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Informist, Wednesday, Sept. 2, 2026

 

--SC: Execute INR-2.7-bln arbitral award to Adani Ent vs UP power body 

 

By Surya Tripathi

 

NEW DELHI – The Supreme Court has upheld an Allahabad High Court order, passed in April, directing execution by three state corporations of arbitral awards amounting to INR 2.75 billion in favour of Adani Enterprises Ltd. The arbitral awards were passed against Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd., Chhattisgarh Mineral Development Corp. Ltd., and Maharashtra State Power Generation Co. Ltd. "...We are satisfied that the impugned judgment (from the high court) calls for no interference," said a bench headed by Chief Justice of India Surya Kant.

 

However, the claim of Adani Enterprises will be first satisfied through assets of the debtor in the case, UCM Coal Co. Ltd. Only if the claim cannot be satisfied through the assets of UCM Coal will execution proceedings go ahead against Uttar Pradesh Rajya Vidyut, Chhattisgarh Mineral, and Maharashtra State Power, the court said. UCM Coal was incorporated as a special purpose vehicle by Uttar Pradesh Rajya Vidyut, Chhattisgarh Mineral, and Maharashtra State Power to develop and operate coal blocks.

 

The apex court upheld the high court's finding that officers of petitioners Uttar Pradesh Rajya Vidyut, Chhattisgarh Mineral, and Maharashtra State Power were involved in the process of creation of UCM Coal, which was set up for the sole purpose of dealing with the coal blocks allocated to them. It rejected the petitioners' argument that the arbitral award could not be enforced against independent corporate entities that were not party to the arbitration proceedings.

 

The petitioners had argued that by impleading the companies as judgment debtors, the execution proceedings had effectively created a liability against third parties without adjudication. The expression "persons claiming under them" in Section 35 of The Arbitration And Conciliation Act, 1996, cannot include shareholders of an arbitral award debtor company merely because they hold shares in the company or participated in its management, they said.

 

Section 35 states that an arbitral award shall be final and binding on the parties and "persons claiming under them". Such an interpretation defeats the settled principle that a company has a separate legal personality distinct from its shareholders, the petitioners argued. The companies are not successors, assignees, transferees, or persons deriving any legal interest from UCM Coal, they said. The arbitral award creates a liability only against UCM Coal and cannot be enforced against the companies in execution proceedings, they further argued.

 

The petitioners, which are state-owned power generating and mining companies, were allotted coal blocks by the Ministry of Coal. They then incorporated UCM Coal Co. to develop and operate the blocks. UCM Coal entered into a mining contract with Adani Enterprises. Subsequently, disputes arose between Adani Enterprises and UCM Coal. These disputes were referred to arbitration. The arbitral tribunal passed an interim award in 2017 and a final award in 2018 against UCM Coal. Thereafter, lower courts directed execution of the awards against the petitioners.

 

At 1500 IST, shares of Adani Enterprises Ltd. were at INR 2,892.50 on the National Stock Exchange, up 1% from Tuesday.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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