National Projects Construction ... vs Royal Construction Co. Pvt. Ltd.
2017 Latest Caselaw 5538 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                Date of decision: 10th October, 2017

+                          CS(COMM) No.188/2017
    NATIONAL PROJECTS CONSTRUCTION
    CORPORATION                                .... Plaintiff
                  Through: Mr. Anup J. Bhambhani, Sr.
                            Adv. with Mr. Rajat Arora &
                            Mr. Jaypreet Singh, Advs..
                           Versus
    ROYAL CONSTRUCTION CO. PVT. LTD. ...Defendant
                  Through: None.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW


1.

The plaintiff, a Government of India enterprise, has instituted

this suit, pleading i) that the plaintiff was awarded certain construction

works by the State Organization for Food Industry, Baghdad, Iraq; ii)

that the plaintiff, vide Agreement dated 29th June, 1982 appointed the

defendant as a sub-contractor / associate of the plaintiff for execution

of part of the aforesaid works; iii) that owing to certain disputes that

arose between the plaintiff and the defendant, the defendant, invoked

the arbitration clause in terms of its agreement with the plaintiff, and

in which arbitration proceedings, the plaintiff, besides filing the reply

to the claim of the defendant, also filed its counterclaim; iv) that the

counterclaim No.1 of the plaintiff was for a sum of ID 1,39,811.00

relating to hire charges of equipment; v) that it was the case of the

plaintiff therein that the plaintiff was to only provide four dumpers

free of cost to the defendant and for any additional dumpers required

by the defendant during the course of execution of the works sub-

contracted to it, the defendant was to pay hire charges therefor to the

plaintiff; however the ex-officials of the plaintiff illegally waived the

hire charges for additional dumpers supplied by the plaintiff to the

defendant, thereby causing a pecuniary loss to the plaintiff and

corresponding pecuniary gain to the defendant; vi) that vide arbitral

award dated 10th August, 2002, the claims of the defendant were

allowed and the counterclaims of the plaintiff dismissed; vii) that the

plaintiff filed OMP No.374/2002 under Section 34 of the Arbitration

& Conciliation Act, 1996 with respect to the said award but which

OMP was dismissed on 26th May, 2008; viii) that the plaintiff

thereafter filed FAO(OS) No.589/2009; ix) that in compliance of the

interim order dated 9th March, 2010 in the said appeal, the plaintiff

deposited a sum of Rs.1.50 crores in this Court and which amount was

released in favour of the defendant; x) that FAO(OS) No.589/2009

was disposed of on 19th May, 2014 and Review Petition No.297/2014

preferred by the plaintiff dismissed on 19th September, 2014; xi) that

the plaintiff filed SLP(C) No.35841/2014 which was admitted and

converted into Civil Appeal No.2543/2015 which was allowed on 24 th

February, 2015 and the orders dated 19th May, 2014 and 19th

September, 2014 were set aside; xii) that Execution Petition

No.131/2015 was filed by one Mool Chand Jain claiming himself to

be the Managing Director of the defendant; xiii) that another

Execution Petition No.192/2015 has been filed by Ashok Kumar Gaba

also claiming to be the Managing Director of the defendant; xiv) both

execution petitions seek enforcement of the arbitral award dated 10th

August, 2002; xv) that during the pendency of the arbitral proceedings

aforesaid, a case titled "CBI Vs. S.K. Relan & Ors." came to be

registered under the Prevention of Corruption Act, 1947 including

against one Mr. M.C. Jain, Managing Director of the defendant; xvi)

that reference to the said CBI case, is also found in the arbitral award;

xvii) that in the aforesaid CBI case, charges were framed against the

said Mr. M.C. Jain, Managing Director of the defendant and also

against the ex-officials of the plaintiff qua the illegal waiving of hire

charges for additional dumper trucks; xviii) that in the aforesaid CBI

prosecution, judgment was delivered on 8th June, 2016 whereby

amongst others, Mr. M.C. Jain, Managing Director of the defendant

was convicted for offences under Section 120B of IPC read with

Sections 5(2) and 5(1)(d) of the Prevention of Corruption Act; xix)

that Mr. M.C. Jain, Managing Director of the defendant was also held

guilty on the charge of entering into criminal conspiracy to waive the

hire charges for additional dumpers and sentenced to rigorous

imprisonment for two years with a fine of Rs.20,000/-; xx) that

besides Mr. M.C. Jain aforesaid, four officers of the plaintiff were also

convicted.

