No Objections U/S 47 Of CPC Can Be Moved By Judgment Debtor Against Execution Of Award U/S 36 Of A&C Act: Delhi High Court

Facts

On 07.03.2007, Anglo American Metallurgical Coal Pvt. Ltd. (“Decree Holder”) and MMTC Ltd. (“Judgment Debtor”) entered into a Long-Term Agreement (“LTA”) for the sale and purchase of coking coal from decree holder. Para 20 of the LTA contained an arbitration clause. Disputes arose between the parties during the fifth tranche of delivery in 2009. An arbitral tribunal was constituted which after evidence being led by both the parties and hearing arguments passed the Award dated 12.05.2014 by a majority of 2:1.

The said award was assailed by the Judgment Debtor by way of filing a petition under Section 34 of the Act which was dismissed by the Court vide judgment dated 10.07.2015. The Division Bench of this Court vide judgment dated 02.03.2020 set aside the above judgment dated 10.07.2015 and the Award passed by the Arbitral Tribunal. The Judgment passed by the Division Bench was challenged by the decree holder before the Hon'ble Supreme Court whereby the Supreme Court set aside the judgment dated 02.03.2020 passed by the Division Bench and restored the Award passed by the Arbitral Tribunal.

During the pendency of the enforcement petition under Section 36, the judgment debtor moved objections under Section 47, Code of Civil Procedure, 1908 (“CPC”) to urge that the Award passed by the Arbitral Tribunal is not executable on the ground of “fraud” as Mr. Suresh Babu, the then GM acted in collusion with the decree holder to provide advantage to them which lead to wrongful gain to the decree holder and wrongful loss to the judgment debtor.

Contentions

The Counsels for the Judgment Debtor submitted that the Award passed by the Arbitral Tribunal as per Section 36, ACA is to be enforced in accordance with the provisions of the CPC in the same manner as if it were a decree of the Court. Accordingly, an award which is a nullity, being against public policy can always be challenged, even at the stage of execution. Provisions of the CPC are squarely applicable in execution proceedings.

In light of the same, the Counsels placed reliance on Section 47, CPC to inter-alia contend that all questions relating to execution, discharge or satisfaction of a decree and arising between the parties to the suit in which a decree is passed, shall be determined in the execution proceedings.

The Counsels further submitted that once a plea of fraud has been set up by the judgment debtor before the Executing court and credible evidence in support of such plea has also been placed, it is imperative for the executing court to examine the issue of fraud on merits.

Refuting the arguments of the Judgment Debtor, the Counsel for the Decree Holder submitted that ACA does not contemplate any challenge to an award being raised post conclusion of Section 34, ACA. The Enforcement Court under Section 36 has not been conferred with any jurisdiction to adjudicate on any such challenge or question the award.

It was further submitted that Executing court can refuse to execute a decree, if on the face of it, the same is a nullity i.e. where there is an inherent lack of jurisdiction or ex-facie, it can be shown that fraud was played on the Court itself. The Counsel submitted that the objections set up by the Judgment Debtor are of an alleged fraud on itself as opposed to a fraud on the Court.

The Counsel for the Decree Holder highlighted that no such challenge was raised by the Judgment Debtor in the decade long litigation and is dishonestly sought to be raised at the final stage of execution only to frustrate the Award.

Observations

The Court observed that the question before it was whether the Judgment Debtor was entitled to move objections under Section 47, CPC against the execution of the Award under Section 36, ACA.

The Court observed that once the limitation period for challenging an Award under Section 34 has expired and/or challenge under Section 34 has failed, then the Award has to be enforced. Further the Court held that the words “as if” used in Section 36, ACA itself denotes that an “award” and “decree of the Court” are two different things. By virtue of using this phrase 'as if it were a decree of the Court' does not render an award akin to a decree but only permits the Court to execute an award in the same manner as it were a decree passed by a civil court. It only means that all the powers of the Executing court will be available to a Court towards 'enforcing' an Award and nothing more. Thus, the legal fiction created under Section 36 has read for the limited purpose for which it is created.

The Court clarified that the provisions of CPC are only applicable to the extent of “enforcement” of an Award such as attachment, sale, auction, detention etc. which are reflected in Order XXI, 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 ACA which aim to ensure finality and limited judicial interference.

The Court further observed that if the objections under section 47 of CPC are allowed to be entertained during the enforcement 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.

Thus, the Court concluded that enforcement petition of the Decree Holder would be allowed and the Award passed by the Arbitral Tribunal dated 12.05.2014 would be enforced.

Case Title – Anglo American Metallurgical Coal Pvt Ltd. v. MMTC Ltd.

Case No. – OMP (ENF.) (COMM.) 19/2018 &E.X.APPL.(OS) 1806/2024

Appearance-

For Decree Holder - Mr. Jayant K Mehta, Sr. Adv. with Mr. Sumeet Kachwaha, Mr. Samar Kachwaha, Ms. Ankit K, Ms. Akanksha Mohan and Ms. Ananya Saluja, Advs.

For Respondent - Mr Chetan Sharma, Ld. ASG with Mr Sanat Kumar, Sr. Adv. with Mr. Akhil Sachar, Ms. Sunanda Tulsyan, Mr R.V. Prabhat, Mr. Amit Gupta, Ms. Kashish Maheshwari, Ms. Shweta Pattnaik, Mr. Vinay Yadav, Mr. Saurabh Tripathi, Mr. Vikramaditya Singh and Mr. Shubham Sharma, Advs.

Date – 09.05.2025

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