In short. Filing a Section 34 challenge doesn't stop the other side from enforcing the award. Many clients learn that too late. Under Section 36 you have to ask the Section 34 court for a stay through a separate application, and on a money award the court will usually want the amount, or a good part of it, deposited or covered by a bank guarantee. A stay with no conditions is kept for fraud or corruption. Start arranging the deposit while the challenge is being drafted. The three-month clock is already running.
Is this your situation?
- The award came in against your company last month, and the board wants to challenge it under Section 34.
- A letter from the award holder's lawyers says pay within a week or they'll file execution.
- Your accounts head rings to say the bank has frozen an account on a court order. Or a notice of an execution petition has just landed on your desk.
- The award is big enough that paying it now would leave nothing to run the business on.
- You're fairly sure the contract, or the award itself, was bought with a bribe or built on forged papers.
- You're a government department, PSU or local body, and someone has noted on the file that government doesn't have to deposit. You aren't sure that's right.
- You're the one holding the award. The other side wants a stay, and you want to know what security to ask for.
What a stay actually does, and what it doesn't
A stay stops the award holder from enforcing the award while your challenge is pending. That's all it does. The award isn't set aside, and the court isn't saying you're right. It freezes things where they stand, so nobody takes the money, the property or whatever else the award orders before the court has decided your Section 34 petition.
Why does that matter so much? Because in India an arbitral award can be enforced as if it were a decree of a civil court. Section 36(1) of the Arbitration and Conciliation Act, 1996 says exactly that, once the time to file a Section 34 challenge has run out. After that date the award holder can file execution, get your bank accounts attached, make you disclose your assets on affidavit and, where a debtor is being difficult, ask for a receiver or even civil detention of the people running the company. A pending challenge, by itself, stops none of it.
So for most award debtors the real question isn't whether they can challenge. It's whether they can hold off execution while the challenge is heard, and what that will cost. On a money award it usually means putting up some or all of the money.
The provisions that decide a Section 36 stay
Section 36(1), Arbitration and Conciliation Act, 1996
When the time for a Section 34 application has expired, the award can be enforced under the Code of Civil Procedure, 1908, just as if it were a decree of the court.
Section 36(2)
Filing a Section 34 application doesn't, on its own, make the award unenforceable. There's a stay only if the court grants one on a separate application asking for it.
Section 36(3) and its first proviso
On that application the court can stay the award on whatever conditions it thinks fit. It has to write down its reasons. Where the award is for payment of money, the court must have due regard to the CPC provisions on staying a money decree. In practice that means Order XLI Rule 5. And security.
Section 36(3), second proviso and Explanation (added in 2021)
If the court finds a prima facie case that the arbitration agreement, the contract the award rests on, or the making of the award itself was induced or effected by fraud or corruption, it shall stay the award unconditionally until the challenge is decided. The Explanation makes this apply to every court case arising out of arbitral proceedings, whether the arbitration started before or after 23 October 2015.
Section 34(3), 34(5) and 34(6)
You get three months from receiving the award to file the challenge. The court can allow up to 30 more days if you show sufficient cause. Not one day after that. You must give the other side notice before filing, and the court is meant to decide within one year of that notice. Courts have read the one-year target as directory, so plenty of challenges run longer.
Order XLI Rule 5, CPC
The general rule for money decrees. You get a stay of execution only if you show substantial loss, apply without unreasonable delay and give security for the due performance of the decree.
Section 19, MSMED Act, 2006
If an MSME Facilitation Council made the award (or an institution it sent the case to), a buyer who wants to challenge it must first deposit 75 percent of the amount awarded. That's a condition for the challenge itself. It has nothing to do with the stay.
Why the automatic stay went away
Until 23 October 2015, the old Section 36 meant an award couldn't be enforced while a Section 34 challenge was pending. You could file a challenge of any quality, even a hopeless one, and sit on the money for years. Plenty of parties did exactly that. The 2015 amendment rewrote Section 36 so that a challenge no longer stays the award unless the court says so.
