# MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited

- **Citation:** 2025 INSC 1279
- **Court:** Supreme Court of India
- **Decided:** 2025-11-03
- **Case number:** Civil Appeal No. 13321 of 2025
- **Bench:** Sanjay Kumar, K.V. Viswanathan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mmtc-limited-v-anglo-american-metallurgical-coal-pvt-limited-38152
- **Pages:** 52

## Headnote

Issue arose whether the High Court was justified in not entertaining
the objections filed by the appellant u/s.47 CPC and in dismissing
the same; and whether at least prima facie the case of breach of
fiduciary duty has been established by appellant.
Headnotes†
Arbitration and Conciliation Act, 1996 - ss.34, 37 - Code of Civil
Procedure, 1908 - s.47 - Objections under - Maintainability -
Long Term Agreement-LTA between the petitioner and the
respondent - Respondent invoked arbitration clause claiming
damages on account of the unlifted quantity of coal contracted
by the appellant - Arbitration award passed in favour of
the respondent - Challenge u/s.34 of the 1996 Act rejected
by the Single Judge, however, the Division Bench allowed
appellant's appeal u/s.37 and set aside the arbitral award - In
appeal before this Court, the judgment of the Division Bench
set aside and that of the Single Judge restored as also the
arbitral award - Review Petition filed by the appellant, admitted
on the limited issue of interest - Subsequently, clarification
application by the appellant disposed of - In the meantime,
the respondent filed execution petition seeking enforcement
of award and the appellant filed its objections u/s.47 CPC -
When the Judgment was reserved, the appellant filed a suit
praying that the award is void and unenforceable, however, the
said suit was dismissed and the Executing Court dismissed
the objections u/s.47 CPC as well as Ord. XXI r.29 application,
seeking stay of execution, pending the suit - Challenge to:
Held: Objection petition u/s.47 should not invariably be treated
as a commencement of a new trial - This Court has warned that
* Author
328
[2025] 11 S.C.R.
Supreme Court Reports
there is a steady rise of proceedings akin to a retrial which causes
failure of realization of the fruits of a decree, unless prima facie
grounds are made out entertaining objections u/s.47 would be
an abuse of process - On the material furnished, it cannot be
said that the Senior Managerial personnel involved at the helm in
appellant company during the relevant period acted in a manner
as no reasonable personnel/director in the circumstances would
have acted - It cannot be concluded that the decisions taken were
not within the range of reasonableness or that the course adopted
by them was not one, a reasonably competent personnel/director
would adopt - Applying the business judgment rule, the course
adopted by them cannot be said to be one to which a court of
law would not defer to - Appellants have not been able to even
prima facie demonstrate that circumstances exist to conclude that
the personnel of appellant did not act in the best interest of the
company - Appeal challenges, in the prayer clause, the judgment
dismissing the objections, though in the prayer clause, no challenge
to dismissal of the application u/Ord. XXI r.29 filed, in the civil appeal
the appellants have indicated that they are aggrieved by the said
order also - Ord. XXI r. 29 provides for stay of execution pending
suit between decree holder and judgment debtor - However, the
suit filed itself now stands rejected u/Ord. VII r.11 but a regular first
appeal was filed - Hence, an occasion for considering an Ord. XXI
r.29 application does not arise - Objection filed u/s.47 claiming
that the award as upheld by this Court is inexecutable, is dealt
with - Jurisdiction lies in a narrow compass - It is the mandate of
this Court that the object of s.47 is to prevent unwarranted litigation
and dispose of all objections as expeditiously as possible - No
merit in the objections filed by the appellant - No good grounds
to entertain the same. [Paras 95-98, 100]
Arbitration - Arbitration award - Execution Petition seeking
enforcement of the Award by the respondent - Appellant-MMTC
filing its objections u/s.47 CPC and when the Judgment was
reserved, MMTC filed a suit praying that the award is void
and unenforceable - However, the said suit was dismissed
and MMTC filed application u/Or

## Text

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[2025] 11 S.C.R. 327 : 2025 INSC 1279
MMTC Limited
v.
Anglo American Metallurgical Coal Pvt. Limited
(Civil Appeal No. 13321 of 2025)
03 November 2025
[Sanjay Kumar and K.V. Viswanathan,* JJ.]
Issue for Consideration
Issue arose whether the High Court was justified in not entertaining
the objections filed by the appellant u/s.47 CPC and in dismissing
the same; and whether at least prima facie the case of breach of
fiduciary duty has been established by appellant.
