Arbitral Award Remains Enforceable Like Decree Even During Challenge: Supreme Court

The Supreme Court has clarified that an arbitral award remains enforceable like a civil court decree even if an application challenging the award is filed and pending. It also said that courts have the power to stay the operation of such an award, but they can impose conditions for granting such a stay, and must give reasons for doing so.

A bench of Justices P S Narasimha and Alok Aradhe was hearing a special leave petition filed by RCM Infrastructure Limited against a September 30, 2024 judgment of the Jharkhand High Court.

The high court had allowed a petition under Article 227 of the Constitution and held that a contractual clause requiring a pre-deposit before challenging an arbitral award is not mandatory. It had accordingly set aside an order of the commercial court which had directed deposit of the award amount in terms of that clause.

After hearing senior advocates Debashish Bharuka and Raghvendra Srivastava for the petitioner, and Avneesh Garg for the respondent, the Supreme Court said the matter could be disposed of by clarifying the legal position under the Arbitration and Conciliation Act, 1996.

Court explained the scheme of the law in simple terms. It said that once an arbitral award is passed, it is final and binding on the parties. After the time limit for challenging the award expires, it can be enforced like a civil court decree. Even if a challenge to the award is filed, the award does not automatically become unenforceable and can still be executed.

Court added that enforcement can only be stopped if a court specifically grants a stay on the award. While granting such a stay, the court can impose conditions, depending on the facts of the case, and must record reasons. It also said that the same principles that apply when staying a money decree will apply when courts consider requests to stay arbitral awards.

In the present case, Court noted that the arbitral award in favour of the petitioner was passed on June 10, 2019, and more than six and a half years have passed. During this period, the petitioner had been contesting the maintainability of the challenge under Section 34 of the Act on the ground that no pre-deposit was made.

"It is high time, the petitioner seeks execution of the award,'' the Bench opined.

Disposing of the petition, the Supreme Court directed that if the petitioner initiates enforcement proceedings under Section 36, the concerned court must decide the matter as expeditiously as possible. It also directed that the court should decide the application independently, without being influenced by the observations made by the high court in the impugned order.

Case Title: RCM Infrastructure Limited Vs The State Highway Authority of Jharkhand

Bench: Justices P S Narasinha and Alok Aradhe

Date of Judgment: February 10, 2026