Gujarat High Court
Dholera Industrial City ... vs M/S Spml Infra Ltd on 4 August, 2023
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20116 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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DHOLERA INDUSTRIAL CITY DEVELOPMENT LIMITED
Versus
M/S SPML INFRA LTD.
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Appearance:
MR KAMAL B. TRIVEDI, SENIOR ADVOCATE WITH MR PREMAL R
MR RS SANJANWALA, SENIOR ADVOCATE WITH MR P M BUCH(7383)
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 04/08/2023
CAV JUDGMENT
1.Heard learned Senior Advocate Mr. Kamal B.
Trivedi with learned advocate Mr. Premal R.
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Joshi for the petitioner and learned Senior
Advocate Mr. R.S. Sanjanwala with learned
advocate Mr. P.M. Buch for the respondents.
2.Feeling aggrieved by order dated 19.09.2022
passed by the Arbitral Tribunal in
Arbitration Case No. 7 of 2021 whereby the
application filed the petitioner to decide
the issue of jurisdiction as a preliminary
issue has been dismissed, the petitioner has
preferred this petition under Articles 226
and 227 of the Constitution of India.
3.The factual matrix of the matter is that the
petitioner herein - Special Purpose Vehicle
of the State Government was formed on
28.01.2016 with equity participation of 49%
through Centre and 51% of through State
Government for procurement and construction
of trunk infrastructure of Dholera Special
Investment Region("DSIR").
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3.1) The petitioner floated a tender on
15.04.2016 inviting offers to undertake the
Design, Construction, Operation and
Maintenance of (i) Water Treatment Plant
(WTP), (ii) Clear Water Reservoir and (iii)
Potable Water Transmission Main and Master
Balancing Reservoir (potable water) in DSIR.
3.2) The respondent company participated
in the tender and its offer was found to be
the lowest and therefore, Letter of Award was
issued on 16.08.2016 by the petitioner
company in favour of the respondent.
3.3) Thereafter Works Contract was
executed on o9.09.2016 between the petitioner
company and the respondent for the execution
of the work in question.
3.4) The petitioner company terminated
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the Works Contract on 01.01.2021 in terms of
clauses 23.1.1(c) and (f) of the Contract, in
view of there being a gross delay caused by
the respondent in completion of the contract
work.
3.5) Respondent issued a notice dated
16.02.2021 under section 21 of the
Arbitration and Conciliation Act, 1996 (For
short "the Act, 1996") requesting reference
of disputes arising out of contract to
arbitration and also appointed Hon'ble Mr.
Justice C.K. Thakkar as its nominee in the
Arbitral Tribunal.
3.6) The petitioner appointed Hon'ble Ms.
Justice Harsha Devani as its nominee in the
Arbitral Tribunal on 12.03.2021. Thereafter
Hon'ble Mr. Justice K.S. Jhaveri was
appointed as the Presiding Officer of the
Arbitral Tribunal (For short "the Tribunal")
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by both the learned arbitrators.
3.7) The respondent company filed its
Statement of Claim on 01.07.2021 and the
petitioner company filed its Statement of
Defence and Counter Claim on 15.09.2021.
Respondent filed its rejoinder to the
Statement of Defence and Counter Claim of the
petitioner company on 22.11.2021.
3.8) Between 2.11.2021 to 30.01.2022,
both the sides filed their respective
applications for interim award under section
31(6) of the Act, 1996 in respect of work
already done in respect to which the Tribunal
directed to provide information in respect of
undisputed claim while fixing the hearing of
the said applications for hearing on
26.02.2022.
3.9) The petitioner company filed an
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application dated 25.02.2022 under sub-
section (2) of section 16 of the Act, 1996
read with section 21 of the Gujarat Pubic
Works Contracts Disputes Arbitration Tribunal
Act, 1992 (For short "the Act, 1992")
questioning the jurisdiction of the Tribunal
on the ground that the dispute pertains to
Works Contract between a pubic undertaking
and the contractor and therefore, the same is
to be adjudicated by the statutory Tribunal
under the Act of 1992.
3.10) The Tribunal by order dated
14.07.2022 dismissed the application filed by
the petitioner under section 16(2) of the
Act, 1996 mainly on the ground that the same
was filed after filing of Statement of
Defence and the delay in raising the plea was
not justified and fixed the further hearing
on merits.
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3.11) Being aggrieved by order dated
14.07.2022, the petitioner company filed
Special Civil Application No.14481 of 2022.
This Court (Coram: Hon'ble Ms. Justice
Vaibhavi D. Nanavati,) passed the order dated
28.07.2022 recording the statement made on
behalf of the petitioner company that it
would prefer an application before the
Tribunal to decide the issue of jurisdiction
as preliminary issue whereupon the petition
came to be posted for hearing on 17.08.2022.
3.12) The petitioner company filed an
application dated 08.08.2022 before the
Tribunal requesting to frame and decide the
question of jurisdiction as a preliminary
issue as to whether the Tribunal has inherent
jurisdiction to adjudicate upon the dispute
between the parties in view of provisions of
the Act, 1992.
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3.13) The Tribunal by order dated
09.08.2022 held that in view of the fact that
the matter is sub-judice before the High
Court on the same issue, it will not be
appropriate for the Tribunal to entertain the
application and application was adjourned
with no order at that stage. The Tribunal
further directed both the parties to give
proposed issue on or before 23.08.2022 and
fixed further hearing on 31.08.2022.
3.14) On 17.08.2022, considering the joint
submission by both the parties to defer the
proceedings before the Tribunal, this Court
passed the order in Special Civil Application
directing the parties to file appropriate
application before the Tribunal for
adjournment.
3.15) The petitioner submitted an
application dated 23.08.2022 before the
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Tribunal to defer the framing of issues and
to adjourn the matter till this Court decides
the writ petition finally. The respondent
company also addressed an email submitting
that they have agreed to defer the framing of
issues till the next date of hearing,
however, requested the Tribunal to proceed
with the hearing on 31.08.2022.
3.16) This Court (Coram: Hon'ble Ms.
Justice Vaibhavi D. Nanavati,) by order dated
26.08.2022 disposed of the writ petition in
view of consensus arrived at between the
parties to make an application to request the
Tribunal to decide the application dated
08.08.2022 filed by the petitioner for
reliefs prayed therein at the first instance
with regard to jurisdiction of the Tribunal.
3.17) The petitioner company submitted an
application dated 29.08.2022 to adjudicate
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the issue of preliminary jurisdiction at
first instance before undertaking any further
proceedings in view of consensus arrived at
between the parties as recorded by this
Court.
3.18) The Tribunal passed the impugned
order dated 19.09.2022 rejecting the
applications dated 08.08.2022 and 29.08.2022
filed by the petitioner observing that no
case was made out for framing the issue of
lack of inherent jurisdiction as a
preliminary issue, as prayed for in the said
application and disposed of the same.
3.19) The petitioner has therefore, filed
this petition challenging the aforesaid
impugned order dated 19.09.2022 passed by the
Tribunal.
4.At the outset, learned Senior Advocate Mr.
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R.S. Sanjanwala appearing with learned
advocate Mr. P.M. Buch raised preliminary
objection with regard to the maintainability
of this petition under Articles 226 and 227
of the Constitution of India against the
impugned order passed by the Tribunal
contending that the writ petition under
Article 227 of the Constitution of India need
not be entertained by this Court in view of
settled legal position as held in the
following decisions:
1) In case of GTPL Hathway Ltd. V.
Strategic Marketing Pvt. Ltd. (judgment dated
20.04.2020 passed in Special Civil
Application No.4524 of 2019).
2) In case of Bhaven Construction Through
Authorised Signatory Premjibhai K. Shah v.
Supreme Court Cases 75.
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3) In case of Sweta Construction v.
Chhattisgarh State Power Generation Company
Limited reported in 2022 SCC OnLine SC 1447.
4) In case of Neeraj Kumarpal Shah v.
Manbhupinder Singh Barinder Singh Atwal
(Judgment dated 11.03.2020 passed in Special
Civil Application Nos. 3913 and 4441 of 2020)
5.With regard to the preliminary objection
raised on behalf of the respondent, learned
Senior Advocate Mr. Trivedi for the
petitioner submitted that the Tribunal has
passed the impugned order by not allowing the
application to frame the preliminary issue
which goes to the root of the matter and
therefore, the writ petition is maintainable
and the same is required to be entertained in
order to save the enormous cost, time and
energy of both the sides as the Tribunal
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ought to have framed the preliminary issue
with regard to the lack of inherent
jurisdiction in view of provisions of the
Act, 1992 which provides for statutory
Tribunal.
5.1) Learned Senior Advocate Mr. Trivedi
referred to and relied upon the the following
provisions of the Act, 1992:
"2(1) In this Act, unless the
context otherwise require,-
......
(i) "public undertaking" means-
(i) any company as defined in
section 3 of the Companies Act, 1956
in which not less than fifty-one per
cent of the paid up share capital is
held by the State Government or any
company which is a subsidiary
(within the meaning of that Act) of
the first mentioned company.
(ii) any corporation (not being a
company as defined in section 3 of
the Companies Act, 1956 or local
authority) established by or under a
Central Act or a State Act and owned
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or controlled by the State
Government,
(iii) such class of local
authorities as the State Government
may, by notification in the Official
Gazette, specify:
(j) Tribunal" means the Gujarat
public Works Contract Disputes
Arbitration Tribunal constituted
under secton 3:
(k) "Works contract" means a
contract made by the State
Government or the public undertaking
with any other person for the
execution of any of its works
relating to construction, repairs or
maintenance of any building or
superstructure, dam, weir, canal,
reservoir, tank, lake,road, well,
bridge, culvert, factory or work
shop or of such other work of the
State Government or, as the case may
be, of the public undertaking, as
the State Government may, by
notification in the Official Gazette
specify, and includes-
(i) a contract made for the supply
of goods relating to the execution
of any of such works,
(ii) a contract made by the Central
Stores Purchase Organisation of the
State Government for purchase of
sale of goods.
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21. The provisions of the
Arbitration Act, shall in so far as
they are inconsistent with the
provisions of this Act, cease to
apply to any dispute arising from a
works contract and all arbitration
proceedings in relation to such
dispute before an arbitrator,
umpire, court or authority shall
stand transferred to the Tribunal."
5.2) It was submitted that in view of
above provisions when the petitioner company
is a Government company, any dispute with
regard to the Public Works Contract would lie
before the Gujarat Public Works Contracts
Disputes Arbitration Tribunal under the
provisions of the Act, 1992.
5.3) It was submitted that by the
impugned order, the Tribunal has rejected the
application filed by the petitioner to frame
the preliminary issue to be decided at first
instance with regard to lack of inherent
jurisdiction, and therefore, this Court is
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required to interfere while exercising the
supervisory jurisdiction under Article 227 of
the Constitution of India.