Older arbitrations caused some confusion for a while. In BCCI v. Kochi Cricket (2018) the Supreme Court held that the amended Section 36 applies even to challenges filed before the amendment, because enforcement is a matter of procedure. Parliament tried to undo that in 2019 with a new Section 87. The Supreme Court struck Section 87 down in Hindustan Construction Company v. Union of India (2019). Where that leaves you is simple. For any domestic award today, you need a court order to stop enforcement.
The 2021 amendment added one exception, and it runs the other way. Show a prima facie case of fraud or corruption in the arbitration agreement, the underlying contract or the making of the award, and the court must stay the award without conditions. It's a narrow door. Deliberately so. There's more on it further down.
Which court hears the stay application
You apply to the court that's hearing your Section 34 petition. Same court. Which court that is depends on the seat of the arbitration. Often that's the city the clause names as the place of arbitration, but not always. If you're not sure, read our note on how the seat decides which court you go to before you file anything. A petition in the wrong court eats time you don't have.
If the award comes out of a commercial dispute of Rs 3 lakh or more, Section 10 of the Commercial Courts Act, 2015 sends the Section 34 petition (and the stay application with it) to the commercial forum. In Delhi, awards above Rs 2 crore go to the Commercial Division of the Delhi High Court on its original side. Smaller ones go to the District Judge (Commercial Court) in the right district complex, whether that's Saket, Tis Hazari, Karkardooma, Rohini, Dwarka or Patiala House. Do check the current pecuniary limit, because there's been talk of raising the district court limit. In Noida, Ghaziabad, Gurugram and Faridabad, it's whichever court is designated as the Commercial Court for that district.
Execution is a separate matter. The award holder doesn't have to execute in the Section 34 court at all. Since Sundaram Finance v. Abdul Samad (Supreme Court, 2018), an award can be executed directly in any court where the debtor has assets, with no transfer needed first. So your Section 34 petition can be pending in Delhi while an execution petition against your factory is filed in Faridabad. It happens. A stay from the Section 34 court binds the execution court, though. You produce the stay order there and ask that the execution be kept in abeyance.
When to file it
File it with the Section 34 petition, or very soon after. The stay application has no limitation period of its own, but the window that matters in practice is short. The award holder can't execute until the Section 34 period is over. Once three months from receipt have gone by, an award holder with good lawyers files execution fast. And if your challenge goes in during the extra 30-day grace period, you may find execution already filed.
Filing both on the same day does something for your credibility too. Courts look at whether you moved without unreasonable delay. Picture the debtor who files a bare challenge, ignores the stay, and comes running only after the bank account is attached. Judges tend to have less patience with that debtor when they fix the deposit.
One thing surprises clients. You can't file a stay application unless a Section 34 petition is pending. If the time to challenge has gone, there's nothing to attach a stay to, and all that's left are the narrow objections allowed in execution. That's why the three-month deadline goes in the diary the day the signed award arrives. Not the day someone finally forwards it to a lawyer.
Applying for a stay, step by step
This is roughly how it goes in a Delhi commercial court or the Delhi High Court. Each court does things a little differently on order and timing.
Write down when you received the award
Limitation under Section 34(3) runs from the day you received the signed award, or from the day a correction request under Section 33 was disposed of. Keep the courier slip or the email that proves the date. You'll need it.
Be honest about the grounds
A stay application is only as good as the Section 34 petition behind it. Pick the grounds that will survive a court that won't re-examine the merits: no proper notice, an award beyond the reference, an ineligible arbitrator, patent illegality on the face of the award, conflict with public policy. Our guide to challenging an award under Section 34 goes through each of them.
Sort out the money at the same time
While the petition is being drafted, talk to your bank about a guarantee, or about breaking fixed deposits. Courts often allow four to eight weeks to deposit. The money still has to be there on the day.
Give notice under Section 34(5)
Serve advance notice of the challenge on the award holder with a copy of the petition, and file an affidavit of service. Courts have called this requirement directory. Skip it anyway and you hand the other side an objection it didn't need to have.
File the petition and a separate stay application
The stay application is its own interlocutory application under Section 36(2) and 36(3), with a supporting affidavit. Set out the prima facie case, the hardship of immediate enforcement and the security you're offering. If you're relying on fraud or corruption, state the facts that show it.
