Section 47 Objections Fail as Court Finds No Prima Facie Fraud; Award Remains Executable

A bench of Justices K.V. Viswanathan and Sanjay Kumar heard the appeal by MMTC Limited challenging the Delhi High Court's refusal to entertain objections under Section 47 of the Code of Civil Procedure and its dismissal of an application under Order XXI Rule 29 seeking stay of enforcement of an arbitral award. The appeal arose from enforcement proceedings of an arbitral award directing MMTC to pay damages for unlifted quantities of coking coal and touching the narrow question whether the executing court could refuse execution on the ground of alleged fraud by MMTC officials in fixing contract price for the fifth delivery period.

The Supreme Court dismissed the appeal and upheld the High Court’s approach that objections under Section 47 lie only within a narrow compass and cannot be used as a vehicle for a re-trial of disputed factual or legal contentions. The Court found that MMTC had not made out a prima facie case of fraud or breach of fiduciary duty sufficient to render the award inexecutable. The Court, in its reasoning, observed: The Court reiterated that “the objective of Section 47 is to prevent unwanted litigation and dispose of all objections as expeditiously as possible.” The judgment also cited the maxim that “fraud unravels everything,” while stressing that allegations of fraud must be distinctly pleaded and proved.

Background

The dispute arose from a Long Term Agreement of 7 March 2007 under which Anglo American Metallurgical Coal Pvt. Ltd. agreed to supply coking coal to MMTC. The arbitral tribunal, by award dated 12 May 2014, granted Anglo damages of US$78.72 million (with interest and costs) for unlifted quantities. Challenges under Section 34 of the Arbitration and Conciliation Act failed at the Single Judge level, were allowed by a Division Bench, and were ultimately restored in favour of Anglo by this Court on 17 December 2020. After a review limited to interest, and a clarification fixing interest rates, MMTC deposited Rs.1,087 crores in the Delhi High Court on 20 July 2022. MMTC thereafter filed objections under Section 47 (10 January 2024) alleging collusion and conspiracy by MMTC officials with Anglo to peg the fifth-period price at US$300 per metric tonne despite market collapse after September 2008; MMTC asserted the fraud only became discoverable later and sought stay of execution. The executing court and the High Court dismissed the Section 47 objections and refused the stay, permitting Anglo to withdraw the deposit. MMTC also filed a civil suit challenging the award, which the High Court later dismissed as not maintainable; a regular first appeal remained pending.

During the proceedings MMTC lodged complaints and a preliminary enquiry by the CBI was registered in January 2023; a follow-up complaint led to registration of an FIR on 21 July 2025. The Supreme Court considered the complaint record but held that a mere FIR or preliminary enquiry did not, without more, establish the existence of fraud rendering the award a nullity. Applying precedents including Electrosteel and Vasudev D. Modi, the Court emphasised that Section 47 objections are restricted to instances where a decree (or award treated as a decree) is a nullity for jurisdictional defect or fraud affecting the tribunal’s competence; errors of law or fact did not suffice. The Court accepted that business realities and contractual practices (including carry‑over shipments and parities with SAIL/RINL prices) formed part of the factual matrix and concluded MMTC had not shown that officials acted outside the range of reasonable corporate decision‑making. The appeal was dismissed and there was no order as to costs. No stay under Order XXI Rule 29 was granted in the circumstances.

Case Details: Case No.: Civil Appeal No. 13321 of 2025 (@ SLP (C) No. 14832 of 2025) Case Title: MMTC Limited v. Anglo American Metallurgical Coal Pvt. Limited Appearances: For the Petitioner(s): N. Venkataraman (Additional Solicitor General); Sanat Kumar (Senior Advocate); Akhil Sachar; Astha Tyagi; Sunanda Tulsyan; Karishma Sharma For the Respondent(s): Neeraj Kishan Kaul (Senior Advocate); Jayant Mehta (Senior Advocate); Sumeet Kachwaha; Samar Singh Kachwaha; Ankit Khushu; Garima Bajaj; Akanksha Mohan; Pratyush Khanna; Ira Mahajan