5.4) In support of his submission,
learned Senior Advocate Mr. Trivedi referred
to and relied upon the following decisions:
1) In case of Deep Industries Limited v.
Oil and Natural Gas Corporation Limited and
another reported in (2020 15 Supreme Court
Cases 706, wherein it is observed as under:
"16) Most significant of all is the
non-obstante clause contained in
Section 5 which states that
notwithstanding anything contained
in any other law, in matters that
arise under Part I of the
Arbitration Act, no judicial
authority shall intervene except
where so provided in this Part.
Section 37 grants a constricted
right of first appeal against
certain judgments and orders and no
others. Further, the statutory
mandate also provides for one bite
at the cherry, and interdicts a
second appeal being filed (See
Section 37(2) of the Act)
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17) This being the case, there is no
doubt whatsoever that if petitions
were to be filed under Articles
226/227 of the Constitution against
orders passed in appeals under
Section 37, the entire arbitral
process would be derailed and would
not come to fruition for many years.
At the same time, we cannot forget
that Article 227 is a constitutional
provision which remains untouched by
the non-obstante clause of Section 5
of the Act. In these circumstances,
what is important to note is that
though petitions can be filed under
Article 227 against judgments
allowing or dismissing first appeals
under Section 37 of the Act, yet the
High Court would be extremely
circumspect in interfering with the
same, taking into account the
statutory policy as adumbrated by us
herein above so that interference is
restricted to orders that are passed
which are patently lacking in
inherent jurisdiction."
2) In case of Narmada Clean-Tech and
another v. Indian Council of Arbitration and
Others reported in 2020(4) GLH 364, wherein
it is observed as under:
"54 It is apparent on plain reading
of the para 12 quoted above that the
learned Single Judge rejected the
petition without entering into the
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merits of the matter only on the
ground that the order passed during
the course of the arbitration
proceedings cannot be challenged
under Articles 226 and/or 227 of the
Constitution of India and it would
be open for both the sides to raise
all the contentions on merits before
appropriate forum in appropriate
proceedings at an appropriate time
in accordance with law. The learned
Single Judge saying so held that the
petitions were not maintainable in
law."
3) In case of SMS Infrastructure Limited v.
Gujarat State Road Development Corporation
(Judgment dated 23.04.2021 passed in Petition
under Arbitration Act No.42 of 2020), wherein
it is observed as under:
"1. The Arbitration Petition has
been filed by the petitioner M/s.
SMS Infrastructure Limited, a
Company incorporated under the
Companies Act, through its Power of
Attorney Holder, seeking to appoint
an Arbitrator to resolve the
disputes between the parties as per
the provisions contained under
Section 11 (6) of the
Arbitration and Conciliation
Act, 1996 (hereinafter referred
to as "the said Act").
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7. Per Contra, the learned Advocate
Mr.Siraj Gori appearing for the
respondent Corporation, pressing
into service the provisions
contained in the Arbitration
Tribunal Act of 1992 in the light
of the averments made in
the affidavit in reply submitted
that the respondent Corporation
being a company incorporated under
the Companies Act and wholly owned
by the Government of Gujarat, it is
a "public undertaking" as per the
definition contained in Clause (i)
of Section 2(1)(i) of the said Act.
He also submitted that the
alleged disputes having arisen
between the parties to the "works
contract" as defined in Section 2(1)
(k) of the said Act, the only remedy
available to the petitioner as per
Clause-30 of the agreement would be
to approach the Arbitration Tribunal
constituted under the said Act of
1992, as may be legally permissible.
Distinguishing the decisions relied
upon by the learned Advocate
Mr.Sukhwani for the petitioner, more
particularly the decision in
case of Om Construction Company
Vs. Ahmedabad Municipal
Corporation and Anr. (supra),
Mr.Gori submitted that none of the
decisions had any application to the
facts of the present case, and
therefore, the present petition
filed under Section 11 of the
Arbitration Act is thoroughly
misconceived and liable to be
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dismissed.
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15. In the instant case, as held
herein above, the respondent
Corporation is a "public
undertaking" as contemplated in
Clause (i) of Section 2(1)(i) and
the contract entered into between
the parties was a "works contract"
as contemplated in Section 2(1)(k)
of the said Act of 1992, and hence
Section 8 of the said Act would come
into play, which mandates the
parties to refer the disputes
arising between them to the Tribunal
constituted under the Act for
arbitration, within one year from
the date when the dispute arises.
Section 21 thereof also
provides that the provisions of
the Arbitration Act,1996, shall
insofar as they are inconsistent
with the provisions of the Act of
1992, cease to apply to any dispute
arising from a works contract. The
said provision of Section 21 has
also been specifically mentioned in
Clause 30 of the agreement in
question and admitted by the
parties. The Arbitration Tribunal
Act of 1992 therefore being
applicable to the facts of the case,
the petitioner could not have
invoked Section 11 of the
Arbitration Act of 1996."
4) In case of Jagmittar Sain Bhagat and
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others v. Director Health Services, Haryana
and others reported in (2013) 10 Supreme
Court Cases 136, wherein it is observed as
under:
"9. Indisputably, it is a settled
legal proposition that conferment of
jurisdiction is a legislative
function and it can neither be
conferred with the consent of the
parties nor by a superior Court, and
if the Court passes a decree having
no jurisdiction over the matter, it
would amount to nullity as the
matter goes to the roots of the
cause. Such an issue can be raised
at any stage of the proceedings. The
finding of a Court or Tribunal
becomes irrelevant and
unenforceable/ inexecutable once the
forum is found to have no
jurisdiction. Similarly, if a Court/
Tribunal inherently lacks
jurisdiction, acquiescence of party
equally should not be permitted to
perpetuate and perpetrate, defeating
the legislative animation. The Court
cannot derive jurisdiction apart
from the Statute. In such
eventuality the doctrine of waiver
also does not apply. (Vide: United
Commercial Bank Ltd. v. Their
Workmen, AIR 1951 SC 230; Smt. Nai
Bahu v. Lal Ramnarayan & Ors., AIR
1978 SC 22; Natraj Studios (P) Ltd.
v. Navrang Studios & Anr., AIR 1981
SC 537; and Kondiba Dagadu Kadam v.
Savitribai Sopan Gujar & Ors., AIR
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1999 SC 2213).
10. In Sushil Kumar Mehta v. Gobind
Ram Bohra (Dead) Thr. Lrs., (1990) 1
SCC 193, this Court, after placing
reliance on large number of its
earlier judgments particularly in
Premier Automobiles Ltd. v. K.S.
Wadke & Ors., (1976) 1 SCC 496;
Kiran Singh v. Chaman Paswan, AIR
1954 SC 340; and Chandrika Misir &
Anr. v. Bhaiyalal, AIR 1973 SC 2391
held, that a decree without
jurisdiction is a nullity. It is a
coram non judice; when a special
statute gives a right and also
provides for a forum for
adjudication of rights, remedy has
to be sought only under the
provisions of that Act and the
Common Law Court has no
jurisdiction; where an Act creates
an obligation and enforces the
performance in specified manner,
"performance cannot be forced in any
other manner."
11. Law does not permit any
court/tribunal/authority/forum to
usurp jurisdiction on any ground
whatsoever, in case, such a
authority does not have jurisdiction
on the subject matter. For the
reason that it is not an objection
as to the place of suing;, "it is an
objection going to the nullity of
the order on the ground of want of
jurisdiction". Thus, for assumption
of jurisdiction by a court or a
tribunal, existence of
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jurisdictional fact is a condition
precedent. But once such
jurisdictional fact is found to
exist, the court or tribunal has
power to decide on the adjudicatory
facts or facts in issue. (Vide:
Setrucharlu Ramabhadra Raju Bahadur
v. Maharaja of Jeypore, AIR 1919 PC
150; State of Gujarat v. Rajesh
Kumar Chimanlal Barot & Anr., AIR
1996 SC 2664; Harshad Chiman Lal
Modi v. D.L.F. Universal Ltd. &
Anr., AIR 2005 SC 4446; and Carona
Ltd. v. M/s. Parvathy Swaminathan &
Sons, AIR 2008 SC 187)."
5) In case of V.G. Jagdishan v. Indofos
Supreme Court Cases 167, wherein it is
observed as under:
"15. In the case of D.P. Maheshwari
(supra) is pressed into service by
learned Senior Advocate appearing on
behalf of the appellant in support
of the submission that the Labour
Court ought not to have given the
decision only on preliminary issue
and ought to have disposed of all
the issues, whether preliminary or
otherwise at the same time. On facts
the said decision is not applicable
to the facts of the case on hand. In
the aforesaid decision no absolute
proposition of law was laid down by
this Court that even the issue
touching the jurisdiction of the
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court cannot be decided by the court
as a preliminary issue and the court
has to dispose of all the issues,
whether preliminary or otherwise, at
the same time. When the issue
touches the question of territorial
jurisdiction, as far as possible the
same shall have to be decided first
as preliminary issue. Therefore, in
the present case, the Labour Court
did not commit any error in deciding
the issue with respect to the
territorial jurisdiction as a
preliminary issue in the first
instance."
6) In case of MSP Infrastructure Limited v.
Madhya Pradesh Road Development Corporation
Limited reported in (2015) 13 Supreme Court
Cases 713, wherein it is observed as under:
"13. Section 16(2) of the
Arbitration Act, 1996 reads as
follows:
"16(2) A plea that the arbitral
tribunal does not have
jurisdiction shall be raised not
later than the submission of the
statement of defence; however, a
party shall not be precluded
from raising such a plea merely
because that he has appointed,
or participated in the
appointment of, an arbitrator."
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On a plain reading, this provision
mandates that a plea that the
Tribunal does not have jurisdiction
shall not be raised later than the
submission of the statement of
defence. There is no doubt about
either the meaning of the words used
in the Section nor the intention.
Simply put, there is a prohibition
on the party from raising a plea
that the Tribunal does not have
jurisdiction after the party has
submitted its statement of defence.
The intention is very clear. So is
the mischief that it seeks to
prevent. This provision disables a
party from petitioning an Tribunal
to challenge its jurisdiction
belatedly, having submitted to the
jurisdiction of the Tribunal, filed
the statement of defence, led
evidence, made arguments and
ultimately challenged the award
under Section 34 of the Arbitration
Act, 1996. This is exactly what has
been done by the Respondent
Corporation. They did not raise the
question of jurisdiction at any
stage. They did not raise it in
their statement of defence; they did
not raise it at any time before the
Tribunal; they suffered the award;
they preferred a petition under
Section 34 and after two years
raised the question of jurisdiction
of the Tribunal. In our view, the
mandate of Section 34 clearly
prohibits such a cause. A party is
bound, by virtue of sub-section (2)
of Section 16, to raise any
objection it may have to the
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jurisdiction of the Tribunal before
or at the time of submission of its
statement of defence, and at any
time thereafter it is expressly
prohibited. Suddenly, it cannot
raise the question after it has
submitted to the jurisdiction of the
Tribunal and invited an unfavourable
award. It would be quite undesirable
to allow arbitrations to proceed in
the same manner as civil suits with
all the well-known drawbacks of
delay and endless objections even
after the passing of a decree.