Headnotes†
Arbitration and Conciliation Act, 1996 - ss.34, 37 - Code of Civil
Procedure, 1908 - s.47 - Objections under - Maintainability -
Long Term Agreement-LTA between the petitioner and the
respondent - Respondent invoked arbitration clause claiming
damages on account of the unlifted quantity of coal contracted
by the appellant - Arbitration award passed in favour of
the respondent - Challenge u/s.34 of the 1996 Act rejected
by the Single Judge, however, the Division Bench allowed
appellant's appeal u/s.37 and set aside the arbitral award - In
appeal before this Court, the judgment of the Division Bench
set aside and that of the Single Judge restored as also the
arbitral award - Review Petition filed by the appellant, admitted
on the limited issue of interest - Subsequently, clarification
application by the appellant disposed of - In the meantime,
the respondent filed execution petition seeking enforcement
of award and the appellant filed its objections u/s.47 CPC -
When the Judgment was reserved, the appellant filed a suit
praying that the award is void and unenforceable, however, the
said suit was dismissed and the Executing Court dismissed
the objections u/s.47 CPC as well as Ord. XXI r.29 application,
seeking stay of execution, pending the suit - Challenge to:
Held: Objection petition u/s.47 should not invariably be treated
as a commencement of a new trial - This Court has warned that
* Author
328
[2025] 11 S.C.R.
Supreme Court Reports
there is a steady rise of proceedings akin to a retrial which causes
failure of realization of the fruits of a decree, unless prima facie
grounds are made out entertaining objections u/s.47 would be
an abuse of process - On the material furnished, it cannot be
said that the Senior Managerial personnel involved at the helm in
appellant company during the relevant period acted in a manner
as no reasonable personnel/director in the circumstances would
have acted - It cannot be concluded that the decisions taken were
not within the range of reasonableness or that the course adopted
by them was not one, a reasonably competent personnel/director
would adopt - Applying the business judgment rule, the course
adopted by them cannot be said to be one to which a court of
law would not defer to - Appellants have not been able to even
prima facie demonstrate that circumstances exist to conclude that
the personnel of appellant did not act in the best interest of the
company - Appeal challenges, in the prayer clause, the judgment
dismissing the objections, though in the prayer clause, no challenge
to dismissal of the application u/Ord. XXI r.29 filed, in the civil appeal
the appellants have indicated that they are aggrieved by the said
order also - Ord. XXI r. 29 provides for stay of execution pending
suit between decree holder and judgment debtor - However, the
suit filed itself now stands rejected u/Ord. VII r.11 but a regular first
appeal was filed - Hence, an occasion for considering an Ord. XXI
r.29 application does not arise - Objection filed u/s.47 claiming
that the award as upheld by this Court is inexecutable, is dealt
with - Jurisdiction lies in a narrow compass - It is the mandate of
this Court that the object of s.47 is to prevent unwarranted litigation
and dispose of all objections as expeditiously as possible - No
merit in the objections filed by the appellant - No good grounds
to entertain the same. [Paras 95-98, 100]
Arbitration - Arbitration award - Execution Petition seeking
enforcement of the Award by the respondent - Appellant-MMTC
filing its objections u/s.47 CPC and when the Judgment was
reserved, MMTC filed a suit praying that the award is void
and unenforceable - However, the said suit was dismissed
and MMTC filed application u/Ord. XXI r.29 CPC - Executing
Court dismissed the objections as well as Order XXI Rule 29
application - Postscript in relation thereto:
Held: Whether in Government, Public Sector Corporations or even
in the private sector, the driving force of the entity are the persons
[2025] 11 S.C.R.
329
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
who administer them - Certain play in the joints is inevitable for
their day-to-day functioning - If they are shackled with the fear
that, their decisions taken for the day-to-day administration, could
years later with the benefit of hindsight, be viewed with a jaundiced
eye, it will create a chilling effect on them - Tendency to play it
safe will set in - Decision making will be avoided - Policy paralysis
will descend - All this will in the long run prove detrimental not
just to that entity but to the nation itself - This Court is not to be
understood to be condoning decisions taken for improper purposes
or extraneous considerations - 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. [Para 99]
Case Law Cited
Electrosteel Steel Limited (Now M/s ESL Steel Limited) v. ISPAT
Carrier Private Limited, 2025 INSC 525; Vasudev Dhanjibhai
Modi v. Rajabhai Abdul Rehman [1971] 1 SCR 66 : (1970) 1
SCC 670; Ram Preeti Yadav v. U.P. Board of High School and
Intermediate Education and Ors. [2003] Supp. 3 SCR 352 :
(2003) 8 SCC 311; S.P. Chengalvaraya Naidu v. Jagannath and
Ors. [1993] Supp. 3 SCR 422 : (1994) 1 SCC 1; Indian Bank v.
Satyam Fibres (India) Pvt. Ltd. [1996] Supp. 4 SCR 464 : (1996)
5 SCC 550; United India Insurance Co. Ltd. v. Rajendra Singh and
Others [2000] 2 SCR 264 : (2000) 3 SCC 581; Rahul S. Shah v.
Jinendra Kumar Gandhi and Ors. [2021] 4 SCR 279 : (2021) 6
SCC 418 - referred to.
