# In the matter Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors. Writ Petition (Civil) No. 1074 of 2019

> SC judgment dated 2019-11-27. Citation: TCN-2019-SC-00009. This case involves a challenge to the constitutional validity of Section 87 of the Arbitration and…

- **Court:** SC
- **Order date:** 27 Nov 2019
- **Citation:** TCN-2019-SC-00009
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/in-the-matter-hindustan-construction-company-limited-anr-vs-union-of-india-ors-w-e1302c0f

## Summary

### Background

This case involves a challenge to the constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996, as inserted by Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019. The petitioners, including Hindustan Construction Company Limited, argue that Section 87, along with the repeal of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015, undermines the objectives of the Arbitration Act and the Insolvency and Bankruptcy Code, 2016. The petitioners contend that Section 87 reinstates an automatic stay on arbitral awards upon the filing of a challenge under Section 34, which delays the recovery of legitimate dues and leads to financial hardship. They also challenge the provisions of the Insolvency Code, arguing that they

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## Facts

Hindustan Construction Company Limited and other petitioners filed writ petitions challenging the constitutional validity of Section 87 of the Arbitration and Conciliation Act, 1996, as inserted by the 2019 Amendment Act, and the deletion of Section 26 of the 2015 Amendment Act. The petitioners argued that Section 87 reinstates an automatic stay on arbitral awards upon the filing of a challenge under Section 34, which delays the recovery of legitimate dues and leads to financial hardship. They also challenged the provisions of the Insolvency Code, arguing that they operate arbitrarily and result in discriminatory treatment. The petitioners contended that government bodies, other than government companies, are exempt from the Insolvency Code, and that a challenge to an

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## Issues and analysis

### Issue 1: Whether Section 87 of the Arbitration and Conciliation Act, 1996, as inserted by the 2019 Amendment …

**Ratio:** Section 87 and the deletion of Section 26 are manifestly arbitrary under Article 14 of

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**Reasoning:** The court reasoned that Section 87 reinstates an automatic stay on arbitral awards upon

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**Interpretation:** The court interpreted Section 87 as being contrary to the object of the

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**Application:** The court applied the ratio to the facts of the case, finding that Section 87

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## Parties

- **Judges:** ROHINTON FALI…; SURYA…; +1 more
- **Appellants:** Hindustan…
- **Respondents:** Union of…

## Timeline

- **2019-08-16 — Writ Petitio…**: Writ Petition No.1074 of 2019 filed alleging a sum of INR 6070 crores was the sum awarded…
- **2019-09-13 — Court Or…**: Court recorded that the Petitioner company will pay the Operational Creditors amounts of…

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