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TMI Blog2025 (5) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings before such arbitrators to the evidence or arguments already put before the Engineer, for the purpose of obtaining his said decision. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrators or any matter whatsoever relevant to the dispute. (iii) The reference to arbitration may proceed notwithstanding that the Works shall not then be or be alleged to be complete, provided always that the obligations of the Employer, the Engineer and the Contractor shall not be altered by the reason of the arbitration being conducted during the progress of the Works. Neither party shall be entitled to suspend the Works, and payment to the Contractor shall be continued to be made as provided by the Contract. (iv) If one of the parties fail to appoint its arbitrators in pursuance of sub para (i) and (ii) above, within 60 days after receipt of the notice of the appointment of its arbitrators by the other party, then the Secretary General of the Permanent Court of Arbitration, the Hague, in the case of foreign contractors opting for the application of the UNCITRAL Arbitration Rules, or the Ministry of Road Transport and High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The 1996 Act only applies where there is an arbitration clause but it does not apply where there is none. The 1996 Act covers all kinds of disputes including the dispute relating to work contracts. In our opinion, the 1983 Act and the 1996 Act can be harmonised by holding that the 1983 Act only applies where there is no arbitration clause but it stands impliedly repealed by the 1996 Act where there is an arbitration clause. We hold accordingly. Hence, the impugned judgment cannot be sustained and we hold that the application under Section 9 of the 1996 Act was maintainable. 4. The appeal is allowed accordingly. No costs." (vi) The disputes arose between the parties from 06.08.2010 onwards in relation to the appellant's right to be reimbursed additional cost incurred by it on account of introduction of subsequent legislation on increase in entry tax on High-Speed Diesel under Clause 70.8 of the Particular Conditions of Contract. (vii) The appellant invoked arbitration under Clause 67.4 vide its notice dated 06.08.2010 and the Tribunal stood constituted on 24.09.2010. (viii) The Tribunal passed a unanimous award dated 08.07.2011 in favour of the appellant for a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (MP)] is set aside. This Court holds that the decision in Va Tech [(2011) 13 SCC 261] has been rendered per incuriam. In that view of the matter the arbitration proceeding may proceed under the M.P. Act of 1983 and not under the AC Act, 1996." (xii) The Division Bench, however, differed on the point of applicability of the State Act to such works contracts which had been terminated, and this difference of opinion caused this matter to be referred to a larger bench in the follow terms: - "Order 60. In view of some divergence of views expressed in the two judgments delivered today by us, the matter may be placed before the Hon'ble the Chief Justice of India for constituting a larger Bench to resolve the divergence." (xiii) The appellant filed its reply dated 16.03.2012 before the Civil Court wherein each of the grounds raised by the respondent in its Section 34 petition were duly responded to. (xiv) Relying on the judgment of this Court in L.G. Chaudhary (I) (supra), the respondent moved an application dated 26.06.2012 before the Civil Court seeking to introduce the ground of lack of jurisdiction in its Section 34 petition. (xv) A Full-Bench of the High Court delivere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such cases where awards had already been made. It was held that "in such cases, if no objection to the jurisdiction was taken at relevant stage, the award may not be annulled on that ground". It is necessary to quote para 17 as under: - "17. We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground." (xx) In the present case, the respondent had admittedly not raised the issue of jurisdiction either before the Tribunal nor in its initial petition filed under Section 34. Clearly, therefore, the instant case fell within the ambit of Para 17 of LG Choudhary-II referred to above. (xxi) The Civil Court passed its judgment dated 20.12.2019 allowing the respondent's Section 34 petition on the ground that the Tribunal lacked jurisdiction to adjudicate the disputes. The Court observed, albeit erroneously, that para 17 of L.G. Chaudhary (II) (supra) did not save the instant case, inasmuch as the issue of jurisdiction could have been raised in the Section 34 proceeding even though no such objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.A. No. 2751 of 2018 @ SLP (C)No. 11615/2012, C.A. No. 2753 of 2018 @ SLP (C)No. 11617/2012, C.A. No. 2754 of 2018 @ SLP (C)No. 11618/2012, C.A. No. 2755 of 2018 @ SLP (C)No. 11619/2012, C.A. Nos. 2756-2757 of 2018 @ SLP (C)Nos. 11633-11634/2012, C.A. Nos. 2758-2759 of 2018 @ SLP (C)Nos. 11631- 11632/2012 & C.A. Nos. 2760-2761 of 2018 @ SLP (C)No. 11628- 11629/2012: 22. We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground. 