Karnataka High Court
Karnataka State Medical Supplies ... vs Plasti Surge Industries Pvt Ltd on 1 September, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
R
Reserved on : 21.08.2025
Pronounced on : 01.09.2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 01ST DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.29449 OF 2024 (GM - CPC)
BETWEEN:
KARNATAKA STATE MEDICAL SUPPLIES
CORPORATION LIMITED
REP. BY ITS AUTHORISED SIGNATORY
MR. SHIVA KUMAR
GENERAL MANAGER ADMIN AND PROCUREMENT
A COMPANY REGISTERED UNDER
THE COMPANIES ACT,2013
HAVING ITS REGISTERED OFFICE AT
NO.1, DR. SIDDAIAH PURANIK
KHB COLONY, MAGADI ROAD
BENGALURU - 560 079.
... PETITIONER
(BY SRI UDAYA HOLLA, SENIOR ADVOCATE FOR
SRI PRASHANTH S. H., ADVOCATE)
AND:
PLASTI SURGE INDUSTRIES PVT. LTD.
REGISTERED UNDER COMPANIES ACT, 1956
A-70, MIDC INDUSTRIAL AREA, PB NO. 95
2
AMRAVATI, MAHARASTRA - 444 607
REP. BY ITS AUTHORIZED SIGNATORY
MR. DHRUV DAGA
... RESPONDENT
(BY SRI CHRISTOPHER E., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR
RECORDS IN COMM EXECUTION PETITION BEARING NO.517/2023
PENDING ON THE FILE OF THE LXXXVII ADDITIONAL CITY CIVIL
COURT, COMMERICAL COURT COMPLEX,(CCH-88) BANGALORE
(ANNX-S); QUASH THE EXECUTION PETITION BEARING NO.
517/2023 PENDING ON THE FILE OF THE LXXXVII ADDITIONAL
CITY CIVIL COURT, COMMERCIAL COURT COMPLEX, (CCH-88)
BANGALORE (ANNX-T) AND ETC.,
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 21.08.2025, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioner/Karnataka State Medical Supplies Corporation
Limited is at the doors of this Court calling in question execution
proceeding in Commercial Execution Petition No.517 of 2023
pending before the LXXXVII Additional Civil and Sessions Judge,
Commercial Court, Bengaluru.
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2. Heard Sri Udaya Holla, learned senior counsel appearing
for the petitioner and Sri E. Christopher, learned counsel appearing
for the respondent.
3. Facts in brief, germane, are as follows: -
3.1. The petitioner floats a tender for supply of drugs,
chemicals and miscellaneous items connected to the drugs and
chemicals for the year 2017-18. The respondent emerges as the
successful bidder in respect of the tender and was consequently
issued a work order. The petitioner again floats a re-tender for
supply of disposable delivery kit. The respondent again participates
and emerges as the successful bidder in respect of the said tender
also and work order was issued to the respondent. In terms of
conditions of tender, the respondent executes a performance bank
guarantee for an amount of ₹9,09,394/- in favour of the petitioner
and additional bank guarantee as necessary. After supplies were
completed, invoices were raised for release of an amount of
₹1,83,40,144/- payable to the respondent by the petitioner.
Alleging certain discrepancies in the list of invoices or payments
4
demanded, as also the alleged fact of several defectives and goods
returned, dispute arose with regard to payment. The respondent
who is an MSME, files a claim before the MSME Council. The Council
initiates conciliation proceedings as is necessary in law and on
failure of such conciliation before MSME, it refers the matter for
arbitration. It was referred to arbitration, owing to failure due to
the absence of the petitioner for conciliation proceedings.
3.2. An Arbitrator was appointed who passes an award
directing the petitioner to pay a sum of ₹1,83,40,144/-. On non-
compliance with the arbitral award, the respondent files execution
petition in Execution No.517 of 2023 claiming an amount of
₹4,02,35,197/-. The Commercial Court attaches movables of the
petitioner. On such attachment about ₹65/- lakhs was paid. A writ
petition comes to be filed by the petitioner challenging the
proceedings in execution insofar as non-consideration of the plea of
the petitioner. The matter was remitted back to the hands of the
concerned Court. On such remand, the petitioner files an
application under Section 47 of the CPC seeking to urge new facts
with regard to forgery and cheating inter alia by the employees of
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the petitioner/Corporation in connivance with the
respondent/Company. The concerned Court rejects the said
application in terms of its order dated 30-08-2024 holding that the
Court cannot go beyond the decree or beyond the award in the case
at hand and Section 47 of the CPC would not permit pleas to be
raised for the first time in execution.
4. The learned senior counsel Sri Udaya Holla appearing for
the petitioner would submit that the concerned Court ought to have
considered the application favourably in the light of the fact that
fraud would unravel everything. The award was the product of
fraud, as employees of the petitioner/Corporation and the
respondent had connived. Therefore, concealment of relevant
material facts before the Arbitration itself would amount to fraud.
He would seek to place reliance upon plethora of judgments to
buttress his submission, all of which would bear consideration qua
their relevance in the course of the order. He would, on this score,
seek obliteration of complete execution proceedings.
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5. Conversely, the learned counsel Sri E.Christopher
appearing for the respondent would vehemently refute the
submissions in contending that the writ petition itself is not
entertainable, as the relief that has to be sought by challenging the
arbitral award is now indirectly sought by filing the subject petition.
The petitioner has failed to challenge the arbitral award in terms of
the Arbitration and Conciliation Act, 1996 ('Act' for short).
Therefore, the petitioner cannot invoke the writ jurisdiction. He
would submit that the petitioner, after suffering an award, cannot
now in the execution petition ask the Court to go beyond the award
and bring out factor that was never urged at any stage before the
Arbitrator. The petitioner has always pleaded before the Executing
Court from time to time that it would make payment of the
decreetal amount and has in fact made payment of ₹1.05/- crores
as on today, by way of deposit before the concerned Court. Having
so done, it would not be open to the petitioner to approach this
Court yet again, challenging the entire execution proceedings. The
petitioner does not challenge the order of the concerned Court
which rejects the application under Section 47 CPC, but challenges
the entire proceedings, which is a remedy that is unavailable to the
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petitioner for not calling in question the arbitral award in question.
He would submit that fraud has to be proved by appropriate
pleadings or it should be demonstrable without such pleading. None
of these factors exist in the case at hand. Therefore, the petition
should be dismissed with exemplary costs.
6. I have heard with anxiousness the submissions of
Sri Udaya Holla, the learned senior counsel for the petitioner, and of
Sri E Chirstopher, learned counsel for the respondent and have
perused the material on record.
SUCCINCT ESSENCE OF THE SUBMISSIONS:
7. The essence of the petitioner's case as articulated is
that, the arbitral award which forms the substratum of the
execution is itself vitiated by fraud, a fraud allegedly
perpetrated in unholy connivance between the officials of
the petitioner and the respondent-Company. The argument
is couched in the oft-repeated maxim that fraud unravels
everything. The essence of respondent's submission is that
the petition is a camouflage, an indirect attempt to do what
8
the petitioner could and should have done directly under
Section 34 of the Act. The petitioner is wanting to contend
grounds of fraud before the Executing Court, which cannot
be done. In the light of the aforesaid succinct essence, it
becomes necessary to notice the facts, beginning from the
award of the arbitrator.
FACTS:
8. The afore-narrated facts and link in the chain of events are
all a matter of record. The contract between the petitioner and the
respondent is again a matter of record. MSME Council initiates
conciliation proceedings and the petitioner does not bother to get
represented. The matter is referred to arbitration. The petitioner
participates in the arbitration. The Arbitrator draws up an award
after hearing the parties. The award of the Arbitrator reads as
follows:
"Arbitral Award
a. The claim of balance payment u/s 15 of MSMED
Act of ₹1,83,40,144/- for the goods supplied by
the applicant supplier Plasti Surge Industries
Private Limited against the non-applicant
Director Karnataka State Drug Logistics &
Warehousing Soc. Is hereby allowed.
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b. Interest on delayed payment u/s 16 of the MSMED
Act, 2006 in respect of balance payment of the
applicant against the non-applicant is hereby allowed.
c. The admission period of 45 days allowed u/s 15 of the
MSMED Act, 2006 shall start from the subsequent day
of the date of acceptance of goods supplied by the
applicant.
d. The claim of interest is to be calculated as per Section
16 of the MSMED Act, 2006 till the date of realization
of the due amount.
e. Both the parties to file compliance report in
respect of present order to this Council within
three months from the date of issue of this
order.
Sd/- sd/-
A.D.Shinde G O Bharti,
Member Secretary Chairman, MSEF Council,
MSEF Council, Amravati. Amravati.
