Estoppel by Conduct Applies—Respondents Cannot Enjoy Benefits of Consent Decree and Later Deny Its Validity: SC Allows Revival of Execution Proceedings

"One Cannot Approbate and Reprobate", In a significant decision Supreme Court of India held that parties who obtain a decree on the basis of an unchallenged arbitral award cannot later challenge the award as a nullity, especially after having accepted and benefitted from it.

Setting aside the decisions of the Commercial Court (24.05.2024) and the High Court (30.08.2024) that rejected interim relief and held the award invalid under Section 92 of the Code of Civil Procedure, 1908, the Court invoked the doctrine of estoppel by conduct and election, permitting the appellants to revive execution proceedings based on a consent decree derived from arbitration.

The case concerns a dispute among trustees of the Guru Tegh Bahadur Charitable Trust, relating to management of a school and other trust properties. Initially, the respondents filed a suit for perpetual injunction, seeking to restrain the appellants from interfering in trust affairs. The Trial Court, accepting the appellants’ objection, rejected the plaint under Order VII Rule 11 CPC citing Section 92 CPC (which requires prior leave of the court for suits concerning public trusts).

Appeal was filed, and during its pendency, both parties jointly agreed to resolve their dispute through arbitration. An arbitral award was passed on 30.12.2022, and on 27.01.2023, the District Court disposed of the appeal, passing a consent decree based on the award. The decree was never challenged.

The appellants later sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, but the Commercial Court rejected their plea, holding that the award dealt with trust matters, which were non-arbitrable under Section 92 CPC, and thus the award was a nullity. The High Court affirmed this decision.

The appellants then approached the Supreme Court, contending that the respondents were estopped from denying the award’s validity after having accepted and acted upon it.

Respondents Cannot Blow Hot and Cold—Estoppel Applies

“The respondents...by their conduct are now estopped from taking an opposite stand.”

The Court noted that the respondents not only sought arbitration, but also filed a joint application to dispose of the appeal based on the award, expressly declaring that they would not challenge it and would abide by it “in true sense and spirit.”

Referring to established principles of approbation and reprobation, the Court cited Mumbai International Airport Pvt. Ltd. v. Golden Chariot Airport, holding:

“A party cannot say at one time that a transaction is valid... and then turn around and say it is void for the purpose of securing some other advantage.”

No Estoppel Against Law? Not in the Face of Conduct-Induced Detriment

The respondents argued that there can be no estoppel against law, and that the subject matter—affairs of a trust—was non-arbitrable under Section 92 CPC, making the award void ab initio.

The Court rejected this contention, stating that “the issue is more about estoppel by conduct and election than estoppel in law.”

“Having lulled the appellants into having the disputes resolved through arbitration...the respondents are definitely estopped from now setting up its invalidity.”

It referred to Dhiyan Singh v. Jugal Kishore, (AIR 1952 SC 145), where even an invalid award was held enforceable due to induced reliance and altered position by one party:

“Even if the arbitrator was wholly wrong... it was open to both sides to accept the decision... and be estopped from denying the implications of the award.”

Consent Decree Attained Finality—Respondents Cannot Resile

The Court emphasized that the decree dated 27.01.2023 passed in the respondents’ own appeal was never challenged. The respondents cannot now repudiate the award while continuing to benefit from the decree.

“If the impugned adjudication is accepted, the respondents would reap benefit from their act of approbation and reprobation.”

Accordingly, the Supreme Court:

• Set aside the Commercial Court’s order dated 24.05.2024 and High Court’s judgment dated 30.08.2024.

• Allowed revival of execution proceedings in Miscellaneous Case No. 122 of 2023.

• Directed that execution shall proceed on its own merits and in accordance with law.

• Held that the civil appeal stands allowed, and parties shall bear their own costs.

“The justice of the case requires that the appellants ought to be permitted to revive the execution proceedings… The appellants cannot be left remediless.”

This judgment provides a powerful reaffirmation of the doctrine of estoppel by conduct, particularly in commercial and arbitration matters. It sends a strong message that parties who accept an award, act upon it, and secure judicial decrees on its basis cannot later turn around and question its validity merely for tactical advantage.

The ruling also underlines that consent decrees, even if based on potentially non-arbitrable subject matter, cannot be lightly disregarded—especially when one party has altered its position based on the other's representations.

In essence, the Supreme Court has prioritized equity, good faith, and finality of litigation over procedural technicalities, reinforcing the sanctity of mutual settlements and consent decrees.

Date of Decision: 14 August 2025