Lazarus Estates Ltd. v. Beasley, (1956) 1 All ER 341; Re Living
Images Ltd., (1996) 1 BCLC 348; Dovey and The Metropolitan
Bank (of England and Wales) Limited v. John Cory, 1901 Appeal
Cases 477; Sharp and Ors. v. Blank and Ors., (2019) EWHC 3096
(Ch); Maple Leaf Foods Inc. v. Schneider Corp., 42 OR (3d) 177;
Kerr v. Danier Leather Inc., (2007) 3 SCR 331 Canadian Supreme
Court Reports - referred to.
List of Acts
Penal Code, 1860; Prevention of Corruption Act, 1988; Code of
Civil Procedure, 1908; Arbitration and Conciliation Act, 1996.
330
[2025] 11 S.C.R.
Supreme Court Reports
List of Keywords
Prima facie case of breach of fiduciary duty; Objections u/s.47
CPC; Long Term Agreement; Arbitration clause; Damages; Unlifted
quantity of coal contracted; Arbitration award; Review Petition;
Interest; Clarification application; Execution petition; Enforcement of
award; Ord. XXI r.29 CPC application; Stay of execution; Business
judgment rule; Postscript; Policy paralysis.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13321
of 2025
From the Judgment and Order dated 09.05.2025 of the High Court
of Delhi at New Delhi in OMP (ENF.) (COMM.) No. 19 of 2018
Appearances for Parties
Advs. for the Appellant:
Venkataraman, A.S.G., Harish Salve, Sanat Kumar, Sr. Advs. Akhil
Sachar, Ms. Astha Tyagi, Ms. Sunanda Tulsyan, Ms. Karishma
Sharma.
Advs. for the Respondent:
Neeraj Kishan Kaul, Jayant Mehta, Sr. Advs., Sumeet Kachwaha,
Samar Singh Kachwaha, Ms. Ankit Khushu, Ms. Garima Bajaj,
Ms. Akanksha Mohan, Pratyush Khanna, Ms. Ira Mahajan.
Judgment / Order of the Supreme Court
Judgment
K.V. Viswanathan, J.
1.
Leave granted.
2.
The present appeal calls in question the correctness of the judgment
dated 09.05.2025 passed by a learned Single Judge of the Delhi
High Court in OMP (ENF.) (COMM.) No. 19 of 2018. By the said
judgment, the High Court dismissed the objections filed by the
appellant-MMTC Limited [for short "MMTC"] under Section 47 of
the Code of Civil Procedure, 1908 ["CPC"] as well as an application
under Order XXI Rule 29 of CPC seeking stay of the enforcement
[2025] 11 S.C.R.
331
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
proceedings. The High Court further directed that the amount
deposited by MMTC shall be withdrawn by the decree holder-Anglo
American Metallurgical Coal Pvt. Limited [for short "the Anglo"]
along with the interest accrued. Aggrieved, the appellant-MMTC is
in appeal by way of special leave.
BRIEF FACTS:-
3.
The respondent-Anglo, on 24.09.2012, invoked the arbitration clause
in the Long Term Agreement [LTA] dated 07.03.2007 entered into
between MMTC and Anglo. The claim in the arbitration was for
damages on account of the unlifted quantity of coal contracted by
the appellant-MMTC. The damages were computed based on the
difference in the price between the contracted price of US$ 300 Per
Metric Tonne [for short "PMT"] and the market price of US$ 126 PMT,
multiplied by the unlifted quantity. In the arbitration, by an Award
dated 12.05.2014, Anglo was awarded a sum of US$ 78.720 million
along with interest and costs by a majority of 2:1.
4.
By a judgment dated 10.07.2015, challenge under Section 34 of the
Arbitration and Conciliation Act, 1996 [for short 'the A&C Act'] failed
before a learned Single Judge of the High Court of Delhi. However,
the Division Bench, by its judgment dated 02.03.2020, allowed
MMTC's appeal under Section 37 of the A&C Act and set aside the
arbitral Award along with the decision of the learned Single Judge.
By a judgment of 17.12.2020, this Court allowed the Civil Appeal
filed by Anglo and after setting aside the judgment of the Division
Bench restored the judgment of the learned Single Judge and the
arbitral Award.
5.
On 29.07.2021, a review petition filed by MMTC, which was admitted
on the limited issue of interest, was disposed of by reducing the
pendente lite and future interest to 6%. The remaining findings were
not disturbed. On 19.04.2022, a clarification application filed by
MMTC was disposed of by clarifying that MMTC would be liable to
pay interest @ 6% from the date of reference till the date of payment
and for the period from the date of breach till the date of reference,
interest was to be paid @ 7.5%.
6.
In the meantime, the respondent filed Execution Petition seeking
enforcement of the Award. Post the disposal of the clarification
application, on 20.07.2022, MMTC deposited a sum of Rs.1,087/-
332
[2025] 11 S.C.R.
Supreme Court Reports
crores with the High Court of Delhi at New Delhi. On 28.11.2022,
E.A. No. 3728 of 2022 in the Execution Petition was filed by MMTC
seeking to stay the operation and implementation of the Award till
the Central Bureau of Investigation [CBI] concludes its investigation
into the matter. It transpires that on 02.09.2022 and 23.11.2022,
complaints were filed by MMTC against persons including its erstwhile
employees alleging fraud and collusion with the respondent in relation
to the price fixed for coal for the 5th Delivery Period. On 09.01.2023,
the CBI, it transpires registered a preliminary enquiry.
