Arbitration and Conciliation Act, 1996 – ss.34, 37 – Code of Civil Procedure, 1908 – s.47 – Objections under – Maintainability – Long Term Agreement-LTA between the petitioner and the respondent – Respondent invoked arbitration clause claiming damages on account of the unlifted quantity of coal contracted by the appellant – Arbitration award passed in favour of the respondent – Challenge u/s.34 of the 1996 Act rejected by the Single Judge, however, the Division Bench allowed appellant’s appeal u/s.37 and set aside the arbitral award – In appeal before this Court, the judgment of the Division Bench set aside and that of the Single Judge restored as also the arbitral award – Review Petition filed by the appellant, admitted on the limited issue of interest – Subsequently, clarification application by the appellant disposed of – In the meantime, the respondent filed execution petition seeking enforcement of award and the appellant filed its objections u/s.47 CPC – When the Judgment was reserved, the appellant filed a suit praying that the award is void and unenforceable, however, the said suit was dismissed and the Executing Court dismissed the objections u/s.47 CPC as well as Ord. XXI r.29 application, seeking stay of execution, pending the suit – Challenge to: Held: Objection petition u/s.47 should not invariably be treated as a commencement of a new trial – This Court has warned that there is a steady rise of proceedings akin to a retrial which causes failure of realization of the fruits of a decree, unless prima facie grounds are made out entertaining objections u/s.47 would be an abuse of process – On the material furnished, it cannot be said that the Senior Managerial personnel involved at the helm in appellant company during the relevant period acted in a manner as no reasonable personnel/director in the circumstances would have acted – It cannot be concluded that the decisions taken were not within the range of reasonableness or that the course adopted by them was not one, a reasonably competent personnel/director would adopt – Applying the business judgment rule, the course adopted by them cannot be said to be one to which a court of law would not defer to – Appellants have not been able to even prima facie demonstrate that circumstances exist to conclude that the personnel of appellant did not act in the best interest of the company – Appeal challenges, in the prayer clause, the judgment dismissing the objections, though in the prayer clause, no challenge to dismissal of the application u/Ord. XXI r.29 filed, in the civil appeal the appellants have indicated that they are aggrieved by the said order also – Ord. XXI r. 29 provides for stay of execution pending suit between decree holder and judgment debtor – However, the suit filed itself now stands rejected u/Ord. VII r.11 but a regular first appeal was filed – Hence, an occasion for considering an Ord. XXI r.29 application does not arise – Objection filed u/s.47 claiming that the award as upheld by this Court is inexecutable, is dealt with – Jurisdiction lies in a narrow compass – It is the mandate of this Court that the object of s.47 is to prevent unwarranted litigation and dispose of all objections as expeditiously as possible – No merit in the objections filed by the appellant – No good grounds to entertain the same. [Paras 95-98, 100]
Arbitration – Arbitration award – Execution Petition seeking enforcement of the Award by the respondent – Appellant-MMTC filing its objections u/s.47 CPC and when the Judgment was reserved, MMTC filed a suit praying that the award is void and unenforceable – However, the said suit was dismissed and MMTC filed application u/Ord. XXI r.29 CPC – Executing Court dismissed the objections as well as Order XXI Rule 29 application – Postscript in relation thereto:
Held: Whether in Government, Public Sector Corporations or even in the private sector, the driving force of the entity are the persons who administer them – Certain play in the joints is inevitable for their day-to-day functioning – If they are shackled with the fear that, their decisions taken for the day-to-day administration, could years later with the benefit of hindsight, be viewed with a jaundiced eye, it will create a chilling effect on them – Tendency to play it safe will set in – Decision making will be avoided – Policy paralysis will descend – All this will in the long run prove detrimental not just to that entity but to the nation itself – This Court is not to be understood to be condoning decisions taken for improper purposes or extraneous considerations – Great caution and circumspection have to be exercised before such allegations are brought forward and adequate proof must exist to back them – Otherwise for fear that carefully built reputations could be casually tarnished, best of talent will not be forthcoming, especially for government and public sector corporations. [Para 99]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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