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16. It is not possible to accept
this submission. In the first place,
there is nothing to warrant the
inference that all objections to the
jurisdiction of the Tribunal cannot
be raised under Section 16 and that
the Tribunal does not have power to
rule on its own jurisdiction.
Secondly, Parliament has employed a
different phraseology in Clause (b)
of Section 34. That phraseology is
"the subject matter of the dispute
is not capable of settlement by
arbitration." This phrase does not
necessarily refer to an objection to
'jurisdiction' as the term is well
known. In fact, it refers to a
situation where the dispute referred
for arbitration, by reason of its
subject matter is not capable of
settlement by arbitration at all.
Examples of such cases have been
referred to by the Supreme Court in
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the case of Booz Allen and Hamilton
Inc. Vs. SBI Home Finance Limited
and Ors.[1] This Court observed as
follows:-
"36. The well-recognised
examples of non-arbitrable
disputes are: (i) disputes
relating to rights and
liabilities which give rise to
or arise out of criminal
offences; (ii) matrimonial
disputes relating to divorce,
judicial separation, restitution
of conjugal rights, child
custody; (iii) guardianship
matters; (iv) insolvency and
winding-up matters; (v)
testamentary matters (grants of
probate, letters of
administration and succession
certificate); and (vi) eviction
or tenancy matters governed by
special statutes where the
tenant enjoys statutory
protection against eviction and
only the specified courts are
conferred jurisdiction to grant
eviction or decide the
disputes."
The scheme of the Act is thus clear.
All objections to jurisdiction of
whatever nature must be taken at the
stage of the submission of the
statement of defence, and must be
dealt with under Section 16 of the
Arbitration Act, 1996. However, if
one of the parties seeks to contend
that the subject matter of the
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dispute is such as cannot be dealt
with by arbitration, it may be dealt
under Section 34 by the Court.
17. It was also contended by Shri
Divan, that the newly added ground
that the Tribunal under the
Arbitration Act, 1996 had no
jurisdiction to decide the dispute
in question because the jurisdiction
lay with the Tribunal under the M.P.
Act of 1983, was a question which
can be agitated under sub-clause
(ii) of clause (b) of sub-section
(2) of Section 34 of the Arbitration
Act, 1996. This provision enables
the court to set- aside an award
which is in conflict with the public
policy of India. Therefore, it is
contended that the amendment had
been rightly allowed and it cannot
be said that what was raised was
only a question which pertained to
jurisdiction and ought to have been
raised exclusively under Section 16
of the Arbitration Act, 1996, but in
fact was a question which could also
have been raised under Section 34
before the Court, as has been done
by the Respondent. This submission
must be rejected. The contention
that an award is in conflict with
the public policy of India cannot be
equated with the contention that
Tribunal under the Central Act does
not have jurisdiction and the
Tribunal under the State Act, has
jurisdiction to decide upon the
dispute. Furthermore, it was stated
that this contention might have been
raised under the head that the
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Arbitral Award is in conflict with
the public policy of India. In other
words, it was submitted that it is
the public policy of India that
arbitrations should be held under
the appropriate law. It was
contended that unless the
arbitration was held under the State
Law i.e. the M.P. Act that it would
be a violation of the public policy
of India. This contention is
misconceived since the intention of
providing that the award should not
be in conflict with the public
policy of India is referable to the
public policy of India as a whole
i.e. the policy of the Union of
India and not merely the policy of
an individual state. Though, it
cannot be said that the upholding of
a state law would not be part of the
public policy of India, much depends
on the context. Where the question
arises out of a conflict between an
action under a State Law and an
action under a Central Law, the term
public policy of India must
necessarily understood as being
referable to the policy of the
Union. It is well known, vide
Article 1 of the Constitution, the
name 'India' is the name of the
Union of States and its territories
include those of the States."
7) In case of Lion Engineering Consultants
v.State of Madhya Pradesh and others reported
in (2018) 16 Supreme Court Cases 758, wherein
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it is observed as under:
"5. We may quote the observations
from M/s MSP Infrastructure [(2015)
13 SCC 713)]:
"16. It is not possible to
accept this submission. In the
first place, there is nothing to
warrant the inference that all
objections to the jurisdiction
of the Tribunal cannot be raised
under Section 16 and that the
Tribunal does not have power to
rule on its own jurisdiction.
Secondly, Parliament has
employed a different phraseology
in Clause (b) of Section 34.
That phraseology is "the subject
matter of the dispute is not
capable of settlement by
arbitration." This phrase does
not necessarily refer to an
objection to 'jurisdiction' as
the term is well known. In fact,
it refers to a situation where
the dispute referred for
arbitration, by reason of its
subject matter is not capable of
settlement by arbitration at
all. Examples of such cases have
been referred to by the Supreme
Court in Booz Allen and Hamilton
Inc. v. SBI Home Finance Limited
(2011) 5 SCC 532. This Court
observed as follows:-
"36. The well-recognised
examples of non-arbitrable
disputes are: (i) disputes
relating to rights and
liabilities which give rise
to or arise out of criminal
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offences; (ii) matrimonial
disputes relating to
divorce, judicial
separation, restitution of
conjugal rights, child
custody; (iii) guardianship
matters; (iv) insolvency and
winding-up matters; (v)
testamentary matters (grants
of probate, letters of
administration and
succession certificate); and
(vi) eviction or tenancy
matters governed by special
statutes where the tenant
enjoys statutory protection
against eviction and only
the specified courts are
conferred jurisdiction to
grant eviction or decide the
disputes."
The scheme of the Act is thus
clear. All objections to
jurisdiction of whatever nature
must be taken at the stage of
the submission of the statement
of defence, and must be dealt
with under Section 16 of the
Arbitration Act, 1996. However,
if one of the parties seeks to
contend that the subject matter
of the dispute is such as cannot
be dealt with by arbitration, it
may be dealt under Section 34 by
the Court.
17. It was also contended by
Shri Divan, that the newly added
ground that the Tribunal under
the Arbitration Act, 1996 had no
jurisdiction to decide the
dispute in question because the
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jurisdiction lay with the
Tribunal under the M.P. Act of
1983, was a question which can
be agitated under sub-clause
(ii) of clause (b) of sub-
section (2) of Section 34 of the
Arbitration Act, 1996. This
provision enables the court to
set- aside an award which is in
conflict with the public policy
of India. Therefore, it is
contended that the amendment had
been rightly allowed and it
cannot be said that what was
raised was only a question which
pertained to jurisdiction and
ought to have been raised
exclusively under Section 16 of
the Arbitration Act, 1996, but
in fact was a question which
could also have been raised
under Section 34 before the
Court, as has been done by the
Respondent. This submission must
be rejected. The contention that
an award is in conflict with the
public policy of India cannot be
equated with the contention that
Tribunal under the Central Act
does not have jurisdiction and
the Tribunal under the State
Act, has jurisdiction to decide
upon the dispute. Furthermore,
it was stated that this
contention might have been
raised under the head that the
Arbitral Award is in conflict
with the public policy of India.
In other words, it was submitted
that it is the public policy of
India that arbitrations should
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be held under the appropriate
law. It was contended that
unless the arbitration was held
under the State Law i.e. the
M.P. Act that it would be a
violation of the public policy
of India. This contention is
misconceived since the intention
of providing that the award
should not be in conflict with
the public policy of India is
referable to the public policy
of India as a whole i.e. the
policy of the Union of India and
not merely the policy of an
individual state. Though, it
cannot be said that the
upholding of a state law would
not be part of the public policy
of India, much depends on the
context. Where the question
arises out of a conflict between
an action under a State Law and
an action under a Central Law,
the term public policy of India
must necessarily be understood
as being referable to the policy
of the Union. It is well known,
vide Article 1 of the
Constitution, the name 'India'
is the name of the Union of
States and its territories
include those of the States."
(6.) Both stages are independent.
Observations in Paragraphs 16 and 17
in MSP Infrastructure (supra) do
not, in our view, lay down correct
law. We also do not agree with the
observation that the Public policy
of India does not refer to a State
law and refers only to an All India
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law.
(7.) In our considered view, the
public policy of India refers to law
in force in India whether State law
or Central law. Accordingly, we
overrule the observations to the
contrary in Paragraphs 16 and 17 of
the judgment in MSP Infrastructures
Ltd. (supra).
(8.) Since amendment application is
not pressed, the appeal is rendered
infructuous. The impugned order is
set aside.
(9.) The matter may now be taken up
by 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 concerned court."
8) In case of SREI Infrastructure Finance
Limited v. Tuff Drilling Private Limited
reported in (2018) 11 Supreme Court Cases
470, wherein it is observed as under:
"3. The undisputed facts of the case
are: -The respondent filed an
application under Section 11 of the
Arbitration and Conciliation Act,
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1996 (hereinafter referred to as
"the 1996 Act") for referring the
dispute to arbitrator on the
strength of contract entered with
appellant. During pendency of the
application under Section 11 with
consent of the parties, Sri Baskar
Sen, Senior Advocate, Bar-at-Law was
appointed as Arbitrator. The
application under Section 11 of the
1996 Act was thus dismissed as not
pressed. One-man arbitral tribunal
entered into reference and called
for the first sitting of the
arbitral tribunal on 27.08.2011.
Both the parties appeared on
27.08.2011 on which date arbitral
tribunal had directed the respondent
to file the statement of claim.
4. Subsequently, 19th November was
fixed on which date the claimant was
absent. The arbitral tribunal
directed for filing statement of
claim by 9th December. On 9th
December, the claim could not be
filed by respondent and by order
dated 12.12.2011, tribunal
terminated the claim under Section
25(a) by making the following
observations: -
"...It appears that the claimant
is not interested to proceed
with the reference. No cause has
been shown as to why they have
not filed their Statement of
Claim in spite of repeated
opportunities being given to
them. In view of Section 25(a)
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of the Arbitration &
Conciliation Act, 1996 the
Arbitrator, therefore, has no
alternative but to terminate the
proceedings.
The arbitration proceedings in
respect of the dispute in which
Tuff Drilling Private Limited is
the claimant which arose out of
the agreement dated 21st
January, 2008 pertaining to 1500
HP diesel electric rig is thus
terminated..."
5. The Claimant filed an application
dated 20.01.2012 praying for recall
of the order dated 12.12.2011 with
further prayer to condone the delay
in filing the statement of claim by
granting necessary extension of
time. In the application, reasons
for non-filing of the statement of
the claim and for non-appearance of
the claimant on 19.11.2011 and
12.12.2011 were stated in detail.
