New Delhi, May 29 "Arbitration in India has not failed; however, courts sometimes have failed arbitration in India," the Supreme Court said on Friday, while dismissing an appeal by Madhya Pradesh Road Development Corporation Ltd (MPRDC) against an arbitral award in favour of M/s Jabalpur Corridor Pvt Ltd (JCPL).
A bench of Justices J K Maheshwari and Atul S Chandurkar was hearing MPRDC's appeal against the December 2016 order of the Madhya Pradesh High Court, affirming the order of a Bhopal district court in the arbitration case, where it did not set aside the majority award of an arbitral tribunal in JCPL's favour in August 2014.
The case stems from a 2003 dispute, when the MPRDC entered into a concession agreement with JCPL (a special purpose vehicle backed by a Malaysian company) for the 176-km Sagar-Damoh-Jabalpur road project on a 'Build-Operate-Transfer' (BOT) basis.
The project stalled after the state government failed to provide vacant land for construction, and instead of resolving the bottleneck, the MPRDC terminated the contract in 2007.
JCPL initiated arbitration in 2011, eventually winning a majority award in 2014.
In its order, the apex court held that there was "no reason to interfere with the saddling of the contractual and statutory interest rate on the appellant, which is completely just and fair".
Dismissing the appeal, the Supreme Court asked the high court's registry to release the deposited amount, along with accrued interest, to JCPL within two weeks, besides directing the MPRDC to pay the remaining amount, along with the accrued interest, within three months.
It observed, "Arbitration in India has not failed; however, courts sometimes have failed arbitration in India. Even the Government's role cannot be ignored.
"A single doubtful precedent in the arbitration field has the potential to cast a shadow on its viability in India and its impact on the ease of doing business in India."
"There is no gainsaying that judicial interference in alternative dispute resolution has often been a cure without a disease in India. In this context, it is high time that judges realise that certainty, uniformity and finality are also cherished values," it said.
In a scathing rebuke, the apex court said that MPRDC's conduct, where it fought tooth and nail to delay the payment of contractual dues, was "deplorable".
It said, "It has taken nineteen years since the Project was terminated for the award to fructify. The pace of the dispute resolution mechanism in the present case is a star witness for the statement 'justice delayed is justice denied'."
"It is even more shocking that an interim application filed by the Respondent (JCPL) has pointed out that there exist various diplomatic exchanges between the Malaysian High Commission and the Ministry of External Affairs, Government of India, regarding the delayed adjudication of this issue," the top court said.
