SUPREME COURT OF INDIA
J.B. PARDIWALA, R. MAHADEVAN, JJ.
M/s. Gayatri Project Limited - Appellant
Versus
Madhya Pradesh Road Development Corporation Limited – Respondent
Civil Appeal No. 6856 Of 2025 (Arising out of Special Leave Petition (C) No. 9740 of 2022)
Decided On : 15-05-2025
Based on the provided legal document, here are the key points regarding the judgment:
Case Details * Case Name: M/s. Gayatri Project Limited - Appellant Versus Madhya Pradesh Road Development Corporation Limited – Respondent. * Court: Supreme Court of India. * Bench: J.B. Pardiwala, R. Mahadevan, JJ. * Civil Appeal No.: 6856 Of 2025 (Arising out of SLP (C) No. 9740 of 2022). * Decided On: 15-05-2025. * Subject: Arbitration - Jurisdictional Challenges. * Act Referred: Arbitration and Conciliation Act, 1996; Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983.
Core Legal Principle * Lack of jurisdiction claims cannot be raised post-arbitration if not raised during proceedings; such claims are waived under the Arbitration Act. * Awards passed under the Arbitration and Conciliation Act, 1996 cannot be annulled on the ground of lack of jurisdiction if the objection was not raised before the arbitral tribunal. * Courts shall not permit raising jurisdictional objections at later stages unless a strong reason is provided. * Failure to raise jurisdictional objection before the tribunal leads to a waiver of the right to contest on those grounds later in court.
Factual Background * The appellant and respondent had a works contract with an arbitration provision mandating a three-member tribunal. * The Tribunal passed a unanimous award dated 08.07.2011 in favor of the appellant. * The respondent challenged the award before the Civil Court under Section 34 of the Act, 1996, but did not challenge the jurisdiction of the Tribunal in the initial petition. * The respondent later sought to introduce the ground of lack of jurisdiction (based on the applicability of the MP Act, 1983) via an amendment application after the award was made and after the decision in L.G. Chaudhary (II). * The High Court allowed the Section 34 petition, annulling the award on the ground of lack of jurisdiction, relying on the decision in Lion Engineering.
Judicial Analysis & Precedents * Conflict Resolution: The Court clarified that there is no conflict between L.G. Chaudhary (II) and Lion Engineering. * Lion Engineering held that a plea of lack of jurisdiction being a question of law may be raised for the first time under Section 34 even if not raised under Section 16, but this was in the context of allowing amendments or raising legal pleas where no waiver existed. * L.G. Chaudhary (II) carved out an exception: where an award has already been made and no objection to jurisdiction was taken at the relevant stage (e.g., before the tribunal or in the initial Section 34 petition), the award may not be annulled only on that ground. * Waiver: The Court reiterated the settled position from Union of India v. Pam Development (P) Ltd. and Gas Authority of India Ltd. v. Keti Construction (I) Ltd. that failure to raise a jurisdictional plea before the arbitral tribunal constitutes a deemed waiver under Section 4 read with Section 16 of the Act. * Applicability of State Act: The Court held that the MP Act, 1983 prevails over the Central Act where there is an arbitration clause, but the exception regarding waiver applies. Since the respondent participated in the arbitration without objection, they cannot now approbate and reprobate. * Recent Precedent: The judgment followed the ratio in Sweta Construction v. Chhattisgarh State Power Generation Company Ltd. and Modern Builders v. State of Madhya Pradesh, reinforcing that awards cannot be set aside solely on jurisdictional grounds if not raised earlier.
Outcome * Appeal Allowed: The appeal filed by the appellant was allowed. * High Court Judgment Set Aside: The impugned judgment of the High Court annulling the award was set aside as it was erroneous to annul the award solely on the ground of lack of jurisdiction which was not raised earlier. * Restoration: The proceedings were restored to the Commercial Court and 19th Upper District Judge, Bhopal (M.P.) to decide all other issues on merit raised in the Section 34 petition. * Directive: The Registry was directed to circulate a copy of this judgment to all High Courts.
| Table of Content |
|---|
| 1. factual background of appeal and award. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 2. court observes the implications of previous judgments on current arbitration and jurisdiction. (Para 12) |
| 3. conflicting interpretations of jurisdiction pleas. (Para 13 , 14 , 15 , 16 , 17 , 19 , 20) |
| 4. court observations on jurisdictional challenges. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31) |
| 5. conclusions on jurisdictional pleas and awards. (Para 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41) |
| 6. final judgment and directive. (Para 42 , 43) |
JUDGMENT :
(J.B. PARDIWALA, J.)
For the convenience of the exposition, this judgment is divided in the following parts: -
| INDEX | |
| A. | FACTUAL MATRIX |
| B. | ISSUES FOR DETERMINATION |
| C. | ANALYSIS i. Can an Award passed under the Act, 1996 be annulled on the ground of lack of jurisdiction where no plea of applicability of MP Act, 1993 was raised before the Arbitral Tribunal? a. Is there a conflict between the decisions of L.G. Chaudhary (II) and Lion Engineering? b. Whether a plea of lack of jurisdiction may be raised for the first time under Section 34 of the Act, 1996 if no such objection was taken before the arbitral tribunal? |
| D. | CONCLUSION |
1. Leave Granted.
2. This appeal arises from the judgment and order passed by the High Court of Madhya Pradesh, Principal Seat at Jabalpur dated 07.01.2022 in Arbitration Appeal No. 79 of 2021 by which the appeal filed by the appellant herein under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, the “Act, 1996”) came to be dismissed thereby affirming the order dated 20.12.2019 passed by the Commercial Court and 19th Additional Sessions Judge, Bhopal (M.P.) allowing application filed by the respondent herein under Section 34 of the Act, 1996.
3. It appears that the respondent herein suffered an award dated 08.07.2011 passed by the Arbitral Tribunal (for short, the “Tribunal”). The said award was challenged by the respondent Corporation under Section 34 of the Act, 1996. The appeal filed by the Corporation under Section 34 of the Act, 1996 came to be allowed on the ground that the Tribunal had no jurisdiction to pass the award in view of the provisions of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (for short, the “MP Act, 1983”). The order passed by the Commercial Court and 19th Additional Sessions Judge, Bhopal (M.P.) came to be challenged by way of appeal before the High Court under Section 37 of the Act, 1996. The appeal came to be dismissed.
A. FACTUAL MATRIX
4. The facts giving rise to this appeal may be summarised as under:-
(ii) The arbitration agreement mandated that the tribunal shall comprise of three members, one to be appointed by each party and the two co- arbitrators had to nominate the presiding arbitrator.
(iii) Clause 67.4 of the Conditions of Particular Application – Part-II reads thus: -
“Sub-Clause 67.4 : Arbitration
Any dispute in respect of which:
a) the decision, if any, of the Board has not become final and binding pursuant to Sub-Clause 67.2, and
b) amicable settlement has not been reached:
(i) In the case of dispute arising between the Employer and a domestic Contractor or between the Employer and a foreign Contractor who opts for the application of the Indian Arbitration and Conciliation Act, 1996 related to any matter arising out of or connected with this Contrac
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