MMTC Limited v. Anglo-American Metallurgical Pty Limited and Ors.

14. There was no reason whatsoever for the plaintiff, which was purchasing coking coal from the defendant No.1 till 30.09.2008 at USD 96.40, to agree to the price of USD 300 per MT for the same period. The execution of the Addendum No. 2 was the catalyst, which drove the defendant No.1 to an ever-dominating position in the transaction. On the other hand, the defendant No. 1 in News Release dated 20.02.2009 made an unambiguous admission that in the second half of 2008, as a result of global economic slowdown, there had been a significant decline of prices of commodities including coking coal.

15. On said price, when the plaintiff was unable to make purchases, the defendant No.1 invoked the arbitration clause of the LTA and obtained an Arbitral Award dated 12.05.2014 against the plaintiff for damages on account of alleged non-lifting of 4,54,034 MT out of the contractual 4,66,000 MT of coking coal by the plaintiff and the defendant No.1 was held to be entitled to recover damages to the tune of US$ 78,720,414.92 along with pre-award interest @ 7.5% inthe sum of US$ 27,329,420.29, along with costs of US$ 977,395, amounting to US$ 107,027,230.21 (approximately Rs. 716 crores), and interest @ 15% on the principal sum from the date of the Award until payment.

16. In execution of said Arbitral Award, the plaintiff has been made to deposit a sum of Rs. 1087,76,44,465.40, (though the calculation of thisamount is disputed by the plaintiff), apart from the original title deeds of 36 immovable properties vested with or owned by the plaintiff totalling to a sum of Rs. 1,275.51 crores with the registry of this Hon‟ble Court.

17. These aforesaid facts itself speaks that there was neither any plausible reason nor circumstance, prevalent in the market justifying in any manner, procurement of 4.66 lakh MT and that too at a price of US$ 300 per MT. Fraud is evident and apparent on the face of record, since the execution of the Addendum No. 2 on 20.11.2008 was the result of fraud, collusion, conspiracy and corruption. This conspiracy led to wrongful gain to the defendant No.1 and wrongful loss to the plaintiff and is a case of an egregious fraud.

18. The defendant No. 4 i.e. Sh. Ved Prakash, Chief General Manager, who addressed the communication dated 20.11.2008, subsequently became the Director (Mktg) on 19.02.2010 and thereafter promoted to the role of Chairman cum Managing Director (“CMD”) of the plaintiff on 14.03.2015 and remained until his superannuation on 29.02.2020. The said officer remained in control of the arbitral proceedings, the hearing of the objections as well as appeal under section 37 of 1996 Act. Post superannuation of Shri Ved Prakash, upon enquiry, it surfaced that he is doing business in Dubai and Mr. Sanjeev Batra, who was the CMD during the period when the addendum was signed, is presently doing business in Singapore.

19. On 24.02.2021, the then CMD, MMTC for the first time issued a confidential note addressed to Joint Secretary, FT(ST), Department of Commerce with a copy to CVO, MMTC, requesting the CVO to seek Govt. of India permission for the enquiry into the matter. On 25.03.2021, the said Department gave permission to initiate enquiry.

20. Pursuant to the letter dated 25.03.2021, the plaintiff examined the case related to supply of coking coal and dispute pertaining to the fifth delivery period and submitted a factual report dated 27.09.2021. Thereafter the matter was examined and on 16.08.2022, a decision was taken to refer the matter to the CBI vide Office Memorandum No.C-13011/06/2020-21-VIG issued by the Under Secretary (Vigilance), Department of Commerce, conveying the approval of the Hon‟ble Commerce and Industry Minister for handing over the case to CBI for detailed investigation of the matter. On 02.09.2022, a Complaint was registered with the CBI by the plaintiff.

21. After getting sanction, on 09.01.2023, the CBI registered a Preliminary Enquiry bearing No. PE2172023A0001. The plaintiff has also moved an application under Section 156(3) of the Criminal Procedure Code, 1973 seeking registration of FIR in the subject matter. Learned Special Judge, CBI vide order dated 09.05.2024 dismissed the said application as not maintainable on the ground that the Court of Learned Special Judge, CBI does not have the powers to direct the CBI to register an FIR. Against the said order, Criminal Revision Petition No. 1060 of 2024 has been filed and notice has been issued.

22. This conspiracy is therefore, currently under further investigation by the CBI. The seeds of the commercial relationship between the exofficials of the plaintiff and the defendant No. 1 leading to the execution of the Addendum No. 2 dated 20.11.2008 is a product of fraud, and as such, the Agreement and the ensuing entire Arbitral proceedings, leading to the culmination of the Award dated 12.05.2014 are infected by poison of fraud.