Sd/- sd/-
Umesh Malu, Virendra Laddha
Member, MSEF Council, Member, MSEF Council,
Amravati. Amravati."
(Emphasis added)
The arbitral award is dated 8-07-2022. The petitioner does not
challenge the award despite passing of a year. The respondent then
initiates execution proceedings. In the execution proceedings order
of attachment was passed and payment of ₹65/- lakhs was made
during the pendency of execution proceedings. The execution
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proceedings come to be challenged before this Court in Writ Petition
No.5362 of 2024. A coordinate Bench, by order dated 26-02-2024,
disposes of the petition by the following order:
"6. Though several contentions have been urged
by both sides, having regard to the undisputed fact
that the petitioner had filed statement of objections to
the main execution petition on 06.02.2024, which has
not been considered by the Executing courtbefore
passing the impugned order of attachment, without
expressing any opinion on the merits/demerits of the
rival contentions and to provide sufficient and
reasonable opportunity to both parties, I deem it
appropriate to set aside the impugned order dated
06.02.2024 and direct the Executing court to consider
and pass appropriate order on or before 26.04.2024 by
taking into account / consideration the statement of
objections filed by the petitioner and after hearing
both sides in accordance with law.
7. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed.
(ii) The impugned order dated 06.02.2024 passed by
the Executing court in Com.Ex.No.517/2023 directing
attachment of movables of the petitioner is hereby set aside.
(iii) The matter is remitted back to the Executing
court for reconsideration afresh by taking into
account/ consideration the statement of objections
filed by the petitioner and hear both sides and pass
appropriate orders in accordance with law on or before
26.04.2024.
(iv) All rival contentions on all aspects of the
matter are kept open and no opinion is expressed on
the same.
(v) At the instance/request of the learned
counsel for the respondent-Decree holder, the amount
of Rs.65 Lakhs already deposited by the petitioner-
Judgment Debtor before the Executing court is
directed to be released/disbursed in favour of
respondent Decree holder without prejudice to the
rights and contentions of the parties and making it
subject to the final outcome of the Execution
proceedings."
(Emphasis supplied)
The coordinate Bench remits the matter back to the Executing
Court for reconsideration afresh by taking into account the
statement of objections filed by the petitioner, hear both the parties
and then pass necessary orders. The Court also recorded that
₹65/- lakhs is already deposited by the judgment debtor/ petitioner
before the Executing Court. It was directed to be released in favour
of the respondent.
9. When the matter goes back to the concerned Court, the
petitioner files an application under Section 47 of the CPC bringing
out several new grounds, for the first time before the Executing
Court, by way of statement of objections on the score that liberty
was reserved by this Court to file statement of objections and had
further directed the objections to be considered by the Executing
Court. After remand from the hands of coordinate Bench, the
concerned Court passes the following order, on different dates:
"13-03-2024
Both counsels are present.
Advocate for Jdr filed memo along with copy of order
passed by the Honorable High Court of Karnataka in WP
No.5362/2024 wherein, the attachment warrant of movables
issued by this Court has been set aside and trial Court is
directed to considered the matter afresh by hearing by both
side.
Apart from this trail Court has been directed to
disburse the amount of Rs.65 lakhs that has been deposited
by the Jdr, in favour of Dhr.
Further, trail Court has been directed dispose off
the matter on or before 26.04.2024.
Office is hereby directed to release the above
amount in favour Dhr.
Call on to hear on issuance of attachment warrant of
movables by 18.03.2024."
... ... ...
23-04-2024:
ORDERS ON OBJECTIONS FILED BY THE J.DR TO
THE MAIN EXECUTION PETITION
The D.hr. herein has filed the present Execution
petition to execute the arbitral award passed by Micro, Small
Enterprises Facilitation Council in Reference N.MH/03
/S/AMV/00204 dated 05-12-2022. On 12-01-2023 D.hr.
deposited a sum of ₹1,03,700/- towards deficit of stamp
duty and this Court issued attachment warrant of movables
against the J.Dr. Thereafter, notice was issued on the main
petition and I.A. to the J.Dr. On 24-11-2023, counsel for
J.Dr. appeared. On 11-12-2023 J.Dr. deposited ₹50.00 lakhs
through D.D. On the same day considering the oral
submissions of both sides, this Court passed an order to
keep the warrant of attachment of movables in abeyance.
Again on 14-12-2023 J.Dr. deposited ₹15.00 lakhs. On
22-01-2024, J.Dr. prayed two weeks time to make balance
amount. On 06-02-2024 objections was filed to the main
petition, but no payment was made by J.Dr. Hence, this
Court issued attachment warrant of movables against the
J.Dr.
2. This order was challenged by the J.Dr before the Hon'ble
High Court of Karnataka in W.P.No.5362 of 2024. While
disposing this writ petition, the Hon'ble High Court remitted
the matter back to the executing court for reconsidering the
statement of objections filed by the J.Dr herein and also
directed the trial court to hear both sides and pass
appropriate orders in accordance with law on or before
26-04-2024. It was also observed that all the rival
contentions on all aspects of the matter are kept open
without expressing any opinion on the same. In view of this
order, both counsel for D.Hr. and J.Dr. argued on their
respective pleadings.
3. Since objections was filed by J.Dr. to the main petition,
this court heard the counsel for J.Dr., who also filed his
additional objections along with certain documents and list of
citations while addressing his arguments, the learned counsel
for J.Dr. drawn the attention of this court to his objections,
wherein he has resisted the execution of the decree for the
following grounds:
i) Non delivery of goods.
ii) defective and returned goods
iii) Earnest money deposit/security deposited
iv) GST amount not paid correctly
v) Lab Testing amount
vi) Prices charged higher than the accepted tender
prices.
While submitting his oral arguments, the counsel for
J.Dr also made some statement that fraud has been
committed by both D.Hr and also the officials of J.Dr and
same has to be adjudicated by this Court. He further argued
that this being an executing court as to reassess the grounds
urged by him in his objection and the decree or the award
cannot be blindly executed. He further drawn the attention of
this Court to the provisions of Order 21 Rule 58 of CPC and
submitted to the Court that there is no need for J.Dr to file a
separate suit to prove the above mentioned grounds and he
can prove the same before the executing court.
4. Per contra, the learned counsel for D.Hr made his
submissions that this Court being an executing Court has
limited scope and it cannot go beyond the decree or award
and also it cannot sit as an appellate court or reassess, re-
write its own judgment or the judgment rendered by the
arbitrator or the other Courts.
5. Since the point that was argued before the Hon'ble High
Court of Karnataka by the J.Dr. was only that his objections
were not considered by this Court before issuing attachment
warrant of movables, the very limited question i.e., now
before this court is whether this Court has right in issuing
attachment warrant of movables?
6. No doubt it is true that this Court has not passed any
considered order on the objections filed by the J.Dr before
issuing the attachment warrant of movables.
7. The counsel for J.Dr relied on following decisions:
i) Bibhuti Bhusan Dutta v. Samarendra Nath Misra -
MANU/WB/0332/2002
ii) M.Abdul Kareem & Ors. v. State of Karnataka and
others - MANU/KA/0256/2023.
iii) Gouriamma v. Yohannan Luckose -
MANU/KE/0276/2010
iv) Copy of the judgment in W.P.No.8352 of 2022 (GM -
CPC) connected with Writ Petition No.12935 of 2022
(GM-CPC).
v) Copy of the judgment in Civil Appeal No.4258 of 2022
dated 28-09-2022.
vi) Copy of the judgment in Ex.F.A.No.18/2010 & CM
No.18758 of 2010 dated 05-07-2011.
8. The learned counsel for the D.Hr. also relied on the
decision rendered by the Hon'ble Apex Court in (2009) 13
SCC 354 reported in Haryana Vidyut Prasaran Ningam
Limited and another.
9. I have carefully gone through the objections filed by the
J.Dr and the decisions relied by both D.Hr and the J.Dr. The
first judgment relied by the J.Dr is Bibhuthi Bhusan Datta's
case rendered by Hon'ble High Court of Calcutta on the para-
6 of the judgment, the Hon'ble court has raised a question to
itself.
Q. How for the courts goes beyond the decree and in
para-6 of the judgment, it was observed 'it is a settled
proposition of law that executing court cannot go beyond the
decree or it can enter into question that the decree sought to
be executed was obtained by fraud or was collusive. The
second judgment in M.Abdul Kareem's case, Hon'ble High
Court of Karnataka dealt with provisions under Order 21 Rule
58, 97, 101, 103 of CPC. In 3rd judgment i.e., T.K.
Marthandan Unnithan case, Hon'ble High Court of Kerala
dealt with Order 21 Rue 58 of CPC. Now the question that
arise before this court is:
Whether the Order 21 Rule 58 of CPC comes to be
rescue of this J.Dr?