Mention for early listing if execution is close
If an execution petition is already listed, or something has been attached, ask for urgent listing. Courts commonly take up the stay application at the first or second hearing.
Meet the conditions on time
If the stay is conditional, deposit the amount or file the bank guarantee within the time allowed, and file proof that you did. Miss it and a deposit-linked stay usually lapses. The award holder can then execute.
Take the stay order to the execution court
File a certified or downloaded copy of the stay order in any pending execution. Ask that the execution be kept in abeyance until the Section 34 petition is decided.
How much deposit will the court want?
For a money award, assume the court will ask for the full principal awarded. Often it'll want some or all of the interest as well, in cash or by bank guarantee. That's the most common deposit for stay of award in the Delhi High Court and the Bombay High Court. The reason is the first proviso to Section 36(3), which points the court to the CPC rule for money decrees, and that rule is built around security.
The Supreme Court has said the CPC is a guide, not a strait-jacket. In Pam Developments v. State of West Bengal (2019) it held that having due regard to the CPC provisions isn't the same as being bound by every detail of them, and that the court can shape the conditions to the case. What judges actually weigh is fairly practical. How strong does the challenge look on a first read? Is there an obvious defect in the award? What are the finances on both sides, and could the award holder pay the money back if the award is later set aside?
That last point cuts both ways. Say you're the award debtor and the award holder is a thinly capitalised company that might not exist in three years. The court may let it withdraw the deposit only against a bank guarantee of its own. If you hold the award, ask for exactly that permission. Otherwise the money sits in a fixed deposit for as long as the challenge lasts.
In November 2025, in Popular Caterers v. Ameet Mehta, the Supreme Court set aside an unconditional stay of a money award and told the award debtors to deposit the principal within eight weeks. It said that, outside fraud or corruption, an unconditional stay is for truly exceptional cases, like an award that's plainly perverse or unsustainable on its face. It also said a stay court shouldn't run a mini-trial on the merits. We expect courts to follow that line.
Forms of security, and what each one costs you
| Form of security | How it works | What it costs you in practice |
|---|---|---|
| Cash deposit in court | You deposit the amount with the Registrar General (High Court) or the court's nazarat. It usually goes into an interest-bearing fixed deposit | The money is out of your business for as long as the challenge runs. Interest earned follows the final result |
| Bank guarantee | An unconditional guarantee from a scheduled bank in favour of the Registrar General, kept alive until the case is disposed of | The bank takes a commission and usually wants margin money or collateral. Some of your working capital is freed up |
| Part deposit, part bank guarantee | A common middle path. Some of it in cash, the rest covered by a guarantee | Gives the award holder security without squeezing your cash flow quite as hard |
| Security of immovable property | An undertaking not to sell or charge a named property, sometimes with the title deeds deposited | Accepted less often on money awards. Useful when cash and guarantees really aren't possible |
| Corporate guarantee or undertaking | An undertaking by the company or a group entity | Rarely enough by itself on a money award. Sometimes accepted from a solvent government body, or alongside other security |
| Unconditional stay | No security at all | Mandatory only on a prima facie case of fraud or corruption. Otherwise kept for exceptional awards |
When you can get a stay with no conditions
There are two routes. One is in the statute, the other is in the court's discretion. The statutory route is the second proviso to Section 36(3). If the court is satisfied, prima facie, that the arbitration agreement, the main contract or the making of the award was induced or effected by fraud or corruption, it has to stay the award without conditions until the challenge is decided. The word is shall. Once the court is satisfied, it has no choice.
The bar is high. Fraud here means a forged contract, documents cooked up for the arbitration, or a bribe paid to win the contract or to sway the arbitrator. It doesn't mean the other side inflated its claim, or that the tribunal believed the wrong witness. Sometimes a fraud plea turns up for the first time in the stay application, with no complaint, no letters and nothing on record behind it. Those rarely get past the first hearing. Worse, they can drag down the rest of your case.
