2026 INSC 361

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. _________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NO. 23869 OF 2023

VPS HEALTHCARE PRIVATE LIMITED

AND ANOTHER … APPELLANT(S)

VERSUS

PRABHAT KUMAR SRIVASTAVA

AND ANOTHER … RESPONDENT(S)

J U D G M E N T

S.V.N. BHATTI, J.

1. Leave granted.

2. VPS Healthcare Private Limited and Medeor Hospitals Limited are the

Appellants. Prabhat Kumar Srivastava and Rishi Srivastava are the

Respondents. A third-party M/S Ernst and Young LLP, Gurugram, is another

entity to which a reference is made in the Judgment. For convenience, we

refer to the Appellants, Respondents and the third party as VPS/Medeor,

Promoters and EY, respectively.

3. The Civil Appeal arises from the Judgment dated 01.05.2023, in OMP

(ENF.) (COMM.) 184/2022 in the High Court of Delhi at New Delhi. The

Impugned Judgment deferred the execution of the Consent Award dated

01.03.2019, which was made by the Singapore International Arbitration

Centre (hereinafter “SIAC”) in Arbitration No. 093/2017 between VPS/Medeor

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and the Promoters. The circumstances leading to the enforcement of the

Award dated 01.03.2019 in Arbitration No. 093/2017 have been set out in

detail in the impugned Judgment. Before capturing the issues in the subject

Appeal, we refer to a few dates and events.

4. VPS is a Company incorporated under the Companies Act, 1956, having

its registered office in Kochi, Kerala. Medeor Hospitals Limited, formerly

known as Rockland Hospitals Limited, is a company incorporated under the

Companies Act, 1956. Prabhat Srivastava and Rishi Srivastava were the

promoters of Rockland Hospitals Limited (now, Medeor).

5. On 11.08.2015, a Professional Services Agreement was entered into

between EY and M/S Rockland Hospitals Limited. The Professional Services

Agreement is alleged to have been intended to attract a strategic

investor/buyer for two of the hospitals run by Rockland Hospitals Limited in

New Delhi. On 29.06.2016, VPS and the Promoters of Rockland Hospitals

Limited entered into a Share Purchase Agreement to acquire 100% equity of

Rockland Hospitals Limited. With the said acquisition, Rockland Hospitals is

renamed as Medeor. It is a matter of record that disputes have arisen under

the Professional Services Agreement dated 11.08.2015 between EY and

Medeor; and also, under the Agreement dated 29.06.2016, between

VPS/Medeor and the Promoters. The nature and scope of disputes are not

relevant circumstances in the present and are not adverted to.

6. On 02.02.2019, VPS/Medeor entered into a Deed of Compromise with

the Promoters. The deed of compromise, intended to give quietus to the

disputes between the parties, sets out the terms of the compromise, the

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subject matter of the disputes, and the mode and manner in which

VPS/Medeor contests/settles the disputes. In Arbitration No. 093/2017, on

01.03.2019, SIAC rendered the Consent Award in terms of the Compromise

Deed dated 02.02.2019. The operative portion that bears on deciding the

maintainability of the Enforcement Petition reads as follows:

Paragraph 32(a)

“From 02.02.2019 (the "Effective Date"), the Respondents

undertake and agree to defend/contest at its cost all

proceedings detailed in Annexure -I of the Deed of

Compromise (as annexed herewith) including legal

expenditures on behalf of the First Claimant. The First and

Second Claimants will provide all necessary assistance in

respect of the said proceedings and also furnish a Power of

Attorney in favour of the Respondents and its Legal Counsels

to defend the said Proceedings. That in the event the said

Proceedings culminate in the Forum imposing any liability on

the First Claimant, the Respondents can take all remedies

available in law including but not limited to settling a

proceeding on behalf of the First Claimant at any juncture

and/or filing Appeals/Review etc. on behalf of the First

Claimant till the Highest Court of Appeal, however, the

Respondents will ensure that no liability in regard to the said

litigation is recovered from the First and Second Claimants by

the Forum. The Respondents will keep the First Claimant

indemnified of the same and ensure that in case any liability

is confirmed by the Highest Court of Appeal, the same will be

discharged by the Respondents within a period of 30 days.”

