Legal Review and Analysis of Popular Caterers vs Ameet Mehta & Ors 2025 INSC 1354

Judgment Synopsis

Case Name: Popular Caterers v. Ameet Mehta & Ors.

Citation: 2025 INSC 1354

Synopsis: The Supreme Court ruled that unconditional stay of an arbitral award is permissible only in exceptional cases—such as fraud, corruption, or when the award is egregiously perverse—and set aside the High Court’s order granting unconditional stay without deposit.

1. Name and Citation of the Judgment

Popular Caterers v. Ameet Mehta & Ors.
Citation: 2025 INSC 1354
Court: Supreme Court of India
Date: November 18, 2025

2. Relevant Laws and Legal Provisions

• Section 36 of the Arbitration and Conciliation Act, 1996 – Enforcement of arbitral awards and grant of stay.

• Order XLI Rule 5 of the Code of Civil Procedure, 1908 – Conditions for stay of execution of money decrees.

• Second Proviso to Section 36(3) of the Arbitration Act – Unconditional stay in cases of fraud or corruption.

• First Proviso to Section 36(3) – Court must have “due regard” to CPC provisions while granting stay of money awards.

3. Basic Details of the Judgment

Facts of the Case

• The appellant, Popular Caterers, entered into a Memorandum of Understanding with Maple Leaf Enterprises on May 25, 2017.

• The appellant paid ₹4 crores as a security deposit.

• Disputes arose when the Tulip Star Hotel was prohibited by state authorities from hosting events.

• The appellant invoked arbitration, and an award was passed on November 28, 2022, directing the respondents to pay ₹4 crores with interest.

• The respondents filed petitions under Section 34 of the Arbitration Act challenging the award and sought an unconditional stay on its execution.

• The Bombay High Court granted an unconditional stay, which was challenged before the Supreme Court.

Issues Before the Court

• Whether the High Court was justified in granting an unconditional stay of the arbitral award without requiring deposit or security.

• Whether an unconditional stay can be granted in cases not involving fraud or corruption.

Ratio Decidendi (Court’s Reasoning)

• The Supreme Court emphasized that unconditional stay of a money decree or arbitral award is an exceptional remedy.

• It referred to its earlier decision in Lifestyle Equities C.V. v. Amazon Technologies Inc., where it laid down that unconditional stay should be granted only in cases where:
  The decree is egregiously perverse,
  It is riddled with patent illegalities,
  It is facially untenable, or
  There are other exceptional circumstances of similar gravity.

• The Court clarified that the second proviso to Section 36(3) applies only in cases of fraud or corruption.

• In non-fraud cases, the court must exercise discretion under Section 36(3) and Order XLI Rule 5 CPC, but unconditional stay should be rare and based on strong grounds.

• The High Court erred by not considering whether the case fell into such exceptional categories.

4. Core Principle of the Judgment

Title: Unconditional Stay of Arbitral Awards – A Rare and Exceptional Remedy

Issue Addressed

The central issue was whether an unconditional stay of an arbitral award under Section 36(3) of the Arbitration Act, 1996, can be granted in the absence of fraud or corruption, and what legal standards govern such a stay.

Analysis and Legal Position

• The Supreme Court reiterated that the power to grant unconditional stay under the second proviso to Section 36(3) is limited to cases where the award is induced by fraud or corruption.

• For other cases, the court must have “due regard” to CPC provisions, especially Order XLI Rule 5, which generally requires deposit or security for stay of money decrees.

• The Court held that unconditional stays outside the fraud/corruption category are permissible only in exceptional cases where the award is egregiously perverse, patently illegal, or facially untenable.

• The High Court’s order was set aside because the respondents did not demonstrate such exceptional circumstances.

5. Final Outcome and Directions

• The Supreme Court allowed the appeal and set aside the High Court’s unconditional stay order.

• The respondents were directed to deposit the principal amount of ₹4 crores with the Prothonotary of the Bombay High Court within eight weeks.

• The stay on the award’s execution will continue subject to this deposit.

• The High Court was requested to decide the Section 34 petitions within six months.

• The Fixed Deposit of the deposited amount shall be made in a nationalized bank with auto-renewal.

6. MCQs Based on the Judgment

Q1. Under which circumstances can an unconditional stay of an arbitral award be granted under the second proviso to Section 36(3) of the Arbitration and Conciliation Act, 1996?
A) When the award is against public policy
B) When the award is perverse
C) When the award is induced or effected by fraud or corruption
D) When the award is contrary to the terms of the contract

Q2. In Popular Caterers v. Ameet Mehta (2025 INSC 1354), the Supreme Court held that unconditional stay of a money decree under Order XLI Rule 5 CPC can be granted only if?
A) The judgment-debtor is a government entity
B) The decree is egregiously perverse or patently illegal
C) The decree-holder agrees to the unconditional stay
D) The court is satisfied with a prima facie case