The application filed by the
claimant was objected by the
appellant. The appellant questioned
the maintainability of the
application dated 20.01.2012 on the
ground that arbitral tribunal has
become functus officio in view of
termination of the proceedings under
Section 25(a), hence the arbitral
tribunal cannot recall its order
terminating the proceedings. The
arbitral tribunal heard both the
parties and by an order dated
26.04.2012 accepted the preliminary
objections of the appellant holding
that in view of order terminating
the proceedings, he cannot pass an
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order recommencing the arbitration
proceedings. The application of the
respondent claimant was thus
rejected.
6. Aggrieved by the order of the
arbitral tribunal dated 26.04.2012,
the claimant approached the Calcutta
High Court in its revisionary
jurisdiction by filing C.O.No.3190
of 2012. The appellant before the
High Court objected the
maintainability of the application
under Article 227 of the
Constitution. It was further
contended before the High Court that
after terminating the proceedings
arbitral tribunal had become functus
officio and had no power to recall
the order dated 12.12.2011. The High
Court after considering the
submissions of parties came to the
conclusion that arbitral tribunal
enjoys the power to recall its own
order relying on the Patna High
Court judgment reported in M/s Snebo
Engineering Ltd. Vs. State of Bihar
and Ors., AIR 2004 Patna 33. The
High Court also overruled the
objections of appellant that
application under Article 227 by the
claimant challenging the order dated
12.12.2011 was not maintainable. The
High Court after entertaining the
application under Article 227 held
that arbitral tribunal has power to
recall its own order. The High Court
set aside the order of the arbitral
tribunal and remitted the matter
back to the arbitral tribunal to
decide the application dated
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20.01.2012 filed by the respondent
on merits. The appellant aggrieved
by the judgment of Calcutta High
Court has come up in this appeal.
xxx
17. Section 19 of the Act provides
for determination of rules of
procedure. Sub-clause (1) of Section
19 provides that the arbitral
tribunal shall not be bound by the
Code of Civil Procedure, 1908 or the
Indian Evidence Act, 1872. The words
"arbitral tribunal shall not be
bound" are the words of amplitude
and not of a restriction. These
words do not prohibit the arbitral
tribunal from drawing sustenance
from the fundamental principles
underling the Civil Procedure Code
or Indian Evidence Act but the
tribunal is not bound to observe the
provisions of Code with all of its
rigour. As per sub-clause (2) of
Section 19 the parties are free to
agree on the procedure to be
followed by the arbitral tribunal in
conducting its proceedings.
21. When the arbitral tribunal
without sufficient cause being shown
by the claimant to file the claim
statement can terminate the
proceedings, subsequent to
termination of proceedings, if the
sufficient cause is shown, we see no
impediment in the power of the
arbitral tribunal to accept the
show-cause and permit the claimant
to file the claim. The Scheme of
Section 25 of the Act clearly
indicates that on sufficient cause
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being shown, the statement of claim
can be permitted to be filed even
after the time as fixed by Section
23(1) has expired. Thus, even after
passing the order of terminating the
proceedings, if sufficient cause is
shown, the claims of statement can
be accepted by the arbitral tribunal
by accepting the show-cause and
there is no lack of the jurisdiction
in the arbitral tribunal to recall
the earlier order on sufficient
cause being shown.
24. It is true that power of review
has to be expressly conferred by a
Statute. This Court in Paragraph 13
has also stated that the word review
is used in two distinct senses. This
Court further held that when a
review is sought due to a procedural
defect, such power inheres in every
tribunal. In Paragraph 13, following
was observed:-
"13. .... The expression
"review" is used in the two
distinct senses, namely (1) a
procedural review which is
either inherent or implied in a
court or Tribunal to set aside a
palpably erroneous order passed
under a misapprehension by it,
and (2) a review on merits when
the error sought to be corrected
is one of law and is apparent on
the face of the record. It is in
the latter sense that the court
in Patel Narshi Thakershi case
held that no review lies on
merits unless a statute
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specifically provides for it.
Obviously when a review is
sought due to a procedural
defect, the inadvertent error
committed by the Tribunal must
be corrected ex debito justitiae
to prevent the abuse of its
process, and such power inheres
in every court or Tribunal."
26. There cannot be a dispute that
the power exercised by the arbitral
tribunal is a quasi-judicial. In
view of the provisions of the 1996
Act, which confers various statutory
powers and obligations on the
arbitral tribunal, we do not find
any such distinction between the
statutory tribunal constituted under
the statutory provisions or
Constitution in so far as the power
of procedural review is concerned.
We have already noticed that Section
19 provides that arbitral tribunal
shall not be bound by the rules of
procedure as contained in Civil
Procedure Code. Section 19 cannot be
read to mean that arbitral tribunal
is incapacitated in drawing
sustenance from any provisions of
Code of Civil Procedure. This was
clearly laid down in Nahar
Industrial Enterprises Limited Vs.
Hong Kong and Shanghai Banking
Corporation, (2009) 8 SCC 646. In
Paragraph 98(n), following was
stated:-
"(n) It is not bound by the
procedure laid down under the
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Code. It may however be noticed
in this regard that just because
the Tribunal is not bound by the
Code, it does not mean that it
would not have jurisdiction to
exercise powers of a court as
contained in the Code. "Rather,
the Tribunal can travel beyond
the Code of Civil Procedure and
the only fetter that is put on
its powers is to observe the
principles of natural justice."
(See Industrial Credit and
Investment Corpn. of India Ltd.
v. Grapco Industries Ltd.[(1999)
4 SCC 710]"
27. We thus are of the view that
principles underlying Order 9 Rule 9
can very well be invoked by the
arbitrator. There is nothing on
record to indicate that parties have
agreed to the contrary. The issue,
which has arisen for consideration
has engaged attention of different
High Courts from time to time. Patna
High Court in M/s. Senbo Engineering
Ltd. Vs. State of Bihar & Ors., AIR
2004 Patna 33, had occasion to
consider the order terminating the
proceedings under Section 25(a).
Patna High Court after considering
the provision has held that arbitral
tribunal has power to review on
sufficient cause being shown. In
paragraph 32, following has been
laid down:-
"32. I find the submissions of
Mr. Chatterjee well founded. Mr.
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Chatterjee has relied upon the
provisions of the Act itself
(that is to say, the internal
aids to interpretation) in
support of the point that on
sufficient cause being shown,
the arbitral tribunal has full
authority and power to recall an
order under Section 25(a) of the
Act. I think that one would
arrive at the same conclusion on
the basis of some external aids
to interpretation."
5.5) Learned Senior Advocate Mr. Trivedi
therefore, submitted that the impugned order
passed by the Tribunal is required to be
quashed and set aside with the direction to
the Tribunal to frame the preliminary issue
with regard to the lack of inherent
jurisdiction to be decided at the first
instance.
6.On the other hand, learned Senior Advocate
Mr. Sanjanwala submitted that reliance placed
by learned Senior Advocate for the petitioner
on the provisions of Rule 2 Order XIV of the
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Code of Civil Procedure, 1908 (For short "the
Code") is misplaced inasmuch as section 19 of
the Act, 1996 clearly provides that the
Tribunal is not bound by the provisions of
the Code nor Act, 1996 contains mandate for
framing of the issue either on facts or law.
It was submitted that the petitioner company
has raised the plea with regard to inherent
lack of jurisdiction on the part of the
Tribunal under section 16(2) of the Act,
1996, however, the Tribunal has held that the
plea has been raised belatedly and did not
entertain the plea and therefore, the stage
of raising such an issue is long over and
therefore, the doctrine of estoppel would
apply.
6.1) It was further submitted by learned
Senior Advocate Mr. R.S. Sanjanwala that the
petitioner company has failed to raise the
issue under section 16(2) of the Act as per
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the provisions of the Act, 1996 as point of
jurisdiction has to be raised not later than
the submission of Statement of Defence and
when the Tribunal has already rejected the
application vide order dated 14.07.2022 to
consider such issue of jurisdiction, the same
could not have been agitated before the
Tribunal to decide at first instance.
6.2) It was further submitted that the
petitioner has already filed its Statement of
Defence and counter claim and has proceeded
with the matter at great length and
therefore, the question of inherent lack of
jurisdiction cannot be raised and there is no
scope of adjudication of the issue as a
question of law to be decided as a
preliminary issue.
7.Learned Senior Advocate Mr. Trivedi on merits
further submitted that the Tribunal ought to
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have decided the application to frame the
issues as to whether the Tribunal has
inherent jurisdiction to adjudicate upon the
disputes between the parties as a preliminary
issue in view of the provisions of the Act,
1992. The attention of the Court was invited
to Rule 2 of Order XIV of the Code to submit
that in view of provisions contained therein,
the application filed by the petitioner
company raising point of law going to the
root of the matter with regard to the
jurisdiction of the Tribunal to be decided at
first instance as agreed by both the sides
and such a point of law can be decided at any
stage even at a preliminary stage as a
preliminary issue.
7.1) Learned Senior Advocate Mr. Trivedi
invited the attention of the Court to various
provisions of Act, 1992 to submit that the
Tribunal lacked inherent jurisdiction to
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resolve the disputes between the parties and
as the Tribunal has decided the application
under section 16(2) of the Act, 1996 only on
the ground that the respondent has missed the
bus as the application raising the issue of
jurisdiction was raised by the petitioner
company after filing of the pleadings, such
issue ought to have been considered as a
preliminary issue so as to relegate the
parties before the Tribunal under the Act,
1992. It was submitted that the question of
delay in raising the point of inherent lack
of jurisdiction would not arise as it was
decided by the Tribunal while disposing of
the application under section 16(2) of the
Act, 1996 that it was open to the parties to
raise such issues. It was therefore,
submitted that the Tribunal ought to have
decided the issue of jurisdiction as a
preliminary issue so as to save the time and
cost of both the parties to proceed further
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on merits.
7.2) Learned Senior Advocate Mr. Trivedi
therefore, submitted that the Tribunal ought
to have allowed the application filed by the
petitioner company to frame the preliminary
issue whether as to the Tribunal has inherent
jurisdiction to adjudicate upon the disputes
between the parties in view of provisions of
Act, 1992 or not.
7.3) Learned Senior Advocate Mr. Trivedi
submitted that the Tribunal has failed to
consider that the question of inherent lack
of jurisdiction would go to the root of the
matter and therefore, conducting entire the
arbitration proceedings without deciding such
issue as a preliminary issue would be an
exercise in futility and therefore, it would
be in the interest of both the sides to
decide the issue of lack of jurisdiction as a
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preliminary issue.
7.4) In support of his submission that
provisions of Act, 1992 shall prevail over
the disputes pertaining to the Public Works
Contract, learned Senior Advocate Mr. Trivedi
relied upon the following decisions:
1) Judgment of this Court in case of
Gujarat State Construction Corporation v.