23. The plaintiff has already invoked the criminal remedies by filing complaint before the CBI and is also independently invoking the civil remedy by way of filing the present suit.

24. Mr. Harish Salve, learned senior counsel appearing for the plaintiff, on maintainability, submits that the averments made in the plaint are to be taken on a demurrer and the merits of the case and the defence available to the defendants are irrelevant to decide the question, whether or not to reject the plaint. The defendant No. 1 has attempted to make oral submissions with regard to the merits of the case, which is impermissible in law as at this stage, the averments made in the plaint are to be considered as true and correct. Reliance is placed on P.V. Guru Raj Reddy v. P. Neeradha Reddy, (2015) 8 SCC 331.

25. The defendant No. 1 has urged that prayers and more particularly (b) and (c) are barred in terms of Section 5 of 1996 Act. However, the case of the plaintiff is that section 5 does not bar the institution of the present suit. Even if it is presumed that prayers (b) and (c) are not maintainable, it is not the case of the defendant No. 1 that prayers (a),

(d) and (e) are not maintainable. Section 5 of 1996 Act nowhere states that the aforementioned reliefs i.e. (a), (d) and (e) cannot be sought by way of a separate suit.

26. Mr. Salve, learned senior counsel while relying on Central Bank of India vs. Smt. Prabha Jain and Others, (2025) 4 SCC 38, submits that even if prayers (b) and (c) as contended by the defendant No. 1 to be barred by law, the said issue cannot be decided under Order VII Rule 11 of Code of Civil Procedure, 1908 (“CPC”) since the plaint cannot be rejected partially and no observations with regard to the prayers (b) and (c) can be made.

27. Admittedly, no application has been filed under section 8 of 1996 Act by defendant No. 1. The plaintiff has clearly pleaded that the Award passed by the AT is tainted by fraud and corruption and the former employees of the plaintiff i.e. defendants Nos. 4-7 colluded with officials of defendant No. 1, causing a substantial loss exceeding Rs. 1,000 crores to the public exchequer. Such serious allegations having broader implications for the public interest must be adjudicated by a Civil Court and are not arbitrable in nature.

28. Reliance is placed on Interplay Between Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1 and more particularly on paragraph 276. Reliance is also placed on National Projects Construction Corporation v. Royal Construction Co. Pvt. Ltd., 2017 SCC OnLine Del 10944 wherein it was held that a suit is maintainable to set aside an Arbitral Award, which is obtained by fraud and the proceedings pursuant thereto are tainted by fraud.

29. Learned senior counsel while placing reliance on M. Hariharasudhan v. R. Karmegam, (2019) 10 SCC 94 and more particularly on paras 5- 6, submits that the jurisdiction of a Civil Court to entertain the suit has to be determined whether the Act provides an adequate final remedy to what the Civil Court would normally do in a suit, such that the jurisdiction of the Civil Court must necessarily be inferred to have been ousted. It is submitted that 1996 Act does not provide for a situation, as pleaded in the plaint. As the 1996 Act does not provide any remedy in such scenario wherein the fraud has been discovered post conclusion of the arbitration proceedings, the plaintiff cannot be rendered remediless and thus the present suit is maintainable.

30. On merits, Mr. Salve, learned senior counsel submits that the cause of action to file the present suit arose for the first time on 16.08.2022, whenafter examining the entire material available and discovered, a decision was taken to refer the matter to the CBI vide Memorandum dated 16.08.2022 issued by the Under Secretary (Vigilance), Department of Commerce, conveying the approval of the Commerce and Industry Minister for handing over the case to the CBI for a detailed investigation in the matter. The plea of fraud was never taken by the plaintiff before the Arbitral Tribunal or in the Objections under section 34 and 37 as well as before the Hon‟ble Supreme Court as the arbitration proceedings were conducted under the supervision of defendant No. 4.

31. Reliance is placed on United India Insurance Co. Ltd. versus Rajendra Singh and Others, (2000) 3 SCC 581 wherein the Hon‟ble Supreme Court has observed that the party cannot be rendered remediless, in the event, it learns about the newly discovered facts amounting to fraud of high degree.

32. A decree obtained by fraud can be set aside by filing a separate suit. Reliance is placed on Indian Bank v. Satyam Fibres (India) (P) Ltd., (1996) 5 SCC 550. The LTA, in the present case, is unlawful and immoral in terms of section 23 of Contract Act, 1872 and the Arbitral Tribunal having not been apprised about the Agreement being unlawful or in ignorance of the said statutory provision, has passed an Arbitral Award.