Section 2(10) of CPC provides definition for 'J.Dr
means any person against whom a decree has been passed
or an order capable of execution has been made. If we
peruse the provision under Order 21 Rule 58 same is relating
to adjudication of claims to or objections to attachment of
property. If this provision is read in whole, the same
provides some restrictions regarding execution of the decree
i.e., Order 21 Rule 58 provides circumstances where
executing court cannot execute the decree. Admittedly, it is
the J.Dr now who is objecting to the decree and not the 3rd
party in capacity of an objector. If we carefully peruse the
execution petition and the objections, the decree obtained by
the D.Hr. for claim amount of ₹4,02,35,197/- from the J.Dr
and the award is a arbitral award passed in Micro, Small
Enterprises Facilitation Council in Reference
No.MH/03/S/AMV/00204 dated 5-12-2022. If we peruse the
objections filed by the Objector, the same are nothing but
the grounds in disguise of an appeal. In his objections, J.Dr.
has raised various grounds disputing the payment of amount
due to the plaintiff due to those grounds. As discussed
above, the very limited question that revolves before this
Court is whether this court is being a executant court can go
beyond the decree and again reopen the case, rewrite a
fresh judgment. Sitting over the award passed by the
arbitrator.
10. the learned counsel for the D.Hr. while addressing his
arguments relied on Haryana Vidyut Prasaran Nigam's
case rendered by Hon'ble Apex Court and in para-17 and 18
of the judgment, Hon'ble Apex Court has clearly held:
17. As indicated hereinbefore, for the purpose
of allowing an objection filed on behalf of a
judgment-debtor under Section 47 of the Code of Civil
Procedure, it was incumbent on him to show that the
decree was ex facie nullity. For the said purpose, the
court is precluded from making an in-depth scrutiny
as regards the entitlement of the plaintiff with
reference to not only his claim made in the plaint but
also the defence set up by the judgment-debtor. As
the judgment of the trial court could not have been
reopened, the correctness thereof could not have
been put to question.
18. It is also well known that an executing
court cannot go behind the decree. If on a fair
interpretation of the judgment, order and decree
passed by a court having appropriate jurisdiction in
that behalf, the reliefs sought for by the plaintiff
appear to have been granted, there is no reason as to
why the executing court shall deprive him from
obtaining the fruits of the decree.
11. If we carefully peruse the objections raised by the J.Dr.,
decisions relied by both sides, it is very clear that the
remedy left for the J.Dr to prove the above said grounds or
only under Section 47 of the CPC by way of appeal and this
court is precluded from making in depth scrutiny in regard to
the grounds urged by JDr. In his objections. Further, this
Court makes it clear, this Court being an executing Court
cannot go beyond the decree. For the above reasons, I hold
that the objections filed by the J.Dr. is not maintainable. In
view of this D.Hr. is directed to take steps afresh for issue of
attachment warrant of movables."
Again, the petitioner defaulted in payment. Therefore, for the
purpose of further payments, the concerned Court again re-issues
attachment warrant by the following order on 30-03-2024.
"30-08-2024:
Case called.
Jdr prays time to make further payment.
Re-issue attachment warrant of movables
for balance amount if PF paid, returnable by
21.09.2024."
(Emphasis added)
The moment the aforesaid order is passed, the petitioner again
knocks at the doors of this Court with the present petition.
10. The issue now would be, whether the petitioner can plead
what was not pleaded before the Arbitrator for the first time in
execution proceedings? Therefore, it is necessary to notice the
statutory landscape and its interpretation by the Apex Court and
other High Courts.
LEGAL LANDSCAPE:
11. The petitioner seeks to breathe life into its cause by
invoking fraud. Undoubtedly fraud, if established, unravels
everything, as it is always said fraud is infinite in variety -
sometimes audacious and sometimes insidious, yet always
corrosive to justice. The Apex Court, has in plethora of cases,
echoed that principle in long line of its Authorities, upon which, the
learned senior counsel for the petitioner has placed reliance upon. A
few of them which are necessary to be considered would be noted.
The submission of the learned senior counsel is fraud unravels
everything and it should not be construed narrowly. Concealment of
relevant and material facts, which should have been disclosed
before the Arbitrator, is an act of fraud. He places reliance on the
following judgments.
11.1. The Apex Court in the case of VENTURE GLOBAL
ENGINEERING v. SATYAM COMPUTER SERVICES LIMITED1
has observed as follows:
".... .... .....
36. It is well known that fraud cannot be put in a
straitjacket and it has a very wide connotation in legal
parlance. In the decision of the House of Lords in Reddaway
(Frank) & Co. Ltd. v. George Banham & Co. Ltd. [1896 AC
199: (1895-99) All ER Rep 133 (HL)], Lord Macnaghten
explained the multifarious aspects of fraud very lucidly, and
which we quote:
"But fraud is infinite in variety; sometimes it is
audacious and unblushing; sometimes it pays a sort of
homage to virtue, and then it is modest and retiring; it
would be honesty itself if it could only afford it. But fraud is
fraud all the same; and it is the fraud, not the manner of it,
which calls for the interposition of the Court."
(AC at p. 221 of the Report).
37. The aforesaid elucidation by the learned Law Lord
has also been accepted in the celebrated treatise on fraud
(see Kerr on Fraud and Mistake, 7th Edn., p. 1). Kerr has
also referred to Story's Equity Jurisprudence and defined
"fraud" as:
"Fraud, in the contemplation of a civil court of
justice, may be said to include properly all acts, omissions,
and concealments which involve a breach of legal or
equitable duty, trust or confidence, justly reposed, and are
injurious to another, or by which an undue or
unconscientious advantage is taken of another."
38. In Indian law, namely, the Contract Act, the said
common law doctrine of fraud has been assimilated in
Section 17 of the said Act. A very wide definition of "fraud"
has been given, which is as under:
(2010) 8 SCC 660
"17. 'Fraud' defined.--'Fraud' means and includes
any of the following acts committed by a party to a
contract, or with his connivance, or by his agent, with intent
to deceive another party thereto or his agent, or to induce
him to enter into the contract--
(1) the suggestion, as a fact, of that which is not
true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having
knowledge or belief of the fact;
(3) a promise made without any intention of
performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially
declares to be fraudulent.
Explanation.--Mere silence as to facts likely to affect
the willingness of a person to enter into a contract is not
fraud, unless the circumstances of the case are such that,
regard being had to them, it is the duty of the person
keeping silence to speak, or unless his silence is, in itself,
equivalent to speech."
39. Therefore, this Court is unable to accept the
contention of the learned counsel for the respondent that the
expression "fraud in the making of the award" has to be
narrowly construed. This Court cannot do so primarily
because fraud being of "infinite variety" may take many
forms, and secondly, the expression "the making of the
award" will have to be read in conjunction with whether the
award "was induced or affected by fraud".
40. On such conjoint reading, this Court is unable to
accept the contentions of the learned counsel for the
respondents that facts which surfaced subsequent to the
making of the award, but have a nexus with the facts
constituting the award, are not relevant to demonstrate that
there has been fraud in the making of the award.
Concealment of relevant and material facts, which should
have been disclosed before the arbitrator, is an act of fraud.
If the argument advanced by the learned counsel for the
respondents is accepted, then a party, who has suffered an
award against another party who has concealed facts and
obtained an award, cannot rely on facts which have surfaced
subsequently even if those facts have a bearing on the facts
constituting the award. Concealed facts in the very nature of
things surface subsequently. Such a construction would
defeat the principle of due process and would be opposed to
the concept of public policy incorporated in the Explanation."
It is the submission of the learned senior counsel that Section 47 of
the CPC can be pleaded for the first time even before the Executing
Court on grounds of fraud, as well as lack of subject matter
jurisdiction.
11.2. The Apex Court in the case of STATE OF UTTAR
PRADESH v. R.K. PANDEY2 has held as follows:
"24. We have made our observations in the context
of Section 47 of the Civil Procedure Code, 1908, which even
at the stage of execution, permits a party to object to the
decree, both on the grounds of fraud, as well as lack of
subject matter jurisdiction. It is apparent that the arbitration
proceedings were a mere sham and a fraud played by
Respondent No. 1, R.K. Pandey, by self-
appointing/nominating arbitrators, who have passed ex-
parte and invalid awards. To reiterate, Respondent No. 1,
R.K. Pandey, is not a signatory to the purported arbitration
agreement. Moreover, the parties thereto, DNPBID Hospital
and the Governor of Uttar Pradesh, do not endorse any such
agreement. From the cumulative facts and reasons
elucidated above, this is a clear case of lack of subject
matter jurisdiction."