7.
When the matter stood thus, on 10.01.2024, MMTC filed its objections
under Section 47 of the CPC. In the objections, the primary contentions
of MMTC were:-
7.1 Despite having complete knowledge of the recession in the
market due to the collapse of the Lehman Brothers, the officials
of MMTC in collusion and conspiracy with the officials of Anglo
contracted the price of coal for the 5th delivery period at US$ 300
PMT. This price was 3 times more than the price of US$ 96.40
PMT which prevailed during the 4th delivery period.
7.2 Viewed in the background of the fact that Neelachal Ispat Nigam
Ltd (for short the "NINL") for whom the coal was sourced did not
have pressing requirement of the ultimately contracted quantity
and considering the fact that there was room for negotiation of
the price, the contention of collusion and conspiracy became
stark.
7.3 The fraud could not be discovered earlier since Shri Ved Prakash,
who was Chief General Manager in 2008, became Director
(Marketing) in 2010 and ultimately Chairman-cum-Managing
Director in 2015, remained at the helm of affairs till 29.02.2020.
The said officer was in control of the arbitral proceedings as
well as at Section 34 and Section 37 stage.
7.4 When the Division Bench under Section 37 of the A&C Act
set aside the Award on 02.03.2020, there was no occasion
to examine the file to unearth the conspiracy. On 17.12.2020,
when this Court set aside the judgment of the Division Bench
and reinstated the Award, the matter was examined and on
24.02.2021, the then CMD of MMTC issued a confidential note
requesting the Chief Vigilance Officer to seek permission of the
Government of India to enquire into the matter.
[2025] 11 S.C.R.
333
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
7.5 It was thereafter that the matter was enquired into, and a decision
was taken to refer the matter to the CBI and a preliminary enquiry
came to be registered on 09.01.2023 by the CBI.
8.
A detailed reply was filed by Anglo taking objections on maintainability
and limitation. Primarily, the reply to the objections on the aspect of
fraud were set out as under:-
8.1 Under the LTA entered into on 07.03.2007 between MMTC and
Anglo, in each of the 5 delivery periods of the contract, Anglo
was to supply specified quantity of coking coal.
8.2 After the 3rd delivery period, MMTC had an option to extend the
Agreement by two years on condition that the option was to be
exercised latest by 31.01.2007. This was as per Clause 1.3.
The 3rd delivery period was to expire on 30.06.2007. Clause
1.3 reads as under: -
"1.3 The PURCHASER had the option to extend
the duration of the Agreement by two more years,
at its sole discretion and the Purchaser to exercise
its option for extending the Agreement by two more
years or otherwise by 31st January, 2007. In case
the PURCHASER decides to exercise such option,
at its sole discretion, the Agreement shall have two
more Delivery Periods as follows:
Fourth Delivery Period: 1st July 2007 to 30th June 2008
Fifth Delivery Period: 1st July 2008 to 30th June 2009"
8.3 The option was indeed exercised before 31.01.2007, on
30.01.2007, with the execution of the Memorandum of
Understanding [MoU]. Option once exercised, MMTC was
obliged to pick up the stipulated quantities at the stipulated
price during the 4th and 5th delivery periods. The 4th delivery
period was from 01.07.2007 to 30.06.2008 and the 5th delivery
period was from 01.07.2008 to 30.06.2009. There could be
postponement of delivery at the option of the purchaser for a
period of three months following each delivery period.
8.4 As per the contract, the price was linked with the price fixed
for two other Public Sector Undertakings, the Steel Authority
of India Limited (SAIL) and the Rashtriya Ispat Nigam Limited
334
[2025] 11 S.C.R.
Supreme Court Reports
(RINL). For SAIL and RINL, the prices were negotiated by the
Government's Empowered Joint Committee and those contracts
were long term contracts for purchase up to 2.5 million MT per
annum as opposed to MMTC's contracted quantity of 4,66,000
Metric Tonnes per annum.
8.5 Addendum No. 2 dated 20.11.2008 to the LTA was only to firm
up the terms and conditions. Shri Ved Prakash was a junior
member of the Committee in 2008 and by the time he became
CMD of MMTC on 14.03.2015 (as mentioned in the objections),
the Award had been pronounced by the Arbitral Tribunal on
12.05.2014.
8.6 The dispute commenced in March 2010 and culminated with
the judgment of this Court on 17.12.2020 and the allegation of
fraud is only to escape the liability under the Award.
9.
By 28.10.2024, when the judgment was reserved in the Section 47
objections, MMTC had filed a Civil Suit praying that the Award
dated 12.05.2014 is void and unenforceable. It further transpires
that, on 29.07.2025, the said Civil Suit has been dismissed as not
maintainable and a Regular First Appeal being RFA (OS) (Comm)
No. 28 of 2025 is pending before the High Court.
