A party cannot challenge the jurisdiction of an Arbitral Tribunal after submitting a statement of defence, as per Section 16(2) of the Arbitration and Conciliation Act, 1996.

JUDGMENT

ABHAY S. OKA, J.

1. Leave granted.

2. Heard the learned senior counsel appearing for the appellant and the learned ASG appearing for the respondent.

3. The respondent executed a contract in favour of the appellant to construct a building for the office of the General Manager, Railway Electrification Project, Allahabad. There was a dispute regarding the amount to be paid to the appellant under the contract. The contract provided for appointing an Arbitral Tribunal consisting of three Arbitrators. Initially, on an application made by the respondent, the learned Chief Justice of the High Court appointed two Arbitrators with a direction to them to appoint an Umpire. As the Arbitrators did not nominate the Umpire, the respondent filed another application before the learned Chief Justice. Ultimately, an order was passed appointing one Shri P.K. Sharma as the Umpire.

4. Subsequently, the said Shri P.K. Sharma resigned. Therefore, the appellant filed an application seeking modification of the earlier order contending that a presiding Arbitrator may be appointed who may not belong to any Government department. On that application, on 26th September, 2003, the learned Chief Justice appointed a retired Chief Justice of the High Court as the sole Arbitrator.

5. The proceedings commenced before the sole Arbitrator. After filing the statement of defence, an objection to the jurisdiction of the sole Arbitrator was raised on the ground that the arbitration clause in the contract provided for the appointment of three Arbitrators. The learned sole Arbitrator rejected the said objection. Ultimately, an award was made on 21st February, 2008, which was challenged by the respondent on various grounds by filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, “the Arbitration Act”) before the learned District Judge, Allahabad. In the exercise of powers under Section 34 of the Arbitration Act, the learned District Judge proceeded to set aside the award only on the ground that the composition of the Arbitral Tribunal was illegal as the sole Arbitrator could not have been appointed. In an appeal preferred under Section 37 of the Arbitration Act by the appellant, the High Court has confirmed the judgment of the learned District Judge.

6. The submission of the learned senior counsel appearing for the appellant is that in the proceedings dated 5th December, 2003, it is recorded that the respondent agreed and accepted the order of the learned Chief Justice of appointing the sole Arbitrator. He pointed out that the respondent filed the statement of defence on 14th February, 2004. Thereafter, time was granted by the Arbitral Tribunal to the respondent to apply for modification of the statement of defence. He submitted that the issue of jurisdiction of the sole Arbitrator was not raised in the statement of defence. On 24th April, 2004, instead of making an application for modification of the statement of defence, the respondent moved an application for challenging the composition of the Arbitral Tribunal. The Arbitral Tribunal rejected the said application. The submission of the learned senior counsel appearing for the appellant is that apart from the fact that the conduct of the respondent shows that it accepted the appointment of the sole Arbitrator, in view of sub-section (2) of Section 16 of the Arbitration Act, it was impermissible to raise a plea of the lack of jurisdiction in the Arbitral Tribunal after filing of the statement of defence. He would, therefore, submit that it was not open for the respondent to challenge the jurisdiction of the sole Arbitrator and, hence, Sections 34 and 37 Courts have committed an error.

7. The learned ASG submitted that when the learned Chief Justice on 26th September, 2003 passed an order appointing the sole Arbitrator (a retired Chief Justice of the High Court), the law was that the order under Section 11 was an administrative order. He submitted that the statement of defence, whi