2025 SCC OnLine SC 52
11.3. Earlier to the aforesaid judgments, the Apex Court has
held that fraud in decree can be set up in collateral proceedings in
the case of JAI NARAIN PARASRAMPURIA v. PUSHPA DEVI
SARAF3 holding:
"Withdrawal of suit--effect of
52. One of the Judges of the High Court in the
impugned judgment opined that in view of the fact that the
appellant had withdrawn the suit questioning the said award
and the decree subsequent to passing of the judgment and
decree of the trial court, they became disentitled to raise the
said question. In so opining, the High Court committed a
manifest error. The appellant had contended that the said
award and the consequent decree passed by the Delhi High
Court was a fraudulent and collusive one. The appellants
having obtained a decree, it was not necessary for them to
obtain another decree. They might not have been able to file
another suit, but the same would not mean that they were
not entitled to question the validity or otherwise of the said
award in the suit for specific performance of contract. If a
judgment or decree is vitiated by fraud, the same would be a
nullity. In such an event, Section 44 of the Evidence Act
would be attracted. As a plea of fraud can be raised even in a
collateral proceeding and the trial court having recorded a
specific finding that the jurisdiction of the Delhi Court was
created artificially by including a Delhi property, in respect
whereof there was no dispute, the said decree must be held
to have been obtained by Sarafs by concealment of material
facts and by a collusive and fraudulent exercise.
53. In the arbitration proceedings, Sarafs stated that
the agreement dated 12-6-1984 was in fact a sale
transaction. In para 8 of the written statement, the stand
taken by them was that the agreement was a sham
document entered into by and between the parties so as to
(2006) 7 SCC 756
enable them to secure removal of padlocks by State Bank of
India, Kanpur.
54. In the said written statement itself they, however,
disclosed about the execution of an agreement for sale in
favour of Defendant 5. The said agreement was registered on
29-9-1984 i.e. much after the execution of agreement for
sale dated 12-6-1984 as also after the institution of the suit.
55. It is now well settled that fraud vitiates every
solemn act. Any order or decree obtained by practising fraud
is a nullity. [See (1) Ram Chandra Singh v. Savitri
Devi [(2003) 8 SCC 319] followed in (2) Vice Chairman,
Kendriya Vidyalaya Sangathan v. Girdharilal Yadav [(2004) 6
SCC 325: 2005 SCC (L&S) 785]; (3) State of A.P. v. T.
Suryachandra Rao [(2005) 6 SCC 149]; (4) Ishwar
Dutt v. Land Acquisition Collector [(2005) 7 SCC 190];
(5) Lillykutty v. Scrutiny Committee, SC & ST [(2005) 8 SCC
283]; (6) Chief Engineer, M.SEB. v. Suresh Raghunath
Bhokare [(2005) 10 SCC 465: 2005 SCC (L&S) 765];
(7) Satya v. Teja Singh [(1975) 1 SCC 120: 1975 SCC (Cri)
50]; (8) Mahboob Sahab v. Syed Ismail [(1995) 3 SCC 693];
and (9) Asharfi Lal v. Koili [(1995) 4 SCC 163].]"
In the afore-quoted three judgments, the Apex Court considers
facts obtaining in each of the cases and holds that fraud would
vitiate the decree. It can be set up in collateral proceedings. What
are the collateral proceedings are necessary to be considered. They
cannot be before the Executing Court. In the case of R.K.PANDEY
supra, the Apex Court holds that even before Executing Court for
the first time under Section 47 CPC, a party can object to a decree,
both on the grounds of fraud as well as lack of subject matter
jurisdiction. The Apex Court has rendered reasons, as the party who
suffered the order was placed ex parte. He was not even the
signatory to the arbitration agreement and the Governor and the
hospital which was a party to the arbitration proceedings had not
even endorsed the agreement. On those facts, it was a clear case
of lack of subject matter of jurisdiction is what the Apex Court
holds. There can no qualm about the principles laid down by the
Apex Court in the afore-quoted judgments. They are
distinguishable with the facts obtaining in the case at hand without
much ado.
12. In the case at hand, the agreement between the two
envisages arbitration. Since respondent is an MSME, it goes before
the MSME Council. Failure of conciliation under Section 18(4) of the
MSME Act led the Council to refer the matter to arbitration. The
petitioner participates in the arbitration, suffers an award as quoted
hereinabove, chooses not to challenge the order under Section 34
of the Arbitration and Conciliation Act. The respondent initiates
execution. In the execution, the petitioner deposits ₹65/- lakhs as
attachment order was passed. The petitioner approaches this Court
in W.P.No.5362 of 2024 and this Court directs the concerned Court
to look into the objections and take the proceedings further. In the
objections, for the first time, new plea with regard to concealment
of facts of fraud are urged without placing any material. The Court
rejects those pleas which were ostensibly invoking Section 47 of the
CPC, on the ground that the Court cannot go beyond the award. I
do not find any error apparent in the order passed by the concerned
Court. The challenge by the petitioner is not the order so passed on
30-08-2024, but the entire proceedings of execution.
13. The petitioner is now wanting to do indirectly what he has
lost to be done directly. The proceedings arise out of arbitration.
The arbitration is under the Arbitration and Conciliation Act which is
a complete code by itself and Section 34 is the only way an award
of Arbitrator can be challenged. It becomes apposite to refer to the
judgment in the case of BHAVEN CONSTRUCTION v. EXECUTIVE
ENGINEER, SARDAR SAROVAR NARMADA NIGAM LIMITED4
wherein the Apex Court holds as follows:
"17. Thereafter, Respondent 1 chose to impugn the
order passed by the arbitrator under Section 16(2) of the
(2022) 1 SCC 75
Arbitration Act through a petition under Articles 226/227 of
the Indian Constitution. In the usual course, the Arbitration
Act provides for a mechanism of challenge under Section 34.
The opening phase of Section 34 reads as
"34. Application for setting aside arbitral
award.--(1) Recourse to a Court against an arbitral award
may be made only by an application for setting aside such
award in accordance with sub-section (2) and sub-section
(3)".
(emphasis supplied)
The use of term "only" as occurring under the provision
serves two purposes of making the enactment a complete
code and lay down the procedure.
18. In any case, the hierarchy in our legal framework,
mandates that a legislative enactment cannot curtail a
constitutional right. In Nivedita Sharma v. COAI [Nivedita
Sharma v. COAI, (2011) 14 SCC 337: (2012) 4 SCC (Civ)
947] , this Court referred to several judgments and held :
(SCC p. 343, para 11)
"11. We have considered the respective
arguments/submissions. There cannot be any dispute that
the power of the High Courts to issue directions, orders or
writs including writs in the nature of habeas corpus,
certiorari, mandamus, quo warranto and prohibition under
Article 226 of the Constitution is a basic feature of the
Constitution and cannot be curtailed by parliamentary
legislation -- L. Chandra Kumar v. Union of India [L.
Chandra Kumar v. Union of India, (1997) 3 SCC 261:1997
SCC (L&S) 577]. However, it is one thing to say that in
exercise of the power vested in it under Article 226 of the
Constitution, the High Court can entertain a writ petition
against any order passed by or action taken by the State
and/or its agency/instrumentality or any public authority or
order passed by a quasi-judicial body/authority, and it is an
altogether different thing to say that each and every
petition filed under Article 226 of the Constitution must be
entertained by the High Court as a matter of course
ignoring the fact that the aggrieved person has an effective
alternative remedy. Rather, it is settled law that when a
statutory forum is created by law for redressal of
grievances, a writ petition should not be entertained
ignoring the statutory dispensation."
(emphasis supplied)
It is therefore, prudent for a Judge to not exercise discretion
to allow judicial interference beyond the procedure
established under the enactment. This power needs to be
exercised in exceptional rarity, wherein one party is left
remediless under the statute or a clear "bad faith" shown by
one of the parties. This high standard set by this Court is in
terms of the legislative intention to make the arbitration fair
and efficient.
19. In this context we may observe Deep Industries
Ltd. v. ONGC [Deep Industries Ltd. v. ONGC, (2020) 15 SCC
706] , wherein interplay of Section 5 of the Arbitration Act
and Article 227 of the Constitution was analysed as under :
(SCC p. 714, paras 16-17)
"16. Most significant of all is the non obstante clause
contained in Section 5 which states that notwithstanding
anything contained in any other law, in matters that arise
under Part I of the Arbitration Act, no judicial authority shall
intervene except where so provided in this Part. Section 37
grants a constricted right of first appeal against certain
judgments and orders and no others. Further, the statutory
mandate also provides for one bite at the cherry, and
interdicts a second appeal being filed [see Section 37(2) of
the Act].
