Parties Are Estopped From Challenging Consent Deed Based On Arbitral Award; Execution Proceedings May Be Revived

A bench of Justices Augustine George Masih and Atul S. Chandurkar heard an appeal concerning whether a party could be permitted to raise estoppel in law while ignoring prior conduct that had induced the other party to alter its position to its detriment. The appeal arose from rival claims of trusteeship and management of Guru Tegh Bahadur Charitable Trust and a challenge to interim relief sought under Section 9 of the Arbitration and Conciliation Act, 1996.

The Court held that the respondents were estopped by their conduct from declaring the arbitral award and the consequent compromise decree a nullity under Section 92 of the Code of Civil Procedure. The judges observed that the respondents had initiated suit in the civil court, denied Section 92 applied, jointly agreed to arbitration, accepted the award of the sole arbitrator and sought disposal of their own appeal in terms of that award; they could not thereafter take an opposite stand. The Court relied on longstanding principles preventing a litigant from "approbate and reprobate" and emphasised party conduct and election as decisive. The Court, in its reasoning, observed: “We therefore find that on the doctrine of estoppel by conduct and election the respondents cannot be permitted to now raise a plea that the compromise deed based on the award dated 30.12.2022 was a nullity in view of the provisions of Section 92 of the Code. On this count, we do not deem it necessary to go into the legality of the award dated 30.12.2022 as was done by the Courts in the impugned orders.” The Court also quoted precedent, asking rhetorically, "Is an action at law a game of chess? Can a litigant change and choose its stand to suit its convenience and prolong a civil litigation on such prevaricated pleas?"

Background: The dispute concerned rival trustees claiming control over the Trust and its school. The respondents had filed a suit for perpetual injunction in civil court, expressly pleading that Section 92 CPC did not bar their suit. The appellants successfully sought rejection of that plaint under Order VII Rule 11 on the ground of Section 92, and the respondents appealed. While that appeal was pending both parties agreed to arbitrate before a sole arbitrator; an award was passed on 30.12.2022. The parties filed a joint application accepting the award and the appellate court disposed of the appeal on 27.01.2023, recording the compromise deed and making it part of the decree. The appellants acted upon the deed, withdrew execution proceedings originally filed on 23.11.2023, and then sought interim measures under Section 9 of the Arbitration Act. The Commercial Court and a Division Bench of the High Court held the award to be non-arbitrable and a nullity under Section 92 and refused interim relief.

The Supreme Court found those courts had not given due weight to the respondents' earlier conduct of approbation and subsequent reprobation. Relying on precedent including Mumbai International Airport Pvt. Ltd. and Dhiyan Singh v. Jugal Kishore, the Court held that where one party accepted and acted upon an award or compromise to the other’s detriment, it could not later repudiate the same on the ground of illegality of the award. The Supreme Court set aside the orders of the Commercial Court dated 24.05.2024 and the High Court dated 30.08.2024, and allowed the civil appeal. It directed that the appellants were at liberty to revive the execution proceedings (Misc. Case No.122 of 2023), to be decided on merits and in accordance with law, leaving parties to bear their own costs. No further interim direction was issued.

Case No.: 2025 INSC 988 (Arising out of SLP (C) No. 29398 of 2024) Case Title: Sanjit Singh Salwan & Ors. v. Sardar Inderjit Singh Salwan & Ors. Appearances: For the Petitioner(s): Mr. C.U. Singh, Senior Advocate For the Respondent(s): Mr. Gagan Gupta, Senior Advocate