HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT AT JABALPUR

05/07/2021 Appellant have filed this Arbitration Appeal challenging order dated 5.3.2019 passed by 13th Additional District Judge, Jabalpur, rejecting his application under section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996').

2. Appeal is filed by appellants on ground that there is patent illegality committed by Additional District Judge in not holding that sole arbitrator passed award for want of jurisdiction. Agreement between parties was a work contract, therefore, claim ought to have been filed by respondent before Arbitration Tribunal under Section 2(7) of M.P. Madhyastham Adhikaran Adhiniyam, 1983.

3. It is submitted by learned Govt. Advocate for appellants that order passed by Additional District Judge is contrary to judgment passed by Apex Court reported in the case of Madhya Pradesh Rural Road Development Authority and Another vs. L. G. Chaudhary Engineers and Contractors, (2018) 10 SCC 826. It is further submitted that plea of jurisdiction is purely a legal question and can be raised at any stage or when award is challenged under section 34 of the Act of 1996. In support of the said argument, learned Govt. Advocate has relied on judgment reported in Lion Engineering Consultants vs. State of M.P. and others (2018) 16 SCC 758 and submits that there is no bar to raise plea of jurisdiction by way of objection under section 34 of the Act of 1996. It is also submitted that award is against public policy as same has been passed contrary to law.

4. Learned counsel for the respondent supported the order passed by Additional District Judge, Jabalpur. It is submitted that appellants have not raised any objection regarding jurisdiction in its reply filed before sole Arbitrator in arbitral proceedings. It is submitted by him that as per Section 16(2) of the Act of 1996, objection was not raised at the time of filing of written statement, therefore, now appellants are barred from raising objection of jurisdiction of sole Arbitrator. In view of the same, he made a prayer for dismissal of Arbitration Appeal.

5. Heard the learned counsel for the parties.

6. Apex Court in the case of M.P. Rural Road Development Authority and Another vs. L. G. Chaudhary Engineers and Contractors (2018) 10 SCC 826, has over-ruled judgment in Va Tech Escher Wyass Flovel Limited vs. Madhya Pradesh State Electricity Board and Another, (2011) 13 SCC 261. It was held that even if work contract between parties itself is terminated, State Act i.e. M.P. Madhyastham Adhikaran Adhiniyam, 1983, will cover a dispute in view of Section 2(4) of said Act. Relying on judgment in the case of M.P. Rural Road Development Authority and Another vs. L. G. Chaudhary Engineers and Contractors, (2012) 3 SCC 495, it was further held that arbitration proceedings may go on under M.P. Madhyastham Adhikaran Adhiniyam, 1983 and not under Arbitration and Conciliation Act, 1996. Apex Court further held that State law will prevail in terms of Section 2(4) of Central Act. Reference under State Law is valid and could be decided in accordance with State Act and proceedings before the Tribunal was restored. Proceedings which were pending before Arbitrator was transferred to State Tribunal.

7. Section 16(2) of Arbitration and Conciliation Act, 1996 reads as under:-

"A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the stat