Won a DIAC Arbitration but the Other Side Will Not Pay? How to Enforce the Award

The short answer: the courts enforce it, not DIAC

DIAC won't enforce your award for you. The Delhi International Arbitration Centre runs the arbitration and issues the award, and that's where its role stops. It can't freeze a bank account or auction a building. That's work for the civil courts. Section 36 of the Arbitration and Conciliation Act, 1996 says an award is enforced under the Code of Civil Procedure, 1908, in the same manner as if it were the court's own decree. So you get the toolkit any money decree gets: attaching bank accounts, garnishee orders on people who owe the debtor money, attaching and selling property and, very rarely, civil detention.

There's no need to turn the award into a decree first. Under the old Arbitration Act, 1940, you had to get the award made a 'rule of the court'. That step is gone. You file an enforcement or execution petition, attach the award, and ask for specific orders.

Two things decide whether you can start. Time, and stay. Once the three months for a Section 34 challenge are over, you can enforce, and even if the other side has filed a challenge, you can still go ahead as long as the court hasn't stayed the award. The rest of this guide takes each step in turn, with the things that usually go wrong.

When can you actually start?

Section 36(1) lets you enforce once the time for filing a Section 34 application to set the award aside has run out. That's three months from the day the losing party received the signed award. The court can allow it 30 days more if it accepts the reason for the delay. Plenty of award holders file for enforcement as soon as the three months end. If a late petition turns up, they deal with it then.

Since the 2015 amendment, a pending Section 34 petition doesn't freeze anything on its own. Section 36(2) says so in terms. The debtor has to apply separately for a stay, and the court has to actually pass a stay order. Until it does, the award can be enforced, challenge or no challenge. We still meet debtors who think filing the petition is enough. It isn't.

Section 35 makes the award final and binding on the parties and on anyone claiming under them. That counts for a lot in execution. The executing court won't reopen the merits, and the debtor can't argue there what it argued, or could have argued, before the tribunal. What the losing side can raise, and by when, is set out in our guide on a Section 34 challenge to a DIAC award.

The first three months: use Section 9 to hold the money in place

Those three months are risky. It's exactly when debtors tend to shift money around. Section 9(1) lets a party ask the court for interim measures 'after the making of the arbitral award but before it is enforced'. Award holders use it to ask for an order that the debtor deposit the award amount, give security, or stop selling or mortgaging named assets.

Suspicion won't get you that order. You need material. A board resolution to sell property helps, and so does stock suddenly moving to a group company, branches shutting down, or a string of unpaid bills to other creditors. A bare plea that the debtor 'may' dispose of assets rarely gets anywhere. The test looks a lot like attachment before judgment in a civil suit, and our page on attachment before judgment shows how judges weigh that sort of evidence.

When a fresh award reaches Advocate B.K. Singh, he asks two things before anything else. Where is the debtor's money today, and where will it be in three months? If the answers point to movement, we'd usually file a post-award Section 9 application in the first few weeks. Waiting for the enforcement date is a gamble.

Which court to file in

You can file wherever the assets are. The Supreme Court settled this in Sundaram Finance v. Abdul Samad (2018): an arbitral award can be enforced anywhere in India where it can be executed, and you don't need a transfer of decree from the court that has jurisdiction over the arbitration. Say the DIAC arbitration was seated in Delhi but the debtor's factory sits in Gautam Buddh Nagar. You can go straight to the court there.

Within Delhi, value picks the court. Section 10 of the Commercial Courts Act, 2015 sends applications arising from arbitrations of commercial disputes of specified value to the commercial courts. Above Rs 2 crore, the petition goes to the Commercial Division of the Delhi High Court, where the registry numbers it as an O.M.P. (ENF.) (COMM.). Up to that figure, it goes to the District Judge (Commercial Court) at the district courts, whether that's Saket, Tis Hazari, Karkardooma or another complex. Check the current limit before you file. A proposal to raise it has been under consideration.