Annexure I

“xxx

5.⁠ ⁠Claim petition filed by the Ernst & young against the

Rockland Hospital in the arbitration bearing ARB. No.

2085/2016 for the claim of Rs. 10 Crores with an interest @

18% with Effect from 01.07.2016 on the strength of the

engagement letter dated 11.05.2015.

xxx”

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7. On 17.08.2021, the dispute between EY and Rockland Hospitals

Limited was decided by a majority Award, accepting EY's claim against

Rockland Hospitals Limited for the sum of Rs. 10 Crore, with interest at the

rate of 9 per cent per annum from the date of the Claim Petition till the date

of realisation of the awarded amount. The Award granted costs of Rs.

5,00,000/- in favour of EY. Challenging the Award dated 17.08.2021, Medeor

filed OMP (COMM) No. 116/2022 under Section 34 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”). On

04.03.2022, a stay of execution of the Award dated 17.08.2021 was granted,

and the operative portion reads thus:

“I.A. 3576/2022 (u/ Section 151 of CPC on behalf of the

Petitioner seeking exemption from furnishing deposit

on filing of appeal)

6.⁠ ⁠The impugned award is in the nature of a money award.

Thus, having regard to the provisions under the Code of Civil

Procedure, 1908 relating to stay of a money decree, subject

to Petitioner depositing the arbitral award amount (principal

plus up-to date interest) within four weeks from today, the

execution of the impugned award shall remain stayed.”

8. The Promoters, under the Special Power of Attorney dated 11.01.2022,

are prosecuting the litigation in terms of the Consent Award dated

01.03.2019. Medeor Hospitals Limited was finally required to deposit the

award amount, with interest and costs, as per the impugned Judgment. The

liability fastened by the majority Award dated 17.08.2021 is actually the

liability of the Promoters in terms of the Consent Award dated 01.03.2019.

However, since the case is contested in the name of Medeor, the Judgment

Debtor is obligated to deposit Rs. 15,86,17,808/-. The sequel to the above

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deposit is the enforcement of the Consent Award dated 01.03.2019 by

VPS/Medeor against the Promoters.

9. The case of VPS/Medeor is that Paragraph 32(a) of the Consent Award

creates an immediate obligation on the Promoters to ensure no liability,

whether interim or final, is recovered from VPS/Medeor at any stage of the

litigation.

10. The Promoters’ resistance to the execution of the Consent Award at this

stage is twofold. They contend that their obligation to actually pay or

discharge the liability arises only within 30 days after the Highest Court of

Appeal has confirmed it. Further, the Promoters argue that any interim orders

or deposits required by courts other than the Highest Court of Appeal have

not transformed into confirmed liabilities that they must satisfy.

11. The impugned Judgment, for the present, closed the Consent Award

and the reasoning is summed up as follows under distinct heads:

11.1 Rejection of Forum argument: High Court rejected the promoters’

claim that the word forum meant the “Highest Court of Appeal”. It ruled that

the forum referred to the Body initially imposing liability, in this case, the

Arbitral Tribunal that issued the EY Award.

11.2 Ambiguity in Paragraph 32(a): The High Court identified a conflict

within the provision, in which one part required the promoters to ensure that

no liability is recovered from the VPS/Medeor. In contrast, another part

stipulated that promoters must discharge liability within 30 days after

confirmation by the Highest Court of Appeal. To resolve this ambiguity, the

Court viewed the Agreement as a Contract of Indemnity under Sections 124

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and 125 of the Indian Contract Act, 1872. (Hereinafter referred to as “Contract

Act”)

11.3 Timing of obligation: It held that while an indemnifier is generally

liable as soon as a loss accrues, the specific contractual stipulation here was

“clear as noonday”. The promoters are only required to discharge the liability

after the Highest Court of Appeal confirms it. Because the EY Award was still

under challenge (and thus not yet confirmed by the Highest Court of Appeal),

the Court concluded that the Enforcement Petition was premature and lacked

merit at this stage.