2. On the basis of the aforesaid pleas, the plaintiff, in this suit, has

sought the reliefs of, i) declaration that the arbitral award dated 10 th

August, 2002 is vitiated by fraud and consequently null and void, non

est in law, inoperative and incapable of being enforced; ii) direction to

the defendant to refund to the plaintiff the amount of Rs.1.50 crores

along with interest of 18% per annum; and, iii) permanent injunction

restraining the defendant from executing the arbitral award dated 10th

August, 2002.

3. It is the contention of the plaintiff in the plaint, i) that the

arbitral award aforesaid is premised upon fraudulent transactions and

is informed and motivated by corruption between Mr. Mool Chand

Jain, Managing Director of the defendant and officers of the plaintiff,

as has been held in the criminal case; ii) that in this manner pecuniary

loss has been caused to the plaintiff; iii) that the arbitral award has

been obtained by suppressing material facts from the Arbitral

Tribunal; iv) that the conviction of Mr. M.C. Jain, Managing Director

of the defendant and ex-officials of the plaintiff relate to a substantial

component of arbitral proceedings particularly the Counterclaim No.1

therein of the plaintiff and which was decided against the plaintiff; v)

that the conviction aforesaid is based on fraudulent suppression,

concealment and misrepresentation in relation to two critical

documents, being letters dated 25th November, 1983 and 30th

November, 1985; vi) that "by reason of conviction in criminal

proceedings in relation to the same contract / the agreement that was

the subject matter of the arbitration proceedings, the higher

evidentiary threshold of proof beyond reasonable doubt has been made

and as a result, the lower evidentiary threshold of proof of balance of

probabilities applied in the arbitral proceedings is no longer

sustainable"; vii) that "as a result of the criminal conviction of the

accused persons in relation to the same contract, the award granting

the civil claim is no longer valid"; viii) that notwithstanding the

decisions rendered in OMP No.374/2002, the arbitral award being

vitiated by fraud is liable to be declared as null and void, non est in

law, inoperative and incapable of being enforced.

4. The suit, for the purpose of court fees and jurisdiction, for the

relief of declaration is valued at Rs.200/- and for the relief of recovery

of Rs.1.50 crores with interest, ad valorem court fees of Rs.1.60 lacs

has been paid and for the relief of permanent injunction, again at

Rs.200/-.

5. The suit was listed first on 10th March, 2017 for admission,

subject to office objection of court fees, when the following order was

made:

"3. The office objection qua court fees subject to which the suit is listed is kept open for adjudication.

4. The plaintiff has sued for i) declaration that an arbitral award, with respect whereto the petition filed by the plaintiff under Section 34

of the Arbitration & Conciliation Act, 1996 has been dismissed and appeal and the Special Leave Petition filed to the Supreme Court whereagainst have also been dismissed, is null and void and non est; ii) for permanent injunction restraining the defendant from executing the award; and, iii) seeking recovery of the awarded amount which has already been recovered by the defendant. The plaintiff seeks the said reliefs on the ground that the Managing Director of the defendant and certain officials of the plaintiff have been convicted under the Prevention of Corruption Act, 1988 including with respect to transaction subject matter of arbitral award and thus the arbitral award is premised on fraudulent transaction.

5. The senior counsel for the plaintiff at the outset states that the two petitions filed for execution of the arbitral award are pending before the Bench presided over by Justice Vibhu Bakhru and the plaintiff by way of objections in the said execution petitions also has raised the same pleas as raised by way of this suit. He thus states that this suit be also considered by the Bench presided by Justice Vibhu Bakhru.

6. I have however enquired from the senior counsel for the plaintiff as to how this suit is maintainable. If the suit is not maintainable, the question of putting it before the same Bench before which the execution petitions are pending does not arise.

