Money decree can’t be stayed unless shown egregiously perverse or patently illegal: Supreme Court

The Supreme Court has held that an unconditional stay on the execution of a money decree can be granted only in exceptional cases where it is established more than prima facie that the decree is “egregiously perverse, riddled with patent illegalities, facially untenable, or affected by similarly exceptional circumstances,” as it set aside a Bombay High Court order that had granted such a stay on a Rs. 4-crore arbitral award in favour of Popular Caterers.

In 2017, a Memorandum of Understanding was signed between Popular Caterers and Maple Leaf Enterprises (LLP), under which the caterer was to provide pure vegetarian catering services for events at the Tulip Star Hotel in Juhu. The agreement required the appellant to pay Rs. 8 crore as an interest-free adjustable security deposit. Popular Caterers paid Rs. 4 crore, which the LLP received, but before the remaining amount could be transferred, State authorities barred the hotel from conducting events following a notice issued by the Mumbai Suburban Collector. Disputes surfaced within 12 days of signing the MoU, after which Popular Caterers invoked arbitration.

An arbitrator appointed by the Bombay High Court passed an award on 28 November 2022, directing the promoters of Maple Leaf Enterprises to jointly and severally refund the Rs. 4-crore deposit with 9 percent annual interest from 21 June 2017 till the date of the award and further interest thereafter until payment. The counter-claim of the LLP was rejected, and the respondents were ordered to pay Rs. 19.18 lakh towards arbitration costs.

Challenging the award, the respondents filed Section 34 petitions and sought an interim stay on execution. On 22 January 2025, the High Court granted an unconditional stay of the award pending the outcome of the Section 34 proceedings. Popular Caterers appealed to the Supreme Court contending that such a stay was contrary to the scheme of Section 36(3) of the Arbitration and Conciliation Act, 1996.

The bench of Justices J B Pardiwala and K V Vishwanathan held that the High Court’s approach was unsustainable.

It noted that the respondents had not pleaded fraud or corruption, which are the grounds that, under the second proviso to Section 36(3), mandate an unconditional stay. The bench observed that even under general principles applicable to stays on money decrees, unconditional stays are permissible only in rare cases involving manifest perversity or patent illegality, and that the present case did not fall within those categories.

Court also remarked that the High Court had entered into an extensive evaluation of the arbitral award’s merits at the interim stage, a determination more appropriately undertaken at the time of deciding the Section 34 petitions.

Setting aside the High Court’s order, the Supreme Court directed the respondents to deposit the principal amount of Rs. 4 crore before the Prothonotary and Senior Master of the Bombay High Court within eight weeks. The deposited amount is to be placed in an auto-renewing fixed deposit with a nationalised bank.

Court further requested the High Court to conclude the hearing of the Section 34 petitions within six months.

The Supreme Court clarified that the stay on execution of the arbitral award will continue subject to the deposit of the Rs. 4-crore principal amount.

Case Title: Popular Caterers Vs Ameet Mehta & Ors

Judgment Date: November 18, 2025

Bench: Justices J B Pardiwala and K V Vishwanathan