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2026 Supreme(All) 845
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW
PANKAJ BHATIA, J.
M/s U.P. Rajya Vidyut Utpadan Nigam, Ltd. Thru. Authorised Representative Pradeep Soni And Others - Appellant
Vs.
M/S Adani Enterprises Ltd., Ahemdabad Thru. Managing Director Ahemdabad And Another - Respondent
Matters Under Article 227 No. 6089, 5333 of 2025
Decided On : 09-04-2026
Advocate Appeared:
For the Petitioner: Vibhanshu Srivastava, Pritish Kumar, Suyash Manjul
For the Respondent: Pranjal Krishna
An arbitral award binds both direct parties and any 'persons claiming under' them. An executing court possesses the power to pierce the corporate veil and enforce an award against parent entities if the subordinate entity is found to be a mere instrumentality or alter ego of those entities.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 35 and 36 - Code of Civil Procedure, 1908 - Order XXI Rule 11 - Enforcement of arbitral award against non-signatories - Doctrine of 'persons claiming under' - Whether an arbitral award rendered against a special purpose vehicle can be enforced against its promoters and parent corporations - Held, Yes, under Section 35 of the Act, an award binds parties and individuals whose position or capacity is derived from a party to the proceedings. (Paras 54, 57-58, 61)
(B) Corporate Law - Lifting of corporate veil - While generally a corporation is a distinct entity, the court may pierce the veil in exceptional circumstances where the corporate form is used as a mere device or instrumentality to evade obligations, especially when the entity has no independent business or existence beyond its parent entities. (Paras 55, 62, 64)
Facts of the case:
Multiple state-owned entities formed a special purpose vehicle to undertake mining operations. The special purpose vehicle entered into a contract containing an arbitration clause. Following the legal cancellation of the resource allocation, the contract became unperformable, leading to arbitration. An arbitral tribunal passed interim and final awards against the vehicle. Execution of these awards was sought against both the vehicle and its constituent parent entities. The parent entities objected, arguing they were not signatories to the arbitration agreement.
Findings of Court:
The Court found that the parent entities exercised pervasive control over the daily affairs of the vehicle. The vehicle was merely a surrogate created for the benefit of the parent entities, and its financial and operational existence was indistinguishable from them. Consequently, the parent entities fall within the scope of "persons claiming under" the party, as defined in Section 35 of the Arbitration and Conciliation Act.
Issues: Whether an arbitral award can be enforced against parent entities who were not signatories to the arbitration agreement, and whether the executing court can pierce the corporate veil to hold such entities liable for an award rendered against an entity they control.
Ratio Decidendi: An arbitral award is final and binding on the parties and "persons claiming under them." This expression includes individuals or entities whose capacity or position is derived from a party to the proceedings. Where a corporate entity serves as a mere facade or instrumentality of its parent corporations, the court may look through the corporate veil to execute the award against those controlling and deriving the benefits from the arrangement.
Result: Petitions dismissed.
| Table of Content |
|---|
| 1. consolidation of petitions centered on common facts and legal issues. (Para 1 , 2 , 3) |
| 2. background facts of coal mining allocation and subsequent arbitration of disputes. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 3. petitioners' contention against the extension of liability to non-signatory entities. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25) |
| 4. respondent's argument that the spv is an alter-ego of the parent companies. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51) |
| 5. interpretation of section 35 and binding effect on persons claiming under original parties. (Para 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63) |
| 6. establishment of liability over parent entities under section 35 of the arbitration act. (Para 64 , 65) |
| 7. final order dismissing writ petitions and directing execution. (Para 66 , 67 , 68) |
JUDGMENT :
PANKAJ BHATIA, J.
1. Writ Petition being Matters Under Article 227 No.6089 of 2025 has been filed by the petitioners challenging the order dated 29.08.2025 passed by learned Commercial Court – I, Lucknow in Execution Case No.383 of 2023 (M/s Adani Enterprises v. UCM Coal Company and Ors.) whereby objections filed by the petitioners have been rejected in respect of the execution sought by respondent no.1 for execution of the final arbitral award dated 20.11.2018.
Writ Petition being Matters Under Article 227 No.5333 of 2025 has been filed by the petitioners against the order dated 31.07.2025 passed by learned Commercial Court – I, Lucknow in Execution Case No.277 of 2021 (M/s Adani Enterprises v. UCM Coal Company and Ors.) whereby the objections of the petitioners were dismissed. The said execution proceedings were initiated by respondent no.1 for execution of the interim award dated 31.01.2017.
2. As the facts and issues are same and the parties are also same, both the petitions are being decided together by this common judgment.
3. For the sake of brevity, facts of Writ Petition being Matters Under Article 227 No.6089 of 2025 are being recorded for deciding the matters.
FACTS OF THE CASE :
4. Ministry of Coal invited bids for allocation of coal mines and petitioner nos.1, 2 & 3 being desirous of participating applied and were allocated coal mines at Chandipada – I and Chendipada – II coal blocks at Odisha vide allocation dated 25.07.2007 (Annexure – 2). In terms of the allocation letter, the allottees were entitled to float a company for excavation and development of the coal block and in pursuance to the said provision, the petitioner nos.1, 2 & 3 formed a company known as UCM Coal Company Ltd. (hereinafter referred to as ‘SPV’). The petitioner nos.1, 2 & 3 were the shareholders in the percentage in which they were allotted the coal blocks by the Ministry of Coal. Copy of the Articles of Association of the SPV are on record as Annexure – 3. It also bears from record that a share holder agreement was executed inter se in between petitioner nos.1, 2 & 3 on 11.11.2008 (Annexure – 4) which specified the manner in which a company (SPV) would be incorporated.
5. The SPV – respondent no.2 herein – floated a request for proposal on 27.09.2009 through an international competitive bidding for selection of suitable mine operator for the coal mines located at Chendipada I and II. Respondent No.1 was desirous of obtaining the contract and submitted its bid and was selected as successful for which a Letter of Award dated 27.10.2010 was issued by the SPV to respondent no.1 (Annexure – 5). Subsequently, a mining contract dated 05.02.2011 was also entered into inter se between respondent no.1 and respondent no.2 (Annexure – 6).The said agreement also contained an arbitration clause.
6. It is claimed that after the issuance of Letter of Award several work contracts and sub-contracts were issued by respondent no.1 which according to the petitioners, were in violation of the agreement.
7. It is on record t