In Uttar Pradesh and Haryana, you file in the court designated as the Commercial Court for the district where the assets lie. That might be the Gautam Buddh Nagar or Ghaziabad district court, or the courts at Gurugram or Faridabad. Our pages on the commercial court in Noida and the commercial court in Gurugram describe how filing and listing really work there. If the assets are scattered, you can file in one court and seek attachment through it, or file separate petitions where each asset sits. We usually decide by asking one thing. Which asset turns into cash fastest?

From award to recovery, step by step

It's Order XXI of the Code of Civil Procedure, bent a little to fit an arbitral award.

1. Get your dates straight

   Write down when the debtor received the signed award and the day the three months end. Search the court websites, and your own inbox, for any Section 34 petition and any stay order. If a stay was granted on condition of a deposit, find out whether the money actually went in.

2. Build the asset list

   Bank accounts first. You'll find them on old cheques, payment advices and in the arbitral record. Then immovable property, vehicles, money the debtor's own customers owe it, and any shares or deposits. The sharper the list, the sooner the first attachment.

3. Work out what's owed

   Principal, pre-award interest as awarded, post-award interest at the awarded rate up to today, and costs. Deduct every part payment. Judges want a clear calculation sheet, and they want it signed.

4. File the petition

   File in the right court with the award, the arbitration agreement, proof the award was delivered, your calculation, and the asset list set out in the table Order XXI Rule 11 requires. Don't ask for 'attachment' in the air. Ask for named modes of execution against named assets.

5. Press for an affidavit of assets

   Ask the court to direct the debtor to file an affidavit disclosing what it owns. Order XXI Rule 41(2) allows it, and the Supreme Court encouraged it in Rahul S. Shah v. Jinendra Kumar Gandhi (2021). If the affidavit is false or evasive, whoever signed it risks contempt and personal consequences.

6. Get the attachments out

   Seek attachment of the bank accounts you've found, and garnishee notices to the customers who owe the debtor money. Once a bank is served, the balance freezes up to the amount stated. That tends to get attention quickly.

7. Handle the objections

   The debtor, or some third party, may object. Reply fast. Ask the court to decide the objections within a fixed time, and keep reminding it how narrow objections to execution of an award are.

8. Collect, then close the file

   When attached money reaches the court or is released to you, apply to withdraw it. If property has to be sold, the court orders a proclamation and sale. Once you're paid in full, record satisfaction. Not before.

In Rahul S. Shah, the Supreme Court directed that execution proceedings should ordinarily be decided within six months of filing, and told executing courts to use their powers to cut down delay. Real timelines turn on how fast the assets are found and how many objections come in.

Papers you'll need for the petition

• The signed DIAC award, plus any correction or interpretation order under Section 33
• Proof of when the debtor got the award: the Centre's email, a courier receipt, an acknowledgment
• The contract with the arbitration clause in it
• Copies of any Section 34 petition, stay application and orders, or if nothing was filed, a statement saying so
• Your calculation of principal, interest to date and costs, signed by someone authorised
• Whatever you know about assets: banks and branches, account numbers if you have them, property addresses, vehicle numbers, the names of the debtor's customers
• If the debtor's a company, its master data from the MCA portal, its latest annual returns and the charges registered against it
• A board resolution or authority letter for whoever is filing, and the vakalatnama
• A supporting affidavit and, if you're relying on emails or other electronic records, a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam, 2023

What the court can actually do to make them pay

• Freeze the bank accounts. If you know the bank and branch, this is the quickest route. The court sends the bank a prohibitory order and it freezes the balance up to the decretal amount.
• Garnishee orders. Where the debtor's customers owe it money, the court can tell them to pay it into court instead of to the debtor (Order XXI Rule 46A onwards). Customers don't enjoy getting that letter, and they tend to ask the debtor questions.
• Attach and sell immovable property. It's slow, because you go through attachment, proclamation, valuation and then the auction. But the prospect of losing a building often brings a settlement offer before the auction date.
• Attach movables. Stock, machinery and vehicles can all be attached. It works well against traders and manufacturers, though you'll pay for storage and valuation.
• Appoint a receiver. Section 51(d) of the Code lets the court put a receiver over rents, receivables or a stream of business income.
• Civil detention. It's there under Section 51 and Order XXI. Courts order it only after an inquiry shows the debtor has the means and still refuses to pay, as the Supreme Court explained in Jolly George Varghese v. Bank of Cochin (1980). Treat it as the last resort it is.

