Delhi High Court Modifies Interim Relief Of Stay Of Award, Allows Air India To Pay 50% Amount In Form Of Bank Guarantee

The arbitral tribunal directed Air India to pay Rs 57.92 crore along with interest and the cost of arbitration proceedings to the All India Aircraft Engineers' Association, which represents 480 members serving as engineers for either Air India or Indian Airlines. Additionally, the arbitral tribunal instructed Air India to calculate and pay wage arrears with interest to the Indian Aircraft Technicians Association.

Brief Facts:

Air India Limited (“Appellant) filed an application under Section 151 of the Civil Procedure Code, 1908 in Delhi High Court (“High Court”), seeking modification of High Court's order dismissing a petition under Section 34 of Arbitration and Conciliation Act (“Arbitration Act”). The Appellant filed the petition under Section 34 challenging an arbitral award related to a 15-year dispute between Indian Airlines (Air India's predecessor) and its employees over the issues over arrears and wage revisions after merger. The Appellant contended that instead of granting an unconditional stay as requested, the High Court restrained the execution of an arbitral award, contingent upon depositing the entire decretal amount, including accrued interest, within six weeks, failing which the Respondent would be entitled to execute the Award. Harish N. Salve, representing the Appellant, agued that complying with the payment condition would severely strain the Appellant's financial stability, potentially jeopardizing its operations, especially considering the substantial amount involved.

Observations by the High Court:

The High Court held that its order appropriately directed the Appellant make a deposit, to restrain the arbitral award. Upon review, the High Court found no error on the face of the order. The High Court noted that there were several undertakings provided Appellant and the Union of India, before the Supreme Court for the payment of wages and arrears of the employees. Considering that the Appellant is a functioning corporation seemingly not under severe financial distress, and with the assurance from the Union of India to rectify any default, the High Court held that the concerns of Respondent were reasonably addressed.

Although, the High Court deemed it appropriate not to alter its previous order directing deposit, it modified its order and directed the Appellant to deposit 50% of the decretal amount along with interest before the High Court in an interest-bearing Fixed Deposit Receipt (FDR) with an auto-renewal clause. The remaining 50% of the said amount with interest is to be deposited in the form of a bank guarantee, subject to the satisfaction of the Registrar General of the High Court. The High Court also instructed the Appellant to comply with these directives within 3 weeks from the date of the decision.

Case Title: Air India Limited vs All India Aircraft Engineers Association & Anr.

Citation: 2024 LiveLaw (Del) 157

Case Number: FAO(OS) 125/2023.

Advocate for the Appellant: Mr. Harish N. Salve, Sr. Advocate (Through V.C.) with Ms. Anuradha Dutt, Mr. Lynn Pereria, Ms. Priyanka M.P. , Ms. Shivangi Suid, Ms. Srishti Prakash and Mr. Arkaprava Dass.

Advocate for the Respondent: Mr. Jay Savla, Sr. Advocate with Mr. Sameer Kumar, Ms. Somi Sharma, Mr. Shah Rukh Ahmad and Mr. Mandeep Baisala.

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