33. Learned senior counsel urges that the Arbitrator becomes functus officio once the Award is signed and no recourse can be made before the Arbitral Tribunal. In the absence of fraud not being discovered at that stage when the Award was assailed in section 34, will the aggrieved party be constrained to suffer the enforcement of the said unlawful Award? To this, it is submitted that no Court would permit the Award holder to enforce an unlawful Award. The 1996 Act does not expressly or impliedly bar the jurisdiction of a Civil Court to challenge such an unlawful Award by filing a separate suit. Reliance is placed on Union of India v. Ramesh Gandhi, (2012) 1 SCC 476 and more particularly on paragraph 23.

34. Mr. Salve, learned senior counsel further argues that the fixation of price of coking coal for the fifth delivery period at US$ 300 per MT and the subsequent discovery of fraud leading to the execution of the Addendum No. 2 was not the subject matter before the learned Arbitral Tribunal and neither before the Hon‟ble Supreme Court. On behalf of the Defendant No. 1

35. Mr. Jayant Mehta, learned senior counsel appears for the defendant No. 1 and vociferously submits that the present suit is ex-facie barred by law, and non-maintainable, apart from being an abuse of process. It deserves rejection at the very threshold, without issuance of summons.

36. He submits that the plaintiff had breached the terms of the LTA by failing to lift the bulk of the required quantity of coal which led to invocation of the arbitration clause. The Arbitral Tribunal entered reference and thereafter, the Award was passed on 12.05.2014. The Award was finally upheld by the Hon‟ble Supreme Court, vide its judgment dated 17.12.2020, the plaintiff filed a Review Petition, which was disposed of vide Order dated 29.07.2021. MMTC then filed an application seeking clarification, which was also disposed of vide order dated 19.04.2022.

37. The present suit has been filed by the plaintiff after the hearing in Enforcement Petition was concluded. The plaintiff moved an objection under section 47 of CPC on the same grounds taken in the present suit i.e. fraud. The said objections were dismissed by this Court on 09.05.2025.

38. Learned senior counsel argues that the pith and substance of the present suit is to question an International Award, which has attained finality till the Hon‟ble Supreme Court. The plaintiff seeks nullification of the Award, by way of a commercial suit which is unknown to law. Such recourse is barred by law under sections 5 and 34 of 1996 Act.

39. Mr Mehta argues that in view of non obstante clause in section 5, the jurisdiction of Civil Court is ousted. The 1996 Act is a complete code in itself. The 1996 Act categorically provides challenge to an Arbitral Award i.e. section 34. Hence, the present suit seeking to challenge the Award (prayer b) is clearly barred by section 5 read with section 34 of 1996 Act and is evidently “barred by law” within the meaning of Order 7 Rule 11 (d) of CPC.

40. The contention raised by the plaintiff that suit is maintainable by placing reliance on judgment that a decree may be challenged at the stage of execution (under section 47 of CPC) or by way of a separate suit is fundamentally flawed for the reason that the plaintiff has not shown that the alleged fraud was played on the Court or a decree was passed by a Court which inherently lacked jurisdiction. A bare reading of the plaint does not show that either of these grounds are pleaded or made out. An arbitral Award is only enforceable “as if it were a decree,” by way of a deeming fiction contained in section 36 of 1996 Act. The said deeming fiction does not convert the Award into a decree but only provides a mechanism for execution.

41. Learned senior counsel urges that section 34 of 1996 Act is the sole and exclusive remedy against an Arbitral Award. Applicability of all other laws are barred. If the present suit is held to be maintainable, Arbitral Awards and section 34 proceedings would lose all sanctity, and every Award Debtor shall seek to come up with a „new ground‟ to challenge the Award, by way of a suit. Holding such an action to be maintainable shall completely defeat the objectives of the 1996 Act.

42. On reading the plaint, the plaintiff has admitted that the disputes arose between the parties, in relation to Addendum No. 2. These disputes were referred to arbitration, leading to the Award dated 12.05.2014. The said Award has attained finality. The plaintiff cannot now seek to raise a new challenge to the said Addendum. The cause of action in relation to the Addendum stands merged into the said Award. There exists no cause of action in relation to the Addendum independent of or outside the Award.

