Supreme Court Slams Double Standards | Parties Who Consented To Arbitration Estopped From Opposing Award On Ground Of Non-Arbitrability
Kiran Raj
The Supreme Court of India Division Bench of Justice Augustine George Masih and Justice Atul S. Chandurkar held that respondents, having earlier consented to the disposal of their appeal on the basis of an arbitral award, were estopped from subsequently questioning the validity of that award. The Court directed that the appellants were entitled to revive their execution proceedings that had been earlier withdrawn, clarifying that the compromise decree, passed in terms of the arbitral award, continued to subsist and had not been challenged. The Court set aside the orders of the Commercial Court and the High Court that had dismissed the appellants’ plea under Section 9 of the Arbitration and Conciliation Act, 1996, on the ground of non-arbitrability of the dispute. The civil appeal was allowed, with liberty to the appellants to pursue execution proceedings.
The dispute pertained to the management and affairs of the Guru Tegh Bahadur Charitable Trust. Both appellants and respondents claimed to be trustees of the said Trust. A disagreement arose between the parties when respondents alleged that the appellants had been removed as trustees. The respondents thereafter instituted a civil suit seeking perpetual injunction to restrain the appellants from entering the premises of the school run by the Trust and from interfering in its functioning.
The appellants responded by filing an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the plaint on the ground that the suit was barred by Section 92 of the Code. The Trial Court accepted this objection and, on 13 April 2022, rejected the plaint. Aggrieved, the respondents filed an appeal before the District Court. During the pendency of this appeal, the respondents submitted an application dated 7 July 2022, stating that the parties had mutually agreed to refer the disputes to a sole arbitrator, Shri Vipin Sodhi, Advocate, Meerut.
On 30 December 2022, the arbitrator passed an award outlining an arrangement for managing the affairs of the Trust. Subsequently, on 2 January 2023, both parties filed a joint application before the District Court, confirming acceptance of the award and seeking disposal of the pending appeal in its terms. On 27 January 2023, the District Court disposed of the appeal in accordance with the arbitral award and directed that the compromise deed recording the award form part of the decree. This decree was never challenged and continued to remain in force.
The appellants claimed to have fulfilled their obligations under the award, but alleged that the respondents had failed to perform their part. Consequently, on 23 November 2023, the appellants initiated execution proceedings by filing Miscellaneous Case No. 122 of 2023. These proceedings, however, were withdrawn on 8 December 2023, following which the appellants filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures based on the award.
The respondents opposed the application, arguing that the award was a nullity since it pertained to the affairs of a charitable trust, which under Section 92 of the Code, could not be referred to arbitration. On 24 May 2024, the Commercial Court accepted this contention, holding that the award dated 30 December 2022 was a nullity and rejecting the appellants’ application under Section 9. The appellants filed an appeal under Section 37 of the Act, which was dismissed by the High Court on 30 August 2024, affirming the Commercial Court’s decision. Aggrieved, the appellants approached the Supreme Court.
The Supreme Court examined the admitted facts on record, noting that the respondents had originally asserted that their suit was not barred by Section 92 CPC. The Court recorded: “These admitted facts clearly indicate that the respondents had taken a conscious stand that the suit filed by them was not barred by Section 92 of the Code and that on the basis of the compromise deed in the form of the award dated 30.12.2022, a decree was passed in the appeal preferred by them. These facts assume importance since they reflect on the conduct of the parties, especially the respondents.”
The Bench further noted that respondents, after having sought disposal of their appeal on the strength of the award, later adopted a contradictory stance by asserting that the award was a nullity. The Court stated: “In our view, it would be impermissible for the respondents to take such opposite stand from the one that they had taken while initiating the proceedings. Having specifically pleaded that the suit filed by them was not hit by the provisions of Section 92 of Code, it would not be now open for them to oppose the validity of the compromise deed dated 02.01.2023 by raising such ground.”
Quoting precedent, the Court relied on the doctrine of estoppel and the principle of approbation and reprobation. It recorded: “The common law doctrine prohibiting approbation and reprobation is a facet of the law of estoppel and well established in our jurisprudence also. It is an elementary rule that a party litigant cannot be permitted to assume inconsistent positions in court, to play fast and loose, to blow hot and cold, to approbate and reprobate to the detriment of his opponent.”
The Court also referred to Dhiyan Singh v. Jugal Kishore (AIR 1952 SC 145), noting: “Even if the award be invalid we are of the opinion that the plaintiffs’ claim is completely answered by the plea of estoppel… There can be no doubt that she acted to her detriment and there can, we think, be equally no doubt that she was induced to do so on the faith of Brijlal’s statements and conduct which induced her to believe that he accepted all the implications of the award.”
The Bench concluded that the respondents, by consenting to the compromise deed and having the appeal disposed of on that basis, could not later question its validity. It held: “The respondents thus by their conduct of accepting the compromise deed based on the award of the arbitrator are now precluded from questioning its validity.”
The Court held that the appellants could not be left without remedy, particularly when the compromise decree had never been challenged and continued to subsist. It stated: “The justice of the case therefore requires that the appellants ought to be permitted to revive the execution proceedings that they had filed being Miscellaneous Case No. 122 of 2023. These proceedings were withdrawn shortly after being filed to enable the appellants to file the application under Section 9 of the Act of 1996 and there was no adjudication of the same on merits.”
Accordingly, the Supreme Court allowed the civil appeal, setting aside the orders of the Commercial Court and the High Court. The Bench directed: “The appellants are at liberty to revive the execution proceedings in the form of Miscellaneous Case No.122 of 2023. The execution proceedings shall be decided on their own merits and in accordance with law. The civil appeal is allowed in aforesaid terms leaving the parties to bear their own costs.”
Advocates Representing the Parties
For the Petitioner(s): Mr. Punit Dutt Tyagi, Advocate-on-Record; Ms. Smriti Sahai, Advocate.
For the Respondent(s): Mr. Gagan Gupta, Senior Advocate; Mr. Ashutosh Garga, Advocate; Mr. Sanchit Garga, Advocate-on-Record; Ms. Mithu Jain, Advocate; Mr. Shashwat Jaiswal, Advocate; Mr. Kunal Rana, Advocate; Mr. Bhanu Pratap Singh, Advocate; Ms. Diksha Arora, Advocate.
Case Title: Sanjit Singh Salwan & Ors. v. Sardar Inderjit Singh Salwan & Ors.
Neutral Citation: 2025 INSC 988
Case Number: Civil Appeal arising out of SLP (C) No. 29398 of 2024
Bench: Justice Augustine George Masih, Justice Atul S. Chandurkar
