Full Judgment Text
2026 INSC 361
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. _________ OF 2026
@ SPECIAL LEAVE PETITION (CIVIL) NO. 23869 OF 2023
VPS HEALTHCARE PRIVATE LIMITED
AND ANOTHER … APPELLANT(S)
VERSUS
PRABHAT KUMAR SRIVASTAVA
AND ANOTHER … RESPONDENT(S)
J U D G M E N T
S.V.N. BHATTI, J.
1. Leave granted.
2. VPS Healthcare Private Limited and Medeor Hospitals Limited are the
Appellants. Prabhat Kumar Srivastava and Rishi Srivastava are the
Respondents. A third-party M/S Ernst and Young LLP, Gurugram, is another
entity to which a reference is made in the Judgment. For convenience, we
refer to the Appellants, Respondents and the third party as VPS/Medeor,
Promoters and EY, respectively.
3. The Civil Appeal arises from the Judgment dated 01.05.2023, in OMP
(ENF.) (COMM.) 184/2022 in the High Court of Delhi at New Delhi. The
Signature Not Verified
Impugned Judgment deferred the execution of the Consent Award dated
Digitally signed by
GEETA AHUJA
Date: 2026.04.13
17:45:58 IST
Reason:
01.03.2019, which was made by the Singapore International Arbitration
Centre (hereinafter “SIAC”) in Arbitration No. 093/2017 between VPS/Medeor
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and the Promoters. The circumstances leading to the enforcement of the
Award dated 01.03.2019 in Arbitration No. 093/2017 have been set out in
detail in the impugned Judgment. Before capturing the issues in the subject
Appeal, we refer to a few dates and events.
4. VPS is a Company incorporated under the Companies Act, 1956, having
its registered office in Kochi, Kerala. Medeor Hospitals Limited, formerly
known as Rockland Hospitals Limited, is a company incorporated under the
Companies Act, 1956. Prabhat Srivastava and Rishi Srivastava were the
promoters of Rockland Hospitals Limited (now, Medeor).
5. On 11.08.2015, a Professional Services Agreement was entered into
between EY and M/S Rockland Hospitals Limited. The Professional Services
Agreement is alleged to have been intended to attract a strategic
investor/buyer for two of the hospitals run by Rockland Hospitals Limited in
New Delhi. On 29.06.2016, VPS and the Promoters of Rockland Hospitals
Limited entered into a Share Purchase Agreement to acquire 100% equity of
Rockland Hospitals Limited. With the said acquisition, Rockland Hospitals is
renamed as Medeor. It is a matter of record that disputes have arisen under
the Professional Services Agreement dated 11.08.2015 between EY and
Medeor; and also, under the Agreement dated 29.06.2016, between
VPS/Medeor and the Promoters. The nature and scope of disputes are not
relevant circumstances in the present and are not adverted to.
6. On 02.02.2019, VPS/Medeor entered into a Deed of Compromise with
the Promoters. The deed of compromise, intended to give quietus to the
disputes between the parties, sets out the terms of the compromise, the
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subject matter of the disputes, and the mode and manner in which
VPS/Medeor contests/settles the disputes. In Arbitration No. 093/2017, on
01.03.2019, SIAC rendered the Consent Award in terms of the Compromise
Deed dated 02.02.2019. The operative portion that bears on deciding the
maintainability of the Enforcement Petition reads as follows:
Paragraph 32(a)
“From 02.02.2019 (the "Effective Date"), the Respondents
undertake and agree to defend/contest at its cost all
proceedings detailed in Annexure-I of the Deed of
Compromise (as annexed herewith) including legal
expenditures on behalf of the First Claimant. The First and
Second Claimants will provide all necessary assistance in
respect of the said proceedings and also furnish a Power of
Attorney in favour of the Respondents and its Legal Counsels
to defend the said Proceedings. That in the event the said
Proceedings culminate in the Forum imposing any liability on
the First Claimant, the Respondents can take all remedies
available in law including but not limited to settling a
proceeding on behalf of the First Claimant at any juncture
and/or filing Appeals/Review etc. on behalf of the First
Claimant till the Highest Court of Appeal, however, the
Respondents will ensure that no liability in regard to the said
litigation is recovered from the First and Second Claimants by
the Forum. The Respondents will keep the First Claimant
indemnified of the same and ensure that in case any liability
is confirmed by the Highest Court of Appeal, the same will be
discharged by the Respondents within a period of 30 days.”