Ghanshyambhai and Bros. reported in (1997) 3
GLR 2302, wherein it is observed as under:
"2. This Court after enlarging time
under Section 28 directed the
Arbitrator to Dispose of the
disputes under reference as
expeditiously as possible but not
later than four months from the date
of receipt of service of notice to
both the parties after receiving
writ of this Court. When the said
revision was heard, the attention of
this Court was not drawn to the
provisions of the Gujarat Public
Works Contracts Disputes Arbitration
Tribunal Act, 1992 Section 3 came
into force on 5th December, 1991 and
the remaining provisions of the Act
came into force on 1st January, 1994
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as per the notification published in
the Official Gazette. The judgment
and order in the aforesaid Civil
Revision Application was passed on
April 10, 1995. Therefore, the
provisions of the Gujarat Public
Works Contracts Disputes Arbitration
Tribunal Act, 1992 were in force.
3. It is in this context, the
applicant Gujarat State Construction
Corporation, original opponent, has
filed this revision application. It
is contended on behalf of the
applicant that instead of sending
the matter to the Arbitrator, the
matter may be sent to the Tribunal.
The contention of the learned
Advocate for the opponent in this
review application is that let the
matter be remitted to the Arbitrator
and the applicant herein could move
the Arbitrator to pass appropriate
order.
Section 21 of the Gujarat Public
Works Contracts Disputes Arbitration
Tribunal Act, 1992 reads as under:
21. The provisions of the
Arbitration Act, shall in so far
as they are inconsistent with
the provisions of this Act,
cease to apply to any dispute
arising from a works contract
and all arbitration proceedings
in relation to such dispute
before an arbitrator, umpire,
Court or authority shall stand
transferred to the Tribunal.
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It can be seen from the aforesaid
provisions that the matter is
required to be sent to the Tribunal
and not to the Arbitrator. All
arbitration proceedings in relation
to such disputes before an
Arbitrator, Umpire, Court or
authority shall stand transferred to
the Tribunal in view of the
provisions of Section 21. Therefore,
there is a fit case for review and
the direction of remitting the
matter to the Arbitrator for
disposal of disputes under reference
needs to be modified and the matter
should be sent to the Tribunal for
disposal in accordance with law."
2) Judgment of Division Bench of this Court
in case of Vijay Construction Co. Consulting
Engineers and Contractors v. Sardar Sarovar
Narmada Nigam Limited reported in AIR 2018
Gujarat 116, wherein it is observed as under:
"[13] Having regard to issue
involved in the present case
viz. whether in view of Tribunal
constituted under State Act for
resolution of disputes relating to
works contract, the Tribunal
constituted under the Act of 1996
can be allowed to handle the
disputes relating to works contract,
is a matter which arise for
consideration. In that view of the
matter, by placing reliance on
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the judgments referred above
and by referring to provisions
under Section 5 and 16 of the
Arbitration and Conciliation Act,
1996, we are not convinced to accept
submission made by learned Counsel
for the appellant that
learned Single Judge has
committed error by entertaining
the petition at this stage.
Further, it is to be noticed that
order impugned dated 30.11.2010
in the petition is passed
only in view of judgment in
the case of Va Tech (supra) and
same is held to be per incuriam
in the subsequent judgment
in the case of L.G.Chaudhary
Engineers and Contractors (supra).
[14] In the case of M.A.Murthy
(supra) relied by learned Senior
Counsel Mr. Trivedi for the
respondents, it is categorically
held by the Hon'ble Supreme Court
that normally, decision of the Court
enunciating a principle of law is
applicable to all cases irrespective
of stage of pendency from
inception. In the aforesaid
judgment, it is held that
doctrine of prospective overruling
which is a feature of American
jurisprudence is an exception to the
normal principle of law. Further,
in the case of Jagmittar Sain Bhagat
and Ors. (supra) relied by learned
Senior Counsel Mr. Trivedi for the
respondents, the Hon'ble Supreme
Court has held that conferment of
jurisdiction is a legislative
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function and it can neither be
conferred with the consent of the
parties nor by a superior court, and
if the court passes a decree holding
no jurisdiction over the matter, it
would amount to nullity as the
matter goes to the root of the
matter. Both the judgments referred
above, supports the case of the
respondents.
[15] Further, in the case of
Executive Engineer, Sardar Sarovar
Narmada Nigam v/s. Bhaven
Construction and Anr. reported in
2013 (1) GLR 580, the Division Bench
of this Court has held that dispute
arising out of public works contract
is to be adjudicated by Arbitration
Tribunal under the Act, 1992 and not
under the Arbitration and
Conciliation Act, 1996."
3) Decision of Hon'ble Apex Court in case
of Madhya Pradesh Rural Road Development
Autority and another v. L.G. Chaudhary
Engineers and Contractors reported in (2018)
10 Supreme Court Cases 826, wherein it is
observed as under:
"2.) Appointment of arbitrator in a
dispute arising out of execution of
a 'works contract' was the subject-
matter for consideration before the
High Court under section 11 of the
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Arbitration and Conciliation Act,
1996.
(3.) Appellants raised objection
that the matter being covered by a
special State Act, namely, M.P.
Madhyastham Adhikaran Adhiniyam,
1983 ("M.P. Act", in short), the
application under section 11 of the
Arbitration and Conciliation Act,
1996 could not be entertained. The
High Court, however, overruled the
said objection relying upon the
judgment of this Court in Va Tech
Escher Wyass Flovel Ltd. v. MPSE
Board & Another, (2011) 13 SCC 261.
(4.) When the matter was considered
by a Bench of this Court on 24th
January, 2012 (order reported in
Madhya Pradesh Rural Road
Development Authority and Anr. v.
L.G. Chaudhary Engineers and
Contractors, (2012) 3 SCC 495), this
Court held that the judgment in Va
Tech Escher Wyass Flovel Ltd.
(supra) was per incuriam insofar as
it held that the M.P. Act stands
implied 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 as follows:
"51. It is no doubt true that if
the matter were before an
Arbitrator appointed under the
Arbitration and Conciliation
Act, 1996 for adjudication of
any dispute including the
question regarding the
justification and legality as to
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whether the cancellation of
works contract was legal or
illegal, then the said
Arbitrator in view of the ratio
of the judgment of the Supreme
Court in Maharshi Dayanand
University & Anr. v. Anand Coop
L(C) Society, (2007) 5 SCC 295,
as also in view of the
persuasive reasoning assigned in
the judgment and order reported
in Heyman & Anr. v. Darwins,
Limited, (1942) 1 All E.R. 337
(HL), would have had the
jurisdiction to adjudicate the
dispute regarding the
justification and legality of
cancellation of works contract
also. 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
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its termination."
(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 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. (supra) which has been held to
be per incuriam. The M.P.Act cannot
be held to be impliedly repealed.
(8.) We are, thus, is agreement with
the proposed opinion of Hon'ble
Ganguly J. in para 42 of the
reported judgment which reads as
follows:
"42. Therefore, appeal is
allowed and the judgment of the
High Court which is based on the
reasoning of Va Tech Escher
Wyass Flovel Ltd. v. M.P. SEB,
Misc. Appeal No. 380 of 2003,
order dated 5-3-2003 (MP) is set
aside. This Court holds the
decision in Va Tech Escher Wyass
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Flovel Ltd. v. M.P. SEB, (2011)
13 SCC 261 has been rendered in
per incuriam. In that view of
the matter the arbitration
proceeding may proceed under
M.P. Act of 1983 and not under
the A.C. Act 1996."
37. In the circumstances, pending
arbitration proceedings shall stand
transferred to the M.P. Arbitration
Tribunal under the M.P. Act, to be
dealt with as per provisions of the
M.P. Act in accordance with law. The
proceedings may be carried out in
continuation of earlier proceedings.
The parties may take steps by moving
the High Court or any other forum
for transfer of records to the
transferee courts in the light of
this order. The appeal is
accordingly disposed of. The parties
may appear before the High
Court/Tribunal for further
proceedings on 9-7-2018."
4) Decision of Hon'ble Apex Court in case
of State of Gujarat through Chief Secretary
and another v. Amber Builders reported in
(2020) 2 Supreme Court Cases 540, wherein it
is observed as under:
(2.) At the outset, it may be noted
that the Gujarat Act was enacted
with a view to compulsorily refer
all disputes arising out of works
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contract entered into by the State
Government or the Public Sector
Undertakings with any other person
for those works defined as works
contract in terms of Section 2 (k)
of the Gujarat Act. As far as this
case is concerned, it is not
disputed that the contract entered
into between the appellant State and
the respondent contractor was a
works contract . The contract order
pertaining to the parties dated
31.07.2007 contained an arbitration
clause, relevant portion of which
reads as follows:
"Clause : 30(1) Disputes to be
referred to Tribunal : The
dispute relating to this
contract, so far as they relate
to of the following matters,
whether such disputes arise
during the progress of the work
of or after the completin or
abandoned thereof, shall be
referred to the Arbitration
Tribunal, Gujarat State"
(15.) Part I of the A&C Act i.e.
from Section 2 to Section 43 deals
with Arbitration and Section 2(2)
clearly states that the said Part
would apply to all Arbitrations
which take place in India. Section
2(4) makes it absolutely clear that
other than Section 40(1), 41 and 43,
Part I of the A&C Act shall apply to
all arbitrations even if they are
carried out under any other
enactment as if the arbitrations
were pursuant to an arbitration
agreement except insofar as the
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provisions of Part I are
inconsistent with the other
enactment or any rules made
thereunder. A plain reading would
show that the provisions of Part I
of the A&C Act would apply to all
arbitrations where the place of
arbitration is within India. Even
statutory arbitrations under other
Acts would be governed by Part I.
The only exception is that if there
is any departure from Part I in the
special enactment then the special
enactment will prevail and the A&C
Act will give way to the special
enactment.
(16.) It is in this context that we
have to examine the Gujarat Act. We
have already referred to certain
provision of the Gujarat Act.
Reference and procedure of the
Tribunal is governed by Chapter 3 of
the Gujarat Act. Section 8 provides
that where any dispute within the
meaning of the said Act, arises
between the parties, the said
dispute shall be referred to
arbitration under the said Act
whether the agreement in question
contained an arbitration clause or
not. Basically, the intention of the
Stage Legislature was that all
disputes relating to works contract
between the State Government and the
persons executing the works defined
as works contract would be
compulsorily referred to the
Arbitral Tribunal constituted under
Section 3 of the Gujarat Act.
Section 8(3) clearly provides that
where the Tribunal admits a
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reference under sub section (2) it
will make an award or an interim
award giving its reasons thereof.
This Section recognizes the power of
the Tribunal to make interim awards.
However, as pointed above, the
Tribunal took a view that an interim
award could not be in the nature of
an injunction.
(17.) The practice and procedure of
the Tribunal is governed by Section
9 of the Act. Section 12 of the Act
vests revisional powers in the High
Court of Gujarat where an award or
any interim award can be challenged
on the grounds set out therein. The
High Court also has suo motu powers
in this regard. Section 13 which is
relevant for our purpose reads as
follows:
"13. Bar of jurisdiction of
Courts.