Tracking down what the debtor owns

Most slow enforcements aren't really slow in court. They're slow because nobody knows where the money is. Start with your own files. The arbitral record usually has the debtor's bank details on cheques, letterheads and payment advices. Its GST number will be in there, with factory and godown addresses from the invoices and customer names from purchase orders. That's often enough for a first round of attachments.

For companies and LLPs, pull the records from the MCA portal. You'll see the registered office, the directors, any charges lenders have registered over assets, and annual filings with receivables and fixed assets on the balance sheet. The sub-registrar's records can show land in the debtor's name, though those searches take time. And court records sometimes show the debtor suing its own customers. That tells you exactly who owes it money.

In execution files that reach Advocate B.K. Singh, the commonest problem is a vague asset list. The award holder files, then waits for the debtor's affidavit to fill the gaps. Debtors count on that. A petition naming two specific bank accounts and one large customer on day one usually does more in a month than a general prayer does in a year.

Stages, time and costs at a glance

When a Section 34 petition is pending: stay and deposit

If the debtor has filed under Section 34 and wants a stay, oppose any unconditional stay. For money awards, Section 36(3) tells the court to have regard to the CPC provisions on staying money decrees. That's why the usual order in Delhi is a conditional stay. The debtor has to deposit the award amount, or a large part of it, in court, or furnish a bank guarantee, within a fixed time.

Miss that deadline and the stay usually falls away, which leaves you free to go ahead with execution. Read the order's exact words, though. Some say the stay 'shall stand vacated' on default. Others need you to file a further application. Once the money's in court, award holders often apply to withdraw it against security, so it works for them while the challenge drags on. Courts take those requests case by case.

There's one situation where the stay is unconditional. Under the 2021 proviso to Section 36(3), if the court is prima facie satisfied that the arbitration agreement or the award was induced or effected by fraud or corruption, it has to stay the award without conditions until the Section 34 petition is decided. If the debtor throws that allegation at you, answer it with documents. Denials won't do.

The interest and costs you can claim

Start with what your award says about interest. Section 31(7)(a) lets the tribunal give pre-award interest at a reasonable rate unless the contract says otherwise. Under Section 31(7)(b), unless the award directs otherwise, the sum carries post-award interest at 2 percent above the 'current rate of interest' (as the Interest Act, 1978 defines it) on the date of the award, running from the award to payment. Most DIAC awards fix their own post-award rate. If yours does, that's the rate.

Post-award interest keeps ticking through the Section 34 challenge and through execution, unless the court orders otherwise when money is deposited. Put it in your calculation sheet up to the filing date, and ask the court to recover it up to the date of payment. Costs the tribunal awarded under Section 31A come back in the same execution. That includes the DIAC administrative costs and the arbitrators' fees you paid.

If the debtor pays the principal and skips the interest, don't record full satisfaction. Take the part payment expressly 'without prejudice' to the balance. Then keep going for the rest.

Company, LLP, firm or proprietor: who you can recover from

The award binds the parties to the arbitration. Nobody else, by default. Directors and shareholders of a private limited company aren't personally liable just because they run it. They become liable only if they were parties themselves (say, as guarantors who signed the agreement containing the clause), or in rare cases where a court finds the company was a sham used to defeat the award. Group companies aren't bound automatically either. Whether a non-signatory is bound turns on the facts, as the Supreme Court explained in Cox and Kings v. SAP India (2023). Clients find this frustrating. It's still the law.

An LLP is a separate legal person, so you go after the LLP's own assets. A sole proprietorship isn't, so the proprietor's personal assets can be reached. Against a partnership firm, Order XXI Rule 50 lets you execute against firm property, against the personal property of partners who were served or admitted they're partners, and, with the court's leave, against the other partners.

Government departments and PSUs can be executed against too, and courts expect public bodies to comply. Many government award debtors pay once a deposit order or attachment is in place. With them, the fight is mostly about getting that first order.

