, not applied wholesale, and the Act creates no privileged class of award debtor: a government body seeking a stay stands where any other award debtor stands.

The conditions courts commonly impose, in ascending order of severity, are these:

• Deposit of the full awarded sum with the court, sometimes with a direction that it be kept in an interest-bearing fixed deposit pending disposal.
• Deposit of a stated proportion of the award, with an unconditional bank guarantee for the balance.
• An unconditional and irrevocable bank guarantee of the whole sum from a scheduled commercial bank, renewed during the pendency.
• Security over identified immovable property, supported by valuation and title documents.
• An undertaking on affidavit not to alienate, encumber or dispose of specified assets, coupled with disclosure of assets.
• Release of an admitted or undisputed portion of the award to the award holder, with stay limited to the balance in dispute.

The stay application is decided long before the Section 34 challenge is heard on merits, and it is decided on a prima facie view: the apparent strength of the challenge is a factor, but the court is not trying the petition at that stage. For most parties the condition imposed is the practical outcome, because a deposit or guarantee, once furnished, shapes any settlement that follows.

An order granting or refusing stay under Section 36(3) does not appear in the list of appealable orders in Section 37(1), which is confined to an order refusing to refer parties to arbitration under Section 8, an order granting or refusing a measure under Section 9, and an order setting aside or refusing to set aside an award under Section 34. Recourse against a stay order therefore lies outside Section 37 — through the supervisory jurisdiction of the High Court under Article 227 of the Constitution where the order was made by a court subordinate to it, or by special leave — and both routes are exercised sparingly in arbitration matters.

When must the court grant an unconditional stay?

The Arbitration and Conciliation (Amendment) Act 2021 inserted a second proviso to Section 36(3). Where the court is satisfied that a prima facie case is made out that the arbitration agreement or the contract which is the basis of the award, or the making of the award itself, was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the Section 34 challenge.

Four features of the proviso matter in argument.

The standard is prima facie, not proof. The court is not required to find fraud; it must be satisfied that a prima facie case of it is made out. That is a lower threshold than the merits standard under Section 34(2)(b)(ii), and it is met on material, not on assertion.

The obligation is mandatory. The proviso uses "shall stay the award unconditionally". Once the threshold is crossed, the discretion in the main part of sub-section (3) — including the power to impose conditions — falls away.

The targets are alternatives. The fraud may attach to the arbitration agreement, to the underlying contract, or to the making of the award. The third limb is the widest: an allegation that the award itself was procured by corruption of the tribunal or by fabricated evidence stands separately from any complaint about the contract.

It applies retrospectively. The amending section that introduced the proviso states that it shall be deemed to have been inserted with effect from 23 October 2015 — the date the 2015 amendment itself came into force — and an Explanation clarifies that the proviso applies to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or the court proceedings commenced before or after the 2015 amendment.

The proviso should not be treated as a general-purpose route to a free stay. A pleading of fraud that amounts to no more than a dispute about the correctness of the tribunal's findings does not engage it, and an unparticularised allegation of corruption made against an arbitral tribunal carries its own professional consequences for the party and the pleader.

Does the amended section apply to older awards and petitions?

This produced a decade of litigation and two reversals, and the current position needs to be stated carefully.

Section 26 of the 2015 Amendment Act provided that nothing in that Act would apply to arbitral proceedings commenced before 23 October 2015 unless the parties otherwise agreed, but that it would apply in relation to arbitral proceedings commenced on or after that date. That section was read in two limbs — the first governing the arbitral proceedings themselves, the second, through the words "in relation to", governing the court proceedings arising out of them — and it was held that the substituted Section 36 applies to Section 34 applications pending on 23 October 2015 as well as to those filed after it, on the reasoning that the provision is procedural in character and that no litigant has a vested right in an automatic stay of enforcement.

The Arbitration and Conciliation (Amendment) Act 2019 then inserted Section 87, which sought to confine the 2015 amendments to arbitrations commenced on or after 23 October 2015 and to court proceedings arising out of them, and omitted Section 26. That provision, together with the omission of Section 26 which accompanied it, was struck down as manifestly arbitrary, and the position described in the preceding paragraph was thereby restored.

The working consequence is that the automatic stay is gone across the board, including for older awards, and an award debtor relying on the pre-2015 regime is relying on a provision that no longer stands.

Which court hears the Section 34 petition, and where can execution be filed?