The discretionary route is the one Popular Caterers talks about. It's for an award so plainly flawed that demanding security would be unjust. The defect has to be visible without digging through the evidence. Think of an award by an arbitrator who was ineligible under Section 12(5), an award on a claim nobody referred, or one that ignores a binding contract clause barring the very relief it grants. Even then the court may want some security. These are exceptions. Plan for a conditional stay, and treat anything better as a bonus.
What gets a deposit reduced
Courts do cut deposits down. When they do, the reasons tend to be concrete. One strong, specific ground you can show from the award itself is worth more than ten general ones. Say the tribunal awarded a head of claim the contract expressly excluded, or added interest at a rate neither side pleaded. The judge can see that at the first hearing, and may secure only the part of the award that isn't seriously in doubt.
Splitting the award into its parts helps too. Most awards carry principal, pre-award interest, pendente lite interest, post-award interest and costs. Your argument against the interest might be good while your argument against the principal is weak. If so, offer the undisputed principal in cash and a guarantee for the rest. That usually lands better than asking for a blanket unconditional stay. Our note on how interest on an award works under Section 31(7) explains how each part is built up.
When Advocate B.K. Singh drafts a stay application for an award debtor, he puts a one-page breakup of the award at the front, head by head, showing what's seriously contested and what isn't. A judge with a crowded board can see in one look what's really at stake. In our experience it keeps the hearing on what security is fair, rather than on the whole figure.
Since Gayatri Balasamy v. ISG Novasoft (Supreme Court, 2025), a court hearing a Section 34 petition has a limited power to modify an award. It can sever an invalid portion, for instance, or correct post-award interest. So a partial challenge, and a partial stay with it, is a more realistic ask than it was a few years ago. We've written about that ruling in our note on whether a court can modify an arbitral award.
Stays on awards that aren't about money
Plenty of awards order something other than payment. A tribunal might direct specific performance, a transfer of shares, handing over a site, a declaration that a termination was illegal, or an injunction. Here the first proviso to Section 36(3), with its reference to money decrees, doesn't fit in the same way. The court sets conditions on the usual principles of prima facie case, balance of convenience and irreparable harm.
The conditions follow the relief. A court might stay an award directing a share transfer, but stop the award debtor from creating third-party rights in those shares meanwhile. It might stay an order to vacate premises on condition that the occupant keeps paying the agreed licence fee into court. The idea is to keep the subject matter intact. Whoever wins at the end should get something real.
Mixed awards are common. Hand over the site and pay damages, say. Expect the court to deal with each part on its own, with a money condition for the damages and a preservation condition for the rest.
Do government departments and PSUs have to deposit?
Usually, yes. Government bodies used to argue that Order XXVII Rule 8A of the CPC exempts government from furnishing security, so their stays should be unconditional. The Supreme Court rejected that in Pam Developments (2019). It said the CPC provisions are only a guide under Section 36(3), and government bodies get no special treatment when the court decides whether to order a deposit.
In practice, courts accept that a government department is solvent and won't vanish, and they can be more relaxed about the form of security. They still often order a deposit of a large part of the award. If you're a contractor holding an award against a public body, push for that deposit. And ask for permission to withdraw it against your own bank guarantee, because the challenge and the appeal after it can easily take years.
MSME Facilitation Council awards work differently
An award made by an MSME Facilitation Council under Section 18 of the MSMED Act, 2006 takes a stricter route. Section 19 says no court shall entertain an application to set it aside unless the applicant (anyone other than the supplier) first deposits 75 percent of the amount awarded. That deposit isn't a stay condition. It's the price of being heard at all. Courts usually let part of it be released to the supplier while the challenge goes on, on suitable terms.
Once the 75 percent is in, the stay of the balance and of execution is decided under Section 36. If you're a buyer with a Council award against you, read our notes on whether a buyer can challenge a Council award and on what happens after a Council award, including the 75 percent deposit. Don't assume you can challenge a Council award cheaply. You can't.
What happens to the stay if your Section 34 petition is dismissed?
