SC Clarifies Effect of Consent in Arbitration: Estoppel Against Non-Arbitrability Plea

Introduction

In Sanjit Singh Salwan & Ors. v. Sardar Inderjit Singh Salwan & Ors[1], decided on 14 August 2025, the Supreme Court addressed a significant issue in regard to disputes relating to charitable trusts. The core question was whether, having voluntarily submitted matters in dispute to arbitration and received a consent decree reflecting the arbitral award, a party could subsequently assert that the dispute was non-arbitrable under Section 92 of the Code of Civil Procedure, 1908 (CPC). The case presented the Court with a chance to look at the relationship between civil procedure and arbitration law as it utilized the doctrine of estoppel to stop inconsistent litigating behaviour.

Facts

The dispute arose between trustees of the Guru Tegh Bahadur Charitable Trust. The respondents claimed the appellants had been removed as trustees and sought an injunction to restrain them from entering the school and interfering in its functioning. The appellants applied under Order VII Rule 11 CPC, contending the suit was barred by Section 92 CPC. On 13 April 2022, the Trial Court accepted this objection and rejected the plaint. The respondents appealed, and during the appeal both parties agreed to arbitration.  

On 30 December 2022, he handed down an award concerning the administration of the trust, which was duly accepted by both parties. The appellants fulfilled the decree by withdrawing an FIR and making the requisite payments; the respondents, however, defaulted in performing their own obligations. Upon the appellants seeking enforcement, the respondents contended that the award was null and void by virtue of Section 92 of the Code of Civil Procedure. The Commercial Court and, on further appeal, the High Court concurred with the view that the award was inoperative. Leave to appeal was then granted by the Supreme Court.

Issue

The Court was faced with deciding whether parties who, after voluntarily entering arbitration, embracing the ensuing award, and obtaining a consent decree, may nevertheless contend that the award and decree are void because the disputes involved fall within the non-arbitrable category stated in Section 92 of the Code of Civil Procedure, or whether, by virtue of the doctrine of estoppel by conduct, such an objection is no longer open to them.

Arguments

The appellants maintained that the respondents willingly engaged in the arbitration, accepted the subsequent award, and subsequently sought the sealing of the award’s terms in the same arbitral forum. They urged that the decree of 27 January 2023 was never called into question and, as such, became res judicata. They added that they have complied with that decree, they have withdrawn the corresponding FIR and discharged the monetary obligations required by the award as a result, they argued, the respondents are barred from now asserting any inconsistent position. They cited both estoppel by conduct and estoppel by election, contending that the respondents have lost the right to contest the decree’s merits at this belated hour.

The respondents argued that disputes relating to the management of a public trust are covered by Section 92 CPC and cannot be referred to arbitration. They also pointed out that the appellants had themselves withdrawn execution proceedings, and having chosen instead to apply under Section 9 of the Arbitration Act, they could not revert to execution.

Judgment

The Supreme Court allowed the appeal, set aside the orders of the Commercial Court and the High Court, and permitted the appellants to revive execution proceedings. The Court observed that the respondents had originally pleaded that their suit was not barred by Section 92 CPC. They then opted for arbitration, accepted the award, and sought a decree in its terms. The District Court had accordingly incorporated the award into a consent decree, which remained unchallenged. The appellants acted upon it, while the respondents later sought to invalidate it.

When a party embraces an award and obtains a decree predicated upon it, it cannot, thereafter, adopt a position that contradicts that earlier acceptance and seek to invalidate the decree. The principle of approbation and reprobation bars a party from regarding the decree as operative for one objective and as null for another. The Court emphasized that litigation is not a game of options in which litigants may realign their positions to suit present expediency.

The Court noted that if the respondents’ position were accepted, the appellants would be left without remedy despite acting in reliance on the decree. Such an outcome would be contrary to the principles of fairness underlying estoppel. The Court referred to earlier decisions, including Dhiyan Singh v. Jugal Kishore (AIR 1952 SC 145), to hold that even if an award is alleged to be invalid, estoppel by conduct can bar a party from denying its effect after having accepted it. The Court therefore directed that the appellants be permitted to revive their execution proceedings and have them decided on merits.

Analysis

The ruling refines the role of estoppel when arbitrability is clouded by party behaviour. Here, the respondents’ sequence of agreeing to arbitration, endorsing the resultant consent decree, and then arguing that the decree is void, constituted a classic application of estoppel by conduct. The outcome, however, does not expand the accepted rule that Section 92 CPC disputes are rarely subject to arbitration.

The ruling instead narrowly regulates the circumstance where the parties affirmatively elect arbitration, embrace the award, and then obtain a decree based on that award. Once these steps are complete, any challenge to the arbitrability of the underlying subject cannot be mounted as a defence to the resultant obligations. Such an outcome promotes measurable coherence and pre-empts the game-playing that would otherwise complicate enforcement.

Consent decrees, as the Court highlighted, represent both the agreement of the parties and the authority of the court. They carry finality and enforceability comparable to judgments on the merits. Allowing them to be undermined indirectly would defeat their purpose. The ruling strengthens the binding nature of consent decrees by holding that they cannot be set aside through contradictory positions unless challenged directly.

The equilibrium established between the doctrine of estoppel and the operation of Section 92 of the CPC is of material importance. Section 92 confines the mode of resolution of trust-related controversies, yet the Bench noted that the parties had previously contended, without objection, that their case fell outside its scope. When, in a subsequent pleading, the same parties invoked Section 92 to resist the suit, they departed from the position first taken.

Conclusion

The Supreme Court ruled that when parties willingly submit to arbitration and accept a consent decree, their subsequent behaviour binds them, precluding any subsequent attempt to assert non-arbitrability under Section 92 of the Code of Civil Procedure. By invoking the principle of estoppel, the court closed the door on any shift to an inconsistent stance, thereby affirming the conclusive nature of consent decrees within trust-related matters

[1] ., Civil Appeal arising out of SLP (C) No. 29398 of 2024.