Isabella Mariam

The Allahabad High Court at Lucknow, Division Bench of Chief Justice Arun Bhansali and Justice Jaspreet Singh dismissed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, upholding an arbitral award exceeding Rs. 126 crores in favour of Adani Enterprises Ltd. The Court ruled that an arbitral award made in one proceeding can serve as evidence in another, though the evidentiary weight accorded to it may differ depending on the circumstances. Emphasizing that such an award retains evidentiary value, the Bench observed that it can be an important piece of evidence in related arbitral proceedings. The appeal was consequently dismissed, affirming the respondent’s entitlement under the arbitral award.

The respondent Adani Enterprises Ltd. (AEL), initiated arbitration concerning a mining contract executed on 5 February 2011 with UCM Coal Company Ltd. (UCM), a special purpose vehicle formed by Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd., Chhattisgarh Mineral Development Corporation, and Maharashtra State Power Generation Company Ltd. The contract envisaged an approval and clearance stage, followed by development and operation stages. During the approvals stage, the Supreme Court cancelled the coal block allocations, including Chhendipada and Chhendipada-II, leading to disputes between UCM and AEL.

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The arbitral tribunal, comprising Justice K.A. Punj (Retd.), Justice N.K. Mehrotra (Retd.), and Presiding Arbitrator Justice Deepak Verma (Retd.), passed a unanimous award on 20 November 2018 allowing claims of AEL, including reimbursement for expenses related to land acquisition processes, mine infrastructure mobilization, and sums paid or committed to third-party consultants. Interest at 11% per annum was awarded, with interest on a component relating to PMC Projects (India) Pvt. Ltd. deferred pending Section 34 proceedings concerning an award in PMC’s favour.

UCM challenged the award under Section 34 before Commercial Court-I, Lucknow, which dismissed the petition on 31 March 2023. UCM then preferred an appeal under Section 37 before the High Court. UCM’s submissions included that AEL had engaged entities such as PMC Projects (India) Pvt. Ltd., SPARC Pvt. Ltd., G.V. Info-solutions Pvt. Ltd., Hydro Geo Survey Consultants Pvt. Ltd., and Vimta Labs Ltd. without prior written consent, allegedly violating the mining contract’s Clauses 12.2, 27.5, and 27.6; that claims lacked evidentiary support, including absence of invoices; and that reliance on Chartered Accountant (CA) certificates was improper due to alleged discrepancies between pre-cancellation and post-cancellation figures. AEL’s response, inter alia, addressed the scope of Section 34/37 review, asserted that the entities were consultants engaged for specialized clearances and approvals, and pointed to the evidentiary record consisting of work orders, progress materials, and an arbitral award in favour of PMC against AEL that crystallized liabilities on a milestone basis.

The High Court examined the permissible scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996. It stated that “interference under Section 37 cannot travel beyond the restrictions laid down under Section 34 of the Act” and clarified that “the jurisdiction of the appellate court under Section 37 is even narrower than the jurisdiction available to the court under Section 34.”

Referring to precedent, the Bench recorded that “courts cannot act as appellate authorities to reappreciate evidence or arrive at a different conclusion” and reiterated that “a possible view by the Arbitral Tribunal, based on appreciation of evidence and interpretation of the contract, cannot be substituted by another possible view merely because the Court feels otherwise.”

The Bench observed that the tribunal had duly considered all materials on record, and that its findings were reasoned and within jurisdiction. On evidentiary matters, the Court stated that “an Arbitral Award, which is placed on record of another arbitral proceedings, can be a highly important piece of evidence. Though, its evidentiary value and weight given to such evidence may differ from case to case but it cannot be said that it has no evidentiary value at all.” It held that “the Arbitral Tribunal committed no illegality in considering the said award for the limited purpose for which it was produced.”

With respect to the contractual issue, the Bench stated that “the consultants engaged were within the permissible framework and their engagement did not violate the contractual stipulations.” It further recorded that “the Arbitral Tribunal, after examining the material placed before it, has returned findings of fact based upon evidence, which cannot be termed perverse.”

Turning to the evidentiary challenge raised by the appellant, the Court noted that “the record reflects that the respondent had supported its claims by furnishing CA certificates. The said CA certificates certified that they have been issued after verification of the relevant documents and books of accounts. The Tribunal has accepted the same and merely because the author of the said certificates may not have been examined it will not per se render the said CA certificates to be inadmissible especially when the same were not challenged nor an objection relating to the said CA certificates was raised and further the appellant could not demonstrate as to any discrepancy or incorrectness in the said certificates either during the cross-examination of the witness or otherwise.”

The Bench added that “since the Arbitral Tribunal is not bound by strict rules of evidence, it has the discretion to rely upon the said documents which has been done and there is nothing on record to show that the appellant ever objected to its admissibility or to its probative value.” It further observed that “the genuineness of the CA certificate was not under cloud and it was also not demonstrated that the said certificates were not issued in context with standard accounting practice.”

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Concluding its analysis, the Court stated that “it cannot be said that the Tribunal incorrectly relied upon the CA certificate and for the said reason, the findings of the Tribunal are perverse. Hence, this Court is not inclined to interfere with the award on this ground as well.” It ultimately held that “the findings of the Arbitral Tribunal are neither arbitrary nor perverse and are based upon due appreciation of evidence and contractual provisions,” and declared that “no case for interference under Section 37 of the Arbitration and Conciliation Act, 1996, is made out.”

The Court stated: “For the aforesaid detailed discussions, this Court is of the clear opinion that the award passed by the Tribunal dated 20.11.2018 and the order passed by the Commercial Court-I, Lucknow dated 31.03.2023 does not fall foul of the patent illegality or being against the public policy test, hence, the appeal is dismissed.” The Court further recorded: “There shall be no order as to costs.”

Advocates Representing the Parties
For the Petitioners: Pritish Kumar, Additional Advocate General; Vibhanshu Srivastava; Suyash Manjul.
For the Respondents: Mr. Vikram Nankani, Senior Advocate with Pranjal Krishna; Abhishek Dwivedi; Suhaib Ashraf; Brijesh Kumar; Manish Mehrotra; Utkarsh Srivastava.

Case Title: UCM Coal Company Ltd. v. Adani Enterprises Ltd.
Neutral Citation: 2025:AHC-LKO:58732-DB
Case Number: Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 No. 52 of 2023 (ARPL No. 52 of 2023)