Annexure I
“xxx
5. Claim petition filed by the Ernst & young against the
Rockland Hospital in the arbitration bearing ARB. No.
2085/2016 for the claim of Rs. 10 Crores with an interest @
18% with Effect from 01.07.2016 on the strength of the
engagement letter dated 11.05.2015.
xxx”
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7. On 17.08.2021, the dispute between EY and Rockland Hospitals
Limited was decided by a majority Award, accepting EY's claim against
Rockland Hospitals Limited for the sum of Rs. 10 Crore, with interest at the
rate of 9 per cent per annum from the date of the Claim Petition till the date
of realisation of the awarded amount. The Award granted costs of Rs.
5,00,000/- in favour of EY. Challenging the Award dated 17.08.2021, Medeor
filed OMP (COMM) No. 116/2022 under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”). On
04.03.2022, a stay of execution of the Award dated 17.08.2021 was granted,
and the operative portion reads thus:
“ I.A. 3576/2022 (u/ Section 151 of CPC on behalf of the
Petitioner seeking exemption from furnishing deposit
on filing of appeal)
6. The impugned award is in the nature of a money award.
Thus, having regard to the provisions under the Code of Civil
Procedure, 1908 relating to stay of a money decree, subject
to Petitioner depositing the arbitral award amount (principal
plus up-to date interest) within four weeks from today, the
execution of the impugned award shall remain stayed.”
8. The Promoters, under the Special Power of Attorney dated 11.01.2022,
are prosecuting the litigation in terms of the Consent Award dated
01.03.2019. Medeor Hospitals Limited was finally required to deposit the
award amount, with interest and costs, as per the impugned Judgment. The
liability fastened by the majority Award dated 17.08.2021 is actually the
liability of the Promoters in terms of the Consent Award dated 01.03.2019.
However, since the case is contested in the name of Medeor, the Judgment
Debtor is obligated to deposit Rs. 15,86,17,808/-. The sequel to the above
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deposit is the enforcement of the Consent Award dated 01.03.2019 by
VPS/Medeor against the Promoters.
9. The case of VPS/Medeor is that Paragraph 32(a) of the Consent Award
creates an immediate obligation on the Promoters to ensure no liability,
whether interim or final, is recovered from VPS/Medeor at any stage of the
litigation.
10. The Promoters’ resistance to the execution of the Consent Award at this
stage is twofold. They contend that their obligation to actually pay or
discharge the liability arises only within 30 days after the Highest Court of
Appeal has confirmed it. Further, the Promoters argue that any interim orders
or deposits required by courts other than the Highest Court of Appeal have
not transformed into confirmed liabilities that they must satisfy.
11. The impugned Judgment, for the present, closed the Consent Award
and the reasoning is summed up as follows under distinct heads:
11.1 Rejection of Forum argument : High Court rejected the promoters’
claim that the word forum meant the “Highest Court of Appeal”. It ruled that
the forum referred to the Body initially imposing liability, in this case, the
Arbitral Tribunal that issued the EY Award.
11.2 Ambiguity in Paragraph 32(a) : The High Court identified a conflict
within the provision, in which one part required the promoters to ensure that
no liability is recovered from the VPS/Medeor. In contrast, another part
stipulated that promoters must discharge liability within 30 days after
confirmation by the Highest Court of Appeal. To resolve this ambiguity, the
Court viewed the Agreement as a Contract of Indemnity under Sections 124
5
and 125 of the Indian Contract Act, 1872. (Hereinafter referred to as “Contract
Act”)
11.3 Timing of obligation : It held that while an indemnifier is generally
liable as soon as a loss accrues, the specific contractual stipulation here was
“clear as noonday”. The promoters are only required to discharge the liability
after the Highest Court of Appeal confirms it. Because the EY Award was still
under challenge (and thus not yet confirmed by the Highest Court of Appeal),
the Court concluded that the Enforcement Petition was premature and lacked
merit at this stage.
11.4 Distinction between litigation categories : The High Court agreed
with the promoters that different categories of legal matters had different
payment structures. For tax proceedings (Category 4), a pre-deposit scheme
was explicitly mentioned, but no such requirement for immediate deposit was
included for the EY arbitration (Category 1).
11.5 Harmonious construction : The Court aimed for a “harmonious
construction” of all stipulations. It found that the ultimate intent was to
protect the Petitioners from final damage, but the specific mechanism agreed
upon was payment, only after the Highest Court’s confirmation.
12. We have heard learned Counsel Mr. Anirudh Bhatia, for VPS/Medeor,
and Senior Counsel Ms. Diya Kapur, for the Promoters.
13. For VPS/Medeor, the broad arguments rest on the immediacy of the
obligation undertaken by the Promoters.
13.1 The disputes between VPS/Medeor and the Promoters, under the Share
Purchase Agreement dated 29.06.2016, have been negotiated and resolved by
the Deed of Compromise dated 02.02.2019. The Deed of Compromise received
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the imprimatur of SIAC through a Consent Award dated 01.03.2019. The
effective date for the parties to discharge the agreed obligations is 02.02.2019.
On the date of signing of the Deed of Compromise, and the passing of the
Consent Award dated 01.03.2019, the claim of EY for a sum of Rs. 10 Crore
was pending against Medeor (previously, Rockland Hospitals Limited). As part
of the settlement, the Promoters have agreed to undertake the obligation to
defend all the proceedings set out in Annexure-I to the Consent Award dated
01.03.2019. VPS/Medeor has agreed to provide the necessary assistance in
these proceedings and to execute a Power of Attorney in favour of the
Promoters or their Counsel to defend the cases effectively. The Promoters have
been given discretion to either prosecute the litigation up to the Highest Court
of Appeal or settle the proceedings at any stage. In the litigation shown in
Annexure-I, the Promoters agreed that no liability arising from the specified
litigation is to be recovered from VPS/Medeor. Paragraph 32 of the Consent
Award further acts as an indemnity contract and undertakes to discharge the
liability of VPS/Medeor within 30 days after any liability is confirmed by the
Highest Court of Appeal. Adverting to the circumstances, Mr. Anirudh Bhatia
argues that Medeor, being a corporate entity, is now under the management
of VPS. The Award in favour of EY, dated 17.08.2021, was challenged by the
Promoters, representing VPS/Medeor, under Section 34 of the Arbitration Act
in OP (COMM) No. 116/2022. Pursuant to its dismissal, an application under
Section 37 of the Arbitration Act numbered as Diary No. 1099418 of 2023 is
pending before the High Court of Delhi.
13.2 Consequently, to avoid execution of the Consent Award, Medeor
deposited Rs. 15,86,17,808/-. As per the Consent Award dated 01.03.2019,
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the amount awarded in favour of EY is the liability of the Promoters. The
amount claimed by EY against Medeor is agreed to be paid by the Promoters.
The amount has been deposited, and against a bank guarantee, EY has also
withdrawn the said amount. The Promoters have agreed to answer EY’s claim
in the Consent Award dated 01.03.2019. The awarded amount has already
been deposited and, in clear commercial understanding, has addressed the
agreed liability of the Promoters and the demand to make good the amount
deposited by VPS/Medeor. Since it did not yield a result, the present
Enforcement Petition in OP No. 184/2022 has been taken up under Section
36 of the Arbitration Act. The High Court, according to him, fell in a serious
error in emphasizing the words “the Respondents will keep the first Claimant
indemnified of the same and ensure that in case any liability is confirmed by
the Highest Court of Appeal, the same will be discharged by the promoters
within a period of 30 days”. The Counsel argues that the words “Highest Court
of Appeal” should not be read out of context, or should not be construed in
such a way that whether the promoters file the appeal or not, the obligation
arises only on the confirmation by the Highest Court of Appeal. He argues
that the Promoters are now carrying on the litigation at leisurely, on the
shoulders of VPS/Medeor, and that the timing of executing the Consent
Award is deferred until confirmation by the Highest Court of Appeal. Such a
situation defeats the Consent Award of a commercial dispute between
VPS/Medeor and the Promoters. The other clause, namely, “however, the
Respondents [the Promoters] will ensure no liability regarding the said
litigation is recovered from the first and second claimants by the Forum.” The
impugned Judgment, which accepted VPS/Medeor’s argument regarding
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what constitutes the forum, should not have closed the petition filed for
enforcement of the Consent Award.
