More Than 24 Years After Arbitral Award, Supreme Court Asks Law Commission To Study Enforcement Delays

An arbitral award dated 10 August 2002 was rendered in favour of Royal Construction Company.

After the award was restored by the Supreme Court in 2015, execution proceedings followed.

In 2017, the High Court directed that liability could be discharged in Indian currency using the exchange rate on the agreement date.

The Division Bench set aside that order and referred a substantial question of law to the Supreme Court under Articles 134-A and 133(1)(a) of the Constitution.

In 2023, the Supreme Court answered the referred question, holding that no occasion arose to determine a conversion date and that the award’s terms were not to be disturbed.

During subsequent execution proceedings, the award-debtor contended that the principal had already been paid in rupees in 2009.

The High Court then granted the parties liberty to seek clarification from the Supreme Court; Royal appealed against that order.

Under Articles 134-A and 133(1)(a) of the Constitution, when the Supreme Court exercises appellate jurisdiction to answer a substantial question of law certified by a High Court, its consideration is confined to that question; the earlier appeal cannot be enlarged to decide distinct factual matters outside the referred issue.

Section 36 of the Arbitration and Conciliation Act, 1996 provides for enforcement of an arbitral award in the same manner as a court decree, engaging the ordinary execution machinery under the Code of Civil Procedure, 1908.

Questions arising in execution are for the competent executing court, subject to the appellate jurisdiction over its orders.

The Supreme Court’s 2023 judgment had answered only the certified question concerning conversion of the awarded amount; it had not examined whether sums were deposited or later withdrawn.

Those payment and adjustment questions were therefore outside the scope of that appeal, and seeking clarification could not convert the Court into a supervisory forum for continuing execution proceedings.

The Court accordingly held that the parties must raise any contentions concerning the alleged payments before the executing court, in accordance with law.

It dismissed the miscellaneous application seeking modification of the 2023 judgment, while preserving the applicant’s liberty to raise objections and contentions concerning adjustment or set-off before the executing court.

The Court also requested the Law Commission of India to study the framework for enforcement and execution of arbitral awards and make any recommendations it considered necessary.