Recently In the case of Mahanagar Telephone Nigam Limited v Canara Bank. Delhi High court stayed the arbitral award and directed the MTNL to refund 160 crores to Canara Bank Financial Service Limited along with interest.
The learned arbitrator has allowed the claims of the Bank and granted a declaration that the cancellation of the bonds by MTNL was illegal. MTNL was consequently directed to refund a sum of ?160 crores to the Bank with interest 6% per annum.
Under sub-section (2) of Section 36 is filed for a stay of operation of the arbitral award, the Court might subject to such conditions as it may deem fit, grant a stay of the operation of such award, for reasons to be recorded in writing. The Court is empowered to impose such conditions as it might deem fit and may grant a stay of operation of the award subject to the furnishing of security covering the entire amount of the award including interest.
Justice Prateek Jalan of Delhi High Court has passed the order under section 36(2) of the Arbitration and conciliation act 1996 That MTNL is not able to show any incriminating evidence that the contract based on which the award was passed is vitiated by any fraud or corruption.
However , MTNL contended that :
The Counsel disputed that respondents CanFina had, in fact, transferred the amount for the subscription of the bonds to MTNL on the issuance of the LoAs, and had retained the amount at the instance of MTNL for investment in the stock market, which then collapsed in the wake of the 1992 scam. He submitted that this transaction was fraudulent and no request for CanFina to invest in market securities on behalf of MTNL was made at any stage.