The main legal point established in the judgment is that a suit for setting aside an arbitral award on the ground of fraud is maintainable, but the plea of fraud must be extraneous to the decree and must have prevented the party from defending the claim in the manner most to his advantage.

1. The plaintiff, a Government of India enterprise, has instituted this suit, pleading i) that the plaintiff was awarded certain construction works by the State Organization for Food Industry, Baghdad, Iraq; ii) that the plaintiff, vide Agreement dated 29th June, 1982 appointed the defendant as a sub-contractor/associate of the plaintiff for execution of part of the aforesaid works; iii) that owing to certain disputes that arose between the plaintiff and the defendant, the defendant, invoked the arbitration clause in terms of its agreement with the plaintiff, and in which arbitration proceedings, the plaintiff, besides filing the reply to the claim of the defendant, also filed its counterclaim; iv) that the counterclaim No.1 of the plaintiff was for a sum of ID 1,39,811.00 relating to hire charges of equipment; v) that it was the case of the plaintiff therein that the plaintiff was to only provide four dumpers free of cost to the defendant and for any additional dumpers required by the defendant during the course of execution of the works sub-contracted to it, the defendant was to pay hire charges therefor to the plaintiff; however the ex-officials of the plaintiff illegally waived the hire charges for additional dumpers supplied by the plaintiff to the defendant, thereby causing a pecuniary loss to the plaintiff and corresponding pecuniary gain to the defendant; vi) that vide arbitral award dated 10th August, 2002, the claims of the defendant were allowed and the counterclaims of the plaintiff dismissed; vii) that the plaintiff filed OMP No.374/2002 under Section 34 of the Arbitration & Conciliation Act, 1996 with respect to the said award but which OMP was dismissed on 26th May, 2008; viii) that the plaintiff thereafter filed FAO(OS) No.589/2009; ix) that in compliance of the interim order dated 9th March, 2010 in the said appeal, the plaintiff deposited a sum of Rs.1.50 crores in this Court and which amount was released in favour of the defendant; x) that FAO(OS) No.589/2009 was disposed of on 19th May, 2014 and Review Petition No.297/2014 preferred by the plaintiff dismissed on 19th September, 2014; xi) that the plaintiff filed SLP(C) No.35841/2014 which was admitted and converted into Civil Appeal No.2543/2015 which was allowed on 24th February, 2015 and the orders dated 19th May, 2014 and 19th September, 2014 were set aside; xii) that Execution Petition No.131/2015 was filed by one Mool Chand Jain claiming himself to be the Managing Director of the defendant; xiii) that another Execution Petition No.192/2015 has been filed by Ashok Kumar Gaba also claiming to be the Managing Director of the defendant; xiv) both execution petitions seek enforcement of the arbitral award dated 10th August, 2002; xv) that during the pendency of the arbitral proceedings aforesaid, a case titled “CBI Vs. S.K. Relan & Ors.” came to be registered under the Prevention of Corruption Act, 1947 including against one Mr. M.C. Jain, Managing Director of the defendant; xvi) that reference to the said CBI case, is also found in the arbitral award; xvii) that in the aforesaid CBI case, charges were framed against the said Mr. M.C. Jain, Managing Director of the defendant and also against the ex-officials of the plaintiff qua the illegal waiving of hire charges for additional dumper trucks; xviii) that in the aforesaid CBI prosecution, judgment was delivered on 8th June, 2016 whereby amongst others, Mr. M.C. Jain, Managing Director of the defendant was convicted for offences under Section 120B of IPC read with Sections 5(2) and 5(1)(d) of the Prevention of Corruption Act; xix) that Mr. M.C. Jain, Managing Director of the defendant was also held guilty on the charge of entering into criminal conspiracy to waive the hire charges for additional dumpers and sentenced to rigorous imprisonment for two years with a fine of Rs.20,000/-; xx) that besides Mr. M.C. Jain aforesaid, four officers of the plaintiff were also convicted.

2. On the basis of the a