What the debtor can object to (not much)

Objections to execution of an award are narrow. The executing court can't go behind the award or re-examine the merits, and it won't decide points that belonged in a Section 34 petition. A debtor that missed its Section 34 deadline doesn't get a back door here.

What it can raise is limited to execution itself. That the award's been paid or settled. That your figure is wrongly worked out. That a particular asset is exempt from attachment. Or, rarely, that the award is a nullity because the tribunal lacked inherent jurisdiction. Third parties may also say the attached property is theirs, not the debtor's. The court decides all of this inside the execution. Our page on execution objections explains how they're heard and how we answer them.

When the debtor looks headed for insolvency

Keep an eye out for insolvency. If the debtor is a company and a corporate insolvency resolution process starts under the Insolvency and Bankruptcy Code, 2016, the moratorium under Section 14 halts execution of awards against it. You'd then file your claim with the resolution professional and stand in line with the other creditors. Money already attached but not yet paid out may get caught by the moratorium as well.

Some award holders think about filing their own insolvency petition to force payment. For a company, the minimum default is Rs 1 crore. But where the award faces a genuine Section 34 challenge, the Supreme Court in K. Kishan v. Vijay Nirman Company (2018) held that the insolvency route shouldn't be used to pressure the debtor. Timing matters a lot. For the NCLT side, our network site ncltlawyers.in goes into detail.

Assets in UP, Haryana, other states or abroad

After Sundaram Finance, you don't need a Delhi court's transfer order to go after assets in Noida, Ghaziabad, Gurugram or Faridabad. File in the court designated as the Commercial Court for that district, attach the award, and proceed under Order XXI. Local practice differs, though. Listing, process service and auction procedure aren't the same at the Gautam Buddh Nagar court in Surajpur, the Ghaziabad district court and the courts at Gurugram and Faridabad. Associate counsel who know the local registry help stop dates from slipping.

Other states, same rule. You file where the assets are. Assets abroad are another matter. An award from an India-seated DIAC arbitration is a foreign award in the country where you want to enforce it, so you'd usually rely on the New York Convention there, if that country applies it. You'll need local counsel in that country. Weigh the cost against what the asset is worth.

It usually pays to begin with the single most liquid asset, typically a bank account in Delhi or the NCR, and add other places only if that doesn't cover the award.

Where award holders go wrong

• Sitting out the Section 34 case. Unless there's a stay, you can enforce. We've seen award holders lose a whole year just waiting.
• Doing nothing in the first three months. That's when debtors move assets. Think seriously about a post-award Section 9 application.
• Filing with no asset details. A general prayer for 'attachment of assets' gets you very little. Name the bank, the branch and the customer.
• Getting the interest wrong. Use the award's rate, run it from the right date, and give credit for part payments.
• Treating a part payment as full settlement. Record each part payment clearly and keep the balance alive.
• Missing the signs of insolvency. If the debtor company looks shaky, move fast and keep checking the NCLT cause lists.

How long you have to enforce

Courts have applied the 12-year period under Article 136 of the Limitation Act, 1963 to execution of domestic arbitral awards, counting from the date the award becomes enforceable. Usually that's the day the three-month Section 34 window closes, or the day a stay ends or a challenge is finally dismissed. The exact starting point can be argued. Don't plan around the outer limit.

The real limit is far shorter. Assets move. Companies get wound up, and the trail showing where the money went goes cold. The six-month direction in Rahul S. Shah is about how quickly courts should decide execution, not how long you can sit on an award. File the day it becomes enforceable.

What to do this week

Put the award, proof of its delivery and the arbitration agreement in one folder. Work out the three-month date. Check whether the debtor has filed under Section 34 or got a stay. Prepare an interest calculation up to today. Then list every bank account, property, customer and vehicle of the debtor you can find in your own records and on the MCA portal.

If you see signs of assets moving, think about a Section 9 application now, not after the three months. If settlement is on the table, insist it's recorded before the court with a default clause, so you can go back to execution if the instalments stop. The general process for court decrees is on our execution of decree page, and our DIAC arbitration page explains how we run matters from award through to recovery.

If you'd like your award and the debtor's details looked at before you file for enforcement, you can send them to Advocate B.K. Singh's team through the contact page.