Karnataka High Court Rejects Ex-Director's Objection To Settlement With NHAI After Company's Liquidation

The Karnataka High Court has declined to entertain an objection by an erstwhile director of A.L. Sudershan Construction Co. Ltd. against a settlement with the National Highways Authority of India (NHAI) over an arbitral award

The court observed that the company was under liquidation and was duly represented by the Resolution Professional, and that any objection would have been raised at an appropriate time before the National Company Law Tribunal.

A Division Bench of Justices Anu Sivaraman and Venkatesh Naik T made the observation while accepting a settlement between NHAI and the company under the Vivad Se Vishwas-III Scheme.

"In the above view of the matter, respondent No.5, who is an erstwhile Director of the Company, cannot have the right to oppose this application for settlement in view of the fact that the Company is in liquidation and respondent No.1 is duly represented by the Resolution Professional. Any objections would have been raised at an appropriate time by respondent No.5 before the National Company Law Tribunal and not before this Court, in these proceedings.", the court observed.

The dispute arose from an arbitral award of September 6, 2014 in favour of A.L. Sudershan Construction, which was challenged by NHAI. During the pendency of the appeal, NHAI deposited ₹36.39 crore representing 50% of the award amount with interest.

Meanwhile, the Corporate Insolvency Resolution Process was initiated against the company on May 9, 2022 and it was ordered to be liquidated on August 28, 2023 with Kalvakolanu Murali Krishna Prasad appointed as the liquidator.

The Stakeholders Consultation Committee approved a settlement and on May 22, 2026, NHAI and the liquidator executed a settlement agreement under Section 73(2) of the Arbitration and Conciliation Act as part of the Vivad Se Vishwas-III Scheme. Under the settlement, NHAI agreed to pay ₹40.80 crore, including interest in full and final settlement of the company's claims.

The Court held that once the company was under liquidation, it was duly represented by the liquidator, and the compromise approved by the Stakeholders' Consultation Committee deserved acceptance.

Accordingly, the Court accepted the compromise approved by the Stakeholders' Consultation Committee, disposed of the appeal in terms of the joint settlement, and dismissed all pending applications.

For Appellant: Advocate Shilpa Ghanshyambhai Shah

For Respondents: C.K. Nandkumar, Senior Advocate, Rukkoji Rao H.S., Vivekananda, Advocates