11.4 Distinction between litigation categories: The High Court agreed

with the promoters that different categories of legal matters had different

payment structures. For tax proceedings (Category 4), a pre-deposit scheme

was explicitly mentioned, but no such requirement for immediate deposit was

included for the EY arbitration (Category 1).

11.5 Harmonious construction : The Court aimed for a “harmonious

construction” of all stipulations. It found that the ultimate intent was to

protect the Petitioners from final damage, but the specific mechanism agreed

upon was payment, only after the Highest Court’s confirmation.

12. We have heard learned Counsel Mr. Anirudh Bhatia, for VPS/Medeor,

and Senior Counsel Ms. Diya Kapur, for the Promoters.

13. For VPS/Medeor, the broad arguments rest on the immediacy of the

obligation undertaken by the Promoters.

13.1 The disputes between VPS/Medeor and the Promoters, under the Share

Purchase Agreement dated 29.06.2016, have been negotiated and resolved by

the Deed of Compromise dated 02.02.2019. The Deed of Compromise received

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the imprimatur of SIAC through a Consent Award dated 01.03.2019. The

effective date for the parties to discharge the agreed obligations is 02.02.2019.

On the date of signing of the Deed of Compromise, and the passing of the

Consent Award dated 01.03.2019, the claim of EY for a sum of Rs. 10 Crore

was pending against Medeor (previously, Rockland Hospitals Limited). As part

of the settlement, the Promoters have agreed to undertake the obligation to

defend all the proceedings set out in Annexure-I to the Consent Award dated

01.03.2019. VPS/Medeor has agreed to provide the necessary assistance in

these proceedings and to execute a Power of Attorney in favour of the

Promoters or their Counsel to defend the cases effectively. The Promoters have

been given discretion to either prosecute the litigation up to the Highest Court

of Appeal or settle the proceedings at any stage. In the litigation shown in

Annexure-I, the Promoters agreed that no liability arising from the specified

litigation is to be recovered from VPS/Medeor. Paragraph 32 of the Consent

Award further acts as an indemnity contract and undertakes to discharge the

liability of VPS/Medeor within 30 days after any liability is confirmed by the

Highest Court of Appeal. Adverting to the circumstances, Mr. Anirudh Bhatia

argues that Medeor, being a corporate entity, is now under the management

of VPS. The Award in favour of EY, dated 17.08.2021, was challenged by the

Promoters, representing VPS/Medeor, under Section 34 of the Arbitration Act

in OP (COMM) No. 116/2022. Pursuant to its dismissal, an application under

Section 37 of the Arbitration Act numbered as Diary No. 1099418 of 2023 is

pending before the High Court of Delhi.

13.2 Consequently, to avoid execution of the Consent Award, Medeor

deposited Rs. 15,86,17,808/-. As per the Consent Award dated 01.03.2019,

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the amount awarded in favour of EY is the liability of the Promoters. The

amount claimed by EY against Medeor is agreed to be paid by the Promoters.

The amount has been deposited, and against a bank guarantee, EY has also

withdrawn the said amount. The Promoters have agreed to answer EY’s claim

in the Consent Award dated 01.03.2019. The awarded amount has already

been deposited and, in clear commercial understanding, has addressed the

agreed liability of the Promoters and the demand to make good the amount

deposited by VPS/Medeor. Since it did not yield a result, the present

Enforcement Petition in OP No. 184/2022 has been taken up under Section

36 of the Arbitration Act. The High Court, according to him, fell in a serious

error in emphasizing the words “the Respondents will keep the first Claimant

indemnified of the same and ensure that in case any liability is confirmed by

the Highest Court of Appeal, the same will be discharged by the promoters

within a period of 30 days”. The Counsel argues that the words “Highest Court

of Appeal” should not be read out of context, or should not be construed in

such a way that whether the promoters file the appeal or not, the obligation

arises only on the confirmation by the Highest Court of Appeal. He argues

that the Promoters are now carrying on the litigation at leisurely, on the

shoulders of VPS/Medeor, and that the timing of executing the Consent

Award is deferred until confirmation by the Highest Court of Appeal. Such a

situation defeats the Consent Award of a commercial dispute between

VPS/Medeor and the Promoters. The other clause, namely, “however, the

Respondents [the Promoters] will ensure no liability regarding the said

litigation is recovered from the first and second claimants by the Forum.” The

impugned Judgment, which accepted VPS/Medeor’s argument regarding

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what constitutes the forum, should not have closed the petition filed for