17. This being the case, there is no doubt
whatsoever that if petitions were to be filed under Articles
226/227 of the Constitution against orders passed in
appeals under Section 37, the entire arbitral process would
be derailed and would not come to fruition for many years.
At the same time, we cannot forget that Article 227 is a
constitutional provision which remains untouched by the
non obstante clause of Section 5 of the Act. In these
circumstances, what is important to note is that though
petitions can be filed under Article 227 against judgments
allowing or dismissing first appeals under Section 37 of the
Act, yet the High Court would be extremely circumspect in
interfering with the same, taking into account the statutory
policy as adumbrated by us hereinabove so that
interference is restricted to orders that are passed which
are patently lacking in inherent jurisdiction."
(emphasis supplied)
20. In the instant case, Respondent 1 has not been
able to show exceptional circumstance or "bad faith" on the
part of the appellant, to invoke the remedy under Article 227
of the Constitution. No doubt the ambit of Article 227 is
broad and pervasive, however, the High Court should not
have used its inherent power to interject the arbitral process
at this stage. It is brought to our notice that subsequent to
the impugned order of the sole arbitrator, a final award was
rendered by him on merits, which is challenged by
Respondent 1 in a separate Section 34 application, which is
pending.
21. Viewed from a different perspective, the arbitral
process is strictly conditioned upon time limitation and
modelled on the "principle of unbreakability". This Court in P.
Radha Bai v. P. Ashok Kumar [P. Radha Bai v. P. Ashok
Kumar, (2019) 13 SCC 445: (2018) 5 SCC (Civ) 773]
,observed : (SCC p. 459, paras 36-37)
"36.3. Third, Section 34(3) reflects the principle of
unbreakability. Dr Peter Binder in International Commercial
Arbitration and Conciliation in UNCITRAL Model Law
Jurisdictions, 2nd Edn., observed:
'An application for setting aside an award can only
be made during the three months following the date on
which the party making the application has received the
award. Only if a party has made a request for correction or
interpretation of the award under Article 33 does the time-
limit of three months begin after the tribunal has disposed
of the request. This exception from the three month time-
limit was subject to criticism in the working group due to
fears that it could be used as a delaying tactics. However,
although "an unbreakable time-limit for applications for
setting aside" was sought as being desirable for the sake
of "certainty and expediency" the prevailing view was that
the words ought to be retained "since they presented the
reasonable consequence of Article 33.'
According to this "unbreakability" of time-limit and true
to the "certainty and expediency" of the arbitral awards,
any grounds for setting aside the award that emerge after
the three month time-limit has expired cannot be raised.
37. Extending Section 17 of the Limitation Act would
go contrary to the principle of "unbreakability" enshrined
under Section 34(3) of the Arbitration Act."
(emphasis in original)
If the courts are allowed to interfere with the arbitral
process beyond the ambit of the enactment, then the
efficiency of the process will be diminished."
(Emphasis supplied)
Therefore, the petitioner having lost the opportunity to challenge
the award of the Arbitrator, cannot now by indirect method seek
obliteration of execution proceedings, which is filed to execute the
award against the petitioner.
14. What the petitioner now seeks to contend is that award
was obtained by fraud. It is not the case of the petitioner that it
was placed ex parte or not afforded adequate opportunity. The plea
of fraud and several factors are for the first time placed before the
Executing Court, that too when the coordinate Bench reserved
liberty to file statement of objections. It is trite law that what
should have been done as grounds under Section 34 of the Act
cannot be raised in execution proceedings. Jurisprudence is replete
with several High Courts taking the view that what should have
been urged under Section 34, cannot be raised in execution
proceedings.
14.1. The High Court of Delhi in the case of ANGLO-
AMERICAN METALLURGICAL COAL PRIVATE LIMITED v.
MMTC LIMITED5 has held as follows:
".... .... ....
53. The legislature by using the phrase "such
award shall be enforced in accordance with the
provisions of the Civil Procedure Code" only intends to
"enforce" an award in the same manner and procedure
as contemplated in CPC without altering the nature
and character of an award. The provisions of
the CPC are only applicable to the extent of
"enforcement" of an award such as attachment, sale,
auction, detention, etc. which are reflected in Order
21 CPC. The legislature did not intend to permit a
challenge to an award during enforcement
proceedings again on merits as this would be contrary
to the objectives of the 1996 Act which aim to ensure
finality and limited judicial interference. The challenge
to an award is only to be made under Section 34 of the
1996 Act. Once the award passes the scrutiny under
Section 34 or the period to challenge an award under
Section 34 lapses, the award becomes final and
binding to the parties therein by virtue of Section 35 of
the 1996 Act.
54. If the objections under Section 47 CPC are
allowed to be entertained during the enforcement
(2025) SCC OnLine Del.3201
proceedings of an award, it would effectively open a
second round for challenging the award which the
legislature did not intend to do as the same would
undermine the provision of Section 34 i.e. challenge to
award on limited grounds available as mentioned
therein and render the finality granted by Section 35,
meaningless. Further, if such interpretation is allowed, the
same would defeat the purpose of the 1996 Act which is to
streamline arbitration and reduce the prolonged litigation. In
addition, allowing objections would not only delay the finality
of disputes but would also nullify the basic contours of the
1996 Act. Any particular provision of a statute has to be
harmoniously construed so as not to render any other
provisions of the statue otiose/inconsistent with the other
provisions.
... ... ...
70. As observed above, I have already held that
Section 5 of the 1996 Act aims limited judicial interference.
The legal fiction created by Section 36 of the 1996 Act,
allowing an award to be enforced "as if it were a decree," is
limited solely to its "enforcement" and does not equate an
award with a decree in substance. Further, the arbitral
proceedings are distinct from civil suits/proceedings. The use
of CPC provisions is confined to enforcement mechanisms
under Order 21 and does not allow a re-challenge to the
award on merits, which is exclusively governed by Section 34
of the 1996 Act. In this backdrop, the award cannot be
termed as a decree as the same is not passed by a court.
Also, the AT is not a "court" and an award does not satisfy
any conditions of Section 2(2) CPC which defines a "decree".
For the said reasons and relying on the observations
of Shaukat Hussain case, it is clear that the award which is
sought to be enforced as a decree and is not a "decree"
passed by this Court where the suit is pending. Hence, on
this ground, Order 21 Rule 29 CPC is not applicable."
(Emphasis supplied)
The High Court of Delhi holds that arbitral proceedings are distinct
from civil proceedings. A challenge to the arbitral award can be
made only under Section 34 of the Act. Once the award passes the
scrutiny or the period to challenge the award under Section 34
lapses, then the award becomes final and binding. Challenging the
award in execution is impermissible in law.
14.2. The High Court of Allahabad in the case of LARSEN &
TOUBRO LIMITED v. MAHARAJI EDUCATIONAL TRUST6 has
held as follows:
".... .... ....
22. The issue that an award made in arbitral
proceedings is not a decree within the meaning of CPC
having been settled by the aforesaid pronouncement
by the Hon'ble Apex Court, the provisions of Section
47 CPC cannot be available to obstruct the execution
of the award.
... ... ...
25. Apart from above, the extent of judicial
intervention has been circumscribed by Section 5 of the Act.
In other words, judicial interpretation is prohibited except as
provided under the Act. Section 5 of the Act reads as under :
"Section 5. Extent of judicial intervention.
Notwithstanding anything contained in any other law for the
time being in force, in matters governed by this Part, no
judicial authority shall intervene except where so provided
in this Part. Section 5 of the Act falls under Part-I which
includes within its ambit Section 2 to Section 43 of the Act.
Thus, Sections 34 and 36 are also included in Part-I of the
Act. The judicial intervention having been limited by the
legislature, the Court cannot interfere at any and every
stage on a ground other than those available in the Act
(2010) SCC OnLine All 1866
itself. Thus, once stage of Section 34 is over and the award
becomes final under Section 35, judicial intervention in the
execution of the award under Section 36 cannot be held to
be permissible on any ground, whatsoever, in view of the
limitation imposed by Section 5 of the Act.
26. Thus, having regard to the provisions of
Sections 5, 12, 13, 16, 34, 35 and 36 of the Act, the
irresistible conclusion is only grounds which can be
pressed into service for challenge to an award is
within the ambit and scope of Section 34 of the Act.
Once the stage of section 34 is over and the questions
that were raised or could have been raised at that
stage cannot be allowed to be raised again and again
by pressing into service section 47 of the Civil
Procedure Code at the time of execution of award
under Section 36 of the Act."
(Emphasis supplied)
The Allahabad High Court holds that an arbitral award is to be
enforced like a decree, but it is not a decree as defined under the
CPC.
