Court holds automatic stay principle in arbitration incorrect pre-2016 amendment, excludes COVID period from limitation; grants judgment debtor final three weeks to comply with award
In a significant decision dated September 16, 2026, the Himachal Pradesh High Court, presided over by Justice Jyotsna Rewal Dua, dismissed the limitation objection raised by the Union of India against the execution petition filed by M/s SRM Constructions for enforcement of an arbitral award dated March 20, 2012. The judgment clarifies the computation of limitation period for execution petitions under the Arbitration and Conciliation Act, 1996, especially in light of amendments introduced in 2016 and the COVID-19 pandemic.
The respondent-Judgment Debtor contended that the execution petition filed on May 23, 2025, was barred by the 12-year limitation period prescribed under Article 136 of the Limitation Act, 1963, since the award was passed over 13 years earlier. However, the Court meticulously examined the evolution of judicial precedents and legislative amendments regarding the automatic stay of arbitral awards upon filing objections under Section 34 of the Arbitration and Conciliation Act.
Historically, landmark Supreme Court rulings in National Aluminium Co. Ltd. v. Pressteel & Fabrications (2004) and Fiza Developers and Inter-Trade Pvt. Ltd. v. AMCI India Pvt. Ltd. (2009) had recognized an automatic stay on arbitral awards upon filing objections under Section 34. This principle effectively suspended the limitation period for enforcement. However, the Supreme Court in Hindustan Construction Company Ltd. v. Union of India (2020) overruled this automatic stay doctrine as per incuriam, clarifying that the unamended Section 36 did not contemplate automatic suspension of enforcement merely by filing objections.
The 2016 amendment to Section 36(2) of the Arbitration Act explicitly stated that filing an application under Section 34 does not render the award unenforceable unless a separate stay order is granted. The Himachal Pradesh High Court held that this amendment, effective from October 23, 2015, must be read retrospectively to arrest the limitation period from the date of award (March 20, 2012) until the amendment's effective date. Thus, the limitation clock was effectively suspended for that period.
Furthermore, the Court relied on the Supreme Court's directive in "Cognizance for Extension of Limitation, In Re" (2022) to exclude the COVID-19 pandemic period from March 15, 2020, to February 28, 2022, from limitation calculations for judicial and quasi-judicial proceedings. Applying this principle, the Court found that the execution petition was filed within the permissible limitation period.
Rejecting the respondent's contention, the Court concluded that the execution petition is maintainable. The judgment debtor was granted a final opportunity of three weeks to comply with the arbitral award by depositing the awarded amount in the Court's registry. The matter is listed for further proceedings on October 9, 2026.
This ruling provides clarity on the interplay between judicial precedents, legislative amendments, and extraordinary circumstances like the pandemic in arbitration enforcement. It underscores that execution petitions filed beyond the usual limitation period may still be maintainable if suspension or exclusion periods are correctly applied.
Bottom Line:
Execution petition seeking enforcement of arbitral award held to be within the limitation period by excluding the period of deemed suspension, amendment of Arbitration Act, and COVID-related exclusion as per Supreme Court directions.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 34, 36(2); Limitation Act, 1963 Article 136
M/s SRM Constructions v. Union of India, (HP) : Law Finder Doc Id # 2981492