These are two different questions, and conflating them costs time.

The Section 34 petition goes to the "Court" as defined in Section 2(1)(e). For a domestic arbitration that is not an international commercial arbitration, that means the principal Civil Court of original jurisdiction in a district, including a High Court exercising ordinary original civil jurisdiction, which would have had jurisdiction over the subject matter had it been the subject of a suit — but not any court inferior to that principal Civil Court and not a Court of Small Causes. Where the dispute is a commercial dispute of the Specified Value under the Commercial Courts Act 2015 — presently not less than three lakh rupees — Section 10 of that Act routes applications and appeals arising out of the arbitration to the Commercial Court or the Commercial Division of the High Court, according to which of them the matter would otherwise have gone to. Section 42 of the Arbitration Act then keeps subsequent applications in the same court.

Execution is different. It is settled that an award holder may file execution proceedings before any court in the country within whose jurisdiction the judgment debtor's assets are located, without first filing before the court that would have had jurisdiction over the arbitral proceedings and then obtaining a transfer of the decree. The reasoning turns on the fiction in Section 36(1): the award is enforced as if it were a decree, but it is not a decree passed by any court, so the transfer machinery in Sections 38 and 39 of the Code is simply not engaged.

For a claimant chasing a debtor with property in several states, that position is of direct practical consequence. Execution can be filed where the factory is, where the bank account is, or where the receivables are, and it can be filed in more than one place. The forums in which these proceedings are conducted are set out on the courts and jurisdictions page.

How is an arbitral award actually executed under Order XXI?

Once Section 36(1) is engaged, the machinery is ordinary civil execution. A money award is executed under Order XXI Rule 30 by detention of the judgment debtor in civil prison, by attachment and sale of the judgment debtor's property, or by both; Section 51 of the Code lists the modes generally and its proviso restricts arrest and detention to cases where the court records satisfaction on specified grounds after giving the judgment debtor an opportunity to show cause.

A workable sequence looks like this.

1. Assemble the enforcement file. The original award or a certified copy, proof of delivery of the signed copy under Section 31(5), the arbitration agreement, evidence that the Section 34 period has expired or that the challenge stands dismissed, and — where a challenge is pending — the order refusing stay or the fact that no stay has been granted.

2. Attend to stamp duty first. An arbitral award is an instrument chargeable with stamp duty under the applicable stamp legislation. The settled position is that objections on stamping and registration are not grounds available under Section 34, but fall to be considered when the award is put to enforcement under Section 36 — which is to say, they arrive precisely at the execution stage, and an insufficiently stamped award can be impounded there.

3. Identify the execution court and file the petition. Draft the petition under Order XXI Rule 11, which prescribes the particulars, and annex a computation showing principal, pre-award interest, post-award interest and costs as separately awarded.

4. Anticipate notice. Order XXI Rule 22 requires notice to show cause before execution in the cases it specifies, including where the application is made more than two years after the decree or is made against a legal representative. Building the timeline into the petition avoids an avoidable adjournment.

5. Locate the assets. Order XXI Rule 41 allows the court to examine the judgment debtor orally as to his property. Under sub-rule (2), where a decree for payment of money has remained unsatisfied for thirty days, the court may on the decree holder's application order the judgment debtor to make an affidavit stating the particulars of his assets. It is often the most productive early step, and non-compliance carries consequences of its own.

6. Attach. Attachment of movables, immovables and debts follows Order XXI Rules 43 to 54, subject to the exemptions in the proviso to Section 60 of the Code. Attachment of a debt due to the judgment debtor from a third party is achieved through the garnishee procedure in Order XXI Rules 46A to 46I — the route usually taken against bank balances and trade receivables.

7. Sell. Sale is governed by Order XXI Rules 64 to 73, beginning with a proclamation of sale under Rule 66 stating the property, the amount to be recovered and the other particulars a purchaser needs in order to judge the nature and value of what is offered. Rule 68 then bars a sale, without the judgment debtor's written consent, until at least thirty days have elapsed in the case of immovable property and fifteen days in the case of movable property, counted from the date the copy of the proclamation was affixed on the court house. The auction and confirmation follow.

8. Meet objections. Claims to, and objections to attachment of, property by a third party are adjudicated under Order XXI Rule 58, and that adjudication is a common source of delay where family or group-company assets have been attached.