enforcement of the Consent Award.

13.3 He relies on Khetarpal Amarnath v. Madhukar Pictures

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to demonstrate

that Section 125 of the Contract Act should be interpreted to entitle the

indemnity holder, i.e., VPS/Medeor, to sue the indemnifier for damages that

are yet to arise, as long as the holder can prove a clear and enforceable claim.

He thus prays that the impugned Judgment be set aside and that enforcement

of the Consent Award dated 01.03.2019 be directed on an immediate basis.

14. Per contra, Ms. Diya Kapur contends that the High Court has not

dismissed the Enforcement Petition but, for right and correct reasons,

deferred the enforceability of the Consent Award dated 01.03.2019 until the

award receives confirmation from the Highest Court of Appeal.

14.1 The Promoters have agreed to indemnify VPS/Medeor of the liability

they incur for any of the causes of action shown in Annexure-I to the Consent

Award dated 01.03.2019. The law governing the enforcement of an indemnity

contract is fairly well settled, and VPS/Medeor cannot claim in a manner

contrary to the agreed terms between the parties. The applicable paragraph

on mutual obligations between the parties is set out in Paragraph 32 of the

Consent Award dated 01.03.2019 . The said paragraph construed, either

literally or through purposive construction, that the enforcement of the

Consent Award is deferred till the confirmation of the Award dated 17.08.2021

in favour of EY by the Highest Court of Appeals. Upon confirmation of the

1 1955 SCC OnLine Bom 73.

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Consent Award, the Promoters are obligated to indemnify VPS/Medeor, but

not before.

14.2 She relies on ⁠the Export Credit Guarantee Corporation of India Limited.

v. Garg Sons International,

2

and Suraj Mal Ram Niwas Oil Mills (Private) Limited

v. United India Insurance Company Limited,

3

for the proposition that the terms

of a commercial insurance contract must be strictly construed based on their

plain language without adding, deleting, or substituting words, and the rule

of Contra Proferentem is inapplicable because such commercial clauses are

bilateral and mutually agreed upon. She, thereby, prays for the dismissal of

the Civil Appeal.

15. We have taken note of the rival submissions and perused the record.

16. After analysing the impugned Judgment, we capture the following

points:

16.1 Internal self-contradiction in paragraph 42: The High Court

contradicts itself within the same paragraph. It rejects the promoters’

argument that “Forum” means only the Highest Court of Appeal by applying

the contractual definition. Yet it adopts the promoters’ conclusion that

liability is payable only after confirmation by the Highest Court of Appeal. This

is the conclusion that would flow if “Forum” meant only the Supreme Court.

On one hand, the construction of “Forum” is as per the definition in the

Compromise Deed; on the other hand, the outcome accepted by the High

Court contravenes that conclusion.

2 (2014) 1 SCC 686 (Para 10 and 11).

3 (2010) 10 SCC 567 (Para 23 and 26).

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16.2 Reading and applying half of the critical clause: The High Court

interprets Paragraph 32(a) by focusing on the fifth limb of the Paragraph. The

fourth limb, i.e., the “Respondents will ensure that no liability regarding the

said litigation is recovered from the First and Second Claimants by the

Forum”, is an unconditional obligation. The phrase “said litigation” refers to

the proceedings covered by Annexure-I at every stage, and not just at the

Highest Court. By restricting the operative portion to the fifth limb alone, the

High Court renders the fourth limb otiose, contrary to the rule that every part

of the contract must be given meaning.