1
13.3 He relies on Khetarpal Amarnath v. Madhukar Pictures to demonstrate
that Section 125 of the Contract Act should be interpreted to entitle the
indemnity holder, i.e., VPS/Medeor, to sue the indemnifier for damages that
are yet to arise, as long as the holder can prove a clear and enforceable claim.
He thus prays that the impugned Judgment be set aside and that enforcement
of the Consent Award dated 01.03.2019 be directed on an immediate basis.
14. Per contra , Ms. Diya Kapur contends that the High Court has not
dismissed the Enforcement Petition but, for right and correct reasons,
deferred the enforceability of the Consent Award dated 01.03.2019 until the
award receives confirmation from the Highest Court of Appeal.
14.1 The Promoters have agreed to indemnify VPS/Medeor of the liability
they incur for any of the causes of action shown in Annexure-I to the Consent
Award dated 01.03.2019. The law governing the enforcement of an indemnity
contract is fairly well settled, and VPS/Medeor cannot claim in a manner
contrary to the agreed terms between the parties. The applicable paragraph
on mutual obligations between the parties is set out in Paragraph 32 of the
Consent Award dated 01.03.2019. The said paragraph construed, either
literally or through purposive construction, that the enforcement of the
Consent Award is deferred till the confirmation of the Award dated 17.08.2021
in favour of EY by the Highest Court of Appeals. Upon confirmation of the
1
1955 SCC OnLine Bom 73.
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Consent Award, the Promoters are obligated to indemnify VPS/Medeor, but
not before.
14.2 She relies on the Export Credit Guarantee Corporation of India Limited.
2
v. Garg Sons International , and Suraj Mal Ram Niwas Oil Mills (Private) Limited
3
v. United India Insurance Company Limited , for the proposition that the terms
of a commercial insurance contract must be strictly construed based on their
plain language without adding, deleting, or substituting words, and the rule
of Contra Proferentem is inapplicable because such commercial clauses are
bilateral and mutually agreed upon. She, thereby, prays for the dismissal of
the Civil Appeal.
15. We have taken note of the rival submissions and perused the record.
16. After analysing the impugned Judgment, we capture the following
points:
16.1 Internal self-contradiction in paragraph 42 : The High Court
contradicts itself within the same paragraph. It rejects the promoters’
argument that “Forum” means only the Highest Court of Appeal by applying
the contractual definition. Yet it adopts the promoters’ conclusion that
liability is payable only after confirmation by the Highest Court of Appeal. This
is the conclusion that would flow if “Forum” meant only the Supreme Court.
On one hand, the construction of “Forum” is as per the definition in the
Compromise Deed; on the other hand, the outcome accepted by the High
Court contravenes that conclusion.
2
(2014) 1 SCC 686 (Para 10 and 11).
3
(2010) 10 SCC 567 (Para 23 and 26).
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16.2 Reading and applying half of the critical clause : The High Court
interprets Paragraph 32(a) by focusing on the fifth limb of the Paragraph. The
fourth limb, i.e., the “Respondents will ensure that no liability regarding the
said litigation is recovered from the First and Second Claimants by the
Forum”, is an unconditional obligation. The phrase “said litigation” refers to
the proceedings covered by Annexure-I at every stage, and not just at the
Highest Court. By restricting the operative portion to the fifth limb alone, the
High Court renders the fourth limb otiose, contrary to the rule that every part
of the contract must be given meaning.
