Supreme Court Dismisses Paharpur Plea Against Sinnar Thermal Power, Bars Arbitral Award Execution Post CIRP

A Bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe, after hearing the parties, dismissed the petition, finding no ground for interference with the high court order. Justice Narasimha also orally termed the plea an “abuse of process."

Senior Advocate Shyam Diwan, appearing for Paharpur, argued that despite the resolution of Sinnar's insolvency, the company was entitled to enforce the arbitral award against entities other than the corporate debtor.

He submitted that Paharpur held an arbitral award of about Rs. 23 crore against Sinnar but was left with only around Rs. 14 lakh after its claim was drastically reduced in the corporate insolvency resolution process. He contended that participation in CIRP was mandatory but did not bar enforcement proceedings against other liable entities.

Diwan argued that Sinnar, which functioned as a special purpose vehicle allegedly backed by NTPC Limited and Maharashtra State Power Generation Company Limited, was wholly controlled, and therefore its parent entities could be proceeded against to enforce the award.

Relying on judgments such as Cheran Properties and Cox & Kings, he submitted that an arbitral award can, in appropriate cases, be enforced against non-signatory group entities, particularly where there is complete control or a single economic unit.

The bench, however, questioned why Paharpur had not pursued its remedies within the CIRP framework itself. “Why you did not go for CIRP then. Why did you not make a claim in the CIRP?” Justice Narasimha asked, indicating skepticism toward attempts to bypass the insolvency process.

Opposing the plea, counsel for Sinnar argued that execution must strictly conform to the arbitral award and cannot be extended to non-parties in the absence of pleadings or findings fixing liability. It was further submitted that lifting the corporate veil requires specific allegations of fraud, which were absent in the present case.

Background

The dispute traces back to a Letter of Award dated August 12, 2010 under which Paharpur was engaged to construct cooling towers for a thermal power project in Nashik. The contracting entity underwent multiple corporate changes, and the project eventually came to be housed in Sinnar Thermal Power Ltd., which functioned as a special purpose vehicle for the project.

Paharpur completed the works in June 2018, but disputes arose over payments and related contractual obligations. Arbitration was invoked on December 6, 2019, and a sole arbitrator was appointed by the Delhi High Court. On November 12, 2021, an arbitral award was passed in favour of Paharpur for approximately Rs. 23 crore.

Sinnar challenged the award under Section 34 of the Arbitration and Conciliation Act in April 2022. During the pendency of that challenge, Sinnar was admitted into the corporate insolvency resolution process on September 19, 2022.

Paharpur filed its claim before the resolution professional in October 2022, which was admitted at over Rs. 23 crore. The Section 34 challenge was subsequently withdrawn on August 26, 2025, resulting in the arbitral award attaining finality.

Even as the insolvency process was nearing completion, Paharpur initiated execution proceedings of the arbitral award on October 27, 2025 seeking to enforce the award against Sinnar as well as its group entities. The resolution plan was approved shortly thereafter on November 28, 2025, reducing Paharpur's admitted claim from about Rs. 23 crore to roughly Rs. 14 lakh.

The Delhi High Court held that such parallel execution proceedings were not maintainable after approval of the resolution plan.