16.3 Conflating a performance timeline with the indemnity trigger : The

third limb, “in case any liability is confirmed by the Highest Court of Appeal,

the same will be discharged within a period of 30 days”, is understood as a

performance clause with a timeline for the extreme scenario where the liability

survives all appellate challenges right up to the Supreme Court. The High

Court converted this into the only trigger for the Promoters’ indemnity

obligation. The clause was thus interpreted by keeping a backstop guarantee

as the sole operative obligation.

16.4 Creating a paradox: The High Court’s interpretation produces a

paradox. If liability is payable only after confirmation by the Supreme Court,

the Promoters can choose not to pursue the appeal to the Supreme Court, so

no liability is confirmed against the Promoters. This would render the

undertaking under Paragraph 32(a) meaningless. Nullity cannot be the

intention of the parties to the Consent Award.

16.5 Ignoring liability: The Petitioners had already been directed by the

High Court to deposit over Rs. 15 Crore with the Registrar General of the High

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Court. This deposit itself is a liability, thereby triggering the fourth limb. The

High Court allowed the recovery.

17. VPS/Medeor are, for all purposes, enforcing the Compromise Deed

dated 02.02.2019, which has been transformed into the Consent Award dated

01.03.2019. It is axiomatic that a Consent Decree is a contract between the

parties with the Court’s seal super-added. A Consent Award is no different

from a Consent Decree. The courts are under an obligation to limit their

enquiries or interpret the agreed terms except in exceptional cases where

enforcement or rejection of the Consent Award is necessary. The Executing

Court, in its armchair, poses to itself the fundamental question: has the

decree been satisfied or discharged, or is the decree a nullity? The answers to

these questions set in motion the execution of a consent decree/award. We

may not be understood as laying down a general proposition of law that the

objections available under Section 47 of the Code of Civil Procedure, 1908,

need not detain a court from conducting an enquiry, or, for that matter, any

objection raised to the execution of an award/consent award is not enquired

into. The executability of the Consent Award is limited to the clauses executed

by the Decree Holder. In the instant case, what is put to execution is the Deed

of Compromise transformed into the Consent Award dated 01.03.2019. The

impugned Judgment has committed an irregularity in the construction of the

subject paragraph under execution. As already noted, the Promoters’

argument regarding the meaning of the word “forum” is rejected. The

Promoters admit that VPS/Medeor deposited Rs. 15.86 Crore to prevent the

execution of Medeor’s properties through sale or otherwise. The objection to

the enforceability of the Consent Award is not limited to the mode or manner

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of execution, but also to the timing of the execution. To wit, it is argued that

the obligation to discharge the liability of the Promoters arises upon

confirmation of liability by the Highest Court of Appeal. The award dated

17.08.2021 is subject to a challenge under Section 34 of the Arbitration Act.

Therefore, the obligation to indemnify under the Consent Award has not

arisen. The argument is reiterated only to be rejected for the following reasons.

18. The parties to the appeal have addressed the principle of indemnity.

More precisely, VPS/Medeor’s case is that, even if the relevant paragraph is

treated as a Contract of Indemnity, the starting point for discharging

responsibility or liability need not await confirmation of the Award by the

Highest Court of Appeal. By contrast, the Promoters’ case is that the parties’

understanding is clear that the Promoters are under an obligation to

discharge responsibility or liability, as confirmed by the Highest Court of

Appeal. In the circumstances of the case, since the award is under challenge

before the High Court of Delhi, the cause of action for enforcing the Consent

Award has not arisen.

