Arbitrability of Dispute

Source: Supreme Court 

Why in News? 

The Supreme Court bench of Justices Augustine George Masih and Atul S. Chandurkar in Sanjit Singh Salwan & Ors. v. Sardar Inderjit Singh Salwan & Ors. (2025) ruled that parties cannot take contradictory stands by first accepting arbitration awards then later challenging their validity. 

What was the Background of Sanjit Singh Salwan & Ors. v. Sardar Inderjit Singh Salwan & Ors. (2025) Case? 

• Both parties claimed to be trustees of Guru Tegh Bahadur Charitable Trust (established 1979).  
• Respondents filed suit for perpetual injunction against appellants and specifically stated in their plaint that the suit was not barred by Section 92 of the Civil Procedure Code, 1908 (CPC). 
• During the appeal, the parties mutually agreed to resolve disputes through arbitration by Shri Vipin Sodhi. The arbitrator passed award on December 30, 2022, which both parties accepted. District Court disposed of appeal in terms of compromise deed on January 27, 2023. 
• Later, when appellants sought enforcement through Section 9 application under the Arbitration & Conciliation Act 1996, respondents challenged the award's validity, claiming it was nullity under Section 92 CPC.  
• Both the Commercial Court and High Court accepted this challenge. 

What were the Court's Observations? 

The Court emphasized the doctrine of estoppel by conduct, stating, "Having specifically pleaded that the suit filed by them was not hit by the provisions of Section 92 of Code, it would not be now open for them to oppose the validity of the compromise deed by raising such ground." The Court further held that:  

• Parties cannot "blow hot and cold" by taking inconsistent positions. 
• The court found respondents had consciously pleaded suit was maintainable, then participated in arbitration willingly. 
• Respondents initially stated their suit was not barred by Section 92 CPC. 
• They willingly participated in arbitration and obtained favorable consent decree. 
• Later took "completely opposite stand" challenging award's validity. 
• Appellants had altered their position to their detriment by complying with award terms. 

Final Directions: 

• Set aside Commercial Court and High Court orders. 
• Allowed appellants to revive execution proceedings. 
• Directed execution proceedings be decided on merits.

What is the Doctrine of Estoppel by Conduct?

About: 

• Prevents parties from taking contradictory positions that prejudice others who relied on their earlier conduct. 
• Based on the principle that parties cannot approbate and reprobate the same instrument. 

Essential Elements: 

• Representation of existing fact by one party. 
• Reliance by other party on such representation. 
• Detriment suffered by relying party.

What is Section 9 of the Arbitration and Conciliation Act, 1996? 

About: 

• Section 9 empowers courts to grant interim protection before, during, or after arbitral proceedings.  
• Any party can seek relief including appointment of guardians, preservation/custody of goods, securing disputed amounts, detention/inspection of property, and interim injunctions. 

Key Limitations: 

• Once arbitral tribunal is constituted, courts cannot entertain Section 9 applications unless tribunal's remedies under Section 17 are ineffective 
• If interim measures are granted before arbitration starts, proceedings must commence within 90 days 

Purpose:  

• To ensure effective arbitration process and enforcement of final awards through protective measures.