7. Attention of the senior counsel for the plaintiff has been drawn to Roshan Lal Gupta Vs. Parasram Holdings Pvt. Ltd. 2009 (109) DRJ 101 and Spentex Industries Ltd. Vs. Dunavant S.A. 2009 SCC OnLine Del 1666, RFA (OS) No.69/2009 preferred whereagainst was dismissed vide judgment dated 29th October, 2009, Kvaerner Cementation India Ltd. Vs. Bajranglal Agarwal (2012) 5 SCC 214,

Ashok Kalra Vs. Akash Paper Board Pvt. Ltd. 2013 SCC OnLine Del 3299 and Vimal Kishor Shah Vs. Jayesh Dinesh Shah (2016) 8 SCC 788 holding that no such suit with respect to the arbitral award lies.

8. Attention of the senior counsel for the plaintiff is also drawn to Shanti Kumar Panda Vs. Shakuntala Devi (2004) 1 SCC 438 and to Kishan Singh Vs Gurpal Singh (2010) 8 SCC 775 holding that merely because of a contrary finding in a criminal case the outcome of the civil proceedings cannot be affected.

9. The senior counsel for the plaintiff states that he has not examined the judgments aforesaid and seeks adjournment to address thereon.

10. List on 24th March, 2017."

6. On 24th March, 2017, the following order was made:

"1. The senior counsel for the plaintiff in response to the queries made on and as recorded in the order dated 10th March, 2017 has been heard further at length.

2. He has contended that the judgments to which his attention was drawn on 10th March, 2017 are in the context of interference with the arbitral proceedings and in which context it was held that a suit does not lie; per contra here the arbitration proceedings have culminated and it is now only the award which is in execution as a decree; thus the said judgments would have no application.

3. The senior counsel for the plaintiff in response to the query, whether the order of conviction is relatable to the contract subject

matter of award, has drawn attention to pages 109, 129, 147, 157, 205 and 211 of the order of conviction. With reference to page 147, it is stated that the contract subject matter of the conviction order and arbitral proceedings is the same.

4. The conviction order at page 211 in para 110 records that had the plaintiff brought it to the notice of the learned Arbitrator that letter dated 30th November, 1985 was written by the accused D.K. Sharma (the then Chief Project Manager, AL EDAWIYAH Project, Iraq of the plaintiff) was without any authority and was not in consonance with Clause 73 of the Agreement, then the observation of the learned Arbitrator would have been different.

5. I have enquired from the senior counsel for the plaintiff, whether the plaintiff took a plea before the Arbitral Tribunal of the letter dated 30th November, 1985 being without authority and if not, why the said plea was not taken, specially when it appears that the prosecution was underway even at the time of the arbitral proceedings. I have further enquired, whether the plaintiff had entrusted the conduct of the arbitral proceedings also to the same officials who where under prosecution with reference to the Agreement subject matter of arbitration.

6. I may in this regard notice that though in para no.21 of the plaint, pleas have been taken of the award having been obtained by suppressing material facts from the learned Arbitrator and the award having thus been obtained fraudulently but there is no clarity as to which official of the plaintiff was conducting the arbitral proceedings and why the requisite pleas, which the conviction order has observed if had been taken, the outcome of the Arbitral Tribunal may have been different, were not taken therein.

7. A plea of fraud is required to be supported by particulars as per Rule 4 of Order VI of the CPC.

8. The senior counsel for the plaintiff though has referred to Ramesh Kumar Vs. Furu Ram (2011) 8 SCC 613 under the Arbitration Act, 1940 but the same is in the context of the arbitral award being not genuine being collusive and sham. Unless it is the specific plea of the plaintiff that its officials conducting the arbitration were also in collusion with the defendant, it appears that the said judgment if at all applicable under the new law would also not apply.

9. Attention of the senior counsel for the plaintiff has also been drawn to grounds (i)&(iii) of Clause A of Sub-section (2) of Section 34 and to grounds (ii) of Clause B of the aforesaid Sub- section read with Explanation-1. They suggest that the pleas as sought to be taken could have been taken in proceedings under Section 34 of the Act. If such pleas could have been taken under Section 34 of the Act, the question would again arise whether the plaintiff after having not taken the said pleas or having taken the said pleas and failed therein, can maintain the suit.