23. The appeals are, accordingly, disposed of. C.A. No. 2616@ SLP (C)No. 35641/2011: 24. Leave granted. 25. In view of order passed in C.A. No. 2751 of 2018 @ SLP (C)No. 16615/2012, no objection having been raised by the respondents in terms of Section 16(2) of the Arbitration and Conciliation Act, 1996 at appropriate stage within the time stipulated, the award could not have been annulled. 26. Accordingly, this appeal is allowed, the impugned judgment is set aside and the award is restored. 27. It is, however make it clear that this order will not debar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh no such objection was taken before the arbitral tribunal under Section 16(2) of the Act. The Hon'ble Supreme Court in the matter of M/s. JMC Projects (India) Ltd. has not referred to the decision in the matter of Lion Engineers which was subsequent to the decision of C.A. No. 2616 of 2018. Hence, The learned trial Court acted in accordance with law while entertaining the objection under Section 34 of the 1996 Act and setting aside the arbitral award on the ground of lack of jurisdiction." B. ISSUES FOR DETERMINATION 5. Having heard the learned counsels appearing for the parties and having gone through the materials on record, the two pivotal questions that fall for our consideration are as under: - I. Whether an arbitral award rendered under the Act, 1996 where the arbitration proceedings was to be governed by the MP Act, 1983, can be set-aside or annulled solely on the ground of lack of jurisdiction, even when no such plea was raised before the arbitral tribunal in terms of Section 16 sub-section (2) of the Act, 1996? II. Whether the decision of this Court in LG Choudhary (II) (supra) could be said to be per incuriam for not having taken into consideration the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government), is a party, and for matters incidental thereto or connected therewith. 5. The Arbitral Tribunal is constituted in terms of Section 3 of the Act for resolving all disputes and differences pertaining to works contract or arising out of or connected with execution, discharge or satisfaction of any such works contract. 6. Section 7 provides for reference to the Tribunal. Such reference may be made irrespective of the fact as to whether the agreement contains an arbitration clause or not. Section 7- A provides for the particulars on the basis whereof the reference petition is to be filed. Section 7-B provides for limitation for filing an application [...] 7. Chapter IV of the Act contains Sections 16 to 18. Section 16 deals with passing of an award by the Tribunal and/or its Benches. Section 17 gives finality to the award made thereunder. Such awards made, in terms of Section 18 would be deemed to be a decree within the meaning of Section 2(2) of the Code of Civil Procedure, 1908. Section 19 confers a power of revision on the High Court [...] xxx xxx xxx 14. The Act is a special Act. It provided for compulsory arbitration. It provides for a reference. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were similar in nature inasmuch as both provided frameworks for resolution of dispute by way of arbitration, any potential conflict or overlap in their application ought to be construed harmoniously. This Court observed that the gravamen of Section 7 of the MP Act, 1983 which provided for reference to arbitral tribunal was only to make arbitration compulsory for resolving disputes arising out of work contracts involving either the State Government or a Public Undertaking of Madhya Pradesh. As per VA Tech (supra) what has been conveyed in so many words by the plain language of Section 7 of the MP Act, 1983 is only to mandate arbitration in respect of such work contracts, and the said provision by no means in the opinion of this Court was intended to override any legislation enacted by the Parliament, be it the Act, 1996 (sic or the Arbitration Act, 1940). As per VA Tech (supra), Section 7 of the MP Act, 1983 cannot be construed to oust the application of Act, 1996 to the arbitration clauses which are otherwise governed by the provisions of the said Act. Accordingly, it held that the MP Act, 1983 would apply only to the disputes pertaining to work contracts as aforementioned which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining to work contracts as mentioned in Section(s) 2(d) and 2(i) thereunder, in view of the subsequent enactment of the Act, 1996. 