ELECTROSTEEL STEEL LIMITED (NOW M/S ESL STEEL LIMITED) versus ISPAT CARRIER PRIVATE LIMITED

ELECTROSTEEL STEEL LIMITED (NOW M/S ESL STEEL LIMITED) versus ISPAT CARRIER PRIVATE LIMITED

The Court held that while a plea of nullity of an arbitral award can be raised in execution proceedings under Section 47 CPC within a narrow compass, the award in this case was a nullity because the respondent's claim stood extinguished upon approval of the resolution plan under Section 31 IBC; consequently the Facilitation Council lacked jurisdiction to pass the award dated 06.07.2018 and that award was incapable of execution, warranting quashing of the execution proceedings and setting aside the executing court and High Court orders.

Parties
Appellant / Judgment Debtor / Corporate Debtor: Electrosteel Steel Limited (Now M/s ESL Steel Limited); Respondent / Decree Holder / Operational Creditor: Ispat Carrier Private Limited
Jurisdiction
India
Judgment Date
21 April 2025
Procedural Posture
Civil Appeal (appeal by Special Leave) / Appeal to the Supreme Court Against High Court Order Under Article 227; Final Judgment on Merits
Outcome
Appeal allowed
Legal Topics
Resolution Plan, Moratorium, Execution of Arbitral Award, Nullity of Award, Jurisdiction of Adjudicating/tribunal, Operational Creditors, Claim Extinguishment
Insolvency and Bankruptcy Code, 2016 Arbitration and Conciliation Act, 1996 Civil Procedure Code, 1908 Micro, Small and Medium Enterprises Development Act, 2006 Companies Act, 2013 Resolution Plan Moratorium Execution of Arbitral Award +4 more

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Parties

Electrosteel Steel Limited (Now M/s ESL Steel Limited)

Appellant / Judgment Debtor / Corporate Debtor

Ispat Carrier Private Limited

Respondent / Decree Holder / Operational Creditor

Procedural Posture

Civil Appeal (appeal by Special Leave) / Appeal to the Supreme Court Against High Court Order Under Article 227; Final Judgment on Merits

Legal Issues

  1. 1 Whether upon approval of the resolution plan by the NCLT the respondent's claim stood extinguished
  2. 2 Whether the Facilitation Council lost jurisdiction to adjudicate the respondent's claim after approval of the resolution plan
  3. 3 Whether an arbitral award can be challenged as a nullity in execution proceedings under Section 47 CPC without challenging under Section 34 of the Arbitration Act

Ratio Decidendi

The Court held that while a plea of nullity of an arbitral award can be raised in execution proceedings under Section 47 CPC within a narrow compass, the award in this case was a nullity because the respondent's claim stood extinguished upon approval of the resolution plan under Section 31 IBC; consequently the Facilitation Council lacked jurisdiction to pass the award dated 06.07.2018 and that award was incapable of execution, warranting quashing of the execution proceedings and setting aside the executing court and High Court orders.

Court Disposition

Appeal allowed

Orders

  • Order dated 03.03.2023 passed by the Presiding Officer, Commercial Court/District Judge-1, Bokaro in Commercial Execution Case No. 21 of 2022 (Execution Case No. 77 of 2018) is set aside
  • Execution proceedings in Commercial Execution Case No. 21 of 2022 (Execution Case No. 77 of 2018) pending in the Court of Presiding Officer, Commercial Court/District Judge-1, Bokaro are quashed