10. Since the plaintiff has also sought recovery of monies from the defendant, it has also been enquired whether the defendant has any assets inasmuch as if the defendant has no assets from which the recovery sought can be made, the plaintiff would again be spending good money after bad.

11. The plaintiff to revert on all the said aforesaid aspects on 1st May, 2017 as sought."

7. On 1st May, 2017 adjournment was sought on behalf of the

plaintiff and thereafter on 17th May, 2017 the following order was

made:

"1. The senior counsel for the plaintiff, in pursuance to the queries raised on 24th March, 2017, has stated:

a. that the arbitral proceedings were not entrusted to the same officials of the plaintiff who have been convicted;

b. that it was not the plea of the plaintiff in the arbitral proceedings that the author of the letter dated 30th November, 1985 was not authorised to write so; the plea taken was that what was stated in the letter was a proposal;

c. that the same pleas were not taken in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996;

d. that the effect of the letter dated 30th November, 1985 is of IQD 139811 on the arbitral award; e. that the plea of criminality was not taken in the arbitral proceedings;

f. that particulars of fraud in accordance with the Order IV Rule 4 of the CPC have been pleaded in paras 8 and 21 of the plaint;

g. that order on the objections preferred in the proceedings for execution of arbitral award have been reserved.

2. The senior counsel for plaintiff has been heard further.

3. Order on admissibility of the suit reserved."

8. The plaintiff filed IA No.11183/2017 for disposal of the

application for interim stay pleading that in the execution proceedings

aforesaid, vide order dated 12th September, 2017, the plaintiff had

been directed to, within eight weeks, deposit Rs.1,26,32,320/- in

enforcement of the arbitral award. The said application came up on

22nd September, 2017 when it was disposed of observing that the order

reserved on 17th May, 2017 will be pronounced prior thereto.

9. First, the ambiguity in the pleadings of the plaintiff needs to be

clarified. As would be evident from above, it is incongruous that if

the appeal of the plaintiff to the Supreme Court was allowed and the

judgment of the Division Bench of this Court dismissing the appeal

preferred by the plaintiff against the dismissal of its OMP was set

aside, why is the arbitral award being enforced. The correct position,

as transpires from the order dated 19th May, 2014 in FAO (OS)

No.598/2009, is that the appeal was pressed limited to the rate at

which the Arbitral Tribunal awarded interest, and the challenge to the

arbitral award on other grounds was given up; the Division Bench

reduced the interest from that awarded of 12% per annum from the

date of commencement of arbitration proceedings till the date of

payment, to 6% per annum and fixed the date of conversion of the

USD amount into Indian rupees as the date of the arbitral award.

Needless to state, the review preferred and which was dismissed, was

also confined to the aforesaid aspects. The Supreme Court held that

the Division Bench could not have altered the rate of interest and the

date of conversion from that contained in the arbitral award. It is for

this reason that the arbitral award is being enforced in the execution

petitions aforesaid.

10. The answer (recorded in para 1 of the order dated 24 th March,

2017 reproduced above) of the senior counsel for the plaintiff in

response to the query contained in paras 6 and 7 aforesaid of the order

dated 10th March, 2017 makes it abundantly clear that the plaintiff, in

the present suit, is seeking declaration / setting aside of the arbitral

award dated 10th August, 2002 having (vide Section 36 of the

Arbitration Act) the force of a decree of the Court. Such a suit for

cancellation or setting aside of a decree is envisaged by Article 59 of

the Schedule to the Limitation Act. Section 44 of the Indian Evidence

Act, 1872 also entitles any party to a suit or other proceeding to show

that any judgment, order or decree was delivered by a Court not

competent to deliver it or was obtained by fraud or collusion.

11. The first question which arises for consideration is, whether the

arbitral award having the force of and executable as a decree of the

Court can also be cancelled or set aside as a decree of the Court.