43. Hence, the present suit is therefore not just barred by law, but an abuse of the process, seeking to reopen facts which stand settled, and through a process unknown to law. None of the prayers sought by the plaintiff in the present suit can stand in the face of the Award. Each one of them, to be granted, would require the Award to first be set aside, which cannot be done by way of a suit. Therefore, the present suit is ex facie vexatious and deserves to be dismissed at the very threshold. On behalf of the Defendant Nos. 4-7

44. Ms. Shyel Trehan, learned senior counsel for the defendant Nos. 4-7 adopts the submissions advanced by Mr. Mehta, learned senior counsel for the defendant No. 1 and in furtherance thereof, she submits that the present suit is barred by the limitation as the Addendum No. 2 is dated 20.11.2008 and the delivery of coal as per the Addendum No. 2 was scheduled between 01.07.2008 to 30.06.2009. The plaint discloses the purported cause of action as 16.08.2022, the date the plaintiff preferred a Complaint with the Central Bureau of Investigation alleging fraud by defendants 4 to 7. It is noteworthy that no such allegation was made prior to this time. The said act of submitting a complaint cannot give rise to an independent cause of action.

45. In this view, a suit, that is on the face of it, barred by limitation is liable to dismissed at the threshold. Reliance is placed on Nikhila Divyang Mehta v. Hitesh P. Sanghvi, 2025 SCC OnLine SC 779 and Shri Mukund Bhavan Trust v. Shrimant Chhatrapati Udayan Raje Pratapsinh Maharaj Bhonsle, 2024 SCC OnLine SC 3844.

46. She further submits that the prayers in the present suit disclose the purpose of the suit which is to garner another opportunity at challenging the Arbitral Award while unfairly seeking to place a claim of fraud on its own officers, a claim that is belied by a plain reading of the plaint and the accompanying documents.

47. Ms. Trehan while relying on Clause 1 and 2 of LTA, submits that the price and quantity were pre-determined under the terms of the MoU and LTA. The transaction was approved by the SPCoD in its meeting dated 06.10.2008. It is pertinent to point out that the SPCoD that approved the proposal for the import of coking coal for NINL and fixed the quantity and price, consisted of approximately 10 Directors and General Managers, however, only 4 have been arrayed as defendants herein.

ANALYSIS

48. Heard learned senior counsels for the parties and considered the material placed on record.

49. The issue for determination in this judgment is can a civil suit be maintainable to nullify an Arbitral Award when the same has attained finality as per the 1996 Act.

50. Order VII Rule 11 of CPC reads as under:- “ORDER VII Plaint

11. Rejection of plaint.— The plaint shall be rejected in the following cases:— (a) where it does not disclose a cause of action; (b) where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;

(c) where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to befixed by the Court, fails to do so;

(d) where the suit appears from the statement in the plaint to be barred by any law; (e) where it is not filed in duplicate; (f) where the plaintiff fails to comply with the provisions of rule 9: Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff.” (Emphasis added)

51. On perusal, the said rule provides 6 grounds to reject the plaint. Amongst others, when the plaint is barred by any law or the plaint does not disclose any cause of action, then the Court shall reject the plaint. The Hon‟ble Supreme Court in Dahiben v. Arvindbhai Kalyanji Bhanusali, (2020) 7 SCC 366 has exhaustively explained the applicability of the said provision in paragraph 23 which is extracted below:- “23.2. The remedy under Order 7 Rule 11 is an independent and special remedy, wherein the court is empowered to summarily dismiss a suit at the threshold, without proceeding to record evidence, and conducting a trial, on the basis of the evidence adduced, if it is satisfied that the action should be terminated on any of the grounds contained in this provision.

23.3. The underlying object of Order 7 Rule 11(a) is that if in a suit, no cause of action is disclosed, or the suit is barred by limitation under Rule 11(d), the court would not permit the plaintiff to unnecessarily protract the proceedings in the suit. In such a case, it would be necessary to put an end to the sham litigation, so that further judicial time is not wasted.

23.4. In Azhar Hussain v. Rajiv Gandhi [Azhar Hussain v. Rajiv Gandhi, 1986 Supp SCC 315. Followed in Manvendrasinhji Ranjitsinhji Jadeja v. Vijaykunverba, 1998 SCC OnLine Guj 281: (1998) 2 GLH 823] this Court held that the whole purpose of conferment of powers under this provision is to ensure that a litigation which is meaningless, and bound to prove abortive, should not be permitted to waste judicial time of the court, in the following words: (SCC p. 324, para 12)

power to reject a plaint, if it does not disclose any cause of action.” …..…… ………..…. ……..……

23.6. Under Order 7 Rule 11, a duty is cast on the court to determine whether the plaint discloses a cause of action by scrutinising the averments in the plaint [Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea Success I, (2004) 9 SCC 512], read in conjunction with the documents relied upon, or whether the suit is barred by any law.