16.3 Conflating a performance timeline with the indemnity trigger : The
third limb, “in case any liability is confirmed by the Highest Court of Appeal,
the same will be discharged within a period of 30 days”, is understood as a
performance clause with a timeline for the extreme scenario where the liability
survives all appellate challenges right up to the Supreme Court. The High
Court converted this into the only trigger for the Promoters’ indemnity
obligation. The clause was thus interpreted by keeping a backstop guarantee
as the sole operative obligation.
16.4 Creating a paradox : The High Court’s interpretation produces a
paradox. If liability is payable only after confirmation by the Supreme Court,
the Promoters can choose not to pursue the appeal to the Supreme Court, so
no liability is confirmed against the Promoters. This would render the
undertaking under Paragraph 32(a) meaningless. Nullity cannot be the
intention of the parties to the Consent Award.
16.5 Ignoring liability : The Petitioners had already been directed by the
High Court to deposit over Rs. 15 Crore with the Registrar General of the High
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Court. This deposit itself is a liability, thereby triggering the fourth limb. The
High Court allowed the recovery.
17. VPS/Medeor are, for all purposes, enforcing the Compromise Deed
dated 02.02.2019, which has been transformed into the Consent Award dated
01.03.2019. It is axiomatic that a Consent Decree is a contract between the
parties with the Court’s seal super-added. A Consent Award is no different
from a Consent Decree. The courts are under an obligation to limit their
enquiries or interpret the agreed terms except in exceptional cases where
enforcement or rejection of the Consent Award is necessary. The Executing
Court, in its armchair, poses to itself the fundamental question: has the
decree been satisfied or discharged, or is the decree a nullity? The answers to
these questions set in motion the execution of a consent decree/award. We
may not be understood as laying down a general proposition of law that the
objections available under Section 47 of the Code of Civil Procedure, 1908,
need not detain a court from conducting an enquiry, or, for that matter, any
objection raised to the execution of an award/consent award is not enquired
into. The executability of the Consent Award is limited to the clauses executed
by the Decree Holder. In the instant case, what is put to execution is the Deed
of Compromise transformed into the Consent Award dated 01.03.2019. The
impugned Judgment has committed an irregularity in the construction of the
subject paragraph under execution. As already noted, the Promoters’
argument regarding the meaning of the word “forum” is rejected. The
Promoters admit that VPS/Medeor deposited Rs. 15.86 Crore to prevent the
execution of Medeor’s properties through sale or otherwise. The objection to
the enforceability of the Consent Award is not limited to the mode or manner
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of execution, but also to the timing of the execution. To wit, it is argued that
the obligation to discharge the liability of the Promoters arises upon
confirmation of liability by the Highest Court of Appeal. The award dated
17.08.2021 is subject to a challenge under Section 34 of the Arbitration Act.
Therefore, the obligation to indemnify under the Consent Award has not
arisen. The argument is reiterated only to be rejected for the following reasons.
18. The parties to the appeal have addressed the principle of indemnity.
More precisely, VPS/Medeor’s case is that, even if the relevant paragraph is
treated as a Contract of Indemnity, the starting point for discharging
responsibility or liability need not await confirmation of the Award by the
Highest Court of Appeal. By contrast, the Promoters’ case is that the parties’
understanding is clear that the Promoters are under an obligation to
discharge responsibility or liability, as confirmed by the Highest Court of
Appeal. In the circumstances of the case, since the award is under challenge
before the High Court of Delhi, the cause of action for enforcing the Consent
Award has not arisen.
