Parties Who Voluntarily Submit to Arbitration Cannot Later Challenge Award on Grounds of Non-Arbitrability : Supreme Court
In Sanjit Singh Salwan & Ors. v. Sardar Inderjit Singh Salwan & Ors., the Supreme Court held that once parties in a trust dispute voluntarily submit to arbitration and accept a consent decree, the doctrine of estoppel applies. They cannot later challenge the decree on the ground that disputes concerning charitable trusts are non-arbitrable.
A Bench of Justices Augustine George Masih and Atul S. Chandurkar dealt with disputes among trustees of the Guru Tegh Bahadur Charitable Trust. Initially, the respondents filed a suit for perpetual injunction, which the Trial Court rejected under Order VII Rule 11 CPC, noting the bar under Section 92 CPC. During appeal, both parties opted for arbitration, and their settlement was incorporated into a consent decree by the District Court.
Subsequently, when the appellants sought interim relief under Section 9 of the Arbitration Act, the respondents challenged the award, arguing that charitable trust disputes are non-arbitrable. Both the Commercial Court and the High Court agreed, declaring the award void. This led the appellants to approach the Supreme Court.
The Supreme Court overturned the lower courts’ rulings, stressing that:
The respondents consented to arbitration and benefited from the decree, including withdrawal of an FIR and monetary settlement.
By such conduct, they are estopped from questioning the decree’s validity.
Parties cannot “approbate and reprobate”, i.e., accept the benefits of a consent decree and later challenge it.
The Court observed that once parties alter their position based on a consent decree, the principle of estoppel by conduct and election prevents them from disputing its enforceability under Section 92 CPC.
Accordingly, the Supreme Court allowed the appeal and revived execution proceedings in favour of the appellants.