Summary
Where trustees who had sued for injunction, pleaded that their suit was not barred by Section 92 CPC, agreed to arbitration during their own appeal and had the appeal disposed of by a compromise decree in terms of the award, the Supreme Court held them estopped by conduct and election from later contending, in opposition to a Section 9 application, that the award was a nullity for non-arbitrability under Section 92; the Commercial Court and High Court orders were set aside and the appellants were allowed to revive execution of the compromise decree.
Issues
- Whether a party that consented to arbitration and obtained a compromise decree in terms of the award can later plead that the award is a nullity because disputes relating to a public trust are non-arbitrable under Section 92 CPC.
- Whether the plea that there can be no estoppel against law enables such a party to overcome the doctrine of approbation and reprobation.
- What relief the appellants, non-suited on the Section 9 application, were entitled to in view of the unchallenged compromise decree.
Provisions considered
- Section 92, Code of Civil Procedure, 1908The respondents had themselves pleaded in their plaint that the suit did not fall within Section 92 and resisted the appellants' objection on that score; having taken that stand and obtained a compromise decree on the award, they could not later invoke Section 92 to call the award a nullity. The Court did not examine the legality of the award under Section 92. (¶¶ 8, 9, 12, 14, 19)
- Order VII Rule 11, Code of Civil Procedure, 1908The trial court had rejected the plaint on the appellants' application as barred by Section 92; the respondents appealed against that rejection and it was in that appeal that the matter was referred to arbitration and the compromise decree passed. (¶¶ 3, 9)
- Section 9, Arbitration and Conciliation Act, 1996The appellants' application for interim measures in terms of the award was rejected by the Commercial Court on the ground that the award was a nullity; the Court held that non-suiting the appellants on that ground caused grave injustice and permitted them to revive the execution proceedings they had withdrawn to file the Section 9 application. (¶¶ 5, 13, 20, 21)
Held
- A litigant cannot take a diametrically opposite stand from the one taken when initiating proceedings; the respondents, having pleaded that their suit was not hit by Section 92 CPC, willingly referred the matter to arbitration and sought disposal of their appeal in terms of the award, are estopped by conduct from attacking the compromise deed on the ground of non-arbitrability. (¶¶ 12, 13, 14)
- The common law doctrine prohibiting approbation and reprobation is a facet of estoppel; a party who accepts a benefit under an instrument cannot say it is valid for one purpose and invalid for another. (¶¶ 15, 16)
- The plea that there is no estoppel against law does not surmount the equitable hurdle of estoppel by conduct and election; following Dhiyan Singh v. Jugal Kishore, where parties accept an award and the other side alters its position on that footing, the invalidity of the award as a question of law cannot be considered apart from the conduct of the parties. (¶¶ 17, 18)
- The appellants had acted on the consent deed to their detriment by withdrawing the FIR and parting with substantial amounts; the respondents, having had their appeal disposed of on the strength of the award, were precluded from questioning its validity, and the Court did not go into the legality of the award. (¶¶ 18, 19)
- The Commercial Court and High Court failed to give due importance to the compromise decree, which was never challenged; the appellants, who had withdrawn execution proceedings only to file the Section 9 application, could not be left remediless and were permitted to revive the execution proceedings. (¶¶ 20, 21)
Result
Appeal allowed; Commercial Court order dated 24.05.2024 and High Court judgment dated 30.08.2024 set aside; appellants at liberty to revive execution proceedings (Miscellaneous Case No.122 of 2023), to be decided on merits in accordance with law; parties to bear their own costs.