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Shakti Nath & Ors. v. Alpha Tiger Cyprus Investment No. 3 Ltd. & Ors.

Civil Appeal · 2020 INSC 203Decided 18 Feb 2020
Civil Appeal No. 1674 of 2020
Justice Uday Umesh Lalit · Justice Indu Malhotra

Background

The appellant-promoters had entered into shareholder agreements with the respondent-investors to jointly develop an IT Special Economic Zone project on leased NOIDA land, but later terminated the agreements soon after the investors brought in their contribution of Rs. 45 crore. The investors won an ICC arbitral award (by 2:1 majority) directing repayment with heavy interest and costs. The promoters' challenge to this award failed before a Single Judge and then a Division Bench of the Delhi High Court, leading to this further appeal to the Supreme Court, during which the Court had already secured deposits and an injunction on the promoters' land to protect the investors' eventual recovery.

Decision Breakdown

The Supreme Court rejected the promoters' challenge to the arbitral award. However, rather than simply enforcing the original award figures, the Court recorded and approved a negotiated commercial settlement reached by all parties during the hearing: the promoters agreed to pay a reduced lump sum of Rs. 107.5 crore in full and final settlement, funded partly through a buyer (the Bhutani Group) purchasing the underlying project company's shares and depositing the sale proceeds with the Court, and partly through the promoters raising funds themselves (for which an earlier injunction on their other property was lifted). The appeal was disposed of strictly on these consent terms, with a default clause reviving the full original award if the promoters failed to pay.

Lesson Learnt

Even after the Supreme Court upholds an arbitral award on the law, the parties remain free to negotiate a practical, court-supervised commercial settlement to actually satisfy the award, and the Court will record and enforce such a settlement (including through conditional safeguards) rather than mechanically restating the original award figures.

Official source (sci.gov.in)View Judgment (PDF)

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