12. I was in Khanna Traders Vs. Scholar Publishing House P.

Ltd. 241 (2017) DLT 145 (and against which no appeal is found to

have been preferred) concerned not with an identical but an allied

question i.e. whether objections under Section 47 of the CPC are

entitled to be considered in execution of an arbitral award as a decree

of the Court. A) Relying on Union of India Vs. Jagat Ram Trehan

AIR 1996 Delhi 191 [and appeal preferred whereagainst was

dismissed in Jagat Ram Trehan & Sons Vs. Union of India 2001 (3)

Arb. LR 41 (SC)], where a Division Bench of this Court negatived the

contention that an arbitral award must be objected to in accordance

with the provisions of the Arbitration Act (in that case of the year

1940) and that it was not open to raise question in execution

proceedings and held that Section 47 of the CPC applies to execution

proceedings taken pursuant to a decree making an award the rule of

the Court and it is open to the executing Court under Section 47 of the

CPC to declare that the award is passed without jurisdiction and

therefore the decree passed thereupon is null and void and non-

executable, and B) holding that the observations in MSP

Infrastructure Ltd. Vs. M.P. Road Development Corporation Ltd.

2014 SCC OnLine SC 1002 and in Bharti Cellular Limited Vs.

Department of Telecommunications (2012) 192 DLT 729 to the

effect, that the judgments of civil law would not apply to a proceeding

under the special law as the Arbitration Act, apply to only the

proceedings provided for under the Arbitration Act and cannot be

extended to proceedings for execution of arbitral award, it was held

that objections under Section 47 CPC, in execution of arbitral award

as a decree, can be entertained.

13. I now find, Supreme Court in Jai Narain Parasurampuria Vs.

Pushpa Devi Saraf (2006) 7 SCC 756 to have been also concerned

with a decree consequent to arbitral award (under the 1940 Act) and

the averment of the same being fraudulent & collusive. Without

however any discussion on, whether the Arbitration Law is a self

contained code, the challenge thereto under Section 44 of the

Evidence Act was held to be maintainable. I also find, Supreme Court

in Ramesh Kumar supra cited by senior counsel for the plaintiff to

have held, that a suit for declaration that the judgment and decree in

terms of arbitral award (under the 1940 Act) to be null and void as the

same was result of fraud and misrepresentation, to be maintainable. It

was held, that the High Court erroneously proceeded on the basis that

the suit was only for declaring the arbitration agreement and the

arbitral award to be invalid and which was not maintainable. It was

held, that the challenge to the arbitration agreement and arbitral award

was made only to establish judgment and decree in terms thereof to be

vitiated with fraud. Thus, Sections 32 and 33 of the Arbitration Act,

1940, were held to be not a bar to the maintainability of the suit.

14. Though the Arbitration & Conciliation Act, 1996 has

overhauled the law relating to arbitration, but I am unable to find the

same to be affecting the ratio of judgments aforesaid holding

challenge to the arbitral award, though under the 1996 Act itself

having force of a decree without requiring a judgment and decree to be

drawn by the Court in terms thereof, as under the 1940 Act, under

Section 44 of the Evidence Act to be maintainable. Even under the

1996 Act, A) vide Section 36(1), the arbitral award has force of a

decree, only after expiry of time prescribed for setting aside thereof

under Section 34 and is executable "in the same manner as if it were a

decree of a Court"; B) vide Section 34 thereof, recourse before a Court

for setting aside of a arbitral award is permissible; and, C) vide

Section 5 thereof, intervention by judicial authority is prohibited, only

qua "matters governed by this part" i.e. Part I - Part I does not govern

execution of arbitral award as if it were a decree of civil Court. In my

opinion, the differences in the 1940 & 1996 Act, howsoever

substantial, do not make any change in the law relating to challenge if

any under the civil law to the arbitral award as if it were a decree of a

Court.

15. Once objections under Section 47 of the CPC have been held to

be maintainable in execution of arbitral award as a decree of the

Court, notwithstanding the remedy available under Section 34 of the

Arbitration Act, so would a suit for setting side of arbitral award as a

decree of the Civil Court be maintainable.

16. The present is not a case of the arbitral award having force of a

decree having been delivered by an Arbitral Tribunal not competent to

deliver it. The ground urged by the plaintiff is, of fraud and collusion.