(1) Save as otherwise provided
by section 12, no Civil Court
shall have jurisdiction to deal
with or decide any question
which the Tribunal is empowered
to deal with and decide by or
under this Act and no injunction
shall be granted by any Civil
Court in respect of any action
taken or to be taken in
pursuance of any power by or
under this Act.
(2) No award or interim award or
order made or proceedings taken
under this Act by the Tribunal
shall be called in question in
any Civil Court.
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Section 13 specifically bars the
jurisdiction of the Civil Courts.
This clearly means that powers
vested in a Civil Court under the
A&C Act, such as the powers to grant
interim relief in terms of Section 9
of the A&C Act and the powers for
setting aside an award under Section
34 of the Act cannot be exercised by
Civil Courts insofar as the awards
made under the Gujarat Act are
concerned. As far as Gujarat Act is
concerned, the power to set
aside/modify an award is vested in
the High Court under Section 12.
Section 21 of the Gujarat Act reads
as follows:
"21. Arbitration Act to cease to
apply. The provisions of the
Arbitration Act, shall in so far
as they are inconsistent with
the provisions of this Act,
cease to apply to any dispute
arising from a works contract
and all arbitration proceedings
in relation to such dispute
before an arbitrator, umpire,
court or authority shall stand
transferred to the Tribunal.
(18.) We are clearly of the view
that the appropriate remedy for the
contractor was to approach the
arbitral tribunal constituted under
the Gujarat Act since that would
have jurisdiction to decide whether
the notice issued by the Government
was a legal notice and whether the
Government was, in fact, entitled to
recover any amount from the
contractor. It would also be within
the jurisdiction of the Tribunal to
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decide whether the contractor has
made out a prima facie case for
grant of interim relief. We are
purposely not going into the merits
of the case because once we hold
that the Tribunal has the
jurisdiction to entertain and
adjudicate upon the dispute it would
not be proper for us to make any
comments on the merits.
xxx
(22.) On a conjoint reading and a
careful analysis of the Acts
together, we are of the view that
insofar as the powers vested in the
Arbitral Tribunal in terms of the
Section 17 of the A&C Act are
concerned, such powers can be
exercised by the Tribunal
constituted under the Gujarat Act
because there is no inconsistency in
these two Acts as far as the grant
of interim relief is concerned. This
power is already vested in the
tribunal under the Gujarat Act and
Section 17 of the A&C Act
compliments these powers and
therefore it cannot be said that the
provisions of Section 17 of the A&C
Act are inconsistent with the
Gujarat Act.
(23.) In view of the above
discussion, both the appeals filed
by the State of Gujarat are allowed,
and the judgments of the High Court
of Gujarat are set aside. However,
liberty is given to the
contractor(s) to approach the
Gujarat Public Works Contract
Disputes Arbitration Tribunal and if
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the Tribunal is approached within 2
months from today, the tribunal
shall not dismiss the claim on the
issue of limitation. It shall decide
the same on merits. Pending
application(s), if any, shall
stand(s) disposed of."
5) In case of Sardar Sarovar Narmada Nigam
Limited and Ors. v. Vijay Construction Co-
Consulting Engineers & Contractors and others
(Judgment dated 26.04.2017 passed in Special
Civil Application No.831 of 2022), wherein is
observed as under:
"1. This petition under Article 226
and 227 of the Constitution of India
has been moved by Sardar Sarovar
Narmada Nigam Ltd., etc. seeking
writ of mandamus and/or certiorari
or any other appropriate writ, order
or direction declaring the order
passed by the Tribunal on 30th
November, 2010 in A.R.No.16/2002
(Annexure-A) was against the
provisions of Gujarat Public Works
Contract Dispute Arbitration
Tribunal Act and further to hold
that Arbitration Reference No.16 of
2002 was maintainable before the
Gujarat Public Works Contract
Arbitration Tribunal and further
seeking directions to the Tribunal
to decide the arbitration reference
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on merits.
xxx
3. While the aforesaid application
of respondent No.1 was pending
before the Tribunal for
adjudication, the Hon'ble Supreme
Court, on 14th January, 2010,
delivered a judgment in the matter
of Va Teach Escher Wyass Flovel
Limited V/s. Madhya Pradesh State
Electricity Board and another. In
the said judgment, on interpretation
of a legislation governing the field
of disputes in respect of Works
Contract with Public Undertakings
prevalent in the State of Madhya
Pradesh under the nomenclature of
Madhya Pradesh Madhyasthan Adhikaran
Adhiniyam, 1983, which came to be
ruled that if the Works Contract
contained an Arbitration clause, a
dispute concerning such Works
Contract by and between the parties
thereto was not required to be
referred to the concerned Tribunal
constituted under the said
legislation of the State of Madhya
Pradesh, but the same was required
to be referred to the Arbitration
Tribunal to be constituted under the
Arbitration and Conciliation Act,
1996 by following the provisions for
the same made under the Works
Contract. The said decision of the
Hon'ble Supreme Court came to be
later on reported in (2011) 13 SCC
4. In view of this decision of the
Hon'ble Supreme Court, respondent
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No.1 requested the Tribunal to
dispose off its aforesaid
application as not maintainable so
that thereafter, based upon the
same, by following provisions of
Arbitration contained in the Works
Contract by and between the
petitioner and respondent No.1, an
Arbitration Tribunal could be
constituted under the Arbitration
and Conciliation Act, 1996 for
adjudication of the claims of
respondent No.1 against the
petitioner. In view of this, on 30th
November, 2010, the Tribunal passed
an order vide which the aforesaid
application of respondent No.1 came
to be disposed off as not
maintainable in terms of the
judgment of Hon'ble Supreme Court of
India.
xxx
18. Mr.Mazmudar, has further
referred to the decision reported in
2013 (10) SCC 136 Jagmittor V/s.
Director, Health Services; wherein,
Hon'ble Supreme Court has held that
indisputably it is a settled legal
proposition that conferment of
jurisdiction is a legislative
function and it can neither be
conferred with the consent of the
parties nor by Superior Court and if
the Court passes the decree having
no jurisdiction over the matter, it
would amount to nullity as the
matter goes to root of the cause.
19. On the other hand, learned
senior counsel, Mr.Dave, for the
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respondent No.1 has mainly argued
that Arbitration proceedings can be
challenged only under Section 34 of
the Arbitration and Conciliation
Act, 1996. In support of this
submission, he has referred to
judgments of the Apex Court, namely,
(i) in the case of SBP & Co. V/s.
Patel Engineering Ltd. and another
reported in (2005) 8 SCC 618 and
(ii) in the case of MSP
Infrastructure Ltd. V/s. M.P. Road
Development Corporation Ltd.
reported in (2015) 13 SCC 713.
20. Proposition of law contained in
these judgments passed by the Apex
Court and relied upon by Mr.Dave
cannot be disputed. However all such
judgments relates to the cases where
arbitration proceedings has been
concluded by the Arbitration
Tribunal under Section 34 of the
Arbitration Tribunal Act. However,
in the case in hand, the arbitration
proceedings have not yet concluded
and are still pending and in
progress when the impugned order
dated 30th November, 2010 has been
passed.
21. This Court is of the considered
opinion that an order passed though
with conformity at the relevant time
but against the provisions and
without jurisdiction will be void
ab-initio. This is particularly so
when Supreme Court in subsequent
decision has reversed its earlier
decision and Division Bench of this
High Court has set aside similar
orders vide which the proceedings
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were withdrawn from the Tribunal and
referred to the Arbitrators under
Section 34 of the Arbitration and
Conciliation Act, 1996. Still
further, the Co-ordinate Bench of
this Court in number of petitions as
referred by Mr.Mazmudar, has been
decided in favour of the petitioner-
Sardar Sarovar Narmada Nigam Ltd.
22. In the circumstances, the
Arbitration Tribunal was not
justified in rejecting the
reference. Accordingly, order dated
30.11.2010 passed in Arbitration
Reference No.16 of 2002 is quashed
and set aside. Arbitration Reference
No.16 of 2002 is restored back to
the Arbitration Tribunal and the
Tribunal shall proceed and decide
the reference in accordance with
law. Petition is allowed as per para
13(A) of the petition. Rule is made
absolute. No order as to cost."
6) In case of Harshad Chimanal Modi v. DLF
Universal Ltd. and another reported in (2005)
7 Supreme Court Cases 791, wherein it is
observed as under:
(30.) We are unable to uphold the
contention. The jurisdiction of a
court may be classified into several
categories. The important categories
are (i) Territorial or local
jurisdiction; (ii) Pecuniary
jurisdiction; and (iii) Jurisdiction
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over the subject matter. So far as
territorial and pecuniary
jurisdictions are concerned,
objection to such jurisdiction has
to be taken at the earliest possible
opportunity and in any case at or
before settlement of issues. The law
is well settled on the point that if
such objection is not taken at the
earliest, it cannot be allowed to be
taken at a subsequent stage.
Jurisdiction as to subject matter,
however, is totally distinct and
stands on a different footing. Where
a court has no jurisdiction over the
subject matter of the suit by reason
of any limitation imposed by
statute, charter or commission, it
cannot take up the cause or matter.
An order passed by a court having no
jurisdiction is nullity.
(31.) In Halsbury's Laws of England,
(4th edn.), Reissue, Vol. 10; para
317; it is stated;
"317. Consent and waiver. Where,
by reason of any limitation
imposed by statute, charter or
commission, a court is without
jurisdiction to entertain any
particular claim or matter,
neither the acquiescence nor the
express consent of the parties
can confer jurisdiction upon the
court, nor can consent give a
court jurisdiction if a
condition which goes to the
jurisdiction has not been
performed or fulfilled. Where
the court has jurisdiction over
the particular subject matter of
the claim or the particular
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parties and the only objection
is whether, in the circumstances
of the case, the court ought to
exercise jurisdiction, the
parties may agree to give
jurisdiction in their particular
case; or a defendant by entering
an appearance without protest,
or by taking steps in the
proceedings, may waive his right
to object to the court taking
cognizance of the proceedings.
No appearance or answer however
can give jurisdiction to a
limited court, nor can a private
individual impose on a judge the
jurisdiction or duty to
adjudicate on a matter. A
statute limiting the
jurisdiction of a court may
contain provisions enabling the
parties to extend the
jurisdiction by consent."
(32.) In Bahrein Petroleum Co., this
Court also held that neither consent
nor waiver nor acquiescence can
confer jurisdiction upon a court,
otherwise incompetent to try the
suit. It is well-settled and needs
no authority that 'where a court
takes upon itself to exercise a
jurisdiction it does not possess,
its decision amounts to nothing.' A
decree passed by a court having no
jurisdiction is non-est and its
validity can be set up whenever it
is sought to be enforced as a
foundation for a right, even at the
stage of execution or in collateral
proceedings. A decree passed by a
court without jurisdiction is a
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coram non-judice."
