Safiya Malik

The High Court of Orissa, Single Bench of Justice Dr. Sanjeeb K. Panigrahi upheld the legality of requiring a 100% deposit of the awarded amount as a condition for stay under Section 36(3) of the Arbitration and Conciliation Act, 1996. Dismissing the State’s challenge to an order of the Commercial Court, Cuttack, the Court held that such a direction is consistent with established Supreme Court jurisprudence and serves to protect the award-holder’s interest. Justice Panigrahi observed that when an arbitral award operates as a money decree, requiring full deposit is not punitive but a legitimate safeguard during the pendency of the challenge.

The dispute originated from a 2013 agreement between the Government of Odisha and Sylvesa Infotech Pvt. Ltd. for furnishing and computerizing 113 Modern Record Rooms across two divisions. The project, scheduled for completion within twelve months, faced delays leading to the contract’s termination on August 13, 2014, and subsequent blacklisting of the company on November 24, 2014. The blacklisting order was quashed by the High Court due to lack of a show cause notice, following which the company was later allowed to resume part of the work.

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In 2019, Sylvesa Infotech raised a claim of approximately Rs.108 crore and appointed a retired judge as arbitrator. The dispute was referred to Justice B.P. Das (Retd.) as sole arbitrator, who on May 15, 2023, awarded Rs.7,46,45,227 in favor of the company, with interest at 10% if unpaid within three months. The State filed a challenge under Section 34 of the Arbitration and Conciliation Act before the Commercial Court, Cuttack, which stayed execution proceedings on May 2, 2025, subject to a 100% deposit of the awarded amount. Aggrieved, the State approached the High Court under Articles 226 and 227, arguing that the direction to deposit the entire sum was excessive and arbitrary.

The State contended that the arbitral award suffered from "patent illegality and non-application of mind," asserting that a full deposit would cause financial hardship. Conversely, Sylvesa Infotech maintained that the award, being a money decree, warranted full security to prevent evasion of payment and ensure the efficacy of arbitration enforcement.

Justice Panigrahi observed that while Section 8 of the Commercial Courts Act, 2015 bars revision against interlocutory orders, it does not curtail the High Court’s constitutional powers of superintendence under Article 227. The Court recorded, “Section 8 despite its initial non-obstante clause, cannot operate as an absolute bar to the exercise of the power of judicial review by High Courts, which is conferred by the Constitution of India under Article 227.” Citing precedents including Surya Dev Rai v. Ram Chander Rai and L. Chandra Kumar v. Union of India, the Court reaffirmed that judicial review remains a basic feature of the Constitution.

However, the Court stated restraint, stating that while the jurisdiction under Articles 226 and 227 remains intact, it should not be exercised to re-evaluate discretionary orders of subordinate courts unless jurisdictional errors or manifest injustice are evident. “Supervisory jurisdiction under Article 227 should remain the exception, not the rule,” the Court recorded.

Citing Supreme Court decisions in Srei Infrastructure Finance Ltd. v. Candor Gurgaon Two Developers and Projects Pvt. Ltd. and Manish v. Godawari Marathwada Irrigation Development Corporation, Justice Panigrahi observed that courts have upheld directions requiring 100% deposit of awarded sums. The judgment recorded, “The principle that emerges is that where it is in the interest of justice to direct the deposit of 100% of the awarded amount, where the Award is in the nature of a money decree and stay of the impugned Award has been sought, the same can and may be directed.”

The Court further stated that such deposit ensures that the award is not rendered illusory by delays or insolvency and balances the rights of both parties. Judicial discretion, the Court noted, “cannot be challenged merely because another view is possible.”

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The Court observed: “The prayer for stay was not ‘turned down’. It was allowed subject to deposit. Parties approaching the Court must recognize that the judicial process is a serious matter and not treat it as a tool to manipulate outcomes through misleading or exaggerated submissions.” The Court cautioned that litigants must approach courts with integrity, warning that “frivolous litigation only serves to burden the judicial system and deprives other deserving parties of timely justice.”

Justice Panigrahi held, “This Court finds no merit in the present Writ Petition and does not deem it an appropriate case to exercise its jurisdiction.” The Court dismissed the writ petition filed by the State, upholding the direction to deposit the full awarded amount before the execution proceedings could be stayed.

“Learned Senior Civil Judge (Commercial Court), Cuttack is directed to dispose of the Execution Case No.257 of 2023 as early as possible preferably within a period of three months from today.” All interim orders, if any, stood vacated.

Advocates Representing the Parties:
For the Petitioners: Mr. Debasish Nayak, Additional Government Advocate
For the Respondents: Mr. A.R. Sethy, Advocate; Mr. J.P. Behera, Advocate

Case Title: Director, Land Records & Surveys, Government of Odisha v. Sylvesa Infotech Pvt. Ltd.
Case Number: W.P.(C) No.21111 of 2025 & W.P.(C) No.24348 of 2024
Bench: Justice Dr. Sanjeeb K Panigrahi