Supreme court refuses to use clarification route to supervise execution proceedings, asks law commission to study enforcement of arbitral awards

Supreme Court Declines Supervisory Role in Execution Proceedings, Prompting Law Commission to Examine Arbitral Award Enforcement.

Case Name: Royal Construction Company Pvt. Ltd. v. National Projects Construction Corporation

Citation: (2026) ibclaw.in 768 SC

Coram: Justice Vikram Nath, Justice Sandeep Mehta and Justice Aparesh Kumar Singh

The Supreme Court has held that once it answers a substantial question of law certified by a High Court, the scope of that appellate adjudication stands exhausted and cannot be enlarged by seeking answers on distinct factual issues arising in continuing execution proceedings. The Bench also requested the Law Commission of India to undertake a focused study of the framework governing enforcement and execution of arbitral awards.

The appellant, Royal Construction Company Pvt. Ltd., is the award-holder, while the respondent, National Projects Construction Corporation, is the award-debtor. An internationally seated arbitration resulted in an award dated 10 August 2002 in favour of the appellant, with the amounts awarded denominated in Iraqi Dinars. By judgment dated 24 February 2015, the Supreme Court underscored the principle of minimal judicial intervention under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, and restored the directions contained in the award.

In execution proceedings, the Delhi High Court by order dated 26 July 2017 directed that the award-debtor could discharge its liability in Indian currency, at the exchange rate prevailing on 26 September 1982, the date of the underlying agreement. The Division Bench set aside this order on 17 December 2019 and certified a substantial question of law of general importance under Articles 134-A and 133(1)(a) of the Constitution, concerning the relevant date for conversion of the awarded sum into Indian rupees.

By judgment dated 10 October 2023, the Supreme Court answered the question in the negative, holding that no occasion arose for determining or fixing a date for conversion. It further cautioned that the terms of the agreement, the arbitral award and the directions in its 2015 judgment ought not to be disturbed.

While execution proceedings continued, the award-debtor contended that the principal amount had already been paid in 2009 pursuant to orders of the High Court. By an interim order dated 16 February 2026, the High Court granted the parties liberty to seek clarification from the Supreme Court as to why this fact had not been brought to its notice earlier. The award-holder challenged that order. The award-debtor separately filed a Miscellaneous Application in the disposed of civil appeal, seeking modification of the 2023 judgment on the ground that the amounts it had deposited in Indian rupees under the High Court's order had been withdrawn by the award-holder in 2009.

Appearing for the appellant, Mr. Rishabh Sancheti argued the matter, while the respondent was represented by Additional Solicitor General Mr. Vikramjit Banerjee.

The Bench of Justice Vikram Nath, Justice Sandeep Mehta and Justice Aparesh Kumar Singh held that the Division Bench had erred in appreciating the scope of the controversy previously adjudicated. The Court noted that in 2023 it was exercising appellate jurisdiction on a certified question, and its consideration was confined to answering that question without examining factual matters beyond its ambit. Having held that no occasion arose to fix a date for conversion and that payment was to be made in foreign currency, the Court had no occasion to clarify factual questions concerning the amounts deposited or their subsequent withdrawal.

The Court observed that it cannot be called upon, in the guise of seeking clarification, to assume a supervisory role over continuing execution proceedings or to adjudicate every issue arising in them. It is for the competent court seized of execution, and the appellate court exercising jurisdiction over its orders, to determine such questions in accordance with law. The Miscellaneous Application was dismissed, with liberty to the applicant to raise all objections concerning adjustment or set-off of the amounts before the executing court.

In an epilogue, the Bench expressed concern at the protracted course of the proceedings. It noted that the arbitration was invoked when the Arbitration Act, 1940 held the field, and that more than twenty-four years after the award, the parties continue to litigate over its enforcement. According to the Court, the efficacy of an arbitral regime must be assessed not only by the speed with which an award is rendered or the limited grounds on which it may be challenged, but also by the ability of the successful party to realise the fruits of the award within a reasonable time.

The Court noted that Section 36 of the 1996 Act provides for enforcement of an award in the same manner as a decree, drawing on the ordinary machinery of execution under the Code of Civil Procedure, 1908. It stated that the identification and disclosure of the award-debtor's assets, coordination of different modes of execution, disposal of repetitive or dilatory objections and the time taken to conclude execution merit focused scrutiny, and that comparative legal systems may offer useful insights.

The Law Commission of India has accordingly been requested to study the statutory and procedural framework for enforcement and execution of arbitral awards, identify practical impediments to timely recovery, examine the experience of other jurisdictions, and consider whether domestic and foreign awards warrant distinct enforcement procedures or a common framework with appropriate safeguards. The Registry has been directed to forward a copy of the judgment to the Chairman of the Law Commission. The appeal was disposed of in these terms.