23.10. At this stage, the pleas taken by the defendant in the written statement and application for rejection of the plaint on the merits, would be irrelevant, and cannot be adverted to, or taken into consideration. [Sopan Sukhdeo Sable v. Charity Commr., (2004) 3 SCC 137]

23.11. The test for exercising the power under Order 7 Rule 11 is that if the averments made in the plaint are taken in entirety, in conjunction with the documents relied upon, would the same result in a decree being passed. This test was laid down in Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea Success I [Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea Success I, (2004) 9 SCC 512] which reads as: (SCC p. 562, para 139)

itself. For the said purpose, the averments made in the plaint in their entirety must be held to be correct. Thetest is as to whether if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed.”

23.12. In Hardesh Ores (P) Ltd. v. Hede & Co. [Hardesh Ores (P) Ltd. v. Hede & Co., (2007) 5 SCC 614] the Court further held that it is not permissible to cull out a sentence or a passage, and to read it in isolation. It is the substance, and not merely the form, which has to be looked into. The plaint has to be construed as it stands, without addition or subtraction of words. If the allegations in the plaint prima facie show a cause of action, the court cannot embark upon an enquiry whether the allegations are true in fact. D. Ramachandran v. R.V. Janakiraman [D. Ramachandran v. R.V. Janakiraman, (1999) 3 SCC 267; See also Vijay Pratap Singh v. Dukh Haran Nath Singh, AIR 1962 SC 941]”

52. On perusal, the Court is only required to see whether the averments made in the plaint along with the documents annexed with the plaint does not disclose any cause of action or the suit is barred by any law and if the answer is in affirmative, then it is the duty of the Court to put an end to sham litigation so that further judicial time is not wasted. The Court is not required to look into the averments made in the application under Order VII Rule 11 of CPC or the written statement filed by the defendant. The test for Order VII Rule 11 of CPC is if the averments made in the plaint are taken as correct in their entirety, then a decree would be passed. If the plaint lacks the essential ingredients of a proper plaint, the Court should, at the threshold, nip in the bud when such bogus litigation appears to be a clear abuse of process. The said rule prevents frivolous, vexatious or legally untenable suits from consuming judicial time.

53. It is also a settled law that plaint cannot be rejected partially. If one of the relief claimed by the plaintiff is barred and the other one is not, then in that case, the Court shall not make any observation against the relief which is barred.[1]

54. The Hon‟ble Supreme Court in T. Arivandandam v. T.V. Satyapal, (1977) 4 SCC 467 categorically urged the Courts to use Order VII Rule 11 of CPC as a tool to nip in the bud when the plaintiff by clever drafting abuses the process of law. The Courts should scrutinize the plaint to ensure that meritless litigation is put to rest immediately. Relevant paragraph from the said judgment is extracted below:-

Central Bank of India (supra) and more particularly paragraphs 23 and 24. meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7, Rule 11 CPC taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order 10, CPC. An activist Judge is the answer to irresponsible law suits. The trial courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Cr. XI) and must be triggered against them….”

55. At the stage of issuance of summon, the Court can suo moto invoke Order VII Rule 11 of CPC. The said provision does not provide that the Court is to discharge its duty of rejecting the plaint only on an application.[2]

56. The Hon‟ble Supreme Court in Samar Singh v. Kedar Nath, 1987 Supp SCC 663 has categorically observed that the Court is to be satisfied that suit is maintainable and the plaint discloses cause of action, and if satisfied, only then the Court should proceed further to issue summons.[3]

57. To sum up, the Court should not allow the sword of damocles to be kept hanging on the head of the defendant when there is unwarranted Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd., (2022) 10 SCC 1 and more particularly paragraph 94.3. litigation which serves no purpose. Hence, the Court should be vigilant to not waste judicial time on vexatious and irresponsible law suits.

58. Having discussed the threshold, I shall now proceed to deal with the submissions advanced by the learned counsel for the parties.

59. Mr Salve, learned senior counsel for the plaintiff has argued that as per the defendant No. 1, prayers (b) and (c) are barred by section 5 of 1996 Act but section 5 of 1996 Act does not bar filing of a suit. Even assuming without admitting, that prayers (b) and (c) are barred, prayers (a), (d), and (e) still remain valid and are not restricted by section 5 of 1996 Act. Relying on Central Bank of India (supra), he submits that even if some prayers are barred, the plaint cannot be rejected in piecemeal. Further, fraud-related issues are to be decided by a Civil Court and are not arbitrable in nature.

60. Much reliance is place on National Projects Construction Corporation (supra) to urge that a civil suit is maintainable to challenge an Arbitral Award obtained by fraud. Reliance is also placed on M. Hariharasudhan (supra).

61. Section 5 of 1996 Act reads as under:- “5. Extent of judicial 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.”