14.3. The Allahabad High Court, again, in the case of
SANJAY AGARWAL v. RAHUL AGARWAL7 has held as follows:
".... .... ....
29. The applicability of Section 47CPC have been
considered by this Court in Larsen & Toubro Ltd. v. Maharaji
Educational Trust [Larsen & Toubro Ltd. v. Maharaji
Educational Trust, 2010 SCC OnLine All 1866] where it was
held: (SCC OnLine All para 13)
2024 SCC OnLine All 149
"The aforesaid scheme of the Act go to show that
Section 34 of the Act prescribes the ground under which
arbitral award can be challenged. If no application is made
under Section 34 within the prescribed period of limitation
or the application is refused the award becomes final under
Section 35 of the Act and enforceable in terms of Section
36. Section 34 of the Act enumerates specific grounds on
which an application for setting aside an award can be
made. Intention of legislature is a guiding factor for
interpreting the provision of a Statute and the same is to be
gathered from the words used in various provisions and the
scheme of the Statute. Under the 1996 Act, the grounds of
challenge having been specified by the legislature by
enacting Section 34 of the Act and finality having been
attached under Section 35, the legislature obviously did not
intend to either enlarge the scope of grounds of challenge or
to provide another opportunity of challenge after the stage
of Section 34 is over. Thus, the objection to the award on
the grounds enumerated in Section 34 of the Act once
adjudicated cannot be allowed to be raised or reagitated by
permitting to raise objection during the execution
proceedings under Section 36 by pressing Section 47CPC in
service as the same would render the provisions of Sections
34 and 35 of the Act virtually redundant.
The use of words 'the award shall be enforced
under the Civil Procedure Code, 1908 in the same
manner as if it were a decree of the court' in Section
36 of the Act would not mean that the provisions of
the Code of Civil procedure with regard to execution
of decree would become applicable in the execution
of the award. Section 36 only creates a fiction that an
award would be enforceable as if it were a decree of
the court within the scope of Order 21 CPC. This
enforcement of the award under Order 21 CPC would
not attract the application of Section 47CPC simply by
use of the expression 'shall be enforceable as a
decree' in Section 36 nor Section 36 can be read
independent of other provisions contained in the Act
itself. The provisions of the Act are to be reconciled
with each other. Section 36 cannot be read out of
context and independent of the scheme of the Act.
Reference to another statute does not attract
application of such other statute to the referring
statute unless expressly provided. A reference in a
statute to another statute cannot be read in a manner
to invite inconsistency in the referring statute. Any
such reference, if made, has to be interpreted in the
context in which the reference is made so as not to
make inconsistent the provisions of the referring
statute itself. If it brings inconsistency, then the same
is to be avoided. If Section 47CPC is to be attracted,
then the restrictions provided in Section 34 of the Act
and finality to arbitral award by virtue of Section 35
of the Act would be redundant. Section 36 cannot be
interpreted in the manner inconsistent with the
provisions contained in the other part of the Act. That
apart the finality of the decree under the Code is
reached after the decision under Section 47CPC, if
raised. But the legislature in its wisdom thought it fit
to incorporate the scope similar to Section 47CPC in
Section 34 of the Act in order to bring finality before
the award becomes executable. Same procedure
cannot be expected to be incorporated in a statute
twice. Legislature can never be interpreted to intend
repetition. At the same time, the object of the Act is
directed towards speedy and hazard free finality with a view
to avoid long drawn proceeding based on technicalities.
Therefore, having regard to the provisions of Sections 13,
16, 34, 35 and 36 cannot be interpreted in a manner
inconsistent with any of the provisions of the Act to attract
the provisions contained in the Code in its entirety.
Therefore, while considering the application filed under
Section 36 of the Act for the execution of an award, the
court cannot overlook the scope and ambit within which the
court is to execute the award taking aid of the provisions for
execution contained in the CPC not inconsistent with the
provisions contained in the 1996 Act. Therefore, in my view,
Section 47CPC cannot be attracted despite the words 'in the
same manner as if it were a decree of the court' used in
Section 36 when the award is sought to be executed
thereunder.
The matter can be viewed from another angle.
Section 47CPC provides for questions to be determined by
the court executing the decree. The said section reads as
under:
'47.Questions to be determined by the court
executing decree.--(1) All questions arising between the
parties to the suit in which the decree was passed, or their
representatives, and relating to the execution, discharge or
satisfaction of the decree, shall be determined by the court
executing the decree and not by a separate suit.
(2) Omitted by the Code of Civil Procedure
(Amendment) Act, 1976, Section 20 (w.e.f. 1-2-1977)
(3) Where a question arises as to whether any
person is or is not the representative of a party, such
question shall, for the purposes of this section, be
determined by the court.
Explanation I.--For the purposes of this section, a
plaintiff whose suit has been dismissed and a defendant
against whom a suit has been dismissed are parties to the
suit.
Explanation II.--(a) for the purposes of this
section, a purchaser of property at a sale in execution of a
decree shall be deemed to be a party to the suit in which
the decree is passed; and
(b) all questions relating to the delivery of
possession of such property to such purchaser or his
representative shall be deemed to be questions relating to
the execution, discharge or satisfaction of the decree
within the meaning of this section.'
It is, thus, clear that in order to invoke Section
47CPC, there must be a decree. Section 2(2)CPC defines
the decree. For a decision or determination to be a decree,
it must necessarily fall within the four-corners of the
language used in the definition. Section 2(2)CPC defines
decree to mean 'formal expression of an adjudication which,
so far as regards the court expressing it, conclusively
determines the rights of the parties with regard to all or any
of the matters in controversy in the suit and may be either
preliminary or final. It shall be deemed to include the
rejection of a plaint and the determination of any question
within Section 144, but shall not include-- (a) any
adjudication from which an appeal lies as an appeal from an
order, or (b) any order of dismissal for
default'. Explanation.--A decree is preliminary when further
proceedings have to be taken before the suit can be
completely disposed of. It is final when such adjudication
completely disposes of the suit. It may be partly preliminary
and partly final.
The use of words 'adjudication' and 'suit' used by
legislature clearly goes to show that it is only a court which
can pass a decree in a suit commenced by plaint
adjudicating the dispute between the parties by means of a
judgment pronounced by the court. The Hon'ble Supreme
Court in Paramjeet Singh Patheja v. ICDS Ltd. [Paramjeet
Singh Patheja v. ICDS Ltd., (2006) 13 SCC 322 : AIR 2007
SC 168] after considering the definition of decree as
contained in CPC in para 29 has held that 'it is obvious that
an arbitrator is not a court, an arbitration is not an
adjudication and, therefore, an award is not a decree'.
Again in para 31, it has been held that words 'decision', and
'civil court' unambiguously rule out an award by arbitrators
to be a decree. In the said case, the Hon'ble Supreme Court
while considering the question as to whether an insolvency
notice under Section 9 of the Presidency Town Insolvency
Act, 1909 can be issued on the basis of an arbitration
award, held that such notice cannot be issued for the reason
the arbitration award is neither a decree nor an order for
payment within the meaning of Section 9(2) of the
Insolvency Act and it is not rendered in a suit. Thus, the
award not being covered under the definition of a decree,
objection with respect to its validity can only be raised as
provided under Section 34 of the Act and not by taking
resort to Section 47CPC.
In Paramjeet Singh Patheja case [Paramjeet Singh
Patheja v. ICDS Ltd., (2006) 13 SCC 322 : AIR 2007 SC
168] , the Hon'ble Supreme Court has interpreted the words
'as if' used in Section 36 of the Act as under:
'The words "as if" demonstrate that award and
decree or order are two different things. Legal fiction is
created for limited purpose of enforcement as a decree.
The fiction is not intended to make a decree for all
purposes under all statutes, whether State or Central.'
While comparing the provisions of Section 15 of the
Arbitration Act, 1899 which also provided for enforcing the
award as a decree with Section 36 of the Arbitration and
Conciliation Act, 1996, the Hon'ble Supreme Court has
observed in paras 56 and 57 as under: (Paramjeet Singh
Patheja case [Paramjeet Singh Patheja v. ICDS Ltd., (2006)
13 SCC 322 : AIR 2007 SC 168] , SCC p. 345, paras 39 and
40)
'39. Section 15 of the Arbitration Act, 1899 provides
for "enforcing" the award as if it were a decree. Thus a
final award, without actually being followed by the decree
(as was later provided by Section 17 of the Arbitration Act
of 1940), could be enforced i.e. executed in the same
manner as a decree. For this limited purpose of
enforcement, the provisions of CPC were made available
for realising the money awarded. However, the award
remained an award and did not become a decree either as
defined in the CPC and much less so far purposes of an
entirely different statute such as the Insolvency Act'
'40. Section 36 of the Arbitration and Conciliation Act
of 1996 brings back the same situation as it existed from
1899 to 1940. Only under the Arbitration Act, 1940, the
award was required to be made a rule of court i.e. required
a judgment followed by a decree of court.'
