New Grounds, Old Problems: Challenging Arbitral Awards on the Ground of Nullity at the Stage of Execution

[Abhinav is a student at National Law University Delhi.]

On 21 April 2025, the Supreme Court in Electrosteel Steel Limited v Ispat Carrier Private Limited (Electrosteel) held that an objection to execution of an award on the grounds of it being a nullity due to jurisdictional infirmities, can be raised before the executing court under Section 47 of the Code of Civil Procedure 1908 (CPC) independent of a challenge under Section 34 of the Arbitration and Conciliation Act 1996 (ACA). The decision effectively provides another opportunity to the award-debtor to challenge the enforcement of an award under Part I of the ACA beyond the recourse under Section 34 of the ACA. The decision threatens to prolong further an already arduous and expensive process that an award-creditor goes through to reap the fruits of an arbitral award.

This article contends that allowing such an objection at the stage of execution, apart from its ill-effects of prolonging enforcement proceedings, is legally flawed for two reasons: first, because the view of the court arises from an incorrect assumption that principles applied to decrees under the CPC are directly applicable to arbitral awards during the execution stage; and second, because awards unlike decrees of the court, can only be challenged under the framework of Section 34 of the ACA. However, it is important to first understand the ground of nullity itself.

Where Does the Ground of Nullity Come From?

It is a settled principle that executing courts must not go behind the decree, i.e. courts must not again open cases for arguments on merits when an application for the execution of a decree is heard. However, an exception to this rule under Section 47 of the CPC is the ground of nullity, which allows the executing courts to decline execution of a decree if an infirmity renders the decree a nullity. The 1954 decision in Kiran Singh v. Chaman Paswan (Kiran Singh) was one of the earliest Supreme Court decisions accepting this as the settled position of law. The reasoning behind the nullity exception is that while executing courts must not go behind a decree, but where an infirmity (like the lack of jurisdiction of the Court granting the decree) renders it a nullity, i.e. non est, there remains no decree at all for the Court to execute. In continuation of this, the question that Electrosteel presents is to what extent the ground of nullity, which has evolved in the context of decrees under CPC, can be applied to arbitral awards being enforced under Section 36 of the ACA.

Previous Instances of the Court Considering the Ground of Nullity

Electrosteel is not the first time that the Supreme Court has recognized the ground of nullity expressly in the context of arbitral awards. Earlier in 2017, in Punjab State Civil Supplies Corporation Limited v Atwal Rice and General Mills (Atwal Rice), even though the Supreme Court did not apply the ground of nullity, it nonetheless accepted it. In that case, the court held that the executing court could not look into the merits of the case, but could consider questions regarding the award being a nullity, like the question of jurisdiction of the arbitral tribunal. However, in Atwal Rice, the court deemed the objections raised to be relating to the merits of the case and therefore, rejected them.

Even though the apex court has now, on more than one occasion, recognized the ground of nullity, the underlying reason for such a view remains contested and unsettled. Neither decision gives serious consideration to whether principles regarding decrees under CPC can be applied to arbitral awards, and whether allowing objections on the grounds of nullity of the award would be in contradiction with the provisions of Sections 5 and 34 of the ACA. The assumption on which Electrosteel and Atwal Rice proceed is that Section 36(1) of the ACA deems an arbitral award to be a decree of the court for the purposes of execution. However, this is a contested view, and the Supreme Court has delivered conflicting judgments on the same, which is examined in the following section.

Section 36(1) is not a Deeming Clause: Conflicting Views

Section 36(1) of the ACA states that where the timeframe for challenging an award under Section 34 has elapsed (3 months from the date of receiving award, extendable by 30 days in certain situations), then the award shall be enforced according to the provisions of the CPC in the same manner as if it were a decree of the court. The statement “in the same manner as if it were a decree of the court” raises the question whether the section is a deeming provision which calls for the award to be seen as no different from a decree. If Section 36(1) is indeed a deeming provision, then the courts can directly apply laws regarding decrees to such awards indiscriminately. However, if the section is not such a deeming provision, then laws regarding decrees (such as the ground of nullity recognized in Kiran Singh) cannot be unquestioningly applied to arbitral awards. The Supreme Court has taken conflicting positions on this question.