11. In L.G. Chaudhary (I) (supra), A.K. Ganguly J. (as he then was) held that the MP Act, 1983 is a special law providing for statutory arbitration in the State of Madhya Pradesh. The opinion of A.K. Ganguly J. is in two parts: - (i) First, placing reliance on the decision of Anshuman Shukla (supra), it was held that the MP Arbitral Tribunal established thereunder had distinct features from an ordinary arbitral tribunal constituted in terms of the Act, 1996. It observed that the structure of the M.P. State Arbitration Tribunal, the manner of appointment and term of office of its members was significantly at variance from that under the Act, 1996. Unlike the Act, 1996, the MP Act, 1983 vests the MP Arbitral Tribunal with inherent powers that may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal. Even the procedure for making a reference to arbitration, for passing an award thereunder, thereafter challenging it and the limitation period thereof, was in stark contrast to the Act, 1996. Accordingly, it held that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the Tribunal. Section 17-B also provides for power conferred on the Tribunal for correction of clerical or arithmetical mistakes. No such power is given to an Arbitral Tribunal under the AC Act, 1996. Section 19 of the M.P. Act gives the High Court the suo motu power of revision. The High Court has also been given the power of revision to be exercised on an application made by an aggrieved party within three months of the award. While doing so, the High Court is to act like a Revisional Court under Section 115 CPC. 23. It is clear from the aforesaid enumeration of the statutory provisions that under the M.P. Act the parties' autonomy in the choice of Arbitral Tribunal is not there. 24. In State of M.P. v. Anshuman Shukla this Court while referring to the M.P. Act and dealing with the nature of the Arbitral Tribunal constituted under the said Act held that the said Act is a special Act and provides for compulsory arbitration. It provides for a reference and the Tribunal has been given the power of rejecting the reference at the threshold. It also held that the M.P. Act provides for a special limitation and fixes a time-limit for passing an award. It has also been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns read as under: - "16. If this Court looks at Section 2(4) of the AC Act, 1996, it will appear that Part I of the AC Act, 1996 which is from Section 2 to Section 43, shall, except sub-section (1) of Section 40 and Sections 41 and 43, apply to every arbitration under any other enactment for the time being in force where the arbitration was pursuant to an arbitration agreement except insofar as the provisions of this Part i.e. Part I are inconsistent with the other enactment or with any other rule made thereunder. 17. Similar provision relating to statutory arbitration was also there in Section 46 of the Arbitration Act, 1940. [...] xxx xxx xxx 36. In reply the learned counsel for the respondent only submitted that the M.P. Act is repugnant to the AC Act, 1996 since the same is a later Act made by Parliament. The learned counsel referred to the provisions of Article 254 of the Constitution. The learned counsel also urged that in view of the provision of Section 85 of the AC Act, 1996, the M.P. Act stands impliedly repealed. 37. The said argument cannot be accepted. The provision for repeal under Section 85 of the AC Act, 1996 does not show that there is any express repeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract pertains to the execution of any of the work enumerated in Section 2(i) thereof. Section 2(i) in turn lays down in explicit terms as to the nature and scope of "works contract" by enumerating the specific nature of disputes that would be covered, i.e., "work relating to construction, repair or maintenance ... supply of goods or material and all other matters relating to the execution of any of the said works". However, since Section 2(i) of the MP Act, 1983 only covers specific and well-defined 'works' and is applicable only in respect of disputes pertaining to its execution, and does not include disputes of repudiation, cancellation or termination of such works, the legal and logical consequence of the aforesaid would be that, insofar as the dispute is not of the nature enumerated in Section 2(i) of the MP Act, 1983, such dispute would be outside the jurisdiction of the M.P. State Arbitration Tribunal, and can be decided by an arbitral tribunal in terms of the Act, 1996, irrespective of whether arbitration clause requires the dispute to be referred to arbitration under the MP Act, 1983. The relevant observations read as under: - "46. On perusal of the aforesaid provision en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will have to be referred to the M.P. State Arbitration Tribunal as envisaged under Section 7 of the 1983 