The issue that an award made in arbitral proceedings
is not a decree within the meaning of CPC having been
settled by the aforesaid pronouncement by the Hon'ble
Supreme Court, the provisions of Section 47CPC cannot be
available to obstruct the execution of the award.
Much emphasis has been laid by the learned counsel
for the applicant on the decision of the Hon'ble Supreme
Court in Dharma Prathishthanam v. Madhok Construction
(P) Ltd. [Dharma Prathishthanam v. Madhok Construction
(P) Ltd., (2005) 9 SCC 686] wherein it has been held that in
the event of appointment of an arbitrator and reference of
disputes to him being void ab initio as totally incompetent
or invalid the award shall be void and liable to be set aside
in any appropriate proceedings when sought to be enforced
or acted upon. However, the said case relied upon by the
learned counsel for the applicant is distinguishable and will
have no application in the facts of the present case. In the
said case when the award was filed in the court for making
rule of the court under the 1940 Act, objections were filed
by the judgment-debtor under Section 30 of the said Act
which were dismissed on the ground that they were filed
beyond the prescribed period of limitation. The intra-court
appeal preferred against the said order was also dismissed
by the Division Bench against which appeal by special leave
was filed. The dispute being under the 1940 Act, the
question of interpretation of Sections 35 and 36 of the Act
and applicability of Section 47CPC to the execution of an
award was not under consideration before the Hon'ble
Supreme Court. The Hon'ble Supreme Court was
considering the validity of the objection filed under Section
30 of the 1940 Act and having found that since the
appointment of arbitrator and reference of dispute was void
and as such the award was also void and the fact that
application was filed beyond the period of limitation was not
of much significance and delay was liable to be condoned.
The same can be inferred from the following observations
made in para 32 of the judgment: (SCC p. 701, para 32)
'32. In the present case, we find that far from
submitting to the jurisdiction of the arbitrator and
conceding to the appointment of and reference to the
arbitrator Shri Swami Dayal, the appellant did raise an
objection to the invalidity of the entire proceedings
beginning from the appointment till the giving of the award
though the objection was belated. In ordinary course, we
would have after setting aside the impugned judgments of
the High Court remanded the matter back for hearing and
decision afresh by the learned Single Judge of the High
Court so as to record a finding if the award is a nullity and
if so then set aside the same without regard to the fact
that the objection petition under Section 30 of the Act filed
by the appellant was beyond the period of limitation
prescribed by Article 119(b) of the Limitation Act, 1963.
However, in the facts and circumstances of the case, we
consider such a course to follow as a futile exercise
resulting in needless waste of public time. On the admitted
and undisputed facts, we are satisfied, as already indicated
hereinabove, that the impugned award is a nullity and
hence liable to be set aside and that is what we declare
and also do hereby, obviating the need for remand.'
In the present case, the situation is quite different.
The applicant invoking Section 34 of the Act filed their
objection challenging the validity of the award which were
dismissed as barred by limitation. The judgment came to be
affirmed by the Hon'ble Supreme Court on dismissal of the
special leave petition. The grounds of challenge to the
arbitral award which were dismissed as barred by limitation,
were much before the Hon'ble Supreme Court but it did not
find it fit to condone the delay and to consider grounds of
challenge on merit, itself or remand back the proceedings
for the said purpose. Hon'ble Supreme Court rather chose to
affirm the orders passed by the District Judge and this Court
dismissing the objection as barred by limitation. Thus, the
reliance placed by the learned counsel for the applicant on
the aforesaid pronouncement of the Hon'ble Supreme Court
is totally misfounded.
Apart from above, the extent of judicial intervention
has been circumscribed by Section 5 of the Act. In other
words, judicial interpretation is prohibited except as
provided under the Act. Section 5 of the Act reads as under:
'5.Extent of judicial intervention.--
Notwithstanding anything contained in any other law for
the time being in force, in matters governed by this part,
no judicial authority shall intervene except where so
provided in this part.' Section 5 of the Act falls under Part I
which includes within its ambit Section 2 to Section 43 of
the Act. Thus, Sections 34 and 36 are also included in Part
I of the Act. The judicial intervention having been limited
by the legislature, the court cannot interfere at any and
every stage on a ground other than those available in the
Act itself. Thus, once stage of Section 34 is over and the
award becomes final under Section 35, judicial intervention
in the execution of the award under Section 36 cannot be
held to be permissible on any ground, whatsoever, in view
of the limitation imposed by Section 5 of the Act.
Thus, having regard to the provisions of Sections 5,
12, 13, 16, 34, 35 and 36 of the Act, the irresistible
conclusion is only grounds which can be pressed into service
for challenge to an award is within the ambit and scope of
Section 34 of the Act. Once the stage of Section 34 is over
and the questions that were raised or could have been
raised at that stage cannot be allowed to be raised again
and again by pressing into service Section 47 of the Code of
Civil Procedure at the time of execution of award under
Section 36 of the Act."
(Emphasis supplied)
On a blend of the judgments rendered by the High Courts of Delhi
and Allahabad, to which I am in respectful agreement of, what the
petitioner has lost to be done directly is wanting to be done
indirectly. The challenge now is to the execution proceedings having
lost the opportunity to challenge the arbitral award. Therefore, the
challenge raised now is, on the face of it, untenable and is sans
countenance.
15. Much reliance is placed on Section 47 of the CPC by the
learned senior counsel for the petitioner. Section 47 of the CPC
reads as follows:
"47. Questions to be determined by the Court
executing decree.--(1) All questions arising between
the parties to the suit in which the decree was passed,
or their representatives, and relating to the execution,
discharge or satisfaction of the decree, shall be
determined by the Court executing the decree and not
by a separate suit.
(2) * * *
(3) Where a question arises as to whether any person
is or is not the representative of a party, such question shall,
for the purposes of this section, be determined by the Court.
Explanation I.--For the purposes of this section, a
plaintiff whose suit has been dismissed and a defendant
against whom a suit has been dismissed, are parties to the
suit.
Explanation II.--(a) For the purposes of this section, a
purchaser of property at a sale in execution of a decree shall
be deemed to be a party to the suit in which the decree is
passed; and
(b) all questions relating to the delivery of possession
of such property to such purchaser or his representative shall
be deemed to be questions relating to the execution,
discharge or satisfaction of the decree within the meaning of
this section."
(Emphasis supplied)
Section 47 no doubt permits plea of fraud to be raised. But, that
cannot be without any substance. At the outset arbitral award is not
a decree and the plea that was not there before the Arbitrator,
cannot be for the first time permitted to be raised in the execution,
that too invoking Section 47 of the CPC.
16. It is trite law that fraud must be specifically pleaded and
established before the appropriate fora in the original proceedings.
16.1. The Apex Court in the case of ELECTROSTEEL
CASTINGS LIMITED v. UV ASSET RECONSTRUCTION
COMPANY LIMITED8 has clearly held that unless fraud is pleaded
with full particulars, the plea cannot spring from air. The Apex
Court has held as follows:
".... .... ....
8. In Bishundeo Narain [Bishundeo Narain v. Seogeni
Rai, 1951 SCC 447: 1951 SCR 548] in para 22, it is observed
and held as under: (SCC p. 454)
"22. ... Now if there is one rule which is better
established than any other, it is that in cases of fraud,
undue influence and coercion, the parties pleading it must
set forth full particulars and the case can only be decided on
the particulars as laid. There can be no departure from
them in evidence. General allegations are insufficient even
to amount to an averment of fraud of which any court ought
to take notice however strong the language in which they
are couched may be, and the same applies to undue
influence and coercion. See Order 6 Rule 4, Civil Procedure
Code."
(2022) 2 SCC 573
8.1. Similar view has been expressed in Ladli Parshad
Jaiswal [Ladli Parshad Jaiswal v. Karnal Distillery Co. Ltd.,
(1964) 1 SCR 270 : AIR 1963 SC 1279] and after considering
the decision of the Privy Council in Bharat Dharma Syndicate
Ltd. v. Harish Chandra [Bharat Dharma Syndicate
Ltd. v. Harish Chandra, 1937 SCC OnLine PC 24 : (1936-37)
64 IA 143], it is held that a litigant who prefers
allegation of fraud or other improper conduct must
place on record precise and specific details of these
charges. Even as per Order VI Rule 4 in all cases in
which the party pleading relies on any
misrepresentation, fraud, breach of trust, wilful
default, or undue influence, particulars shall be stated
in the pleading. Similarly in K.C. Sharma & Co. [Union of
India v. K.C. Sharma & Co., (2020) 15 SCC 209] it is held
that "fraud" has to be pleaded with necessary particulars.