17. However, the fraud or collusion as a ground for setting aside of

a decree, has to be in obtaining the decree. The fraud, that will enable

the Court to set aside the decree at the instance of a party to the

decree, must be a fraud which is extraneous to the decree. The fraud

which entitles a party to the decree to have the decree set aside must

have prevented the party from defending the claim in the manner most

to his advantage. The fraud contemplated is an intrinsic collateral act

unconnected with the matters adjudicated upon, by which a litigant is

prevented from appearing and placing his case before the Court at

trial. The fraud on the ground of which a decree can be set aside is not

a plea of fraud on the merits of the case which could have been raised

in adjudication.

18. The Full Bench of the Madras High Court in Kadirvelu Nainar

Vs. Kuppuswami Naiker AIR 1919 Mad 1044 held that the fact that a

decree was obtained by perjured evidence or by suppression of

evidence, is not a fraud extraneous to the decree and therefore no suit

will lie to set aside the decree on that ground.

19. A Division Bench of the High Court of Bombay, in Bhikaji

Mahadev Gund Vs. Balvant Ramchandra Kulkarni AIR 1927 Bom

510 cautioned that though a Court has jurisdiction to set aside a decree

obtained by fraud, yet, if the second suit practically amounts to re-

hearing of the first, it should not be heard. It was held that if a decree

is passed on basis of perjured evidence, it cannot be open to opponent

to start a new action on the allegation that that evidence was wrongly

believed and that if it was so permitted, it would be the end of the

doctrine of res judicata. A Division Bench of the High Court of

Bombay in Shripadgouda Venkangouda Aparanji Vs. Govindgouda

Narayangouda Aparanji AIR 1941 Bom 77 held that the expression

"obtained by fraud" under Section 44 refers to the fraud practised

against the Court by one party or it may also imply a fraud against any

party to the proceeding; however a party cannot be permitted to take

advantage of his own baseness or permitted to defeat a judgment by

showing that in obtaining it he had himself practised a imposition on

the Court.

20. A Division Bench of this Court in T.R. Verma Vs. Union of

India (1969) ILR Delhi 587 held that fraud contemplated by Section

44 of the Evidence Act is an extrinsic act unconnected with matters

adjudicated upon, such as fraud in preventing a litigant from appearing

and presenting his case before the Court. Constructive fraud was held

to be not enough. It was held that fraud must be actual, positive fraud,

a meditate and intentional contrivance to keep the parties and/or

Courts in ignorance of facts relevant to enquiry and judgment should

have been obtained by such contrivance. It was yet further held that

suppression of a fact which was known to the plaintiff is not a fraud

within Section 44.

21. Supreme Court, in S.P. Chengalvaraya Naidu Vs. Jagannath

AIR 1994 SC 853 held that the principle of "finality of litigation"

cannot be pressed to the extent of such absurdity that it becomes an

engine of fraud in the hands of dishonest litigants; such a judgment /

decree, by the first Court or the highest Court has to be treated as a

nullity by every Court, whether superior or inferior; it can be

challenged in any Court, even in collateral proceedings. It was on

facts held, that obtaining a preliminary decree of partition of property

without mentioning at trial, of having executed a release deed, before

filing the suit, regarding the property in favour of another, to be a

decree vitiated by fraud.

22. Again, in Hamza Haji Vs. State Of Kerala (2006) 7 SCC 416,

while reiterating that Section 44 of the Evidence Act gives jurisdiction

and authority to a Court to consider and decide the question whether a

prior adjudication is vitiated by fraud, it was held on the facts of that

case that where a party founded his case before Forest Tribunal on a

false plea or on a claim which he knew to be false, and suppressed

documents which had relevance to deciding the claim, the same would

amount to fraud. It was held to be not a case of the party merely

putting forward a false claim or obtaining a judgment based on

perjured evidence; it was found to be suppression of most vital fact

and founding of a claim on a non-existent fact, knowingly and

deliberately, with the intention to deceive. It was further found to be a

case where on a fundamental fact of entitlement to relief, the party had

misled the Court by suppressing vital information - a case of

procuring the order from Forest Tribunal by playing a fraud. It was

owing thereto, that the fact that on an earlier occasion interference had

been declined on the ground of delay, was held to be not a deterrent to

the Court declaring the order of Forest Tribunal as vitiated by fraud.

