Allahabad High Court Upholds Arbitral Award in Favor of Adani Enterprises Ltd.

UCM Coal Company Ltd.'s Appeal Dismissed; Court Reiterates Limited Scope of Judicial Intervention in Arbitration Awards

The Allahabad High Court's Division Bench at Lucknow, comprising Chief Justice Arun Bhansali and Justice Jaspreet Singh, delivered a significant judgment on September 23, 2025, in the case of UCM Coal Company Ltd. v. Adani Enterprises Ltd. The court dismissed UCM Coal Company Ltd.'s appeal under Section 37 of the Arbitration and Conciliation Act, 1996, thereby upholding the arbitral award favoring Adani Enterprises Ltd.

The dispute arose from a mining contract for the Chhendipada and Chhendipada-II coal blocks, which were allocated to UCM Coal Company Ltd. The contract, awarded to Adani Enterprises Ltd., was disrupted by the Supreme Court's cancellation of coal block allocations in 2014. The arbitral tribunal awarded Adani a sum of Rs. 126.63 crores, including interest, for expenses incurred during the contract's clearance stage.

UCM challenged the award, arguing that Adani engaged sub-contractors without prior consent and presented inflated claims. However, the High Court reinforced the principle that courts cannot interfere with arbitral awards unless there is evidence of perversity or patent illegality. The court noted that the arbitral tribunal had thoroughly examined the evidence and correctly interpreted the contract terms, distinguishing between sub-contractors and consultants.

This decision reaffirms the judiciary's limited role in arbitration, emphasizing deference to the arbitral tribunal's findings unless they are arbitrary or shock the court's conscience. The judgment underscores the importance of respecting the autonomy and finality of arbitral awards, a cornerstone of the Arbitration and Conciliation Act, 1996.

Bottom Line:

Arbitration and Conciliation Act, 1996 - Court cannot interfere with arbitral award merely because an alternative view on facts and interpretation of contract exists unless the award portrays perversity or patent illegality under Section 34 or Section 37 of the Act.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 34, 37

UCM Coal Company Ltd. v. Adani Enterprises Ltd., (Allahabad)(DB)(Lucknow) : Law Finder Doc Id # 2783182