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.