Adani Power Limited Vs Shapoorji Pallonji and Co. Pvt. Ltd. & Ors. (Supreme Court of India)
Summary: The Supreme Court of India dismissed the appeal filed by Adani Power Limited against the judgment dated 23 February 2023 of the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, concerning the treatment of a contingent claim raised by Shapoorji Pallonji and Co. Pvt. Ltd. under an approved insolvency resolution plan. The NCLAT had upheld the approval of the resolution plan but observed that the Resolution Professional ought not to have made a contingent provision concerning Shapoorji Pallonji’s claim in the particular circumstances of the case, subject to the outcome of pending arbitration proceedings. It also permitted Shapoorji Pallonji to pursue its contentions in arbitration, with those proceedings to be decided independently on their merits. Adani Power challenged the NCLAT’s decision before the Supreme Court, raising concerns about the effect of the arbitration proceedings on the approved resolution plan.
The Supreme Court examined paragraphs 19 and 20 of the NCLAT judgment and found no ambiguity in its observations and directions. The Court clarified that the approved resolution plan was binding on all concerned and could not itself become the subject matter of arbitration or other proceedings. It noted that the Resolution Professional had categorised Shapoorji Pallonji’s claim as a contingent liability. Nevertheless, Shapoorji Pallonji remained free to continue the pending arbitration proceedings for adjudication and quantification of its claim, should it choose to do so. The Court thereby distinguished the determination of the disputed claim from the enforceability of any resulting liability against Adani Power under the approved resolution plan.
The Supreme Court expressly held that even if Shapoorji Pallonji succeeded in arbitration, the outcome would have no bearing on Adani Power’s rights and obligations under the approved resolution plan. Adani Power could not be burdened with any liability beyond what was specified in that plan. Since the NCLAT’s judgment, properly understood, already protected Adani Power against such additional liability, the Supreme Court concluded that the appellant had no surviving grievance. Accordingly, the civil appeal was dismissed, and all pending applications were disposed of. The decision preserved Shapoorji Pallonji’s liberty to pursue adjudication and quantification of its contingent claim while maintaining the binding effect of the approved resolution plan.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Paragraphs 19 and 20 of the judgment under challenge, dated 23.02.2023 passed by the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi read as under:
“19. For all the foregoing reasons, we are of the considered view that there is no illegality in the Order of the ‘Approval of the Resolution Plan’ by the Adjudicating Authority and we do not see any reason to set aside the Resolution Plan per se except for observing that the RP ought not to have made a ‘Contingent Provision’ with respect to the Appellant herein having regard to the specific facts of this case, which would be subject to the result of the Arbitration Proceedings.
20. Having observed so, liberty is being given to the Appellant herein to pursue all contentions available to them in the pending Arbitration Proceedings and the same be decided in the said proceedings on its own merits in accordance with law. This Appeal is disposed of with the aforenoted observations. No order as to costs. It is to be noted that keeping in view the peculiar facts of the attendant case on hand, this Order is being passed.”
In our opinion, there is no ambiguity in the above observations and directions recorded by the NCLAT, as they reflect that the Resolution Plan, as approved, is binding on all and cannot be made subject matter of arbitration or any other proceedings. The claim of respondent no. 1 – Shapoorji Pallonji and Co. Pvt. Ltd. has been categorized by the Resolution Professional as a ‘contingent liability’. Respondent no. 1 – -Shapoorji Pallonji and Co. Pvt. Ltd. may continue with the arbitration proceedings for adjudication of its claim and quantification thereof, if they so wish and choose to do so.
However, the claim even if allowed in favour of M/s Shapoorji Pallonji and Co. Pvt. Ltd. will have no bearing on the rights and obligations of the appellant – M/s. Adani Power Limited, which are in terms of the Resolution Plan. It has been held by the judgment dated 23.02.2023, that the appellant cannot be saddled with any liability except what is mentioned in the Resolution Plan.
Recording the aforesaid, the appeal is dismissed on the ground that the appellant has no grievance.
Pending application(s), if any, shall stand disposed of.
The appeal is dismissed, in terms of the signed order.
Pending application(s), if any, shall stand disposed of.