7) In case of Hindustan Zinc Limited (HZL)
v. Ajmer Vidyut Vitran Nigam Limited reported
in (2019) 17 Supreme Court Cases 82, wherein
is observed as under:
"16. Shri Vaidyanathan, learned
senior counsel for the appellant,
has argued that the challenge to the
Award was only on merits before the
learned Commercial Court, and no
challenge was raised stating that
the Arbitrator s appointment itself
would be without jurisdiction, both
the parties having agreed to the
order dated 12.02.2007 to refer the
matter to arbitration. However, the
said issue was argued and taken up
before the High Court in First
Appeal under Section 37 of the
Arbitration Act.
(17.) We are of the view that it is
settled law that if there is an
inherent lack of jurisdiction, the
plea can be taken up at any stage
and also in collateral proceedings.
This was held by this Court in Kiran
Singh and Others v. Chaman Paswan
and Others (1955) 1 SCR 117 as
follows:
"6...It is a fundamental principle
well-established that a decree
passed by a Court without
jurisdiction is a nullity, and
that its invalidity could be set
up whenever and wherever it is
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sought to be enforced or relied
upon, even at the stage of
execution and even in collateral
proceedings. A defect of
jurisdiction, whether it is
pecuniary or territorial, or
whether it is in respect of the
subject-matter of the action,
strikes at the very authority of
the Court to pass any decree,
and such a defect cannot be
cured even by consent of
parties. If the question now
under consideration fell to be
determined only on the
application of general
principles governing the matter,
there can be no doubt that the
District Court of Monghyr was
coram non judice, and that its
judgment and decree would be
nullities."
8) In case of Chief General Manager (IPC)
MP Power Trading Co. Ltd and another v.
Narmada Equipments Pvt. Ltd. reported in 2021
SCC OnLIne SC 255, wherein it is observed as
under:
"12 From the above judgment, it is
evident that this Court has held
that Section 86(1)(f) of the 2003
Act is a special provision which
overrides the general provisions
contained in Section 11 of the 1996
Act. Section 86(1)(f) vests a
statutory jurisdiction with the
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State Electricity Commission to
adjudicate upon disputes between
licensees and generating companies
and to refer any dispute for
arbitration. The "and" between
"generating companies" and "to refer
any dispute for arbitration" is to
be read as an "or", since the State
Electricity Commission cannot
obviously resolve the dispute itself
and also refer it to arbitration.
Section 86(1)(f) is extracted below:
"86.Functions of State Commission.--
(1) The State Commission shall
discharge the following functions,
namely:-
*** *** ***
(f) adjudicate upon the disputes
between the licensees and generating
companies and to refer any dispute
for arbitration;"
xxx
15. A similar issue was raised
before a three-Judge bench of this
Court in Hindustan Zinc Limited
(supra), where an arbitrator was
appointed by the State Electricity
Commission under Section 86(1)(f) of
the 2003 Act with the consent of the
parties. Subsequently, the arbitral
award was challenged under Section
34 of the 1996 Act before a
Commercial Court, and the Commercial
Court's decision was challenged in
an appeal under Section 37 of the
1996 Act where it was held that the
State Electricity Commission had no
jurisdiction to appoint the
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arbitrator since Section 86(1)(f)
refers to disputes only between
licensees and generating companies,
and not licensees and consumers.
When the matter reached this Court,
the contention was that the
objection to jurisdiction could not
have been raised in a proceeding
under Section 37 of the 1996 Act
once the parties had consented to
arbitration earlier. Speaking for
the Court, Justice Rohinton F
Nariman held that if there is
inherent lack of jurisdiction, the
plea can be taken at any stage and
also in collateral proceedings. He
highlighted the well-established
principle that a decree passed by a
court without subject matter
jurisdiction is a nullity, and that
its invalidity could be set up
whenever and wherever it is sought
to be enforced or relied upon. Such
a defect of jurisdiction cannot be
cured even by the consent of the
parties. The above dictum would
apply to the present case."
9) In case of Ghanshyambhai Indravadanbhai
Pandya and ors. v. Maharaja Sayajirao
University (Judgment dated 02.03.2017 passed
in First Appeal No. 2797 of 2016),wherein it
is observed as under:
"6.01. At the outset, it is required
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to be noted that by the impugned
order the learned Commercial Court
has rejected the plaint in exercise
of the powers under Order 7 Rule
11(d) of the Code of Civil Procedure
on the ground that in view of the
provisions of the Gujarat Public
Works Contract Disputes Arbitration
Act, 1992, Suit Civil Court /
Commercial Court shall be barred to
adjudicate the dispute between the
parties arising out of the public
works contract. As such, the issue
whether the original defendant -
M.S. University can be said to be
Public Undertaking as defined under
the provisions of the Act of 1992 is
already concluded by the Division
Bench of this Court in the case of
Gujarat Agricultural University
(supra) and by the learned Single
Judge in the case of Sardar Patel
University (supra). In the case of
Gujarat Agricultural University,
while considering the similar
provisions of the Gujarat
Agricultural University Act, the
Division Bench of this Court has
specifically observed and held that
the Gujarat Agricultural University
can be said to be / called as
Corporation aggregate and therefore,
will be deemed to be Public
Undertaking withing the meaning of
section 2(i)(ii) of the Act and
therefore, the dispute arising out
of the Public Works Contract between
the Gujarat Agricultural University
and the Contractor shall have to be
decided by the learned tribunal
constituted under the provisions of
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the Act of 1992.
6.02. Similar view has been taken by
the learned Single Judge in the case
of Sardar Patel University (supra).
6.03. Under the circumstances, as
such, it cannot be said that the
learned Commercial Court has
committed any error in holding that
for the dispute between the
plaintiff and thedefendant
University arising out of the Public
Works Contract, Suit before Civil
Court / Commercial Court shall be
barred and the suit before the
Commercial Court shall not be
maintainable and only the learned
tribunal constituted under the
provisions of the Act of 1992 shall
have jurisdiction."
8.On merits, learned Senior Counsel Mr. R.S.
Sanjanwala submitted that the order dated
19.09.2022 passed by the Tribunal is correct
in law. It was submitted that the Act, 1992
is not applicable to the present proceedings,
since the petitioner has failed to fulfill
the mandate under Section 8 of the Act, 1992.
8.1) It was submitted that the petitioner
has themselves submitted to the jurisdiction
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of the Tribunal and the arbitral proceedings
have reached an advanced stage where
application of both parties for interim award
under Section 31(6) of the Arbitration Act is
being heard and the said applications for
interim award practically stood concluded on
31.01.2022, when the petitioner filed the
present round of interim applications, first
under Section 16 on 25.02.2022 and then the
present application on 8.08.2022 under Order
XIV Rule 2 of the Code.
8.2) The attention of the Court was
invited to the arbitration clause in the
Contract between the parties, which reads as
under:
"ARTICLE 26
26. Dispute Resolution
26.1 Dispute Resolution
26.1.1 Any dispute, difference or
controversy of whatever nature
howsoever arising under or out of or
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in relation to this Agreement
(including its interpretation)
between the Parties, and so notified
in writing by either Party to the
other Party (the "Dispute") shall,
in the first instance, be attempted
to be resolved amicably in
accordance with the conciliation
procedure set forth in Clause 26.2.
....
26.3 Arbitration
26.3.1 Any Dispute which is not
resolved amicably by conciliation,
as provided in Clause 26.2, shall be
finally decided by reference to
arbitration by a Board of
Arbitrators appointed in accordance
with Clause 26.3.2. Such arbitration
shall be held in accordance with the
Rules of Arbitration of the
International Centre for Alternative
Dispute Resolution, New Delhi (the
"Rules"), or such other rules as may
be mutually agreed by the Parties,
and shall be subject to the
provisions of the Arbitration and
Conciliation Act 1996. The venue of
such arbitration shall be
(Gandhinagar), and the language of
arbitration proceedings shall be
English.
..."
8.3) Referring to the sequence of events
leading to filing of the present petition, it
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was submitted that it was amply clear that
the petitioner has been blowing hot and cold
with regards to their stand on the
jurisdiction of the Tribunal and when it
suits them, they submit to the jurisdiction
and when it appears that they would not
receive their desired orders, they challenge
the jurisdiction of the Tribunal.
8.4) It was submitted that the Hon'ble
Supreme Court in the context of the Act, 1996
vis a vis special statute such as the
Act,1992 has held that once a party has by
conduct opted for the contractual arbitration
proceedings and not raised an objection to
the jurisdiction at the appropriate stage,
then it shall not be permitted to do so later
to defeat the award. Reliance in this regard
is placed on the following decisions:
1) In case of Sweta Construction v.
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Chhattisgarh State Power Generation Co. Ltd.,
reported in 2022 SCC OnLine SC 1447, wherein
it is observed as under:-
"17. We are also of the view that in
particular facts of the present case,
the position is even more gross
because when the appellant claimed
arbitration, the respondent accepted
invocation of arbitration, suggested a
panel of Arbitrators, the appellant
chose one of the Arbitrators out of
the two suggested and the Arbitrator
was so appointed as the sole
Arbitrator. Thus, the arbitration
proceedings commenced in pursuance to
the acts: of the respondent and it
cannot be permitted to get away to say
that the whole process was gone
through because of some misconception
or inappropriate legal advice.
Arbitration by consent is always
possible. The mode and manner of
conduct of arbitration is possible and
how those arbitration proceedings
would be governed is also a matter of
consent. If at all there were any
rights of the respondent to have
claimed arbitration under the
Adhiniyam, that right was never
exercised or waived. The respondent
cannot be reprobate permitted and that
to too proceedings and that too
approbate in and arbitration in
dispute or resolution through the
method of arbitration defeating the
very purpose of an alternative dispute
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resolution to arbitration as an
expeditious remedy."
2) In case of M.P. Housing and Infrastructure
Development Board v. K.P. Dwivedi, reported
in (2022) 3 SCC 783, wherein it is observed
as under:-
"15. The short question which is posed
before this Court for consideration
is, whether, in view of the award
declared by the Housing Commissioner,
M.P. Housing Board, who was appointed
as an arbitrator pursuant to the order
[K.P. Dwivedi v. M.P. Housing Board,
WP No. 9131 of 2008, order dated 20-8-
2008 (MP)] passed by the High Court in
Writ Petition No. 9131 of 2008, was it
open for the respondent contractor
thereafter to file a reference before
the M.P. Arbitration Tribunal with
respect to the very claim/claims which
were the subject-matter of arbitration
before the arbitrator Housing
Commissioner.
16. It is the case on behalf of the
respondent contractor that as the
contract was a "works contract" and
therefore, the dispute between the
appellants and the respondent
contractor could only be decided by
the learned Arbitral Tribunal
constituted under the 1983 Act,
therefore, the Housing Commissioner
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had no authority to act as an
arbitrator and decide the dispute
between the parties and the award
passed by the arbitrator Housing
Commissioner can be said to be non est
and wholly without jurisdiction.