19. The High Court, in resolving the incongruence it perceived in Paragraph

32(a), treated the clause as a “Contract of Indemnity” governed by Sections

124 and 125 of the Contract Act. We accept that Paragraph 32(a) of the

Consent Award contains an indemnity component. However, a threshold

question arises, even before constructing the said paragraph, i.e., is the fourth

limb, “the Respondents will ensure that no liability regarding the said

litigation is recovered from the First and Second Claimants by the Forum”, an

indemnity obligation in the first place, or if it is an absolute obligation? This

question is a matter of construction and cannot be presumed to be answered

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by the High Court. Where the promisor incurs an absolute obligation, it can

be enforced without the occurrence of actual loss, whereas in an indemnity

contract, the risk of loss remains contingent. The word “ensure” in the fourth

limb, combined with the broad contractual definition of “forum”, points to an

absolute obligation, and not a contingent obligation. A Contract of Indemnity

is perceived and implemented on the principle of a contract by which one

party agrees to make good a loss suffered by the other. Another way of

simplifying a Contract of Indemnity is to say that it is one whereby a party

undertakes to save another party harmless from loss or damage arising from

a particular transaction or claim. In Khetarpal Amarnath (supra), Hon’ble Mr.

Justice Gajendragadkar, speaking for the Bench, referred to the consideration

of the Contract of Indemnity by Hon’ble Mr. Justice Chagla, held as follows:

“25. In this connection, we may refer to the decision of

Mr. Justice Chagla, as he then was, in ‘Gajanan Moreshwar

v. Moreshwar Madan’, AIR 1942 Bom 302 (A). In considering

the scope and effect of the provisions of Ss. 124 and 125,

Contract Act, Chagla J. has observed that S. 124 deals only

with one particular kind of indemnity which arises from a

promise made by the indemnifier to save the indemnified from

the loss caused to him by the conduct of the indemnifier

himself or by the conduct of any other person; but that it does

not deal with those classes of cases where the indemnity

arises from loss caused by events or accidents which do not

or may not depend upon the conduct of the indemnifier or any

other person.

26. In other words, according to the learned Judge, section

124 does not exhaustively deal with all classes and kinds of

contracts of indemnity. Similarly, S. 125 deals only with the

rights of the indemnity-holder in the event of being sued, and

it is by no means exhaustive of the rights of the indemnity-

holder who has other rights besides those mentioned in the

section.

27. With respect, we agree with the view thus expressed by

Chagla J. In our opinion, in dealing with the rights and

obligations flowing from a contract of indemnity, the Court

must always ask itself whether the indemnified party has

incurred a liability, and if it shown that liability has been

incurred and is absolute, then he has a cause of action to call

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upon the indemnifier to save him from that liability and to

meet that obligation.”

The crux of consideration may not hinge on the scope or extent of

Indemnity agreed in Paragraph 32(a) of the Consent Award, but rather on the

clauses dealing with the immunity assured to VPS/Medeor on the one hand

and, on the other hand, the starting point for enforcing the Contract of

Indemnity.

20. The leading judgment in this regard is Parayya Allayya Hittalamani v.

Sri Parayya,

4

which surveyed cases

5

and applied the principles of contractual

construction to a consent decree. In this light, the principles of Contractual

Construction as laid down in Annaya Kocha Shetty (Dead) through LRs v.

Laxmibai Narayan Satose (since Deceased) through LRs & Ors,

6

a decision one

of us (SVNB J.) was a party to, is relevant for our discussion:

“17. The guide to the construction of deeds and tools adopted

can broadly be summarised as follows:

17.1 The contract is first constructed in its plain, ordinary and

literal meaning. This is also known as the literal rule of

construction.

17.2 If there is an absurdity created by literally reading the

contract, a shift from literal rule may be allowed. This

construction is generally called the golden rule of

construction.

17.3 Lastly, the contract may be purposively constructed in

light of its object and context to determine the purpose of the

contract. This approach must be used cautiously.”

21. Let us, for convenience, reproduce Paragraph 32(a) in five limbs by

noting the phrases in support of the VPS/Medeor (Appellants) in italics and

those in support of the Promoters (Respondents) in bold:

4 (2007) 14 SCC 318.

5 See, Baldevdas Shivlal v. Filmistan Distributors (India) (P) Ltd., (1969) 2 SCC 201; and

Hindustan Motors Ltd. v. Amritpal Singh Nayar & Anr, 2002 100 DLT 278.

6 2025 INSC 466

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21.1 First Limb: “From 02.02.2019 (the 'Effective Date'), the Respondents [the

Promoters] undertake and agree to defend/contest at its cost all proceedings

detailed in Annexure-I of the Deed of Compromise (as annexed herewith)

including legal expenditures on behalf of the First Claimant [Medeor].”

21.2 Second Limb: “The First and Second Claimants [VPS/Medeor] will

provide all necessary assistance in respect of the said proceedings and also

furnish a Power of Attorney in favour of the Respondents [the Promoters] and

its legal Counsels to defend the said Proceedings.”

21.3 Third Limb: “That in the event the said Proceedings culminate in the

Forum imposing any liability on the First Claimant [Medeor], the Respondents

[the Promoters] can take all remedies available in law including but not limited

to settling a proceeding on behalf of the First Claimant [Medeor] at any juncture

and/or filing Appeals/Review, etc. on behalf of the First Claimant [Medeor] till

the Highest Court of Appeal[.]”

21.4 Fourth Limb: “[H]owever, the Respondents [the Promoters] will ensure

that no liability in regard to the said litigation is recovered from the First and

Second Claimants [VPS/Medeor] by the Forum.”

21.5 Fifth Limb: “The Respondents [the Promoters] will keep the First

Claimant [Medeor] indemnified of the same and ensure that in case any

liability is confirmed by the Highest Court of Appeal , the same will be

discharged by the Respondents within a period of 30 days.”

*Insertions made in [ ]

21.6 It is apposite to note that Annexure-I to the Compromise Deed (titled

“List of Proceedings Being Taken Over by Third Party”) includes at S. No. 5,

the EY Arbitration before ICA bearing No. AC-2085. Further, Forum was

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contractually defined as: “means any Court, Court of Appeal, Authority,

Tribunal, Statutory Authority, Ministry, Judicial, Quasi-Judicial Authority,

Adjudicatory, Investigation Officer, etc., by whatsoever name called”. So, it

can be inferred that the present dispute is covered. These factors were decided

in favour of VPS/Medeor by the High Court.

22. The literal construction of Paragraph 32(a) discloses the following

obligations between the parties:

22.1 Obligation to Defend: The heading to Annexure-I reads as “List of

Proceedings Being Taken Over by Third Party”. This implies that the

Promoters undertook to defend and contest all proceedings detailed in

Annexure-I of the Compromise Deed at their own cost, including all legal

expenditures. The EY Arbitration is included in the said Annexure.

22.2 Appellants’ Assistance: VPS/Medeor were required to provide all

necessary assistance in these proceedings and furnish a Power of Attorney to

the promoters and their legal counsels to enable them to defend the cases.

22.3 Promoters’ Remedies: If a forum imposes any liability on VPS/Medeor,

the promoters are authorised to take all available legal remedies, including

settling the proceedings at any stage or filing appeals up to the Highest Court

of Appeal.

22.4 Protection from Recovery : The promoters must ensure that no

liability regarding the specified litigation is recovered from VPS/Medeor by

any forum.

22.5 Indemnity and Discharge of Liability: The promoters agreed to keep

the VPS/Medeor indemnified. They specifically undertook to ensure that any

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liability confirmed by the Highest Court of Appeal would be discharged by

them within 30 days.

23. The impugned Judgment has taken note of the obligation undertaken

by the Promoters in the sentence shown in bold, but has not given due

construction to the preceding sentences in italics. This makes all the

difference in fixing the trigger point of discharging the liability by the

Promoters.

24. As noted in Khetarpal Amarnath (supra), if the indemnity holder has

incurred a liability, and that liability is absolute, he is entitled to call upon

the indemnifier to save him from that liability and pay it off. Therefore, the EY

Arbitration Award and its associated proceedings crystallise a liability against

VPS/Medeor that was absolute in character. The High Court’s Order dated

04.03.2022 directed Medeor to deposit the full awarded amount (principal,

interest and cost) for a conditional stay of the execution of the EY Arbitration

Award. On 17.05.2023, Medeor deposited Rs. 15,86,17,808/- under protest

to prevent execution by sale of its assets. This deposit is a liability in regard

to the EY Arbitration Award, which is placed at Sl. No. 5 of Annexure-I to the

Consent Award. Thus, the fourth limb’s trigger, i.e., recovery of liability by a

forum, had fully crystallised by the stay order dated 04.03.2022.

