Supreme Court Cannot Act As Supervisory Body Over Arbitral Execution Under Guise Of Clarification

"This Court cannot be called upon, in the guise of seeking clarification, to assume a supervisory role over the continuing execution proceedings or to adjudicate upon every issue that may arise therein. It is for the competent court seized of the execution proceedings, and the appellate court exercising jurisdiction over its orders, to determine the questions arising in accordance with law." Declaring that the Supreme Court cannot assume a supervisory role over pending execution proceedings under the guise of clarification applications after answering a certified substantial question of law, a three-judge bench of the Supreme Court comprising Justice Vikram Nath, Justice Sandeep Mehta, and Justice Aparesh Kumar Singh on October 28, 2026, held that factual inquiries regarding deposit, adjustment, and set-off fall strictly within the jurisdiction of the executing court under Section 36 of the Arbitration and Conciliation Act, 1996.

The dispute stems from an arbitral award rendered in August 2002 denominated in Iraqi Dinars in favour of M/s Royal Construction Company, which was restored by the Supreme Court in 2015. During execution proceedings, the Delhi High Court certified a substantial question of law under Article 134-A read with Article 133(1)(a) of the Constitution regarding the conversion date into Indian currency, which the Supreme Court answered in October 2023 by holding payment was to be made in foreign currency without determining a conversion date. Subsequently, upon the award-debtor's plea that the principal amount stood paid in Indian Rupees in 2009 pursuant to court orders, the High Court granted the parties liberty to seek clarification from the apex court, prompting the present appeal.

Whether the Supreme Court, having answered a certified substantial question of law under Articles 134-A and 133(1)(a) of the Constitution, can be called upon through a clarification application to adjudicate ongoing factual issues of payment and adjustment arising in arbitral execution proceedings?

Whether factual claims regarding prior deposit, withdrawal, and set-off of an arbitral award must be exclusively adjudicated by the executing court under Section 36 of the Arbitration and Conciliation Act, 1996 read with Order 21 CPC?

Scope of jurisdiction under constitutional reference is strictly confined to the certified question

The bench observed that the Division Bench of the High Court erred in misconstruing the nature of the previous adjudication. Justice Vikram Nath, authoring the verdict, emphasized that the Supreme Court’s appellate jurisdiction was invoked solely to answer the certified substantial question of law and could not be extended into an open-ended inquiry.

The Court made it clear that appellate proceedings exhaust themselves once the referred question is answered, leaving no room to re-examine extraneous factual issues.

Appellate proceedings stand exhausted once the certified question of law is answered

Once the legal reference stood decided, the bench noted, the apex court was neither required nor empowered to adjudicate upon continuing execution disputes.

"Once the substantial question of law referred to this Court stood answered, the scope of the earlier appellate proceedings stood exhausted. It would be impermissible to enlarge the scope of that adjudication by seeking answers to questions that are distinct from, and unconnected with, the lis previously decided."

The Court cautioned that parties cannot utilize clarification applications to convert the apex court into a continuous supervisor of execution matters governed by statutory procedural codes.

Executing court is the sole forum to determine adjustment, deposit, and satisfaction under Order 21 CPC

Addressing the award-debtor's claim regarding prior payment in Indian currency, the Court held that questions concerning deposits, withdrawals, and satisfaction of the decree are matters of fact to be proved before the executing forum under Order 21 CPC.

The bench clarified that it had no occasion to issue directions on factual transactions, reiterating that the competent executing court seized of the matter holds exclusive jurisdiction to evaluate such claims in accordance with law.

Alarm expressed over multi-decade execution delays frustrating the Arbitration Act

Expressing grave concern over the fact that enforcement proceedings remained unresolved more than twenty-four years after the award was rendered, the Court observed that prolonged post-award litigation defeats the very purpose of alternative dispute resolution.

"The efficacy of an arbitral regime cannot be measured merely by the expedition with which an award is rendered or the circumscribed grounds upon which it may be challenged. It must equally be assessed by the ability of the successful party to realise the fruits of the award within a reasonable time."

The bench observed that while Section 36 of the Arbitration and Conciliation Act, 1996 imports the execution machinery of the Code of Civil Procedure, 1908, the present regime requires systemic overhaul to prevent dilatory objections from thwarting enforcement.

Law Commission requested to conduct focused study on arbitral execution framework

Highlighting the need for robust procedural mechanisms, the bench requested the Law Commission of India to examine practical impediments in execution and consider legislative reforms to establish a more effective enforcement framework.

The Court observed that comparative legal systems should be evaluated to streamline asset disclosure, eliminate repetitive objections, and secure India's position as an arbitration-friendly jurisdiction.

The Supreme Court disposed of the civil appeal by setting aside the High Court's direction granting liberty to seek clarification, dismissed the award-debtor's miscellaneous application, and granted liberty to the applicant to raise all contentions regarding adjustment or set-off directly before the executing court in accordance with law.

Date of Decision: October 28, 2026

Case Title: M/s Royal Construction Company Pvt. Ltd. v. M/s National Projects Construction Corporation | Civil Appeal No(s). ___ of 2026 (Arising out of SLP (C) No. 14005 of 2026) with M.A. @ Diary No. 48152 of 2026 in Civil Appeal No. 1991 of 2019

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