Delhi High Court

Delhi High Court: A petition was filed by the NHPC Ltd (decree-holder) seeking execution of the Arbitral Award dated 07-10-2019 corrected on 18-12-2019 thereby seeking recovery of Rs. 13,24,03,428. Jasmeet Singh, J., held that the decree-holder’s entitlement, as awarded in the Arbitral Award, constitutes a decree enforceable in law and despite subsequent corrections to the award, recognized the decree-holder’s right to enforce the awarded amount of Rs. 13.24 crores.

The case involved a dispute arising from an Arbitral Award dated 07-10-2019, with corrections made on 18-12-2019. The Arbitral Tribunal, comprising Justice B.P. Jeevan Reddy and Sri K.K. Madan, awarded Jaiprakash Associates Limited (‘Claimant’) Rs. 60 crores for additional costs due to overstay at the project site. The Respondent also had counterclaims allowed, leading to a net amount of Rs. 46,75,96,572 awarded in favor of the Claimant. Additionally, a counter-claim by the decree-holder was allowed for Rs. 13.24 crores. However, subsequent legal challenges were raised by both parties regarding the validity and quantum of the award. The decree-holder sought to enforce the portion of the Arbitral Award that awarded them Rs. 13.24 crores, contending that it constituted a decree enforceable in law. On the other hand, the judgment-debtor argued that the award was only for Rs. 46.75 crores (as corrected on 18.12.2019) in their favor and that the decree-holder’s entitlement was not part of the final award. In the present petition, the decree-holder is seeking a recovery of Rs. 13,24,03,428.

Counsel for the decree-holder states that the amount of counter-claim awarded in favour of the decree-holder of Rs.13,24,03,428 is a decree enforceable in law and therefore, the present execution lies. Counsel for judgment debtor submitted that the Award is only for a sum of Rs. 46,75,96,572 as corrected on 18-12-2019. He stated that the entitlement of the decree-holder of Rs. 13.24 crores is only an entitlement and not the Award. The Award is only in favour of the judgment-debtor and once the same is set aside, the parties must invoke the mechanism of arbitration.

The Court meticulously analyzed the contents of the Arbitral Award, emphasizing the initial allocation of sums to both parties. It noted that while the original award granted Rs. 60 crores to the judgment-debtor and Rs. 13.24 crores to the decree-holder, subsequent corrections were made, adjusting the total amount awarded. The court delved into the relevant sections of the Arbitration & Conciliation Act, 1996, particularly focusing on Section 31, which outlined the form and contents of arbitral awards. It provided a comprehensive interpretation of the Act’s provisions, emphasizing the requirement for written awards signed by the arbitral tribunal members and the inclusion of reasons unless otherwise agreed by the parties.

Drawing from legal precedents and established principles, the Court addressed the issue of partial setting aside of the Arbitral Award. It opined that such action is permissible if the portion being annulled is independent and can be severed without impacting the rest of the award. After thorough examination, the court concluded that the decree-holder’s entitlement of Rs. 13.24 crores, as awarded in the Arbitral Award, constitutes a decree enforceable in law. This determination was based on the interpretation of relevant legal provisions and the specific circumstances of the case, ensuring that the decree-holder’s rights are upheld in accordance with the law.

The Court remarked:

“In the present case, the Arbitral Tribunal had allowed the claimant’s claim upto Rs. 60 crores and the respondent’s counter claim of Rs. 13.24 crores. Hence, the Arbitral Tribunal awarded Rs. 60 crores in favour of the judgment-debtor and Rs. 13.24 crores in favour of the decree-holder. It is only subsequently that the Arbitral Tribunal, after adjusting the amount of Rs. 13.24 crores awarded Rs. 46,75,96,572 in favour of the judgment-debtor. Hence, the Award was only for Rs. 45.75 crores would be a misnomer and in case that interpretation is to be taken, the award of counter claims in favour of the decree-holder will become a nullity.”

“As long as the part of an Award which is proposed to be annulled is independent and stands unattached to the other part and can be validly incised, the partial setting aside would be valid and justified. The same also applies to execution proceedings. The part of the Award which can be validly incised must be enforced as a decree of Court. Section 36 of the Arbitration & Conciliation Act, 1996 describes the manner of enforcement.”

Thus, the Court held that the decree holder is entitled for execution of recovery of Rs. 13,24,03,428.

[NHPC Ltd. v. Jai Prakash Associates Ltd., 2024 SCC OnLine Del 1319, decided on 14-02-2024]

Advocates who appeared in this case :

Mr Gauhar Mirza, Ms Hiral Gupta and Ms Sukanya Singh, Advocates for decree holder

Mr Lovkesh Sawhney, Sr. Adv. With Mr Rohit Kumar, advocate for judgment debtor

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