10. On 11.11.2024, MMTC filed an application under Order XXI Rule 29
CPC. By the impugned judgment, the Executing Court dismissed
the objections under Section 47 as well as the Order XXI Rule 29
application seeking stay of execution, pending the suit. Aggrieved,
MMTC has filed the present Appeal, by way of special leave, and
this is how the matter presents itself before us.
11. The High Court, by the impugned judgment, though held that the
objections under Section 47 were not maintainable, made a brief
observation on merits. It held that on merits that the acts of the Officers
bind the Corporation as MMTC being a separate legal entity can only
function through its Officers. Only a preliminary enquiry had been
registered (when the proceedings were pending in the High Court)
and, as such, there is no finding of fraud, cheating and collusion
against the Officers of MMTC with the Officers of the decree-holder.
12. We have heard 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
[2025] 11 S.C.R.
335
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
and Ms. Karishma Sharma, learned counsels for the appellant. We
have also heard 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.
13. We have carefully considered the submissions and perused the
records of the case. Elaborate arguments were heard on 22.05.2025,
23.05.2025, 24.07.2025, 29.08.2025, 18.09.2025 and 25.09.2025,
both on maintainability and merits of the Section 47-objections.
14. Before we proceed to consider the contentions, we need to notice
one additional fact which transpired during the pendency of the
proceedings. It appears that, on 20.07.2025, MMTC had filed a followup complaint with the CBI and the CBI, on 21.07.2025, registered an
FIR. We will deal with the same during the course of the judgment.
QUESTION FOR CONSIDERATION: -
15. In the above background, the question that arises for consideration
is - 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?
MAINTAINABILITY: -
16. Mr. N. Venkataraman, learned ASG, assailed the impugned judgment
by first contending that the finding on maintainability is completely
untenable in view of the judgment of this Court in Civil Appeal No.
2896 of 2024 [Electrosteel Steel Limited (Now M/s ESL Steel
Limited) vs. ISPAT Carrier Private Limited1] decided on 21.04.2025.
According to the learned ASG, this Court has held that the plea of
nullity qua an Arbitral Award can be raised in a proceeding under
Section 47 of CPC though the scope was very narrow.
17. Before the High Court, considerable arguments were advanced on
the question of maintainability of Section 47 objections under the
CPC, once the award had been challenged and the Section 34
objection had been dismissed and sustained right up to the highest
1
2025 INSC 525
336
[2025] 11 S.C.R.
Supreme Court Reports
Court. The High Court held that if the objections under Section 47
are allowed to be entertained during the enforcement proceedings of
an Award, it would effectively open a second round for challenging
the Award. According to the High Court, this was not intended by
the legislature and would defeat the purpose of the A&C Act, apart
from delaying the finality of disputes.
18. Mr. N. Venkataraman, learned ASG, drew our attention to the judgment
of this Court in Electrosteel (supra). In Electroteel (supra), certain
arbitration proceedings between parties therein were commenced
on 07.06.2017. On 27.06.2017, proceedings commenced under
Section 7 of the Insolvency and Bankruptcy Code, 2016(IBC) against
the appellant therein. The arbitration proceedings were kept in
abeyance, due to the moratorium. The respondent therein filed a
claim before the resolution professional who partly admitted the claim.
A resolution plan submitted by the successful resolution applicant
therein was approved by the Adjudicating Authority on 17.04.2018
under Section 31 of the IBC. In the plan, 'nil' value was provided for
the operational creditors. The approval of the plan attained finality right
up to this Court and the challenge made by some other operational
creditors were not fruitful.
19. The arbitrator, whose proceedings were kept in abeyance, resumed
proceedings after the lifting of the moratorium and passed an Award on
06.07.2018 with the appellant therein Electrosteel not even contesting
the proceedings. An award for a sum of Rs. 1,59,09,214/- along with
interest was made in terms of Section 16 of the Micro, Small and
Medium Enterprises Development Act, 2006 (for short 'MSME Act').
No challenge was made under Section 34. Execution came to be
levied by the respondent therein, when appellant Electrosteel filed
a petition under Section 47 CPC, contending that the Award was
a nullity and is not executable. The Executing Court dismissed the
petition resulting in a challenge under Article 227 before the High
Court. The High Court dismissed the Article 227-petition primarily
holding that since arbitral proceedings were initiated prior to the
insolvency resolution process, the arbitrator was not barred from
proceeding.
20. Before this Court, apart from arguments on Section 31 of the IBC
which provided for binding nature of the plan on all the stakeholders,
Electrosteel also argued that it was not barred from challenging the
[2025] 11 S.C.R.
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MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
award at the execution stage. The contention was that since the
award was a nullity, even if the appellant had not filed a petition
under Section 34 of the A&C Act, it would not foreclose them from
challenging the award in the execution proceedings. It was argued
therein that the Facilitation Council in the said case inherently lacked
jurisdiction to arbitrate the claim of the respondent, post the approval
of the resolution plan. The respondent therein contended that since
the appellant-Electrosteel did not challenge the award it was not
open to them to raise a challenge to the award in the Section 47
proceeding.