Act. Hence, in addition to the reasons assigned in the judgment and order of learned Brother Ganguly, J. disputes arising out of execution of works contract have to be referred to the M.P. State Arbitration Tribunal and not under the Arbitration and Conciliation Act, 1996. xxx xxx xxx 51. [ ] But the same cannot be allowed to be raised under the M.P. Act of 1983 since the definition of "works contract" unambiguously lays down in explicit terms as to what is the nature and scope of "works contract" and further enumerates the specific nature of disputes arising out of the execution of works contract which would come within the definition of a "works contract". However, the same does not even vaguely include the issue or dispute arising out of cancellation and termination of contract due to which this question, in my considered opinion, would not fall within the jurisdiction of the M.P. State Arbitration Tribunal so as to be referred for adjudication arising out of its termination. 52. As already stated, fallout certainly would be otherwise if the matter were to be adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in terms of Section 7 of the Act of 1983. But if the works contract itself has been repudiated and hence not in existence at all by virtue of its cancellation/termination, then in my considered view, the dispute will have to be referred to an independent arbitrator to be appointed under the Arbitration and Conciliation Act, 1996 since the M.P. Act, 1983 envisages reference of a dispute to the State Tribunal only in respect of certain specified types of arbitration enumerated under Section 2(i) of the M.P. Act, 1983. xxx xxx xxx 57. Thus, the sum and substance of what I wish to emphasise is that the question as to whether the dispute would be referred to the M.P. Tribunal in terms of Section 7 of the M.P. Act of 1983 or to an independent arbitrator under the Arbitration and Conciliation Act, 1996 will depend upon the factum whether the works contract is existing between the parties or not out of which the dispute has arisen. In case, the works contract itself has been repudiated/cancelled, then, in view of its non- existence, Section 7 of the M.P. Act pertaining to reference of dispute to the Tribunal would not come into play at all by virtue of the fact that the dispute re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty v. L.G. Chaudhary Engineers and Contractors), this Court held that the judgment in VA Tech Escher Wyass Flovel Ltd. was per incuriam insofar as it held that the M.P. Act stands impliedly repealed by the Central Act. While Hon'ble Ganguly, J., held that the State Act will cover a dispute even after termination of the "works contract", Hon'ble Gyan Sudha Mishra, J. took a different view [...] 5. We find from the definition under Section 2(d) of the Arbitration and Conciliation Act, 1996 that even after a contract is terminated, the subject-matter of dispute is covered by the said definition. The said provision has not been even referred to in the judgment rendered by Hon'ble Gyan Sudha Mishra, J. 6. In view of the above, we are of the opinion that the view expressed by Hon'ble Ganguly, J. is the correct interpretation and not the contra view of Hon'ble Gyan Sudha Mishra, J. Reference stands answered accordingly. 7. Taking up appeal on merits, we find that the High Court proceeded on the basis of the judgment of this Court in VA Tech Escher Wyass Flovel Ltd. which has been held to be per incuriam. The M.P. Act cannot be held to be impliedly repealed. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 arising out of SLPs (C) Nos. 11633-34 of 2012, CAs Nos. 2758-59 of 2018 arising out of SLPs (C) Nos. 11631-32 of 2012 & CAs Nos. 2760-61 of 2018 arising out of SLPs (C) Nos. 11628-29 of 2012. 15. Leave granted. In view of order passed in Civil Appeal No. 2615 of 2018 [arising out of SLP (C) No. 16889 of 2012], the impugned order is set aside and the application(s) filed by the respondent(s) under Section 11 of the Arbitration and Conciliation Act, 1996 are dismissed. 16. However, since it is stated that proceedings are pending before the arbitrator in pursuance of the impugned order, the same will stand transferred to the State Tribunal and the State Tribunal may proceed further taking into account the proceedings which have already been taken. The learned counsel for the respondent(s) pointed out that in view of Section 16(2), the objection to the jurisdiction could not be raised after statement of defence was filed. This contention cannot be accepted in view of the fact that the SLP was filed prior to the filing of statement of defence wherein this objection was raised. 