The Supreme Court, on February 5, reserved its judgment in an appeal lodged by the Indian Oil Corporation Limited (IOCL) against Arcelor Mittal Nippon Steel Limited (AMNS). The appeal pertains to the appointment of an arbitrator to oversee a dispute related to Essar Steel India Limited (ESIL), which was acquired by AMNS through the corporate insolvency resolution process.
The court conducted a hearing lasting over 30 minutes and instructed lawyers from both sides to submit written arguments by February 9.
The dispute centers around a Gas Supply Agreement (GSA) between IOCL and ESIL in 2009. In 2017, ESIL terminated the agreement, prompting IOCL to object, claiming no breach of contractual obligations. IOCL issued a demand notice for certain amounts due to the abrupt termination and invited ESIL to participate in an amicable settlement procedure per the GSA. With no response from ESIL, IOCL initiated arbitration as per the Gas Supply Agreement.
During this dispute, the National Company Law Tribunal (NCLT) admitted Essar to the insolvency resolution process, appointing a Resolution Professional (RP). IOCL submitted a claim of over Rs 3,500 crore to the RP, who admitted the claim for a notional value of Rs 1. This notional value was included in the approved resolution plan, executed by AMNS in 2019.
Despite the resolution plan’s implementation, IOCL approached the Delhi High Court in 2022, seeking the appointment of an arbitrator to address the previously settled dispute. The High Court reasoned that the resolution plan, approved by the Supreme Court after hearings, conclusively settled the matter. Acceptance of the Resolution Plan, resulting in the extinguishment of claims, precluded reopening of the issue.
The court determined that the dispute raised by IOCL could not be allowed before any arbitral tribunal. Consequently, it declined to appoint an arbitrator, stating that the matter is non-arbitrable. The Supreme Court is yet to deliver its judgment on this appeal.