21. In answering the issue about the maintainability of the objection under
Section 47, this Court held that the High Court was correct insofar
as it stated that plea of nullity qua an Arbitral award can be raised
in a proceeding under Section 47 of CPC, but such a challenge
would lie within a very narrow compass. This Court further held that
in terms of Section 36 of the A&C Act, an Award can be enforced in
accordance with the provisions of the CPC, in the same manner as if
it were a decree of the Civil Court. This Court further held as under.
"48. .......... Execution of decrees and orders is provided for
in Order XXI CPC. The law is well settled that at the stage
of execution, an objection as to executability of the decree
can be raised but such objection is limited to the ground
of jurisdictional infirmity or voidness. The law laid down
by this Court in Vasudev Dhanjibhai Modi Vs. Rajabhai
Abdul Rehman, (1970) 1 SCC 670, is that only a decree
which is a nullity can be the subject matter of objection
under Section 47 CPC and not one which is erroneous
either in law or on facts. The aforesaid proposition of law
continues to hold the field."
22. In conclusion, this Court on the said issue, held that objection to
execution of an award under Section 47 was not dependent or
contingent upon filing a petition under Section 34. Ultimately insofar
as Electrosteel (supra) was concerned, the appeal of Electrosteel
was allowed in view of the provisions of the IBC, particularly, Section
30 and 31. It was found that the Facilitation Council did not have
jurisdiction to arbitrate the claim after approval of the plan.
23. Electrosteel (supra) held that any challenge under Section 47 would
lie within a narrow compass. It has also been held that at the stage
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[2025] 11 S.C.R.
Supreme Court Reports
of execution, an objection as to executability of the decree can be
raised, limited to the ground of jurisdictional infirmity or voidness.
It has been further held that errors of facts and law cannot be the
subject matter of objection under Section 47.
24. In Vasudev Dhanjibhai Modi vs. Rajabhai Abdul Rehman2, it
was held that an Executing Court cannot go behind the decree. It
was also held that where a decree is a nullity like, for example, in
cases where it is passed without bringing the legal representatives
on record or made by a Court which inherently lacked jurisdiction,
objections can be raised at the execution stage.
25. It should be pointed out that, in the present case, the objection is
not based on the ground of any inherent lack of jurisdiction. What is
really argued is that the Officials of MMTC committed fraud on MMTC,
their employer and there was collusion and conspiracy between the
Officials of MMTC and Anglo in pegging the price at US$ 300 PMT
for the 5th delivery period. So, the argument on inexecutability of the
decree was based on fraud committed by the Officials of MMTC on
MMTC, by collusion and conspiracy resulting in a favourable Award
for Anglo. It is also argued that fraud was discovered only after the
Award was upheld by this Court.
26. Mr. Neeraj Kishan Kaul, learned senior counsel for Anglo, argued that
objections under Section 47 were barred by law; that the A&C Act is
a complete Code and Section 5 bars any form of judicial intervention
other than what is expressly provided in the Act. According to the
learned senior counsel, the A&C Act contains a comprehensive
mechanism not just for the conduct of arbitral proceedings but also
for challenge to an execution of an arbitral award. Learned senior
counsel contended that awards cannot be challenged by a sidewind
in Section 47-proceedings. Mr. Kaul contended that the fraud alleged
in the present case is a fraud on itself by the employees (on the
MMTC) and is not a fraud on the Arbitral Tribunal. According to the
learned senior counsel, fraud alleged is a fraud on the formation
and validity of the underlying contract. Learned Senior Counsel also
submits that these objections were never taken at any point in the
earlier stage of litigation.
2
(1970) 1 SCC 670
[2025] 11 S.C.R.
339
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
27. In response, Mr. N. Venkataraman, learned ASG drew our attention
to a judgment of the English Court and to the following passage in
Lazarus Estates Ltd. v. Beasley3, as cited in Ram Preeti Yadav v.
U.P. Board of High School and Intermediate Education and Ors.4:-
"I cannot accede to this argument for a moment. No court
in this land will allow a person to keep an advantage which
he has obtained by fraud. No judgment of a court, no
order of a minister, can be allowed to stand if it has been
obtained by fraud. Fraud unravels everything. The court
is careful not to find fraud unless it is distinctly pleaded
and proved; but once it is proved it vitiates judgments,
contracts and all transactions whatsoever;"
28. Learned ASG also relied on the principle that fraud avoids all judicial
acts, ecclesiastical or temporal and relied on the judgment in S.P.
Chengalvaraya Naidu v. Jagannath and Ors.5, as cited in Ram
Preeti Yadav (supra). Learned ASG further relied on Indian Bank v.
Satyam Fibres (India) Pvt. Ltd.6, United India Insurance Co.
Ltd. v. Rajendra Singh and Others7, and judgment of the Delhi
High Court in National Projects Construction Corporation v.