62. On perusal, the said section starts with non obstante clause which indicates that no other law will prevail over Part I. Further, no judicial authority shall intervene except where it is so provided in Part I. The main purpose and intent behind this section is “limited judicial interference”. The Hon‟ble Supreme Court in Interplay (supra) has interpreted the said section in detail and the relevant paragraphs are

arbitral process. In the context of Section 5, this means that the provisions contained in Part I of the Arbitration Act ought to be given full effect and operation irrespective of any other law for the time being in force. It is now an established proposition of law that the legislature uses non obstante clauses to remove all obstructions which might arise out of the provisions of any other law, which stand in the way of the operation of the legislation which incorporates the non obstante clause. [State of Bihar v. Bihar Rajya M.S.E.S.K.K. Mahasangh, (2005) 9 SCC 129:

83. A non obstante clause is appended in a provision to give such provision overriding effect over other provisions of the law.……….

84. Although a non obstante clause must be allowed to operate with full vigour, its effect is limited to the extent intended by the legislature. In Icici Bank Ltd. v. Sidco Leathers Ltd. [Icici Bank Ltd. v. Sidco Leathers Ltd., (2006) 10 SCC 452] a two-Judge Bench of this Court held that a non obstante clause must be interpreted by confining it to the legislative policy. Thus, even if a non obstante clause has wide amplitude, the extent of its impact has to be measured in view of the legislative intention and legislative policy. [JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255: (2012) 2 SCC (Civ) 82: (2012) 2 SCC (Cri) 125] In view of this settled legal position, the issue that arises for our consideration is the scope of the non obstante clause contained in Section 5 of the Arbitration Act.

85. In Morgan Securities & Credit (P) Ltd. v. Modi Rubber Ltd. [Morgan Securities & Credit (P) Ltd. v. Modi Rubber Ltd., (2006) 12 SCC 642], the issue before the two-Judge Bench was whether the provisions of the Arbitration Act would prevail over the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). While noting the non obstante clause contained in Section 5 of the Arbitration Act, this Court held that the non obstante clause has “limited application aiming at the extent of judicial intervention”. It was held that the Arbitration Act would not prevail over SICA since the latter enactment seeks to “achieve a higher goal”. In other words, the scope of the non obstante clause is limited to prohibiting the intervention of judicial authorities, unless it has been expressly provided for under Part I of the Arbitration Act.

88. One of the main objectives behind the enactment of the Arbitration Act was to minimise the supervisory role of Courts in the arbitral process by confining it only to the circumstances stipulated by the legislature……

89. Section 5 contains a general rule of judicial noninterference. Therefore, every provision of the Arbitration Act ought to be construed in view of Section 5 to give true effect to the legislative intention of minimal judicial intervention.”

63. Section 5 of 1996 Act is the fundamental principle for ensuring minimal judicial interference only to the extent “so provided” under Part I of the 1996 Act. By featuring limited judicial intervention, the role of Court is not excluded in the arbitral proceedings but limited to the circumstances where the aid is required for implementation and enforcement of arbitration process. The non obstante clause gives overriding effect with the conflicting/inconsistent provisions under other statutes which means that the provisions in Part I of 1996 Act ought to be given full effect irrespective of any other law for the time being in force. The use of non obstante clause is to remove all obstructions which might arise out of the provisions of any other law, which stand in the way of the operation of the legislation which incorporates the non obstante clause.

64. In addition, the 1996 Act is a self-contained code which provides a complete framework for arbitrationfrom reference to enforcement; thus, the applicability of general law is to be excluded. Unless the 1996 Act specifically permits it, the provisions of another legislation cannot be used to override it. Hence, the procedure set forth in the 1996 Act must be strictly followed.[4]

65. It is also relevant to note that section 19 of 1996 Act states that the Arbitral Tribunal shall not be bound by the CPC or the Evidence Act making clear that arbitral proceedings are meant to be more flexible, informal, and party-driven. Interplay (supra) and more particularly paragraph 92.

66. In the present case, the Arbitral Award dated 12.05.2014 passed by the learned AT has been upheld by the Hon‟ble Supreme Court vide judgment dated 02.03.2020. The present suit has been framed seeking declaration, recovery of money, and permanent injunction, however, in essence and substance, the plaintiff has made a collateral challenge to the said Award which has already attained finality.

67. The plaintiff herein seeks to declare the said Award as void and unenforceable and to set aside in prayers (b) and (c) quoted above. The prayer (e) seeks to grant permanent injunction restraining the defendants from relying upon the Addendum No. 2 and the Award. Prayer (a) seeks declaration that Addendum No. 2 is vitiated by fraud and corruption and is void ab initio and prayer (d) seeks recovery of an amount from the date of cause of action.