A stay under Section 36(3) lasts only as long as the Section 34 petition. When the petition is dismissed, the stay goes with it. The award holder can then execute, usually with your deposit already sitting in court. If you appeal under Section 37, you'll need a fresh stay from the appellate court. In Toyo Engineering v. Indian Oil Corporation (2021), the Supreme Court indicated that Order XLI Rule 5 CPC principles apply to stay applications in those appeals. Security stays the norm.
For commercial disputes the appeal lies to the Commercial Appellate Division of the High Court, or the Commercial Appellate Court, within 60 days under Section 13 of the Commercial Courts Act. Our note on Section 37 appeals explains what you can and can't appeal. If you go on to the Supreme Court by special leave petition, the money in the High Court generally stays put, and the Supreme Court may let the award holder withdraw it against security. Every stage brings its own fight over security. Count all of them before you decide to fight.
How long each stage takes
| Stage | Time limit or usual range | What happens |
|---|---|---|
| Section 34 challenge | 3 months from receipt of the award, plus up to 30 days if you show sufficient cause | Petition and a separate stay application filed in the Section 34 court |
| First hearing on the stay | Often within days or a few weeks of filing. Quicker if execution is pending | Notice goes out. Interim protection may be given, subject to a deposit |
| Time to make the deposit | Usually 4 to 8 weeks, as the order fixes | Cash deposited or bank guarantee filed. Default, and the stay lapses |
| Decision on the Section 34 petition | Section 34(6) says one year from notice. One to three years is common in practice | Award upheld, set aside, or partly set aside or modified |
| Section 37 appeal | 60 days under Section 13, Commercial Courts Act, for commercial disputes | A fresh stay application, decided on security principles |
| Special leave petition | Ordinarily 90 days from the High Court judgment | The Supreme Court may continue or change the security conditions |
| Court fees | Set by state law. Section 34 petitions and applications carry court fee | Check the current schedule for Delhi, UP or Haryana before you file |
Papers you'll need for a stay application
From the arbitration file
- The signed award, and whatever proves the date it reached you (courier slip, email)
- The contract or agreement with the arbitration clause in it
- Statement of claim, statement of defence, and the counter claim if there was one
- Procedural orders, especially the ones on notice, adjournments and the arbitrator's disclosure
- The evidence the award relies on or skips over, with page numbers marked
For the stay and the security
- A head-by-head breakup of what was awarded, with interest worked out to today
- The bank's sanction letter, or a draft guarantee in the court's format
- Your latest financial statements, if you're going to plead hardship
- A board resolution authorising the filing and naming who signs
- Any execution petition, attachment order or demand letter you've already received
- If you're pleading fraud or corruption, whatever backs it up: complaints, forensic reports, a copy of the FIR
An invented example: a Gurugram developer and a Noida electrical contractor
This one is made up. A Gurugram developer hires a Noida electrical contractor for wiring and substation work on a commercial tower. The contract names New Delhi as the seat. The developer terminates the contract, the contractor goes to arbitration, and the sole arbitrator awards Rs 3.4 crore. That's Rs 2.1 crore for unpaid running bills, Rs 60 lakh as damages for loss of profit, and the rest interest, with further interest at 12 percent from the date of the award.
The developer thinks the loss-of-profit award is wrong, because the contract excluded consequential loss. It also thinks the interest rate goes beyond what the contract allowed. The running bills are another story. Its own architect certified most of them. Because the award is above Rs 2 crore and the seat is New Delhi, the Section 34 petition goes to the Commercial Division of the Delhi High Court.
An unconditional stay isn't realistic. So in the tenth week after receiving the award, the developer files the petition and a stay application together. It offers to deposit the Rs 2.1 crore principal on the running bills in cash, and a bank guarantee for the damages and interest. A one-page table at the front shows which heads it contests and why. On facts like these, a court may well accept that offer or something near it, maybe adding part of the interest, and may let the contractor withdraw the cash against its own guarantee.
The contractor, for its part, had an execution petition ready against the developer's Gurugram bank accounts, to go in the day the three-month window shut. Because the developer moved in time and secured the award, that execution is kept in abeyance. If the developer had waited for its accounts to be frozen, it would be arguing for release of attached money instead. Much less room to bargain.