Royal Construction Company Private Ltd.8, to contend that fraud
avoids all judicial acts and that fraud affects the solemnity, regularity
and orderliness of the proceedings. By relying on Rajendra Singh
(supra), it was contended that no Court or Tribunal can be regarded
as powerless to recall its own order if it is convinced that the order
was wangled due to fraud or misrepresentation of such a dimension
as would affect the very basis of the claim.
29. In Rajendra Singh (supra), while allowing the appeal of the Insurance
Company to recall two awards of the Motor Accident claims Tribunal
and permitting them to resist the claim on the ground of fraud, this
Court opened the judgment with the following strong words:-
"2. If what the appellant Insurance Company now says is
true, then a rank fraud had been played by two claimants
3
(1956) 1 All ER 341
4
(2003) 8 SCC 311
5
(1994) 1 SCC 1
6
(1996) 5 SCC 550
7
(2000) 3 SCC 581
8
2017 SCC Online Del 10944
340
[2025] 11 S.C.R.
Supreme Court Reports
who wangled two separate awards from a Motor Accident
Claims Tribunal for a bulk sum. But neither the Tribunal nor
the High Court of Allahabad, before which the Insurance
Company approached for annulling the awards, opened
the door but expressed helplessness even to look into the
matter and hence the Insurance Company has filed these
appeals by special leave.
3. "Fraud and justice never dwell together" (fraus et jus
nunquam cohabitant) is a pristine maxim which has never
lost its temper over all these centuries. Lord Denning
observed in a language without equivocation that "no
judgment of a court, no order of a Minister can be allowed
to stand if it has been obtained by fraud, for, fraud unravels
everything" (Lazarus Estates Ltd. v. Beasley : (1956) 1
All ER 341).
4. For a High Court in India to say that it has no power
even to consider the contention that the awards secured
are the by-products of stark fraud played on a tribunal,
the plenary power conferred on the High Court by the
Constitution may become a mirage and people's faith in
the efficacy of the High Courts would corrode. We would
have appreciated if the Tribunal or at least the High Court
had considered the plea and found them unsustainable
on merits, if they are meritless. But when the courts preempted the Insurance Company by slamming the doors
against them, this Court has to step in and salvage the
situation."
30. Faced with this situation, Mr. Kaul submitted that even if the case is
examined on merits, the MMTC has not made out any case, nor even
a prima facie case, by establishing any fraud or collusion warranting
a decision that the Award is inexecutable.
31. In the light of the judicial pronouncements discussed hereinabove,
we are not inclined to dismiss the objections only on maintainability.
Elaborate arguments spanning over several days have been heard
on merits and we set out to examine the objection of the appellants
on merits to see if any prima facie case of fraud is made out for the
appellant to contend that the Award is inexecutable.
[2025] 11 S.C.R.
341
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
NATURE OF ALLEGATION OF FRAUD - BREACH OF FIDUCIARY
DUTY: -
32. The fraud that is alleged in this case originates in the grievance
of MMTC that its employees in senior managerial roles including
directors on the Board committed a breach of fiduciary duty. According
to MMTC, there was collusion and criminal conspiracy by them with
the Officials of Anglo in fixing the contracted price for the 5th delivery
period at US$ 300 PMT. MMTC contends that the market price was
only US$ 96.40 PMT for the 4th delivery period. The further contention
is that the contracted quantity was far in excess of what was in need
for NINL for whom the coal was being sourced. They also seek to
explain the delay in unearthing the fraud for the reasons adduced by
them which have been discussed in the earlier part of the judgment.
33. It is important to recollect here that we are at a stage where the
award has attained finality in view of the dismissal of the appeal by
this Court in proceedings arising under Section 34 of the A&C Act.
The initiation of the dispute was on 04.03.2010 and the judgment
of this Court was delivered on 17.12.2020.
LEGAL FRAMEWORK TO DETERMINE BREACH OF FIDUCIARY
DUTY: -
34. Before we discuss the nitty-gritty of the merits insofar as they are
essential for adjudication of Section 47-objection to examine whether
at all even a prima facie case is made out, it is important to set out
the legal parameters as laid down in judicial precedents in cases
involving breach of fiduciary duty. The broad framework as to what
would constitute the breach of fiduciary duty and what are the legal
parameters for deciding the same have arisen before courts across
the globe in various fact situations. To understand the principles
that would govern is even more important in a case like ours where
parties have litigated for over a period of 15 years and the allegation
of breach of fiduciary duty has cropped up after the Award has had
the imprimatur of this Court.
35. As was rightly forewarned in Re Living Images Ltd.9, the first
precaution to be taken is not to fall into the trap of being too wise
9
(1996) 1 BCLC 348
342
[2025] 11 S.C.R.
Supreme Court Reports
after the event. In Re Living Images (supra), highlighting the need
to discount the benefit of hindsight, the Court observed as under:-
"I should add that the court must also be alert to the dangers
of hindsight. By the time an application comes before the
court, the conduct of the directors has to be judged on
the basis of statements given to the Official Receiver, no
doubt frequently under stress, and a comparatively small
collection of documents selected to support the Official
Receiver's and the respondents' respective positions.