23. I am afraid, the present suit has been filed without the aforesaid

clarity and only on general notions of fraud. The plea of fraud, even if

any to be found in the plaint, is of fraud practised by the ex-officials of

the plaintiff in collusion with Mr. M.C. Jain, Managing Director of the

defendant in waiving off hire charges for additional dumper trucks of

the plaintiff used by the defendant. The said fraud was antecedent to

the arbitral proceedings culminating in the arbitral award having force

of the decree and the plea with respect whereto ought to have been

taken in the arbitral proceedings and / or in the petition under Section

34 of the Arbitration Act preferred with respect to the arbitral award.

Even if the said plea was not taken in the said proceedings, the said

plea does not amount to fraud in obtaining the arbitral award.

24. Not only are there no averments of the officials of the plaintiff

conducting the arbitration proceedings and the proceedings under

Section 34 of the Arbitration Act and the defendant or its Managing

Director having acted collusively or fraudulently, but the senior

counsel for the plaintiff, in response to the specific query (contained in

para 5 aforesaid of the order dated 24th March, 2017), on 17th May,

2017 (and as recorded in the order of that date reproduced above)

categorically stated that the arbitration proceedings were not entrusted

to the same officials of the plaintiff who had colluded with Mr. M.C.

Jain, Managing Director of the defendant in waiver of the hire charges

and which officials have been convicted.

25. Applying the aforesaid law, I fail to see any attempt even by the

plaintiff to plead the case of the arbitral award having force of the

decree having been obtained by the defendant by practicing fraud.

26. It has thus but to be held that no plea of fraud and /or of the

arbitral award having the force of the decree having been obtained by

practicing fraud, having been made, no case for setting aside of the

arbitral award having force of a decree on the ground of fraud is made

out.

27. There is another aspect of the matter. Section 47 of the CPC

requires all questions arising between the parties to the suit in which

the decree was passed, or their representatives, and relating to

execution, discharge or satisfaction of the decree, to be determined by

the Court executing the decree and not by a separate suit. Thus, if the

plea, of the arbitral award having force of the decree being a nullity on

the ground of fraud is a question relating to execution, discharge or

satisfaction of the said arbitral award having force of the decree, it has

to be raised before the executing Court and a separate suit therefor, as

this suit is, would not lie.

28. However I find this Court to have in Addisons Paints &

Chemicals Ltd. Vs. Santram Parma Nand AIR 1976 Del 137 held

that an executing Court cannot go behind the decree and must take the

decree as it is and must proceed to execute it - it must take the decree

as per its tenor and cannot entertain any objection that the decree is

incorrect in law or in facts; there is however a well established

exception that if there was lack of inherent jurisdiction in the Court

which passed the decree, then the decree is a nullity and the executing

Court has to refuse to execute it; the question whether the decree was

obtained by fraud or misrepresentation is not one which relates to

inherent jurisdiction of Court; the executing Court has no jurisdiction

to go into this question; a decree obtained by fraud is not a nullity but

might at best be invalid; the questions relating to misrepresentation

and fraud do not relate to execution of a decree but relate to

impeaching the decree itself and cannot be raised under Section 47 of

CPC. No contrary view has been found by me. It thus has to be held

that Section 47 of the CPC is not a bar to the suit.

29. Though I have held as aforesaid, but even if it were to be held

that judgments of civil law would not apply to a proceeding under the

special law as the Arbitration Act and the challenge to the arbitral

award has to be only in accordance with Section 34 thereof, the suit

would still be not maintainable.

30. I thus answer the questions raised in the orders reproduced

above as to the maintainability and admissibility of the suit as under:

(i) The suit for setting aside of an arbitral award having force of a decree on the ground of the arbitral award having been obtained by fraud and the proceedings pursuant thereto being tainted by fraud is maintainable.

(ii) However the pleas in the plaint as elucidated in the replies of the senior counsel for the plaintiff to the queries in the nature of Order X Rule 2 of the CPC and as reproduced above do not disclose a case of the arbitral

award having force of a decree and the proceedings pursuant thereto being vitiated by fraud.

31. The plaint thus does not disclose a cause of action for the relief claimed.

32. Resultantly, the plaint is rejected.

No costs.

RAJIV SAHAI ENDLAW, J.

th OCTOBER 10 , 2017 „gsr‟