17. We do not express any opinion on the applicability of the State Act where award has already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or applicability of any State Act may be raised. The facts of Lion Engineering (supra) were that the respondent State therein had sought to amend its pleadings in the proceedings under Section 34 of the Act, 1996 to raise the objection of a lack of jurisdiction on the ground of applicability of the MP Act, 1983. The said amendment application was rejected by the trial court as being barred by limitation. The High Court however, in exercise of its supervisory jurisdiction under Article 227 of the Constitution allowed the said amendment. In appeal, before this Court it was inter-alia contended by the appellant therein, that the amendment ought not to have been allowed, since the objection of lack of jurisdiction had never been raised before the arbitral tribunal and hence was barred by Section 16 sub-section (2) of the Act, 1996. This Court held that any legal plea arising on undisputed facts can be raised in the proceedings under Section 34 of the Act, 1996 even if they were never raised under Section 16. It further held that, such plea being a question of law arising from admitted facts, can be raised without seeking any amendment of the pleadings. Accordingly, it held that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the trial court for consideration of objections under Section 34 of the Central Act. It will be open for the respondents to argue that its objection that the Act stands excluded by the M.P. Madhyastham Adhikaran Adhiniyam, 1983 could be raised even without a formal pleading, being purely a legal plea. It will also be open to the appellant to argue to the contrary. We leave the question to be gone into by the court concerned. (Emphasis supplied) 18. It is in this aforesaid context, that the respondent herein has contended before us that there exists a conflict between the decisions of this Court in Lion Engineering (supra) and L.G. Chaudhary (II) (supra), insofar as the issue of when a plea of lack of jurisdiction on the basis of applicability of a State law can be raised. It was submitted that Lion Engineering (supra) clearly holds that an objection of lack of jurisdiction is a legal plea that may be raised for the first time in the proceedings under Section 34 of the Act, 1996, even if the same was never raised before the arbitral tribunal, and being a question of law, Section 16 sub-section (2) of the Act, 1996 would have no application. It was further canvassed on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the question whether an amendment of pleadings was required or not, to raise a plea of jurisdiction. It was in this aforesaid context, that this Court held that such objection being a question of law can be raised by way of an objection in the proceedings under Section 34 of the Act, 1996 even if no such objection was raised under Section 16 of the Act, 1996. Thus, the aforesaid observations could be said to be confined only to the issue of requirement to amend the pleadings for raising such an objection, and cannot be stretched to apply blanketly in all cases. (iii) Thirdly, even otherwise, the ratio of Lion Engineering (supra) in paras 6 to 9 only goes so far as to hold that where a plea of jurisdiction involves purely a question of law and is based on undisputed facts, then such a plea may be raised for the first time in the proceedings under Section 34 of the Act, 1996, notwithstanding the bar of Section 16 sub- section (2) or whether, such plea was taken before the arbitral tribunal or not. However, Lion Engineering (supra) does not address the question whether an award may be annulled only on the ground of lack of jurisdiction or not. It does not disturb the settled po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta Construction v. Chhattisgarh State Power Generation Company Ltd. reported in (2022) SCC OnLine SC 1447, while dealing with an issue pertaining to the applicability of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983, which is pari materia to the MP Act, 1983, this Court followed the ratio laid down in L.G. Chaudhary (II) (supra), and reiterated that where awards have already been made and if no objection to the jurisdiction was taken at the relevant stage, then the award may not be annulled "only" on that ground. The relevant observations read as under: - 12. [...] Thus what was opined was that where awards have already been made and if no objection to the jurisdiction was taken at the relevant stage, the award may not be annulled "only" on that ground and the appeals dealing with those aspects were granted a favourable consideration. 