Interest is a substantial part of most enforcement figures and belongs in the petition as a separate head. Unless the award directs otherwise, Section 31(7)(b) provides that the sum carries interest from the date of the award to the date of payment at a rate two per cent higher than the current rate of interest prevalent on the date of the award, the expression "current rate of interest" carrying the meaning given to it in Section 2(b) of the Interest Act 1978. That formulation was substituted by the 2015 amendment and applies to awards made on or after 23 October 2015; for an award made before that date the unamended sub-section prescribed eighteen per cent per annum, and the rate on an older award has to be worked out on the provision as it then stood.

What stops execution once it has started?

Three things, in practice.

A stay under Section 36(3). This is the ordinary route, and it is discussed above. Where the stay is conditional, the award holder should ask for the condition to be time-bound and for liberty to proceed on default, so that a deposit direction that is never complied with does not become a permanent suspension.

An insolvency moratorium. Section 14(1)(a) of the Insolvency and Bankruptcy Code 2016 prohibits, from the insolvency commencement date, the institution or continuation of proceedings against the corporate debtor including execution of any judgment, decree or order in any court, tribunal, arbitration panel or other authority. An award holder executing against a company that is admitted to a corporate insolvency resolution process ceases to be an execution creditor and becomes a claimant who must file proof of claim. The scope and the limits of that freeze — including the fact that it does not protect guarantors — are set out in the note on the Section 14 IBC moratorium.

Limitation. An execution petition is subject to the Limitation Act 1963, and Article 136 prescribes twelve years for the execution of a decree, running from the date the decree becomes enforceable. The characterisation of an arbitral award for this purpose has been the subject of decisions and should be checked against the position applicable to the particular award rather than assumed.

How does this differ from enforcing a foreign award?

Section 36 sits in Part I of the Act and governs awards made in India. A foreign award to which the New York Convention applies is dealt with in Part II, Chapter I. Sections 47 and 48 set out the evidence to be produced and the exhaustive grounds on which enforcement may be refused, and Section 49 provides that where the court is satisfied that the award is enforceable, the award "shall be deemed to be a decree of that Court". There is no Section 34 challenge to a foreign award and therefore no Section 36(3) stay application; the resisting party's case is made within the Section 48 grounds at the enforcement hearing itself. The vocabulary of both regimes is collected in the glossary of Indian legal terms.

A checklist for each side

For the award holder

1. Diarise the Section 34 window from the date of receipt of the signed award, not from the date it was signed.

2. Verify stamp duty on the award before filing anything, and pay or regularise it rather than meeting the objection in court.

3. Map the judgment debtor's assets by state before selecting the execution court, and file where the assets are.

4. Where a Section 34 petition is filed, oppose stay on the footing that Section 36(2) makes the award enforceable and ask for conditions and a time limit if stay is granted.

5. Ask for release of any admitted or undisputed portion of the award even where the balance is stayed.

6. Compute post-award interest under Section 31(7)(b) in the execution petition itself, and update it periodically.

7. Watch for insolvency filings against the debtor, since admission converts the enforcement position entirely.

For the award debtor

1. File the Section 34 petition and the Section 36(2) stay application together; the second is not implied by the first.

2. Plead the stay application on material — the account reconciliation, the financial statements, the valuation of assets offered as security — rather than on assertion.

3. Address the first proviso directly by proposing a condition, rather than leaving the court to construct one.

4. Where fraud or corruption is genuinely in issue, plead it with particulars and invoke the second proviso expressly; a general challenge will not attract it.

5. Comply with any deposit or guarantee direction within the time fixed, because default usually restores enforcement.

6. Do not treat the thirty-day extension in the proviso to Section 34(3) as available; it is discretionary and it is the end of the road.

Enforcement of awards sits alongside the other routes by which commercial money claims are pursued in India, and the choice between them is often made before arbitration is ever invoked. The wider landscape is set out in the guide to debt recovery in India, the procedural comparison with court proceedings in the note on commercial litigation, and the statutory arbitration route available to small suppliers in the note on the MSMED Act Facilitation Council, whose awards are enforced through this same Section 36 machinery. Related practice areas are described under debt recovery and legal advisory.

This article is general information on the law as it stands and is not legal advice; the course open in any matter depends on the terms of the award, the record before the tribunal and the facts of the account. Queries on arbitration and award enforcement may be directed through the contact page.