In Ram Singh [Ram Singh v. Gram Panchayat Mehal Kalan,
(1986) 4 SCC 364], it is observed and held by this Court
that when the suit is barred by any law, the plaintiff
cannot be allowed to circumvent that provision by
means of clever drafting so as to avoid mention of
those circumstances by which the suit is barred by law
of limitation.
8.2. In T. Arivandandam v. T.V. Satyapal [T.
Arivandandam v. T.V. Satyapal, (1977) 4 SCC 467], it is
observed and held in para 5 as under: (SCC p. 470)
"5. We have not the slightest hesitation in
condemning the petitioner for the gross abuse of the
process of the court repeatedly and unrepentantly resorted
to. From the statement of the facts found in the judgment
of the High Court, it is perfectly plain that the suit now
pending before the First Munsif's Court, Bangalore, is a
flagrant misuse of the mercies of the law in receiving
plaints. The learned Munsif must remember that if on a
meaningful -- not formal -- reading of the plaint it is
manifestly vexatious, and meritless, in the sense of not
disclosing a clear right to sue, he should exercise his power
under Order 7 Rule 11 CPC taking care to see that the
ground mentioned therein is fulfilled. And, if clever drafting
has created the illusion of a cause of action, nip it in the bud
at the first hearing by examining the party searchingly
under Order 10 CPC. An activist Judge is the answer to
irresponsible law suits."
8.3. A similar view has been expressed by this Court
in the recent decision in P. Selathal [Canara Bank v. P.
Selathal, (2020) 13 SCC 143]."
(Emphasis supplied)
Therefore, the plea of fraud sought to be set up by the petitioner
for the first time to get away with the making of payment in the
execution cannot be accepted, as it is trite law that Executing
Court cannot go beyond the decree.
16.2. It is apposite to refer to the judgment of the Apex Court
in the case of HARYANA VIDYUT PRASARAN NIGAM LIMITED
v. GULSHAN LAL9 wherein it is held as follows:
".... .... ....
17. As indicated hereinbefore, for the purpose of
allowing an objection filed on behalf of a judgment-debtor
under Section 47 of the Code of Civil Procedure, it was
incumbent on him to show that the decree was ex facie
nullity. For the said purpose, the court is precluded
from making an in-depth scrutiny as regards the
entitlement of the plaintiff with reference to not only
his claim made in the plaint but also the defence set
up by the judgment-debtor. As the judgment of the
trial court could not have been reopened, the
correctness thereof could not have been put to
question.
(2009) 13 SCC 354
18. It is also well known that an executing court
cannot go behind the decree. If on a fair interpretation
of the judgment, order and decree passed by a court
having appropriate jurisdiction in that behalf, the
reliefs sought for by the plaintiff appear to have been
granted, there is no reason as to why the executing
court shall deprive him from obtaining the fruits of the
decree.
19. In Deepa Bhargava v. Mahesh Bhargava [(2009) 2
SCC 294: (2008) 16 Scale 305] this Court held as under:
(SCC p. 298, para 9)
"9. ... An executing court, it is well known, cannot go
behind the decree. It has no jurisdiction to modify a decree.
It must execute the decree as it is. A default clause
contained in a compromise decree even otherwise would not
be considered to be penal in nature so as to attract the
provisions of Section 74 of the Contract Act."
20. It is also not a case where this Court can exercise
its jurisdiction under Article 142 of the Constitution of India
to mould an order. The decree passed by the learned trial
court has attained finality. Whether rightly or wrongly, the
judgment of the learned trial Judge has been affirmed by this
Court. It is one thing to say that no right having crystallised
in favour of a party to the lis, this Court can mould the relief
appropriately, but it is another thing to say that despite the
decree being found to be an executable one, this Court will
refuse to direct execution thereof.
21. We are not oblivious of the fact that the
respondents legally would not have been entitled to the
reliefs prayed for by them. However, as a decree has been
passed, we do not intend to go behind the same. The
executing court shall, it goes without saying, execute the
decree strictly in terms thereof."
(Emphasis supplied)
The Apex Court holds that the Executing Court cannot entertain an
objection filed under Section 47 of the CPC against a decree, unless
it is shown that the decree suffers from an ex-facie nullity. In
execution of decree, the Court will not go behind the decree
or beyond the decree. The Executing Court would only
execute the decree in strict terms thereof. Therefore, the
plea that is now raised without any material which was
never raised, cannot be permitted to be raised in the
execution proceedings.
17. Equally untenable is the plea that because the
petitioner is a Government Corporation, public money is at
stake and special indulgence should follow. The submission
is again sans countenance. The law brooks no such
differential treatment. The Apex Court in the case of PAM
DEVELOPMENT PRIVATE LIMITED v. STATE OF WEST
BENGAL10observes that when State enters the market place, it
sheds its sovereign mantle and is bound, like any other
litigant, by the discipline of law. The Apex has held as follows:
".... .... ....
26. Arbitration proceedings are essentially alternate
dispute redressal system meant for early/quick resolution of
(2019) 8 SCC 112
disputes and in case a money decree -- award as passed by
the arbitrator against the Government is allowed to be
automatically stayed, the very purpose of quick resolution of
dispute through arbitration would be defeated as the decree-
holder would be fully deprived of the fruits of the award on
mere filing of objection under Section 34 of the Arbitration
Act. The Arbitration Act is a special Act which provides
for quick resolution of disputes between the parties
and Section 18 of the Act makes it clear that the
parties shall be treated with equality. Once the Act
mandates so, there cannot be any special treatment
given to the Government as a party. As such, under the
scheme of the Arbitration Act, no distinction is made
nor any differential treatment is to be given to the
Government, while considering an application for
grant of stay of a money decree in proceedings under
Section 34 of the Arbitration Act. As we have already
mentioned above, the reference to CPC in Section 36 of
the Arbitration Act is only to guide the court as to
what conditions can be imposed, and the same have to
be consistent with the provisions of the Arbitration
Act."
(Emphasis supplied)
The Apex Court holds that arbitration proceedings are meant
for quick resolution of the dispute. In case of money decree
passed by Arbitrator against Government is allowed to be
automatically stayed, the very purpose of quick resolution
would be defeated. No special treatment should be given to
the Government as a party.
18. In the light of the preceding analysis, what would
unmistakably emerge is, that the Act is a self contained Code.
Section 34 provides the exclusive remedy for challenging an award.
Section 36 clothes an award with enforceability, as if it were a
decree. Jurisprudence, noted hereinabove, from the Apex
Court or other High Courts is mere unanimous that
objections which could and should have been raised under
Section 34, cannot be paraphrased into execution
proceedings under the guise of Section 47 of the CPC,
indeed, to permit such a course would convert execution into
a proxy appeal, frustrate the principle of finality and reduce
arbitration to a futile ritual.
19. A Government Corporation is dodging the issue of
payment right from 2018 to the respondent who has supplied
materials, on one pretext or the other. What is glaring is, against
arbitral award the petitioner had all the opportunity to file a petition
under Section 34 of the Act within the time limit. The time limit
having gone and impossibility of filing a petition under Section 34 of
the Act emerging, other steps are now taken indirectly to achieve
what it could not do directly.
20. The Court cannot lend its writ jurisdiction to
perpetuate delay and defeat the fruits of an arbitral award.
The petition, therefore, is devoid of merit, being so, should
lead to its dismissal. It does lead, but not a dismissal
simpliciter, but with imposition of exemplary costs to be paid
by the petitioner to the respondent. The act of the petitioner
is a drain, on both judicial time, and the decree holder's
legitimate entitlement. Therefore, this Court deems it fit to
impose exemplary cost of Rs.1,00,000/- payable by the
petitioner to the respondent within 4 weeks. Furthermore, as
the execution proceedings have already languished for nearly 2
years, the Executing Court is directed to bring them to finality,
within 6 months from the date of receipt of copy of the order.
21. For the reasons afore-stated, the following:
ORDER
(i) The Writ Petition fails and is dismissed with costs of
Rs.1,00,000/-.
(ii) The petitioner shall deposit the said cost with the
respondent within 4 weeks from the date of receipt of a
copy of this order.
(iii) The Executing Court shall conclude the pending
execution within 6 months.
(iv) All deposits already made, till date by the
petitioner/Corporation, shall be duly taken into account
in the course of such execution and released in favour
of the respondent.
Consequently, I.A.No.1 of 2024 also stands disposed.
Sd/-
(M.NAGAPRASANNA)
JUDGE
Bkp
CT:SS