13. [...] It was however, clarified in the very next paragraph that the order would not debar proceedings under Section 34 of the 1996 Act. 23. Furthermore, this Court in Sweta Construction (supra), taking note of the ostensible conflict between the decisions of L.G. Chaudhary (II) (supra) and Lion Engineering (supra), made the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid observation in Lion Engg. Consultants and that too emerging from identical Bench in the two matters, we would have to construe as what is meant by this sentence extracted aforesaid. We take note of the fact that this is an order and not a judgment. The controversy before the Court was something different as noticed by us aforesaid. In that context, this sentence has been inserted, but that does not take away the law laid down in the substantive judgment (in M.P. Rural Road Development Authority) dealing with the issue at hand in respect of awards already made where petitions were pending before the competent Court under Section 34 of the said Act." (Emphasis supplied) (iii) Thirdly, that the law expounded in L.G. Chaudhary (II) (supra) insofar as those awards which have already been passed are concerned, should be read as one made by this Court under Article 142 of the Constitution to do substantive justice inter se the parties, keeping in mind the cleavage of judicial view earlier and to ensure that the objective of arbitration as an expeditious and effective alternative dispute resolution mechanism is not defeated. The relevant observations read as under: - "17. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o approbate and reprobate and that too in arbitration proceedings and that too in dispute or resolution through the method of arbitration defeating the very purpose of an alternative dispute resolution to arbitration as an expeditious remedy." (Emphasis supplied) 24. In yet another decision of this Court in Modern Builders v. State of Madhya Pradesh & Anr. reported in (2024) 10 SCC 637, the appellant contractor therein had approached the M.P. State Arbitration Tribunal for initiation of arbitration in respect of certain disputes, however the reference was rejected by the State Tribunal in view of the law laid down by VA Tech (supra) that held field at that time. Accordingly, the appellant therein initiated arbitration under the Act, 1996, and consequently an award was passed. The aforesaid award came to be challenged, wherein the High Court under Section 37 of the Act, 1996 set-aside the award only on the ground that the arbitral tribunal had no jurisdiction in view of the MP Act, 1983. In appeal, this Court setting aside the order of the High Court, held that even though the objection based on applicability of the MP Act, 1983 had been raised by the respondent therein in its wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11(6) of the Arbitration Act, which was not objected to on the grounds of the applicability of the 1983 Act. The objection of the State Government was confined to the merits of the claim. The award is only in the sum of Rs 6,52,235 with interest. The award was made on 25-4-2014. Therefore, in the facts of the case, it will be unjust to set aside the award only on the ground of the failure of the appellant to take recourse to the 1983 Act. In fact, the appellant had taken recourse to the 1983 Act before seeking the appointment of an arbitrator. 10. In this case, as can be seen from the impugned judgment, the award has been set aside only on the ground that the appellant ought to have invoked the provisions of the 1983 Act. Even assuming that the observations in para 17 of the decision in M.P. Rural Road Development Authority, are not applicable, this is a fit case to exercise jurisdiction under Article 142 of the Constitution of India to ensure that complete justice is done. Therefore, by setting aside the impugned judgment, the appeal under Section 37 of the Arbitration Act will have to be restored with a request to the High Court to decide the same on merits. (Emphasis suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration Act, 1996 provides that the Arbitral Tribunal may rule on its own jurisdiction. Section 16 clearly recognises the principle of kompetenz-kompetenz. Section 16(2) mandates that a plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. Section 4 provides that a party who knows that any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non- compliance without undue delay shall be deemed to have waived his right to so object. 8. In our opinion, the High Court has correctly come to the conclusion that the appellant having failed to raise the plea of jurisdiction before the Arbitral Tribunal cannot be permitted to raise for the first time in the Court. [...] (Emphasis supplied) 29. In Gas Authority of India Ltd. v. Keti Construction (I) Ltd. reported in (2007) 5 SCC 38 this Court held that where a party does not raise a plea of lack of jurisdiction before the arbitral tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s waived his right, in terms of Section 4 of the Act to raise the same at a later stage. Such objection cannot be raised for the first time when the party is challenging the award under Section 34. Here, respondent no. 1 not only filed his statement of defence and participated in the arbitral proceedings but also filed a counter-claim, thereby submitting to the arbitral tribunal's jurisdiction. Hence, any jurisdictional objection must be rejected on this ground as well." (Emphasis supplied) 31. The fallacy of the aforesaid argument of the respondent herein lies in the very fact, that it has misconstrued the observations of this Court in Lion Engineering (supra) by ignoring the very settled position of law as regards the interplay between Section(s) 16 and 34 of the Act, 1996, respectively. 