68. Section 34 of 1996 Act provides a remedy to challenge an Award which the plaintiff did after the Award was passed by the Arbitral Tribunal. All the remedies as available to the plaintiff under the 1996 Act have been exhausted with respect to challenge to the present Arbitral Award. For the sake of perusal, section 34 of 1996 Act is

basis of the record of the arbitral tribunal that] …………”

69. On perusal, the said section clearly specifies that the Arbitral Award can “only” be set aside by an application in accordance with subsection (2) and sub-section (3) of section 34 1996 Act. It further states that the Arbitral Award may be set aside “only” on the grounds mentioned there under. By using the word “only” twice, section 34 of 1996 Act makes it clear that no challenge to an Award can be launched outside of the said section and beyond the grounds specified therein. This means that section 34 of 1996 Act offers an exhaustive and exclusive remedy to contest an Arbitral Award.

70. Reliance placed on M. Hariharasudhan (supra) is misconceived, for the reasons noted above, in view of section 5 read with section 34 of 1996 Act as it expressly bars a suit and further provides a final remedy which the plaintiff has already exhausted.

71. It is contended by the plaintiff that fraud came to light only in 2022 upon internal investigation when Mr. Ved Prakash superannuated and thereafter a CBI reference. However, assuming these allegations as true, section 34 of 1996 Act already includes the ground of “award induced or affected by fraud or corruption” as a basis for challenge, which the plaintiff failed to raise timely. Alleged new discovery does not revive a remedy that is otherwise barred by law.

72. Even assuming that the alleged fraud gives rise to a fresh cause of action then also the Addendum was executed on 08.11.2008 and the Award was rendered in 2014. The present suit, filed in 2024, is hopelessly time barred. Mere filing of a CBI complaint in 2022 won‟t revive a dormant claim.

73. It is not in dispute that the Award has not been obtained by fraud or corruption upon the Arbitral Tribunal rather the core contention of the plaintiff is that Addendum No. 2 executed on 20.11.2008 was vitiated by fraud and collusion amongst its own officers i.e. defendants 4 to 7 in collusion with the representatives of defendant No. 1, thereby rendering the subsequent Arbitral Award dated 12.05.2014 void ab initio. There is a clear distinction between the fraud played upon the Court and fraud inter se among the parties.

74. It is further argued by the plaintiff that even if prayers (b) and (c) are barred, others (a), (d), and (e) still survive and plaint cannot be rejected in piecemeal. However, all reliefs are linked to the nullification of the Arbitral Award. Without first setting aside the Arbitral Award (which this Court cannot do), no independent relief can be granted. Even otherwise the said reliefs are arbitrable in nature as the arbitration clause between the parties is not in dispute.

75. The Hon‟ble Supreme Court in Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710, while relying on A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386, observed as under:-

76. A co-ordinate bench of this Court in Amrish Gupta v. Gurchait Singh Chima, 2022 SCC OnLine Del 1116, after analyzing catena of judgments of the Hon‟ble Supreme Court, observed as under:-

37. It is clear from a reading of the various judgments of the Supreme Court that the jurisprudence has evolved to limit the exclusion of disputes that are non-arbitrable on the ground of fraud. A clear distinction is drawn in respect of the disputes that may result in penal consequences or conviction of an offence under criminal law. Clearly, such cases are required to be adjudicated by Courts of law. An arbitral tribunal cannot convict a person of an offence punishable under the Penal Code, 1860 or render decision in the realm of public law as these matters are squarely reserved for Courts of competent jurisdiction. However, there is no reason to exclude contractual disputes that can be tried by a Trial Court, as nonarbitrable.

39. As a working rule, it must be accepted that where a challenge is made to an agreement on the ground of fraud, it must be assumed that the challenge is to the main agreement and not specifically to the arbitration agreement. Thus, in such cases, the arbitral tribunal would have the jurisdiction to adjudicate disputes regarding validity of an agreement, which is impeached on the ground of fraud, as it must be assumed that such a challenge is to the main agreement and not to the arbitration agreement. ……………. ………………. ……………...

42. It is material to note that the A&C Act does not exclude any dispute as non-arbitrable. However, certain disputes are intrinsically non-arbitrable, either for the reason that they cannot be confined as private disputes between parties or there are special statutes, which provide a separate mechanism for adjudication of such disputes. In the former category would be cases such as grant of probate, which are matters in rem. In the latter category are cases such as landlord-tenant disputes covered under the Rent Control Act, matrimonial disputes relating to divorce, etc. Such disputes are intrinsically non-arbitrable and thus, cannot be referred to arbitration, notwithstanding, the agreement between the parties.

