Order
1. Leave granted.
2. The parties had entered into an agreement under which the respondent was to supply certain material and make construction. Disputes arose between them. The disputes were referred to arbitration. Claims and counterclaims were made by the parties before the arbitrator. Ultimately, the arbitrator, by an award dated 9-1-2001, held that an amount of Rs 13,97,072.24 was due to the respondent and an amount of Rs 9,85,316 was due to the appellant. In the circumstances, the arbitrator held that ultimately the respondent was entitled to recover a sum of Rs 4,11,756 being the amount of Rs 13,97,072.24 less Rs 9,85,316 from the appellant. Accordingly, the award was passed directing the appellant to pay the respondent the said sum together with interest at 12% from the date of the award till payment.
3. An application was made by the respondent challenging that part of the award which related to the finding of the arbitrator in favour of the appellant. While the challenge was pending, an application for execution was moved by the respondent for recovery of the entire amount of Rs 13,97,072.24 from the appellant. The application for execution was allowed. Being aggrieved, the appellant preferred an appeal before the Division Bench. Pending the appeal before the Division Bench, the Division Bench had granted stay of the order of the executing court subject to the appellant depositing a sum of Rs 5,00,000. The said amount of Rs 5,00,000 was deposited and has been withdrawn by the respondent against a bank guarantee. The Division Bench was of the view that since there was no challenge by the appellant to the finding of the arbitrator that an amount of Rs 13,97,072.24 was payable, the respondent was entitled to execute the award for that amount. The Division Bench in disposing of the appeal directed the appellant to deposit a further sum of balance awarded amount and gave liberty to the respondent to withdraw the same upon furnishing appropriate security.
4. The matter has been brought before this Court by the appellant inter alia on the ground that this Court had in National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd. (2004) 1 SCC 540 held on a construction of Section 36 of the Arbitration and Conciliation Act, 1996, that there was no power in a court to direct the execution of an award when an application under Section 34 of that Act challenging the award was pending. Being prima facie satisfied with the submission of the appellant, we had stayed the operation of the impugned order of the Division Bench.
5. The learned counsel appearing on behalf of the respondent has submitted that in fact there were two separate awards: one which allowed the respondent's claim up to Rs 13,97,072.24 and the second which allowed the appellant's counterclaim for Rs 9,85,316. It is contended that since the respondent alone had challenged the award in favour of the appellant, it was open to the respondent to execute that portion of the award which was in the respondent's favour and against which no application under Section 34 was pending.
6. We are of the view that the award clearly states that after an adjustment of accounts, the only amount payable by the appellant to the respondent was Rs 4,11,756. How the arbitrator arrived at this figure is not for us to see. For the purposes of Section 36 of the Act, the court cannot be called upon to go behind the awarded amount and deal with the processes by which the amount was arrived at. There is on record only one award for the amount of Rs 4,11,756. Even though the respondent claims that the application under Section 34 was filed in respect of part of the award, it is in fact only a process by which the arbitrator has arrived at the awarded amount. This would mean that the award as a whole cannot be enforced under Section 36 of the Act. As held by this Court in National Aluminium Co. Ltd. (2004) 1 SCC 540:
“… the mandatory language of Section 34 (Section 36) of the 1996 Act, that an award, when challenged under Section 34 within the time stipulated therein, becomes unexecutable. There is no discretion left with the court to pass any interlocutory order in regard to the said award except to adjudicate on the correctness of the claim made by the applicant therein. Therefore, that being the legislative intent, any direction from us contrary to that, also becomes impermissible.”
7. In that view of the matter, the appeal must be allowed. The impugned decision is set aside. If the appellant has deposited any further amount pursuant to the direction of the Division Bench, it will be at liberty to withdraw the same. Any bank guarantee which may have been furnished by the respondent in respect of any unrealised amount will stand discharged. If the sum of Rs 5,00,000 in respect of which the respondent has also filed bank guarantee is equal to or less than the final awarded amount of Rs 4,11,756 with interest as awarded, it will be open to the respondent to file an appropriate application before the High Court for the purpose of discharge of that bank guarantee.