32. The observations made by this Court in Lion Engineering (supra) that "We do not see any bar to plea of jurisdiction being raised by way of an objection under Section 34 of the Act even if no such objection was raised under Section 16" cannot be singled out and construed devoid of its context. The aforesaid observations have to be construed in light of the settled position of law by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a plea is not purely a question of law or that the party raising the plea had waived it in terms of Pam Development (supra). Whereas Gas Authority of India (supra) goes one step ahead of Pam Development (supra) and lays down that where a party makes out a strong and good reason for its failure to take a plea of lack of jurisdiction before the arbitral tribunal, then there would be no deemed waiver of such a plea, and the same may then be looked into by the courts under Section 34 of the Act, 1996. 34. Thus, insofar as the manner in which the question of whether a plea of lack of jurisdiction being raised for the first time under Section 34 of the Act, 1996 has to be decided, the decision of this Court in Pam Development (supra) and Gas Authority of India (supra) would be applicable, as Lion Engineering (supra) only decided the limited issue of whether the bar under Section 16 sub- section (2) would preclude raising of such a plea i.e., whether such a plea is maintainable or not, and never decided or laid down when the courts would entertain such a plea. It is in this aforesaid context that the observations of this Court in L.G. Chaudhary (II) (supra), more particularly at para 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction, being a pure question of law, may be raised for the first time under Section 34 of the Act, 1996. The failure of L.G. Chaudhary (II) (supra) to take into consideration the decision of this Court in Lion Engineering (supra) does not render the former per incuriam, as there exists no direct conflict between the two. While Lion Engineering (supra) permits a jurisdictional plea to be raised under Section 34 of the Act, 1996 even if not urged under Section 16, L.G. Chaudhary (II) (supra) merely clarifies that an arbitral award will not be annulled solely on that ground, particularly where the issue was not raised before the tribunal. On the contrary, the aforesaid observations of L.G. Chaudhary (II) (supra) had been consciously made by this Court keeping in mind the ratio of Lion Engineering (supra), even though the latter was never explicitly referred to. L.G. Chaudhary (II) (supra) cannot be termed to be per incuriam, as the very factum that the aforesaid observations were made by L.G. Chaudhary (II) (supra) in paras 16, 17 and 19 respectively shows that this Court was well aware of the decision of this Court in Lion Engineering (supra), and accordingly chose to carve out an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the arbitral tribunal under Section 16 of the Act, 1996 or where such plea of jurisdiction was turned down in view of the position of law that was prevailing prior to L.G. Chaudhary (II) (supra) i.e., such challenge to the jurisdiction was decided prior to the date of pronouncement of L.G. Chaudhary (II) (supra), then even in such cases, as per the decision of this Court in Modern Builders (supra), the award should not be disturbed or set-aside only on the ground of lack of jurisdiction. 39. In the present case at hand, we take note of the following circumstances emerging from the facts on record: - a. It is an admitted fact that at the time of constitution of the arbitral tribunal, the respondent never objected to the invocation of arbitration under the Act, 1996 and both the parties proceeded to nominated their respective co- arbitrators. b. On the date of invocation of the Act, 1996, and commencement of arbitration proceedings, as well as of the date when the arbitration proceeding concluded and the award in question passed, the erstwhile decision of this Court in VA Tech (supra) held the field. c. The respondent herein never raised any objection to the arbitral tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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