KARNATAKA STATE MEDICAL SUPPLIES v. PLASTI SURGE INDUSTRIES PVT. LTD

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. 6

Conversely, 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 7 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.

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:

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:

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. 9 b. c. d. e. 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. 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.

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 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. 11 (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 directed to be released/disbursed 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.

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 12 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 in Reference N.MH/03 Enterprises Facilitation Council 13 /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.

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.

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: Non delivery of goods. defective and returned goods i) ii) iii) Earnest money deposit/security deposited iv) GST amount not paid correctly v) Lab Testing amount 14 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) ii) iii) Bibhuti Bhusan Dutta v. Samarendra Nath Misra – MANU/WB/0332/2002 M.Abdul Kareem & Ors. v. State of Karnataka and others – MANU/KA/0256/2023. Gouriamma MANU/KE/0276/2010 v. Yohannan Luckose – 15 iv) v) vi) Copy of the judgment in W.P.No.8352 of 2022 (GM – CPC) connected with Writ Petition No.12935 of 2022 (GM-CPC). Copy of the judgment in Civil Appeal No.4258 of 2022 dated 28-09-2022. 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 16 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 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. Facilitation Council

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:

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.

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 17 why the executing court shall deprive him from obtaining the fruits of the decree.

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. 18

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. 19

11.1. The Apex Court in the case of VENTURE GLOBAL ENGINEERING v. SATYAM COMPUTER SERVICES LIMITED1 has observed as follows: “…. …. …..

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).

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 to another, or by which an undue or injurious unconscientious advantage is taken of another.

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: 1 (2010) 8 SCC 660 20

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.

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”.

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 21 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 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 reasons the cumulative agreement. From elucidated above, this is a clear case of lack of subject matter jurisdiction.

facts and Pandey, R.K. No. 1, 2 2025 SCC OnLine SC 52 22

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

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.

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 3 (2006) 7 SCC 756 23 enable them to secure removal of padlocks by State Bank of India, Kanpur.

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. [See

It is now well settled that fraud vitiates every solemn act. Any order or decree obtained by practising fraud is a nullity. (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 24 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 the afore-quoted judgments. They are distinguishable with the facts obtaining in the case at hand without much ado.

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 25 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.

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 4(2022) 1 SCC 75 26 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 considered 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 for redressal of statutory is created by 27 grievances, a writ petition should not be entertained ignoring the statutory dispensation.

(emphasis supplied) judicial interference beyond It is therefore, prudent for a Judge to not exercise discretion to allow 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.

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 28 interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction.” (emphasis supplied)

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.

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 Law Arbitration Jurisdictions, 2nd Edn., observed: and Conciliation in UNCITRAL Model ‘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, 29 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.

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 30 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 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 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. during

54. If the objections under Section 47 CPC are allowed to be entertained during the enforcement 5 (2025) SCC OnLine Del.3201 31 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. … … …

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.” The High Court of Delhi holds that arbitral proceedings are distinct from civil proceedings. A challenge to the arbitral award can be (Emphasis supplied) 32 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: “…. …. ….

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. … … …

Apart from above, 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 : the extent of judicial “Section 5. Extent of 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 6 (2010) SCC OnLine All 1866 33 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 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: “…. …. ….

The applicability of Section 47CPC have been considered by this Court in Larsen & Toubro Ltd. v. Maharaji Ltd. v. Maharaji Educational Educational Trust, 2010 SCC OnLine All 1866] where it was held: (SCC OnLine All para 13) Trust [Larsen & Toubro 72024 SCC OnLine All 149 34 “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.