19. The High Court, in resolving the incongruence it perceived in Paragraph
32(a), treated the clause as a “Contract of Indemnity” governed by Sections
124 and 125 of the Contract Act. We accept that Paragraph 32(a) of the
Consent Award contains an indemnity component. However, a threshold
question arises, even before constructing the said paragraph, i.e., is the fourth
limb, “the Respondents will ensure that no liability regarding the said
litigation is recovered from the First and Second Claimants by the Forum”, an
indemnity obligation in the first place, or if it is an absolute obligation? This
question is a matter of construction and cannot be presumed to be answered
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by the High Court. Where the promisor incurs an absolute obligation, it can
be enforced without the occurrence of actual loss, whereas in an indemnity
contract, the risk of loss remains contingent. The word “ensure” in the fourth
limb, combined with the broad contractual definition of “forum”, points to an
absolute obligation, and not a contingent obligation. A Contract of Indemnity
is perceived and implemented on the principle of a contract by which one
party agrees to make good a loss suffered by the other. Another way of
simplifying a Contract of Indemnity is to say that it is one whereby a party
undertakes to save another party harmless from loss or damage arising from
a particular transaction or claim. In Khetarpal Amarnath (supra) , Hon’ble Mr.
Justice Gajendragadkar, speaking for the Bench, referred to the consideration
of the Contract of Indemnity by Hon’ble Mr. Justice Chagla, held as follows:
“25. In this connection, we may refer to the decision of
Mr. Justice Chagla, as he then was, in ‘Gajanan Moreshwar
v. Moreshwar Madan’, AIR 1942 Bom 302 (A). In considering
the scope and effect of the provisions of Ss. 124 and 125,
Contract Act, Chagla J. has observed that S. 124 deals only
with one particular kind of indemnity which arises from a
promise made by the indemnifier to save the indemnified from
the loss caused to him by the conduct of the indemnifier
himself or by the conduct of any other person; but that it does
not deal with those classes of cases where the indemnity
arises from loss caused by events or accidents which do not
or may not depend upon the conduct of the indemnifier or any
other person.
26. In other words, according to the learned Judge, section
124 does not exhaustively deal with all classes and kinds of
contracts of indemnity. Similarly, S. 125 deals only with the
rights of the indemnity-holder in the event of being sued, and
it is by no means exhaustive of the rights of the indemnity-
holder who has other rights besides those mentioned in the
section.
27. With respect, we agree with the view thus expressed by
Chagla J. In our opinion, in dealing with the rights and
obligations flowing from a contract of indemnity, the Court
must always ask itself whether the indemnified party has
incurred a liability, and if it shown that liability has been
incurred and is absolute, then he has a cause of action to call
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upon the indemnifier to save him from that liability and to
meet that obligation.”
The crux of consideration may not hinge on the scope or extent of
Indemnity agreed in Paragraph 32(a) of the Consent Award, but rather on the
clauses dealing with the immunity assured to VPS/Medeor on the one hand
and, on the other hand, the starting point for enforcing the Contract of
Indemnity.
20. The leading judgment in this regard is Parayya Allayya Hittalamani v.
4 5
Sri Parayya , which surveyed cases and applied the principles of contractual
construction to a consent decree. In this light, the principles of Contractual
Construction as laid down in Annaya Kocha Shetty (Dead) through LRs v.
6
Laxmibai Narayan Satose (since Deceased) through LRs & Ors , a decision one
of us (SVNB J.) was a party to, is relevant for our discussion:
“17. The guide to the construction of deeds and tools adopted
can broadly be summarised as follows:
17.1 The contract is first constructed in its plain, ordinary and
literal meaning. This is also known as the literal rule of
construction.
17.2 If there is an absurdity created by literally reading the
contract, a shift from literal rule may be allowed. This
construction is generally called the golden rule of
construction.
17.3 Lastly, the contract may be purposively constructed in
light of its object and context to determine the purpose of the
contract. This approach must be used cautiously.”
21. Let us, for convenience, reproduce Paragraph 32(a) in five limbs by
noting the phrases in support of the VPS/Medeor (Appellants) in italics and
those in support of the Promoters (Respondents) in bold :
4
(2007) 14 SCC 318.
5
See, Baldevdas Shivlal v. Filmistan Distributors (India) (P) Ltd ., (1969) 2 SCC 201; and
Hindustan Motors Ltd. v. Amritpal Singh Nayar & Anr, 2002 100 DLT 278.