If you hold the award: answering a stay application
Don't argue the whole Section 34 case at the stay stage. It's tempting, we know. But courts aren't meant to decide merits there, and a long reply on merits mostly gets you a long adjournment. Put your energy into how strong the award looks on its face and whether the debtor is likely to move or strip assets. Then name the exact security you want, with interest worked out to the likely date of decision.
Where the debtor's finances look shaky, ask for the deposit in cash, with liberty to withdraw it against your own bank guarantee or undertaking. If there's a real chance assets will be moved before the stay is heard, you can apply under Section 9 for interim measures after the award and until it's enforced. Our guide on enforcing an arbitral award in India covers the execution side. For how commercial courts execute decrees, see our sister site's page on execution of a decree.
Keep an eye on the compliance date. If the stay was conditional and the debtor doesn't deposit in time, file an application saying so and get on with execution. In files that come to Advocate B.K. Singh from the award holder's side, this is the chance most often missed. The debtor defaults on the deposit date and nobody notices for two months. By then the time that could have gone into attaching accounts, while they still had money in them, is gone.
Mistakes that cost award debtors the most
- Waiting for the execution petition. If you only ask for a stay after an attachment order, you're on the back foot, and the delay becomes part of the argument against you.
- Thinking the Section 34 petition is enough. It hasn't been since 2015. No separate application and no order means the award can be enforced.
- Pleading fraud with nothing behind it. A thin fraud plea won't get you an unconditional stay. It may also make the judge doubt your other grounds.
- Leaving the money till the end. Banks take their time sanctioning guarantees. A stay that lapses because the guarantee wasn't ready is worse than having no stay.
- All or nothing. Judges respond better to a reasoned offer of security on the parts of the award you aren't seriously disputing.
- Missing the outer limit. Three months plus 30 days is absolute under Section 34(3). Past that there's no challenge. No stay either.
What to do this week
Find out the date the award was received and work out the last day for a Section 34 challenge. Then get someone who didn't live through the arbitration to read the award with you, and mark which parts are open to challenge and which aren't. Fresh eyes help. Ring your bank about a guarantee for the likely amount. And if you're not sure there's a real challenge at all, our note on the grounds on which courts set aside awards should help you decide between fighting and negotiating a settlement on the award amount.
If you'd like your award, the arbitration record and your stay options looked at before the deadline, or want to keep track of how courts are treating deposits, send your papers to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Does filing a Section 34 petition stop the award from being enforced?
No. Since the 2015 amendment, Section 36(2) says a pending challenge doesn't by itself make the award unenforceable. You need a separate application, and a court order granting the stay.
Can the award holder file execution while my challenge is pending?
Yes, once the three-month period for a Section 34 challenge is over, unless the court has stayed the award. And it can file wherever your assets are, not just where your challenge is pending.
Will the court accept a bank guarantee instead of cash?
Often, yes. Courts regularly accept a guarantee from a scheduled bank for all or part of the amount, sometimes with some cash as well. The mix is decided case by case.
Do I get interest on the money I deposit?
Cash deposited in court usually goes into an interest-bearing fixed deposit. Whoever wins in the end gets the deposit along with the interest it's earned, subject to the court's orders.
Can the award holder take the deposit out before the challenge is decided?
Sometimes. Courts usually allow it against the award holder's own bank guarantee, or an undertaking to refund with interest if the award is set aside. It turns on the case and on how financially sound the award holder is.
What if I can't afford to deposit the full amount?
Set out your position on affidavit, with financial statements, and offer the security you genuinely can. That might be a part deposit plus a guarantee, or security over property. The court doesn't have to order the full amount. It will want to see a real offer, though.
Does the stay from the Section 34 court carry on during a Section 37 appeal?
No. It ends when the Section 34 petition is decided. You'll need a fresh stay from the appellate court, and security principles apply there too.
Is the fraud exception available for awards made before 2021?
Yes. The 2021 Explanation applies the fraud and corruption proviso to all court cases arising out of arbitral proceedings, whether the arbitration started before or after 23 October 2015.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.