The Supreme Court has dismissed MMTC Limited’s objections under Section 47 of the Code of Civil Procedure, which sought to resist execution of a USD 78.7 million arbitral award in favour of Anglo American Metallurgical Coal Pvt. Ltd., holding that the allegations of fraud and collusion were unsubstantiated, and not backed by adequate proof.
The dispute stemmed from a 2007 Long-Term Agreement between MMTC and Anglo American for the supply of coking coal to Neelachal Ispat Nigam Ltd. The arbitral tribunal, by a 2:1 majority in 2014, awarded Anglo $78.7 million in damages for unlifted quantities, which the Delhi High Court initially upheld. Although the Division Bench had set aside the award in 2020 while hearing the appeal under Section 37 of the A & C Act. However, the Supreme Court, in December 2020, restored the arbitral award and confirmed Anglo’s entitlement. Following review and clarification orders, MMTC deposited ₹1,087 crores with the Delhi High Court in 2022.
In 2024, MMTC filed objections under Section 47 of the Code of Civil Procedure, claiming the award was “inexecutable” due to a newly discovered fraud allegedly committed by its former employees in collusion with Anglo during price fixation for the fifth delivery period at $300 per metric tonne, which is almost thrice the previous price. MMTC contended that the fraud surfaced only after a change in management and the initiation of a CBI preliminary inquiry in 2023. The Delhi High Court, however, dismissed the objections as ‘not maintainable’ and permitted Anglo to withdraw the deposited amount with accrued interest. Aggrieved, MMTC has filed the Appeal before the Supreme Court, by way of special leave.
The Court considered the following question-
Whether the High Court was justified in not entertaining the objections filed by the appellant under Section 47 of CPC and in dismissing the same?
MMTC argued that the objections under Section 47 CPC were maintainable since the award, according to MMTC, was vitiated by fraud and breach of fiduciary duty by its former employees in collusion with Anglo American, therefore rendering the award a nullity. Reliance was placed on Electrosteel Steel Limited v. ISPAT Carrier Private Limited, 2025 INSC 525. Further, relying on S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1, the appellant submitted that fraud unravels everything, and that such jurisdictional fraud keeps the execution objection maintainable.
In response, Anglo American opposed the maintainability of the objections, submitting that Section 5 bars any form of judicial intervention other than what is expressly provided in the Act. He argued that the alleged collusion between MMTC’s own officials, even if assumed, does not constitute fraud on the tribunal or the arbitral process, and hence does not affect the award’s validity.
After observing that it was not inclined to dismiss the objections only on maintainability, the Bench of Justice Sanjay Kumar and Justice K.V. Viswanathan clarified that, though there were serious doubts about the maintainability of MMTC’s objections under Section 47 CPC, it would nevertheless examine the allegations of fraud on merits in the interest of completeness.
The Court concluded that there was no basis to infer that MMTC’s senior management acted dishonestly or beyond reasonable business judgment during the 2008 price fixation. Applying the business judgment rule, the Bench held that the decisions taken were within the range of reasonableness expected of competent directors. The Court noted that MMTC failed to even prima facie demonstrate that its officials acted contrary to the company’s best interests.
The Bench observed that although MMTC’s appeal referred to an application under Order XXI Rule 29 CPC, the underlying suit had already been rejected under Order VII Rule 11, and therefore, no occasion arose for considering a stay of execution under that provision.
Reiterating the narrow scope of Section 47 CPC, the Court referred to its earlier ruling in Electrosteel Steels Ltd. v. Ispat Carrier Pvt. Ltd. (2025 INSC 525) and the precedent in Rahul S. Shah v. Jinendra Kumar Gandhi (2021) 6 SCC 418. The Court cautioned against using Section 47 as a fresh round of litigation, observing that doing so would frustrate realisation of decrees and amount to abuse of process.
Holding that there is no merit in the objections filed by MMTC under Section 47 of the CPC, so there are no good grounds to entertain the same. The appeal was accordingly dismissed.”
Before parting with the judgment, Justice K.V. Viswanathan cautioned against casually alleging fraud in commercial decisions involving public sector undertakings. The Court observed that while genuine acts of corruption must be prosecuted, constant suspicion of bona fide decisions may create a chilling effect on public administration.
“If officials are shackled by the fear that decisions taken years ago will be viewed with a jaundiced eye, a tendency to play it safe will set in. Decision making will be avoided. Policy paralysis will descend. All that we are at pains to drive home is that 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.”
Appearances
Mr. N. Venkataraman, learned Additional Solicitor General and Mr. Sanat Kumar, learned Senior Advocate, ably assisted by Mr. Akhil Sachar, Ms. Astha Tyagi, Ms. Sunanda Tulsyan and Ms. Karishma Sharma, learned counsels for the appellant.
Mr. Neeraj Kishan Kaul and Mr. Jayant Mehta, learned Senior Advocates, ably assisted by Mr. Sumeet Kachwaha, Mr. Samar Singh Kachwaha, Ms. Ankit Khushu, Ms. Garima Bajaj, Ms. Akanksha Mohan, Mr. Pratyush Khanna and Ms. Ira Mahajan, learned counsels for the respondent.