In Atwal Rice, a division bench of the Supreme Court held that under Section 36(1), the arbitral award is given the status of a decree of the civil court, thus reading Section 36(1) as a deeming provision. However, just a year later in 2018, another division bench of the Supreme Court in Sundaram Finance v. Abdul Samad (Sundaram Finance) gave a decision to the contrary, stating that “…an award is to be enforced in accordance with the provisions of the said code in the same manner as if it were a decree. It is, thus, the enforcement mechanism, which is akin to the enforcement of a decree, but the award itself is not a decree of the civil court as no decree whatsoever is passed by the civil court.” (emphasis supplied)

The conflicting views of the court require a resolution. However, between the two precedents, a comprehensive reading of the ACA furthers the view taken in Sundaram Finance, because Section 36(1) of the ACA only provides the framework for executing an arbitral award, as the arbitral tribunal itself does not have such a mechanism under the law. In other places where the ACA deems an arbitral award to be a decree of the court, the language of the provision leaves no doubt in this regard. For example, Section 49 of the ACA states that where the court is satisfied that the foreign award is enforceable, “the award shall be deemed to be a decree of that court” (emphasis supplied). Comparing the language of Section 49 of the ACA itself with the language used in Section 36(1) makes it clear that the former is a deeming provision while the latter is not. Therefore, the view taken in Sundaram Finance is correct; an award remains an award even during the execution stage under Section 36(1). Consequently, the ground of nullity regarding decrees would not apply to arbitral awards; this is especially so due to the framework of the ACA, as will be discussed next.

Section 34 is the Only Recourse Against an Arbitral Award

Section 34(1) of the ACA states that “recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3)” (emphasis supplied). Thus, the said provision makes it clear that there is only one recourse available against an arbitral award, and it is “only by an application for setting aside” under Section 34 of the ACA. As established, since an arbitral award remains an award even at the stage of execution, allowing the ground of nullity to be taken for challenging awards independently of the recourse under Section 34 of the ACA is in contradiction with the position of law stated by that provision in language which could not be plainer. 

A recourse under CPC, independent of Section 34(1) of the ACA, which allows courts to hear challenges to awards governed by Part I of the ACA is also completely against Section 5 of the Act which states that “Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part” (emphasis supplied). Therefore, no external independent recourse against an award can be provided beyond the ACA.

Further, since the ground of nullity has been recognised as independent of Section 34, the purpose of prescribing a time limit for challenges to awards under the said provision also stands defeated because challenges like those assailing the jurisdiction of the arbitral tribunal can be brought up whenever the award is sought to be executed. For instance, even in Electrosteel, the challenge to the award on the grounds of nullity was brought after ten months of the passing of the award, instead of the timeframe of three months prescribed under Section 34 of the ACA.

The Protracted Way Ahead for the Enforcement of Arbitral Awards

The lamentation of the Privy Council in 1872 that “the difficulties of a litigant in India begin when he has obtained a decree” has become a hackneyed phrase invoked by the courts almost mechanically in most cases where enforcement of decrees has been a protracted ordeal. It remains true of enforcement proceedings for arbitral awards as well. Electrosteel and the several High Court judgments which take the same view make available a recourse in the form of nullity, which allows an unwilling award-debtor to further extend the litigation, and delay or completely exclude the enjoyment of the fruits of an award by the award-creditor. Such decisions make the enforcement of an award nothing short of a Sisyphean ordeal. Therefore, the position of law in Electrosteel needs reconsideration, as argued in this post, to make the enforcement process quicker and more efficient, one which allows the award-creditor to enjoy the fruits of their labour, this being imperative for the long-term health of arbitration in India.