Adani Enterprises v GSECL: SC Reaffirms Minimal Judicial Interference in Arbitration Matters

The Supreme Court has ruled that tests such as the “eye of the needle” and “ex facie meritless” are inconsistent with modern arbitration principles, which place arbitral autonomy and minimal judicial interference at the forefront.

A bench of Justices J K Maheshwari and Vijay Bishnoi allowed a plea filed by Adani Enterprises Ltd challenging a Gujarat High Court order dated July 5, 2024. The High Court had rejected Adani’s application under Section 11(6) of the Arbitration and Conciliation Act, 1996, on multiple grounds.

After examining the case record, the Supreme Court noted that the High Court had applied the “eye of the needle” test, as laid down in NTPC Ltd vs SPML Infra Ltd (2023). However, referring to its more recent judgment in SBI General Insurance Company Ltd vs Krish Spinning Mills (2024), the bench observed that such tests no longer align with contemporary arbitration law.

Quoting paragraph 118 of the Krish Spinning judgment, the bench said, “Tests like ‘eye of the needle’ and ‘ex facie meritless’ are not in conformity with the principles of modern arbitration, which place arbitral autonomy and judicial non-interference on the highest pedestal.”

court found merit in Adani’s arguments and said that the issues raised in the case required a proper examination of the Request for Proposal (RFP) and the Letter of Award (LOA) i.e. documents that form the basis of the contractual relationship between the parties, in light of the Krish Spinning Mills judgment.

Without expressing any opinion on the merits of the case, the Supreme Court set aside the High Court’s order and sent the matter back to the Gujarat High Court for a fresh decision.

“We deem it appropriate to set aside the impugned order and remit the matter to the High Court for a fresh decision. We have not expressed any opinion on the merits of the contentions of either side,” the bench said.

Court directed the High Court to decide the matter as expeditiously as possible, preferably within three months.   

Case Title: Adani Enterprises Ltd Vs Gujarat State Electricity Corporation Ltd 

Order Date: October 28, 2025

Bench: Justices J K Maheshwari and Vijay Bishnoi