Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-013321-013321 – 2025 |
| Diary Number | 28002/2025 |
| Judge Name | HON’BLE MR. JUSTICE K.V. VISWANATHAN |
| Bench |
HON’BLE MR. JUSTICE J.B. PARDIWALA HON’BLE MR. JUSTICE K.V. VISWANATHAN |
| Precedent Value | Binding authority on subordinate courts |
| Overrules / Affirms | Affirms existing precedent on Section 47’s narrow ambit |
| Type of Law | Civil Procedure; Arbitration & Conciliation Act; Contract/Fiduciary Duty |
| Questions of Law |
|
| Ratio Decidendi | The Court held that objections under Section 47 CPC lie only to the extent of jurisdictional nullity or fraud on the arbitral tribunal, not to errors in law/fact or breaches of underlying contract. It reaffirmed that Section 36 A&C Act makes an award a decree enforceable under CPC. Allegations of collusion or breach of fiduciary duty by corporate officers must show a prima facie case that decisions were outside the range of reasonable discretion. Applying the “business judgment rule,” officers’ commercial decisions made in good faith and within the spectrum of reasonable alternatives cannot be revisited on hindsight. Mere pendency of a criminal probe or FIR does not stay enforcement. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by Court |
|
| Facts as Summarised by the Court | MMTC entered a 2007 Long Term Agreement with Anglo for five annual quantities of coking coal, price pegged to SAIL/RINL via EJC at US$300/PMT for the 5th period. Anglo obtained an arbitral award for unlifted coal. Review and appeals under A&C Act failed for MMTC; award enforced as decree under CPC. MMTC filed Section 47 objections alleging fraud/collusion by its officers and invoked CBI probe but failed to show any prima facie breach of fiduciary duty or nullity. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | High Courts and tribunals |
| Follows |
|
What’s New / What Lawyers Should Note
- Reaffirms that Section 47 CPC objections to award enforcement lie only in cases of jurisdictional nullity or fraud on the tribunal—not for contractual breaches or errors in law/fact.
- Clarifies that allegations of corporate officers’ breach of fiduciary duty require prima facie proof that decisions were outside the spectrum of reasonable alternatives.
- Confirms application of the “business judgment rule” to corporate decision-making: courts defer to officers’ good-faith commercial judgments within a reasonable range.
- Holds that mere pendency of a criminal complaint or FIR does not stay enforcement of a decreed award.
- Affirms that Order XXI Rule 29 stay applications fail if the underlying suit is dismissed as not maintainable.
Summary of Legal Reasoning
- Maintainability under Section 47 CPC
- Section 47 can be invoked at execution stage only for jurisdictional nullity or fraud on the tribunal.
- Errors in law/fact or contractual breaches fall outside its narrow ambit.
- Relies on Electrosteel (2025) and Vasudev Modi (1970).
- Scope of fraud/breach of fiduciary duty
- Allegations must show officers acted dishonestly or beyond reasonable corporate discretion.
- Court applies business judgment rule and avoids hindsight bias (Re Living Images; Dovey).
- Mere high price or later market collapse does not prove collusion or conspiracy.
- Enforcement as decree
- Under Section 36 A&C Act, award is a decree enforceable via CPC.
- Criminal probe or NFIR does not suspend execution absent proper stay.
Arguments by the Parties
Petitioner (MMTC)
- Officials colluded with Anglo to fix a peak price of US$300/PMT for the 5th delivery period, breaching fiduciary duty.
- Fraud undiscovered due to tenure and control of MMTC officers; CBI probe pending.
- Carryover and price-reduction requests ignored; execution must be stayed until criminal investigation concludes.
Respondent (Anglo)
- Price pegged to SAIL/RINL via Empowered Joint Committee before Lehman collapse; MMTC’s option to extend contract duly exercised.
- Section 47 limited to nullity/fraud on tribunal; A&C Act provides exclusive challenge mechanism—no “sidewind” in execution.
- No prima facie evidence officers acted outside range of reasonable judgment; business judgment rule applies.
- Pendency of FIR is irrelevant; execution cannot be indefinitely delayed.
Factual Background
MMTC contracted in March 2007 with Anglo for five annual delivery periods of coking coal, extending the contract by two years at US$300 PMT for the 5th period, linked to SAIL/RINL prices. Anglo claimed US$78.72 million in arbitration for unlifted coal; award confirmed by courts up to Supreme Court. On enforcement, MMTC filed Section 47 CPC objections alleging fraud by its officers and sought stay under Order XXI Rule 29—both dismissed, leading to this appeal.
Statutory Analysis
- Section 47 CPC: objections at execution limited to jurisdictional nullity or void decree.
- Section 36 A&C Act: arbitral awards have the force of decrees.
- Sections 34/37 A&C Act: exclusive remedies for challenging awards.
- Section 5 A&C Act: bars recourse to courts beyond Act’s provisions.
- Order XXI Rule 29 CPC: stay of execution pending suit not maintainable where suit fails.
Alert Indicators
- ✔ Precedent Followed – reaffirms narrow ambit of Section 47 objections