Punjab & Haryana High Court Refuses Unconditional Stay of ₹296 Crore Arbitral Award Against Municipal Corporations; Holds Government Bodies Not Entitled to Preferential Treatment Under Arbitration Act
Case Name: Municipal Corporation, Jalandhar & Another v. M/s JITF Urban Waste Management (Jalandhar) Ltd. & Others; Municipal Corporation, Moga & Another v. M/s JITF Urban Waste Management (Jalandhar) Ltd. & Others
Date of Judgment: 09 December 2025
Citation: FAO-CARB-9-2024 & FAO-CARB-10-2024
Bench: Hon’ble Mr. Justice Sheel Nagu, Chief Justice and Hon’ble Mr. Justice Sanjiv Berry
Held: The Punjab and Haryana High Court dismissed appeals filed by Municipal Corporations challenging dismissal of their Section 34 objections for non-compliance with a conditional stay order. The Court held that government and statutory bodies are not entitled to any preferential or lenient treatment under Section 36 of the Arbitration and Conciliation Act, 1996, and that in the absence of any allegation of fraud or corruption, unconditional stay of a money award cannot be granted. Failure to deposit the awarded amount despite repeated opportunities justified dismissal of objections.
Summary: The dispute arose out of concession agreements executed for implementation of integrated municipal solid waste management projects in the Jalandhar and Ferozepur clusters. Upon disputes arising, arbitration proceedings culminated in an award directing the Municipal Corporations to pay substantial sums along with interest. The Corporations challenged the award under Section 34 and sought unconditional stay of its execution.
While an initial unconditional stay was granted, subsequent orders required the Corporations to deposit the entire awarded amount as a condition for continuation of the stay. Despite repeated extensions and multiple proceedings before the Commercial Court and the High Court, the Corporations failed to deposit even a part of the awarded amount. On account of non-compliance, the Commercial Court dismissed the objections without entering into the merits.
Before the High Court, the Corporations argued that being statutory bodies, they should not have been subjected to a condition of 100% deposit and that the objections ought to have been decided on merits. The Court rejected these submissions, holding that arbitral awards for payment of money are executable as money decrees and that Section 36 mandates application of principles akin to Order XLI Rule 5 CPC. The Court emphasised that neither the Arbitration Act nor constitutional status of a party permits special treatment to government entities.
Relying on authoritative Supreme Court precedents, the Court reiterated that arbitration law mandates equal treatment of parties and that allowing automatic or unconditional stay in favour of government bodies would defeat the very object of speedy dispute resolution. The Court also took note of the contumacious conduct of the appellants in repeatedly seeking time while avoiding compliance, and held that such conduct disentitled them from any equitable relief.
Decision: Both appeals were dismissed. The High Court upheld the Commercial Court’s order dismissing the Section 34 objections for failure to comply with the conditional deposit order.