Estoppel by conduct bars challenge to compromise decree based on arbitral award after voluntary acceptance and reliance

A party that voluntarily accepted a compromise decree founded on an arbitral award, and induced the other side to act on that arrangement, cannot later repudiate it by alleging non-arbitrability and treating the award and decree as void. The SC applied the principle that a litigant cannot approbate and reprobate, and held that estoppel by conduct can bar a challenge even when framed as one to the legal validity of the underlying arrangement, where the opposing party altered its position in reliance on the compromise. The respondents were therefore estopped from disputing the compromise decree, and relief followed for the appellants.

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Issues: Whether a party that accepted a compromise decree founded on an arbitral award and induced the opposite party to act on that basis can later contend that the award and compromise were a nullity on the ground of non-arbitrability and resist enforcement.

Analysis: The parties had originally litigated over the trust disputes, but during the pendency of the appeal they jointly agreed to refer the matter to arbitration and then sought disposal of the appeal in terms of the award. The appellate court accepted that course and passed a decree in terms of the compromise deed. The appellants acted on that arrangement and altered their position, including by taking steps consistent with the compromise. In these circumstances, the respondents' later attempt to invoke Section 92 of the Code of Civil Procedure, 1908 to treat the award and compromise decree as void was inconsistent with their earlier stand. The governing principle was that a litigant cannot approbate and reprobate, and estoppel by conduct may operate even where the challenge is cast as one to the legal validity of the underlying arrangement, if the challenge contradicts a representation on which the other side relied to its detriment.

Conclusion: The respondents were estopped from disputing the validity of the compromise decree on the ground of non-arbitrability, and the appellants were entitled to relief.

Ratio Decidendi: A party that has voluntarily accepted and acted upon a compromise decree based on an arbitral award, and has induced the opposite party to alter its position, cannot later repudiate that arrangement by asserting that the award was a nullity on a ground inconsistent with its earlier conduct.

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