25. We further note that the third limb, the remedies clause permitting

appeals up to the Highest Court, merely authorises the Promoters. Further,

the fifth limb granting thirty days after confirmation by the Highest Court is

for an extreme scenario in which liability survives every appellate challenge.

It is not the primary trigger for the Promoters’ obligation. Treating the fifth

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limb as a necessary prerequisite to the Promoters’ obligation would render the

fourth limb otiose.

26. From a careful reading of the relevant sentences in the subject

paragraph, it can be, without contradiction, stated that the parties to the

Consent Award have agreed not only to absolve but have also agreed to absorb

the exigencies of the litigation which the Promoters have undertaken in this

context. Further, in construing the said paragraph, the first four limbs cannot

be ignored, and effect be given only to the fifth limb. Consequently, the

enforcement of the Award falls within the expression of “will ensure”. Upon

literal construction of the agreed clause between the parties, we are of the

view that applying the thirty days after the Award is received, the confirmation

of the Highest Court of Appeal, to the first four limbs of the paragraph is

erroneous. In our view, this is a stand-alone situation, and by the use of the

word “ensure”, the obligation of the Promoters is to insulate VPS/Medeor from

any liability arising from pending disputes.

27. The reliance by the Promoters on both Export Credit Guarantee

Corporation of India Limited (supra) and Suraj Mal Ram Niwas Oil Mills (P)

Limited. (supra) is misplaced. On the contrary, we note that the ratio of these

decisions supports the VPS/Medeor, rather than the Promoters. Both

Judgments state that in commercial contracts, the exact words used by the

parties must be given paramount importance, and courts are strictly

prohibited from adding, deleting, or substituting words under the guise of

interpretation. In the present dispute, the High Court used a “purposeful

interpretation” to conclude that the Promoters owed no financial duty until

the EY liability was confirmed by the Highest Court of Appeal. By doing so,

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the High Court ignored the immediate obligation mandated by the

Compromise Deed, namely, that the Promoters must “ensure that no liability...

is recovered from [VPS/Medeor] by the Forum”. Since both decisions state that

a Court’s endeavour should always be to interpret the words in which the

contract is expressed by the parties rather than altering them, the Promoters

cannot use these decisions to justify the High Court’s departure from the plain

terms of the Consent Award.

28. Purposive construction is unavailable in the present case because a

literal and plain reading of Paragraph 32(a) of the Consent Award, taking every

limb together and none in isolation, ensures an immediate enforceable

obligation. The present case is one of discharge of a crystallised liability, and

it is not a case of indemnity that matures only upon the confirmation by the

Highest Court of Appeal. The liability against VPS/Medeor crystallised when

the Forum compelled the deposit of Rs. 15,86,17,808/-. This triggers the

obligation under Paragraph 32(a) of the Respondents (Promoters) to

compensate the Appellants (VPS/Medeor).

29. The Enforcement Petition is allowed, and the Promoters are granted 30

days to pay or deposit Rs. 15,86,17,808/- for the benefit of VPS/Medeor. The

amount deposited by the Promoters is subject to the outcome of the pending

proceedings between EY and the Promoters. In case VPS/Medeor is successful

in setting aside the Award dated 17.08.2021, the Promoters are entitled to

encash the bank guarantee provided by EY in the proceedings before the High

Court of Delhi.

30. In the facts and circumstances of the case and for the above reasons,

the impugned Judgment is accordingly set aside. The Civil Appeal is allowed.

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No order as to costs. Pending application(s), if any, stand disposed of

accordingly.

…....……….…………………J.

[S.V.N. BHATTI]

……..…………………………J.

[PRASANNA B. VARALE]

New Delhi;

April 13, 2026