The Supreme Court
on Monday set aside a Delhi High Court order that dismissed the Indian Oil
Corporation’s (IOC’s) plea for appointment of an arbitral tribunal to settle
its Rs 8,772-crore claim against billionaire Lakshmi Mittal-led ArcelorMittal
Nippon Steel (AMNS).
The dispute is
related to Essar Steel India Limited (ESIL), which was acquired by AMNS through
the insolvency resolution process in 2019. This was approved by the Supreme
Court. The apex court noted that both IOC and AMNS have agreed to the
appointment of arbitrators within a week.
“The parties have
agreed to nominate two arbitrators within a week. The two arbitrators so
appointed will nominate the third arbitrator. In view of the agreement of the
parties, the Delhi High Court’s judgment dated October 10, 2023, is rendered
infructuous,” said the bench of Chief Justice of India (CJI) DY Chandrachud and
Justices JB Pardiwala and Manoj Misra.
The Delhi High
Court in October last year dismissed IOC’s plea to appoint an arbitrator to
adjudicate a dispute regarding a gas supply agreement (GSA) that it had entered
into with ESIL in 2009. ESIL had terminated the agreement in 2017 but IOC
objected to the termination, saying it had not breached any of its contractual
obligations. Hence, the termination notice was liable to be viewed as
ineffective, IOC said.
IOC had issued a
demand notice asking ESIL to pay for the abrupt termination of the GSA and
asked ESIL to participate in the amicable settlement procedure as per the GSA.
IOC then invoked arbitration in terms of the GSA after no response from ESIL.
Amid this
dispute, the National Company Law Tribunal (NCLT) bench at Ahmedabad admitted
Essar to the insolvency resolution process.
IOC approached
the Delhi High Court in 2022 for the appointment of an arbitrator to adjudicate
its dispute, which had already been put to rest by the resolution plan. ESIL
was acquired by AMNS through the insolvency resolution process in 2019. This
was approved by the Supreme Court.
The High Court
then in October 2023 said the resolution plan was approved by the Supreme Court
and once a party accepts the approval of the resolution plan, which results in
the extinguishment of their claims, it cannot be reopened against the
successful resolution applicant (ArcelorMittal).
"This would clearly amount to rewriting upon
the clean slate based upon which the respondent (ArcelorMittal) took over the
corporate debtor (Essel Steel)," Justice Yashwant Varma had said.