6
2025 INSC 466
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21.1 First Limb: “ From 02.02.2019 (the 'Effective Date'), the Respondents [the
Promoters] undertake and agree to defend/contest at its cost all proceedings
detailed in Annexure-I of the Deed of Compromise (as annexed herewith)
including legal expenditures on behalf of the First Claimant [Medeor].”
21.2 Second Limb: “ The First and Second Claimants [VPS/Medeor] will
provide all necessary assistance in respect of the said proceedings and also
furnish a Power of Attorney in favour of the Respondents [the Promoters] and
its legal Counsels to defend the said Proceedings. ”
21.3 Third Limb: “That in the event the said Proceedings culminate in the
Forum imposing any liability on the First Claimant [Medeor], the Respondents
[the Promoters] can take all remedies available in law including but not limited
to settling a proceeding on behalf of the First Claimant [Medeor] at any juncture
and/or filing Appeals/Review, etc. on behalf of the First Claimant [Medeor] till
the Highest Court of Appeal[.] ”
21.4 Fourth Limb: “[H] owever, the Respondents [the Promoters] will ensure
that no liability in regard to the said litigation is recovered from the First and
Second Claimants [VPS/Medeor] by the Forum .”
21.5 Fifth Limb: “The Respondents [the Promoters] will keep the First
Claimant [Medeor] indemnified of the same and ensure that in case any
liability is confirmed by the Highest Court of Appeal , the same will be
discharged by the Respondents within a period of 30 days.”
*Insertions made in [ ]
21.6 It is apposite to note that Annexure-I to the Compromise Deed (titled
“List of Proceedings Being Taken Over by Third Party”) includes at S. No. 5,
the EY Arbitration before ICA bearing No. AC-2085. Further, Forum was
16
contractually defined as: “means any Court, Court of Appeal, Authority,
Tribunal, Statutory Authority, Ministry, Judicial, Quasi-Judicial Authority,
Adjudicatory, Investigation Officer, etc., by whatsoever name called”. So, it
can be inferred that the present dispute is covered. These factors were decided
in favour of VPS/Medeor by the High Court.
22. The literal construction of Paragraph 32(a) discloses the following
obligations between the parties:
22.1 Obligation to Defend : The heading to Annexure-I reads as “List of
Proceedings Being Taken Over by Third Party”. This implies that the
Promoters undertook to defend and contest all proceedings detailed in
Annexure-I of the Compromise Deed at their own cost, including all legal
expenditures. The EY Arbitration is included in the said Annexure.
22.2 Appellants’ Assistance: VPS/Medeor were required to provide all
necessary assistance in these proceedings and furnish a Power of Attorney to
the promoters and their legal counsels to enable them to defend the cases.
22.3 Promoters’ Remedies: If a forum imposes any liability on VPS/Medeor,
the promoters are authorised to take all available legal remedies, including
settling the proceedings at any stage or filing appeals up to the Highest Court
of Appeal.
22.4 Protection from Recovery : The promoters must ensure that no
liability regarding the specified litigation is recovered from VPS/Medeor by
any forum.
22.5 Indemnity and Discharge of Liability : The promoters agreed to keep
the VPS/Medeor indemnified. They specifically undertook to ensure that any
17
liability confirmed by the Highest Court of Appeal would be discharged by
them within 30 days.
23. The impugned Judgment has taken note of the obligation undertaken
by the Promoters in the sentence shown in bold, but has not given due
construction to the preceding sentences in italics . This makes all the
difference in fixing the trigger point of discharging the liability by the
Promoters.
24. As noted in Khetarpal Amarnath (supra) , if the indemnity holder has
incurred a liability, and that liability is absolute, he is entitled to call upon
the indemnifier to save him from that liability and pay it off. Therefore, the EY
Arbitration Award and its associated proceedings crystallise a liability against
VPS/Medeor that was absolute in character. The High Court’s Order dated
04.03.2022 directed Medeor to deposit the full awarded amount (principal,
interest and cost) for a conditional stay of the execution of the EY Arbitration
Award. On 17.05.2023, Medeor deposited Rs. 15,86,17,808/- under protest
to prevent execution by sale of its assets. This deposit is a liability in regard
to the EY Arbitration Award, which is placed at Sl. No. 5 of Annexure-I to the
Consent Award. Thus, the fourth limb’s trigger, i.e., recovery of liability by a
forum, had fully crystallised by the stay order dated 04.03.2022.
