Karnataka High Court Reiterates Limits of Execution Fresh Objections Cannot Be Raised Under Section 47 CPC

Introduction 

On 1st September 2025, the Karnataka High Court at Bengaluru, headed by Justice M. Nagaprasanna, passed a seminal judgment in Writ Petition No. 29449 of 2024 (GM-CPC). The matter, instituted by Karnataka State Medical Supplies Corporation Limited (KSMSCL) against Plasti Surge Industries Pvt. Ltd., posed serious questions regarding the reach of execution proceedings under the Civil Procedure Code (CPC) and the level to which fresh objections could be raised once an arbitral award has achieved finality.

The judgment reaffirms that no executing court can go beyond the decree or arbitral award and underlines the sanctity of arbitration proceedings, especially in disputes coming under the MSME Development Act, 2006.

Background of the Case

The controversy has its origin in a tender issued by KSMSCL for the supply of drugs, chemicals, and allied items for the year 2017–18. Plasti Surge Industries, a Maharashtra-based firm, successfully bid for the tender and was entrusted with the contract. Subsequently, in a re-tender for the supply of disposable delivery kits, the respondent again emerged as the successful bidder and completed the work order.

According to tender conditions, the respondent provided a performance bank guarantee of ?9,09,394 and other guarantees. Upon completion of supplies, the respondent submitted bills totalling ?1,83,40,144, which KSMSCL supposedly did not settle. The petitioner used discrepancies, defective supplies, and returned goods as grounds for withholding payment.

As a registered MSME, the respondent referred the case to the MSME Act provisions and went to the MSME Facilitation Council. Conciliation did not work, and the issue was referred to arbitration.

Arbitration and Execution Proceedings

The arbitrator issued an award mandating KSMSCL to pay ?1,83,40,144 to the respondent. KSMSCL did not implement the award. Thus, the respondent filed a Commercial Execution Petition before the Commercial Court, Bengaluru, claiming a sum of ?4,02,35,197 (including interest and cost).

The Commercial Court went ahead and attached KSMSCL's movable properties, resulting in a recovery of approximately ?65 lakhs. Dissatisfied, KSMSCL petitioned the High Court previously, arguing that their objections were not considered properly. The High Court remanded the case to the executing court for reconsideration.

On remand, KSMSCL invoked Section 47 of the CPC, attempting to raise new objections. It complained of forgery and cheating by its own staff in concert with Plasti Surge Industries. The Commercial Court refused the application, holding that such pleas could not be heard in execution as the court is bound by the arbitral award.

It was this order that KSMSCL assailed before the High Court in the instant writ petition.

High Court's Reasoning

The petition was rejected by Justice M. Nagaprasanna, affirming the order of the Commercial Court. The Court said that section 47 CPC gives the executing court jurisdiction to determine issues concerning the execution, discharge, or satisfaction of a decree. The provision does not, however, permit the executing court to look beyond the decree itself. The High Court reaffirmed the established rule that the execution court cannot scrutinize the correctness of the decree or revive matters that should have been raised before the arbitral tribunal.

The petitioner had charged that its staff colluded with the respondent in faking invoices and perpetrating fraud. The Court, however, ruled that such charges were not made either before the MSME Council at the stage of conciliation or before the arbitrator. After an award has been rendered and has reached finality, such charges cannot be heard at the stage of execution.

If KSMSCL had fraud evidence, the remedy was to challenge the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, within the time limit, rather than to raise it at a later stage in execution.

The Court held that permitting fresh objections in execution would spoil the very purpose of arbitration. Arbitration aims at furnishing a quick and effective settlement of disputes, especially under the MSME regime, which seeks accelerated payment to small businesses. To permit KSMSCL's application would not only undercut the award but also induce parties to delay litigation, which is against the spirit of the Arbitration Act and MSME Act.

Judgment

The High Court rejected the writ petition, holding that the execution court was correct in declining to entertain KSMSCL's application under Section 47 CPC. An executing court cannot go beyond the decree or arbitral award. Allegations of fraud or collusion cannot be made for the first time in execution proceedings, and KSMSCL, having missed out the opportunity to challenge the arbitral award under the Arbitration Act, cannot bypass the process by invoking Section 47 CPC. The execution proceedings filed by Plasti Surge Industries Pvt. Ltd. were therefore held to be valid, and KSMSCL was ordered to abide by the award.

Conclusion

The Karnataka High Court ruling is a salutary reminder that proceedings of execution are not a chance for parties to re-agitate points or raise new claims. Parties can either obey the arbitral award or enforce it under the Arbitration Act in the statutory scheme once the award is made.

For MSMEs, it is a welcome affirmation of the legal safeguards contemplated by the MSME Development Act. For big businesses and the government, it is a warning against the abuse of procedural tools to delay legitimate claims. Ultimately, it maintains the integrity of arbitration as an instrument of commercial justice.

Case Reference: KARNATAKA STATE MEDICAL SUPPLIES CORPORATION LIMITED VERSUS PLASTI SURGE INDUSTRIES PVT. LTD., WRIT PETITION NO. 29449 OF 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU