On 15th September 2025, the Supreme Court (SC) in the Chakardhari Sureka v. Prem Lata Sureka case has addressed one important issue pertinent to the interrelation between enforcement and the arbitral appeal mechanism. The SC considered whether the court executing the arbitral award should defer enforcement only because an appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (Act).
The present dispute arose out of a family partnership firm composed primarily of family members and one external partner. The firm was engaged in trading, manufacturing and import business. However, in 2003, after the death of two partners who were pivotal to the firm’s operations, allegations of impropriety and mismanagement arose. It was alleged that a series of fabricated partnership deeds were entered into to exclude the Respondent from the partnership firm, and the sole asset was misappropriated. Further, there were attempts to create third party rights on the subject property. The Respondent issued a legal notice in 2015, invoking Clause 15 of the Original Partnership Deed, which contained an arbitration clause. However, the Petitioner denied all claims and contended that the partnership had been dissolved in 1981 itself.
The Tribunal rejected the Petitioner’s contention and held that the validity and continuity of the partnership deed was undisputed. Upon further rejecting the claim that the request for arbitration was barred by limitation, the Tribunal finally held that since the firm was no longer a going concern, the property of the firm should be divided equally between the Respondent and the Petitioner, who were the only remaining partners with actionable claims.
In response to the award, the Petitioner filed a Section 34 petition before the Delhi High Court, contending that the arbitrator had become functus officio on the date of passing the award because under Section 29A of the Act, the period within which arbitration was to be completed was one year from the date of entering into reference, a condition which was not fulfilled in the present case. The Petitioner further contended that an extension was taken but even then, no award was passed within the decided timeframe. Lastly, the merits of the award were also challenged by contending that the arbitrator had ignored vital material which had been produced and that the award is based on equity and good conscience which contradicts Section 28(3) of the Act. The Delhi High Court in its judgment delivered on 21st February 2025, refused to set aside the award, holding that the Court cannot go into factual contentions, and the petition does not fall within the established grounds of setting aside under Section 34. Regarding the Section 28 contention, the Court held that as long as parties have given power to the arbitrator, it is clear that the arbitrator has not resorted to Section 28 of the Act. In response to this decision, an appeal under Section 37 was filed before the SC.
The SC held that the execution of an award cannot be stayed merely because an appeal under Section 37 of the Act has been filed against rejection of the application under Section 34. The Court said that to deter enforcement, a specific stay order to that effect was required and no automatic stay would operate. In the present case, the lack of an interim order was undisputed. Therefore, the Court said that the question of executability of the award and the addressal of objections should be done by the Execution Court and no deference or delay can be accepted in the absence of a specific interim order, explicitly providing for the same.
The SC finally held that the Execution Court should be free to proceed with the execution of the Award in accordance with law and any objections regarding executability should be addressed after giving the opportunity of hearing to the parties concerned.
This decision respects the fundamental principle of party autonomy by ensuring that the will of parties to resort to arbitration is not hindered by the mere procedural filing of an appeal. It further upholds time efficiency, recognising that appeals, particularly in India, take long to resolve and unjustifiably staying enforcement till then vitiates the very objective of speedy dispute resolution. Importantly, it also prevents misuse of the appellate mechanism because in the absence of such a decision, parties would delay enforcement by filing appeals, consequently undermining the finality of arbitration.
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