On the basis of this the court has to pass judgment on
the way in which the directors conducted the affairs of
the company over a period of days, weeks or, as in this
case, months. Those statements and documents are
analysed in the clinical atmosphere of the courtroom.
They are analysed, for example, with the benefit of
knowing that the company went into liquidation. It is
very easy therefore to look at the signals available to
the directors at the time and to assume that they, or
any other competent director, would have realised that
the end was coming. The court must be careful not
to fall into the trap of being too wise after the event."
(Emphasis supplied)
36. It is always useful while adjudicating on alleged breach of fiduciary
cases to remember the memorable words of Lord Davey in Dovey
and The Metropolitan Bank (of England and Wales) Limited v.
John Cory10:-
"I think the respondent was bound to give his attention
to and exercise his judgment as a man of business on
the matters which were brought before the board at
the meetings which he attended, and it is not proved
that he did not do so"
(Emphasis supplied)
10
1901 Appeal Cases 477
[2025] 11 S.C.R.
343
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
37. MMTC now launches a 'no holds barred attack' on most of the directors
and senior managerial personnel who were in office from 2008-2009
right up to those who held office till 2020. The case projected is that
the senior managerial personnel including the directors operated as
a cabal to defraud MMTC and that it was only after this Court upheld
the Award that an enquiry was launched and the fraud unearthed.
TEST OF A REASONABLY COMPETENT DIRECTOR: -
38. Before we examine the merits, we should also bear in mind the
principle that in cases like this, a court cannot be swayed by what the
Court thinks would have been a reasonable course of action for the
director to adopt but the duty is to enquire whether on the available
evidence before the Court to consider whether the course adopted
by the director was one reasonably competent directors could have
adopted. In Sharp and Ors. v. Blank and Ors,11 a judgment by
Norris J in Chancery Division in the context of negligence the Court
observed as under:
"631. ... in testing whether a director has been negligent
the question is not simply what the Court thinks it would
be reasonable for the director to have done; rather it is
what the evidence before the Court establishes were the
courses open to reasonably competent directors (the
burden lying on a complainant to establish that the course
of which complaint is made is not amongst them).
627. ... When embarking upon a transaction a director
does not guarantee or warrant the success of the venture.
Risk is an inherent part of any venture (whether it is called
'entrepreneurial' or not). A director is called upon (in the
light of the material and the time available) to assess and
make a judgment upon that risk in determining the future
course of the company. Where a director honestly holds
the belief that a particular course is in the best interests
of the company then a complainant must show that the
director's belief is one which no reasonable director in the
same circumstances could have entertained."
11
(2019) EWHC 3096 (Ch)
344
[2025] 11 S.C.R.
Supreme Court Reports
RANGE OF REASONABLENESS - TEST
39. Dealing with the aspect of how the Court cannot second guess
the directors by substituting its opinion and laying down that the
enquiry should be whether the decision taken was within the range
of reasonableness, it was held by the Court of appeal for Ontario in
Maple Leaf Foods Inc. v. Schneider Corp.12, thus:
"The mandate of the directors is to manage the company
according to their best judgment; that judgment must be
an informed judgment; it must have a reasonable basis.
If there are no reasonable grounds to support an
assertion by the directors that they have acted in the
best interests of the company, a court will be justified
in finding that the directors acted for an improper
purpose.
The law as it has evolved in Ontario and Delaware has
the common requirements that the court must be satisfied
that the directors have acted reasonably and fairly. The
court looks to see that the directors made a reasonable
decision not a perfect decision. Provided the decision
taken is within a range of reasonableness, the court
ought not to substitute its opinion for that of the board
even though subsequent events may have cast doubt
on the board's determination. As long as the directors
have selected one of several reasonable alternatives,
deference is accorded to the board's decision......
This formulation of deference to the decision of the
Board is known as the "business judgment rule".
The fact that alternative transactions were rejected
by the directors is irrelevant unless it can be shown
that a particular alternative was definitely available
and clearly more beneficial to the company than the
chosen transaction"
(Emphasis supplied)
12
42 OR (3d) 177
[2025] 11 S.C.R.
345
MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited
BUSINESS JUDGMENT RULE: -
40. The above decision also highlights the principle that as long as the
decision taken falls within the range of options reasonably available,
Court would defer to the decision of the Board under the "Business
Judgment Rule". The said principle was also reiterated by the
Supreme Court of Canada in Kerr v. Danier Leather Inc.,13 in the
following words:
"On the broader legal proposition, however, I agree with
the appellants that while forecasting is a matter of business
judgment, disclosure is a matter of legal obligation. The
Business Judgment Rule is a concept well-developed in
the context of business decisions but should not be used to
qualify or undermine the duty of disclosure. The Business
Judgment Rule was well stated by Weiler J.A. in Maple
Leaf Foods Inc. v. Schneider Corp. (1998), 42 O.R.