New Delhi, Nov 4 (PTI) The tendency to play safe will set in, leading to policy paralysis if the high officials running PSUs and private sector firms are “shackled with the fear” that their decisions would be viewed with “a jaundiced eye” later and run them and their firms into litigations, the Supreme Court has said.
The observations were made in a judgment by the top court which on Monday upheld the enforcement of a USD 78.72 million (approx Rs 650 crore) arbitral award in favour of Anglo American Metallurgical Coal Pvt Ltd, dismissing a challenge by state-run MMTC Ltd and holding that the PSU failed to establish even a prima facie case of fiduciary breach by its senior management.
A bench of Justices Sanjay Kumar and K V Viswanathan delivered the judgment on MMTC’s appeal against a 2025 Delhi High Court ruling that rejected its objections under Section 47 of the Code of Civil Procedure (CPC) and allowed Anglo American Coal Pvt Ltd to withdraw the amount deposited with interest.
Justice Viswanathan, writing an 82-page judgment for the bench, upheld the high court order and dismissed MMTC’s plea, noting there were “no good grounds” to interfere with the enforcement of the award.
Concluding the judgment, Justice Viswanathan wrote a postscript.
“Whether in Government, Public Sector Corporations or even in the private sector, the driving force of the entity are the persons who administer them. A certain play in the joints is inevitable for their day-to-day functioning.
“If they are shackled with the fear that their decisions taken for day-to-day administration, could years later with the benefit of hindsight, be viewed with a jaundiced eye, it will create a chilling effect on them,” the verdict said.
“A tendency to play it safe will set in. Decision making will be avoided. Policy paralysis will descend. All this will in the long run prove detrimental not just to that entity but to the nation itself,” it said.
The bench said it should not be understood to be condoning decisions taken for improper purposes or extraneous considerations.
“All that we are at pains to drive home is that great caution and circumspection have to be exercised before such allegations are brought forward and adequate proof must exist to back them. Otherwise for fear that carefully built reputations could be casually tarnished, best of talent will not be forthcoming, especially for government and public sector corporations,” it said.
The bench found no merit in the objections filed by MMTC under Section 47 of the CPC and dismissed its appeal.
The dispute arose out of a long-term coal supply agreement executed in March 2007 between MMTC and Anglo American firm for the supply of coking coal over multiple delivery periods.
After MMTC failed to lift certain quantities during the fifth delivery period amid market volatility in 2008, Anglo American Coal Pvt Ltd invoked arbitration seeking damages based on price differentials.
In May 2014, a majority of the arbitral tribunal awarded Anglo American firm USD 78.72 million with interest and costs. MMTC’s challenge to the award under Section 34 of the Arbitration Act failed before a single judge of the Delhi High Court in July 2015.
Although a division bench later set aside the award in March 2020, the Supreme Court restored it in December 2020. MMTC subsequently objected to enforcement on grounds including alleged breach of fiduciary duties by its former officials and an ongoing criminal investigation.
The PSU also sought a stay under CPC, claiming the award was inexecutable. The top court rejected all contentions, ruling that MMTC was attempting a “retrial” of issues already settled. PTI SJK SJK KSS KSS
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