43. The allegations regarding fraud, forgery or inducement relating to an agreement, do not fall in either of the two categories as stated above. Such disputes, however serious the allegations may be, cannot be stated to be inherently non-arbitrable. If the parties voluntarily agree that said disputes be decided by arbitration, there is no reason to exclude such disputes from arbitration. The guiding principle is that if a civil court can decide the disputes in a trial, so can an arbitral tribunal. The complexity of the questions or the volume of evidence involved, does not render any dispute inherently non-arbitrable.”

77. In the present case, there is no dispute to the execution of the main agreement i.e. LTA containing the Arbitration Clause, the only dispute is with regard to the execution of the Addendum No. 2 which the plaintiff alleges that the same has been executed fraudulently in collusion between the officials of the plaintiff i.e. defendant No. 4-7 and the officials of the defendant No. 1. In view of the said judgments, as there is no dispute to the arbitration agreement i.e. LTA, the plea of fraud raised by the plaintiff qua Addendum No. 2 is arbitrable in nature.

78. At this juncture, it is also relevant to refer section 9 of CPC which reads as under:- “9. Courts to try all civil suits unless barred.—The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.

79. On perusal, the said section clearly states that the civil courts shall try all suits except the suits which are expressly and impliedly barred. Section 5 read with section 34 of 1996 Act constitutes such a bar to challenge an Arbitral Award by way of filing a suit which is supposed to be done in the present case. The non-obstante clause of section 5 of 1996 Act makes it amply clear that the civil court cannot entertain suits relating to matters governed by the 1996 Act unless specifically permitted. The plaintiff in the present plaint by cleverly and eschewedly is seeking to nullify and set aside an Arbitral Award which squarely falls within the ambit of Order VII Rule 11(d) of CPC which mandates rejection of a plaint where the suit is barred by law.

80. The Hon‟ble Supreme Court in Interplay (supra) observed as under:-

Act, 1872. Moreover, it stipulates that an Arbitral Tribunal may conduct the proceedings in any manner it deems appropriate if the parties fail to agree on the procedure to be followed by the Tribunal. Although Arbitral Tribunals have autonomy in the procedural and substantive sense, they are not completely independent of the law of the country in which the Arbitral Tribunal has its juridical seat, as discussed in the following segments.”

81. As noted above, the Courts have to be vigilant and strike down the clever drafting which seeks to circumvent statutory restrictions. If such suits are permitted, then it would open a floodgate of litigation, undermining the core objectives of the 1996 Act which are finality and efficiency. Arbitration, chosen by consent, cannot be overridden by post-facto civil suits on allegedly rediscovered facts otherwise arbitration will turn into a never-ending cycle of challenges.

82. To my mind, challenging an Award, which has already been upheld by the Hon‟ble Supreme Court, in the present suit is not only an abuse of the process of law but will be a travesty of justice if the said challenge is allowed by way of filing of the present suit and would render the 1996 Act nugatory, and undermine public confidence in Arbitration. The Court is bound to give full effect to the legislative scheme and uphold the sanctity of finality.

83. In addition, if the present suit is allowed then no Arbitral Award after being upheld by the Hon‟ble Supreme Court will ever be executed. Thus, judicial time must be preserved for genuine disputes.

84. Reliance placed on National Projects Construction Corporation (supra) is misplaced as the said judgment is prior to the judgment of Interplay (supra) wherein the Hon‟ble Supreme Court has clearly and unequivocally elucidated the scope of section 5 of 1996 Act and section 9 of CPC and more particularly para reproduced above. Once the Hon‟ble Supreme Court has clarified the law, the same is binding on this Court. In addition, the said judgment does not deal with the ambit and scope of section 9 of CPC.

85. Reliance placed on United India Insurance Co. Ltd. (supra) is misplaced as the Hon‟ble Supreme Court observed that the remedy to move for recalling the order on the basis of the newly-discovered facts amounting to fraud of high degree, cannot be foreclosed in such a situation. However, in the present case, after newly discovered facts, the plaintiff has filed a seperate suit which is expressly barred by section 5 read with section 34 of 1996 Act.

86. Reliance placed on Indian Bank (supra) is also misconceived as it is was observed therein that Court has inherent powers under section 151 of CPC to recall its judgment or order if it is obtained by fraud on Court whereas in the present case, fraud is not upon the Court but inter se among the parties. Union of India (supra) is also on the same lines and hence, the reliance placed on this judgment is also misplaced.

CONCLUSION

87. For the foregoing reasons, the prayers already quoted above are not maintainable in view of section 5 read with section 34 of 1996 Act. Hence, the plaint filed by the plaintiff stands rejected by exercising powers under Order VII Rule 11 of CPC.

88. Pending applications, if any, are disposed of accordingly.

JASMEET SINGH, J