Supreme Court Dismisses UCM Coal Company's Challenge To Rs.126 Cr Arbitral Award In Favor Of Adani Enterprises

The Supreme Court recently dismissed a challenge to the Allahabad High Court order which upheld an arbitral award of Rs.126 crores in favor of Adani Enterprises.

A bench of Justices JK Maheshwari and Atul S Chandurkar passed the order in a petition filed by UCM Coal Company Ltd., a joint venture of Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd., Chhatisgarh Mineral Development Corporation and Maharashtra State Power Generation Corporation Limited incorporated for development, exploration and mining of coal blocks allotted to them.

To recap, UCM Coal floated tenders for mine developer and operator, and Adani Enterprises was the successful bidder. At the clearance stage, a PIL was filed before the Supreme Court, which cancelled the allocation of coal blocks to UCM.

Adani Enterprises raised a dispute for recovering expenses incurred in the process of acquisition of land in the coal block, setting up of mine infrastructure and for mobilizing movable and immovable assets, and such amount which was paid or committed as advances, including for capital commitments.

An arbitral tribunal was formed, which, after adjudication, allowed Adani Enterprises' claims and awarded Rs. 126,63,21,44/- along with the interest at the rate of 11% per annum. Adani Enterprises was supposed to pay PMC Projects (India) Pvt. Ltd Rs. 126 crores as per the award in another arbitral proceedings. Payment of interest to Adani Enterprises was delayed till the challenge to the other award was finalized.

Commercial Court-I, Lucknow dismissed the challenge under Section 34 of the Arbitration Act. Thereafter, UCM Coal approached the High Court on grounds that the contractual interpretation by the Arbitral Tribunal was misconstrued, and certain documents which were relied could not be the basis for deciding the claims.

Referring to the decisions of the Supreme Court in Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corpn. Ltd. and AC Chokshi Share Broker (P) Ltd. v. Jatin Pratap Desai, the High Court held that though the embargo was on Adani Enterprises from hiring sub-contractors, there was no bar in hiring consultants, which it had done. Even in cross-examination, witnesses had stated the agencies hired by Adani Enterprises were consultants and not sub-contractors. It was also observed that at no point did UCM Coal raise any objection regarding hiring of the consultant agency without its prior written consent.

Observing that the Tribunal had referred to oral and documentary evidence for coming at the conclusion as above, the Court observed,

“In light of the said overwhelming evidence indicating the manner in which the contract was understood and acted upon by the parties, a view has been subscribed by the Tribunal which cannot be said to be without supporting evidence or it is a view which cannot be culled out from the terms of the contract by any prudent person.”

It was held that the Tribunal had not overwritten the terms of the contract.

Further, the Court observed that the reliance placed on the award in favor of PMC and against the respondent was rightly made as it crystalized the liability of Adani Enterprises to the tune of at least Rs. 125 crores. It held that the same was a credible piece of evidence showing that the amount claimed by Adani Enterprises was for the work carried out.

An arbitral award given in one proceedings can be used as evidence in other arbitral proceedings, though the weightage given to it may vary on case to case basis, the Court said.

Holding that the Arbitral Tribunal was not bound by strict rules of procedure or evidence, the Court dismissed the appeal by UCM Coal and upheld the Award. Aggrieved, UCM Coal moved the Supreme Court.

Appearance: Mr. Tushar Mehta, Solicitor General, with Mr. Adarsh Tripathi, AOR, and team for the petitioners;

Mr. Mukul Rohatgi and Mr. Vikram Nankani, Senior Advocates, with Mr. Mahesh Agarwal, Mr. E.C. Agrawala, AOR, and team for the respondents.

Case Title: UCM COAL COMPANY LTD. v. ADANI ENTERPRISES LTD., SLP(C) No. 2954/2026

Click here to read the order