25. We further note that the third limb, the remedies clause permitting
appeals up to the Highest Court, merely authorises the Promoters. Further,
the fifth limb granting thirty days after confirmation by the Highest Court is
for an extreme scenario in which liability survives every appellate challenge.
It is not the primary trigger for the Promoters’ obligation. Treating the fifth
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limb as a necessary prerequisite to the Promoters’ obligation would render the
fourth limb otiose.
26. From a careful reading of the relevant sentences in the subject
paragraph, it can be, without contradiction, stated that the parties to the
Consent Award have agreed not only to absolve but have also agreed to absorb
the exigencies of the litigation which the Promoters have undertaken in this
context. Further, in construing the said paragraph, the first four limbs cannot
be ignored, and effect be given only to the fifth limb. Consequently, the
enforcement of the Award falls within the expression of “will ensure”. Upon
literal construction of the agreed clause between the parties, we are of the
view that applying the thirty days after the Award is received, the confirmation
of the Highest Court of Appeal, to the first four limbs of the paragraph is
erroneous. In our view, this is a stand-alone situation, and by the use of the
word “ensure”, the obligation of the Promoters is to insulate VPS/Medeor from
any liability arising from pending disputes.
27. The reliance by the Promoters on both Export Credit Guarantee
Corporation of India Limited (supra) and Suraj Mal Ram Niwas Oil Mills (P)
Limited. (supra) is misplaced. On the contrary, we note that the ratio of these
decisions supports the VPS/Medeor, rather than the Promoters. Both
Judgments state that in commercial contracts, the exact words used by the
parties must be given paramount importance, and courts are strictly
prohibited from adding, deleting, or substituting words under the guise of
interpretation. In the present dispute, the High Court used a “purposeful
interpretation” to conclude that the Promoters owed no financial duty until
the EY liability was confirmed by the Highest Court of Appeal. By doing so,
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the High Court ignored the immediate obligation mandated by the
Compromise Deed, namely, that the Promoters must “ ensure that no liability...
is recovered from [VPS/Medeor] by the Forum ”. Since both decisions state that
a Court’s endeavour should always be to interpret the words in which the
contract is expressed by the parties rather than altering them, the Promoters
cannot use these decisions to justify the High Court’s departure from the plain
terms of the Consent Award.
28. Purposive construction is unavailable in the present case because a
literal and plain reading of Paragraph 32(a) of the Consent Award, taking every
limb together and none in isolation, ensures an immediate enforceable
obligation. The present case is one of discharge of a crystallised liability, and
it is not a case of indemnity that matures only upon the confirmation by the
Highest Court of Appeal. The liability against VPS/Medeor crystallised when
the Forum compelled the deposit of Rs. 15,86,17,808/-. This triggers the
obligation under Paragraph 32(a) of the Respondents (Promoters) to
compensate the Appellants (VPS/Medeor).
29. The Enforcement Petition is allowed, and the Promoters are granted 30
days to pay or deposit Rs. 15,86,17,808/- for the benefit of VPS/Medeor. The
amount deposited by the Promoters is subject to the outcome of the pending
proceedings between EY and the Promoters. In case VPS/Medeor is successful
in setting aside the Award dated 17.08.2021, the Promoters are entitled to
encash the bank guarantee provided by EY in the proceedings before the High
Court of Delhi.
30. In the facts and circumstances of the case and for the above reasons,
the impugned Judgment is accordingly set aside. The Civil Appeal is allowed.
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No order as to costs. Pending application(s), if any, stand disposed of
accordingly.
…....……….…………………J.
[S.V.N. BHATTI]
……..…………………………J.
[PRASANNA B. VARALE]
New Delhi;
April 13, 2026
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