Arbitral award binding on persons claiming under award debtor, allowing execution against constituent shareholder companies in proper cases.

Section 35 of the Arbitration and Conciliation Act, 1996 gives an arbitral award finality and binding force not only against the parties to the award but also against persons claiming under them. In execution proceedings under Section 36 read with the Code of Civil Procedure, the Court distinguished award execution from ordinary civil decree execution and held that impleadment of constituent shareholder companies can be permissible where the SPV operates as their instrumentality. On the stated facts, the shareholders had formed and managed the SPV, shared its finances, and participated in satisfaction of the award, so they were treated as persons claiming under the award debtor and execution against them was legally sustainable.

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Issues: Whether the arbitral interim and final awards, though rendered against the SPV alone, could be executed against its constituent shareholder companies as persons claiming under the award debtor, and whether their impleadment in execution proceedings was permissible.

Analysis: The awards had attained finality, and the execution proceedings were governed by Section 36 of the Arbitration and Conciliation Act, 1996 read with the Code of Civil Procedure, 1908. The Court distinguished ordinary civil decree execution from execution of an arbitral award and held that Section 35 of the Arbitration and Conciliation Act, 1996 extends finality and binding force not only to the parties but also to persons claiming under them. Relying on the settled meaning of that expression, the Court found that the petitioners had created and led the SPV for the coal-block project, participated through their officers in its formation and functioning, shared management and finances, and had already contributed towards satisfaction of the award, showing that the SPV acted only as their instrumentality.

Conclusion: The petitioners fell within the expression "persons claiming under" the award debtor, and the execution against them was legally sustainable.

Final Conclusion: The challenge to the execution orders failed because the arbitral awards were enforceable against the SPV's constituent companies on the facts of the corporate structure and their relationship with the award debtor.

Ratio Decidendi: Under Section 35 of the Arbitration and Conciliation Act, 1996, an arbitral award binds not only the signatory party but also persons whose capacity or position is derived from and is the same as that party, permitting execution against such persons in appropriate cases.

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