26. At the outset, it is required to
be noted that as such the earlier
order [K.P. Dwivedi v. M.P. Housing
Board, WP No. 9131 of 2008, order
dated 20-8-2008 (MP) passed by the
High Court in Writ Petition No. 9131
of 2008, by which the dispute between
the parties was referred to the
arbitrator Housing Commissioner was a
consent order. It was the respondent
contractor who filed Writ Petition No.
9131 of 2008 submitting that he has
invoked the arbitration clause.
Thereafter the respondent contractor
submitted the claim before the
arbitrator Housing Commissioner who
passed an award. The respondent
contractor did not challenge the award
passed by the arbitrator - Housing
Commissioner and therefore, as such
the award passed by the arbitrator
Housing Commissioner dated 7-11-2008
has attained finality.
33. Even otherwise it is required to
be noted that no objection was raised
by the respondent contractor before
the arbitrator - Housing Commissioner
on the jurisdiction of the Housing
Commissioner to act as an arbitrator.
On the contrary as observed
hereinabove the order passed by the
High Court referring the dispute
between the parties for adjudication
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to the arbitrator Housing Commissioner
was a consent order and the respondent
contractor conceded to and accepted
the said order and submitted his claim
before the arbitrator Housing
Commissioner. The arbitrator Housing
Commissioner also passed an award on
the said claim. Therefore, as no
objections were raised by the
respondent contractor at the
appropriate stage, the award cannot be
annulled subsequently. At the cost of
repetition, it is observed that at no
point of time the respondent
contractor had challenged the award
passed by the arbitrator Housing
Commissioner and as observed and held
hereinabove even no court has set
aside the award declared by the
arbitrator- Housing Commissioner dated
7-11-2008 and the same has attained
finality. Therefore, the same is
binding between the parties. Hence,
the subsequent fresh reference
petition before the learned Arbitral
Tribunal under the 1983 Act for the
very same claims which were raised
before the arbitrator Housing
Commissioner would not be maintainable
at all. We agree with the view taken
by the Arbitral Tribunal."
8.5) It was further submitted that the
learned Tribunal has correctly observed that
the present proceeding is nothing but an
attempt to delay the proceedings.
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8.6) It was further submitted that on
the issue of the mandate of one year provided
under Section 8 of the Act, 1992 this Court
in the following cases have held that the
limitation period to apply to the statutory
Arbitral Tribunal is one year, subject to
condonation of delay for sufficient cause as
provided under Section 17 of the Act, 1992: -
1) B. Patel & Co. v. State of Gujarat,
reported in 1998 (3) G.L.R. 1913.
2) State of Gujarat v. Mahendra Construction,
reported in 2010 SCC OnLine Guj 480.
3) Kaushik Construction Company v. State of
Gujarat, reported in 2001 SCC OnLine Guj 235.
8.7) It was further submitted that in the
present case no such application has been
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made under Section 8 of the Act, 1992 till
date by the petitioner for their alleged
counter claim which clearly shows that they
have themselves opted for the contractual
arbitration proceedings which is going on
before the Tribunal.
8.8) It was submitted that the Act, 1996
is a special legislation and the application
made by the petitioner under Order XIV Rule 2
of the Code is misconceived and seeks to
invoke general provisions of the Code to
overcome its failure under the specific
provision, i.e., Section 16 of the Act, 1996.
It was submitted that the petitioner is
seeking to achieve indirectly, what it failed
to achieve directly in its application under
Section 16 of the Act, 1996. It was submitted
that it is settled law that the Act, 1996 is
a complete code in itself and not bound by
procedural technicalities of the Code and the
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Evidence Act. Reliance in this regard is
placed on the Supreme Court's decision in the
case of Fuerst Day Lawson Ltd. v. Jindal
Exports Ltd., reported in (2011) 8 SCC 333.
8.9) Learned Senior Counsel Mr.
Sanjanwala drew attention of the Court to
Section 19 of the Act,1996 which reads as
under:
"19. Determination of rules of
procedure. -- (1) The arbitral tribunal
shall not be bound by the Code of Civil
Procedure, 1908 (V of 1908) or the
Indian Evidence Act, 1872 (1 of 1872)."
8.10) It was submitted that the principles
of generalia specialibus non derogant,
squarely applies to the facts of the present
case. Referring to the decision of the
Hon'ble Supreme Court in case of PASL Wind
Solutions (P) Ltd. v. GE Power Conversion
(India) (P) Ltd., reported in (2021) 7 SCC 1,
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it was submitted that the Apex Court held
that when there was an apparent conflict
between the Commercial Courts Act, 2015 and
the Arbitration Act, held that the special
law, i.e., the Arbitration Act must be
allowed its full play and the general law
cannot over-ride the special law, even though
it contains a non-obstante clause.
8.11) It was submitted that in the present
case the petitioner took recourse to the
remedy under Section 16 of the Act,1996 to
challenge the jurisdiction of the Arbitral
Tribunal which challenge was repelled by the
Tribunal vide Order dated 14.07.2022. It was
submitted that this order has attained
finality at this stage, inasmuch as the
petitioner challenged the said order before
this Court by way of Special Civil
Application No. 14481 of 2022, and did not
press the said petition. It was submitted
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that this Court vide Order dated 26.08.2022
disposed of the above writ petition by
recording the consent of the parties to
proceed before the Arbitral Tribunal for
framing of issues on the aspect of
jurisdiction.
8.12) Learned Senior Advocate Mr.
Sanjanwala submitted that by virtue of the
present application under Order XIV Rule 2 of
the CPC, the petitioner is seeking to re-
agitate the same issue at a preliminary
stage, which it tried and failed under
Section 16 of the Arbitration Act which is a
malafide attempt to overcome the limitation
imposed under Section 16(2) of the Act, 1996
which warrants that the issue of limitation
must be raised at the time of filing of the
Statement of Defence, which the petitioner
herein has failed to do in the present case.
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8.13) Referring to the decision of the
Hon'ble Supreme Court in the case of
Sangramsinh P. Gaekwad v. Shantadevi P.
Gaekwad, reported in (2005) 11 SCC 314, it
was submitted that the Apex Court has held
that it is trite law that what cannot be done
directly cannot be done indirectly.
8.14) Learned Senior Advocate Mr.
Sanajanwala submitted that the petitioner
having opted for the remedy under Section 16
and failed cannot now seek to re-agitate the
same issue by the present application under
Order XIV Rule 2 of the Code. The Tribunal
has consciously left open the issue of
jurisdiction to be decided at the final
hearing stage and not foreclosed the rights
of the petitioner and the petitioner is not
rendered remediless and as such, all issues
have been kept open to be decided at the time
of final arguments.
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8.15) It was submitted that the petitioner
has themselves submitted to the jurisdiction
and made a counter claim as well as an
application for interim award, which was
argued at great length and only when the
Tribunal sought a calculation working sheet,
did the petitioner raise the issue of
jurisdiction. This clearly is not a bonafide
action by the petitioner and such a party
deserves no indulgence by this Court under
discretionary jurisdiction under Article
226/227 of the Constitution of India.
8.16) It was therefore, submitted that
the present petition is bereft of any merit
and is nothing but a dilatory tactic on the
part of the petitioner to avoid adverse
orders in the Arbitral proceedings and
therefore, the petition be dismissed with
cost.
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9.Having heard the learned Senior Advocates on
both the sides and having perused the
impugned order, it appears that the Tribunal
after considering the submissions made by
both the sides referred to the order dated
14.07.2022 whereby it was held that it has no
jurisdiction to decide the application under
section 16(2) of the Act and further observed
in paragraph no.16 of the said order as
under:
"16.0 The observations made
hereinabove are tentative and it will
be open for both the sides to
adjudicate upon this point while
deciding all issues in the main
Arbitration case."
10. Thus the Tribunal has left the issue
open to be decided along with all other
issues during the course of the proceedings
and not as a preliminary issue.
11. The Tribunal while disposing of the
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application filed by the petitioner has held
as under:
"10.0 In the considered opinion of
this Tribunal, sub-rule (2) of Order
XIV of the Code of Civil Procedure
would not come to the aid of the
orig. respondent, inasmuch as under
the provisions of sub-section (2) of
section 16 of the Arbitration Act,
it was permissible for the
respondent to raise the plea that
the Arbitral Tribunal does not have
jurisdiction not later than the
submission of the statement of
defence and under sub-section (4)
thereof, the Tribunal could admit a
later plea if it considered the
delay justified; however, the
respondent filed the application
under sub-section (2) of section 16
of the Arbitration Act much later
than the submission of the statement
of defence and did not explain the
delay, as a result whereof the
Tribunal rejected the application on
the ground that it did not have
jurisdiction to decide the
application. Therefore, the orig.
respondent having first attempted to
get the issue regarding lack of
jurisdiction on the part of the
Tribunal decided under sub- section
(2) of section 16 of the Arbitration
Act cannot seek to have another
innings by resorting to sub-rule (2)
of Order XIV of the Code.
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10.1 Besides, the present
proceedings are under the provisions
of the Arbitration and Conciliation
Act, 1996. Sub-section (2) of
Section 16 of the Arbitration Act is
a specific provision which empowers
the Tribunal to rule on its own
jurisdiction provided the
requirements thereof are satisfied.
Therefore, when there is a specific
provision in the statute itself, one
cannot fall back upon the general
provisions of the Code of Civil
Procedure. More importantly,one
cannot first resort to the specific
power under the Arbitration Act and
upon being unsuccessful in such
attempt, seek to invoke the general
provisions of the Code of Civil
Procedure, inasmuch as it would
amount to rendering nugatory the
order made under a specific
provision of the Arbitration Act.
10.2 It is a well-established
doctrine of interpretation that
where under a specific section or
rule a particular subject has
received special treatment, such
provision will exclude the
applicability of any general
provision which might otherwise
cover the said topic. (See
Maharashtra State Board of Secondary
& Higher Secondary Education v.
Paritosh Bhupeshkumar Sheth (1984) 4
SCC 27.)
10.3 Strong reliance has been placed
by the learned counsel for the orig.
respondent on the observations made
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in paragraph 16 of the order dated
14.07.2022 of this Tribunal made on
the application under sub-section
(2) of section 16 of the Arbitration
Act; however, on a plain reading of
the contents of paragraph 16 of the
said order it is clear that the
Tribunal has left it open for the
parties to raise the point while
deciding all the issues in the main
arbitration case. Therefore, the
point can be decided with all other
issues and the question of deciding
the same as a preliminary issue will
not arise. As rightly submitted by
Mr.Saha, learned counsel for the
claimant, deciding the issue as a
preliminary issue would amount to
doing indirectly what cannot be done
directly.
11.0 The Tribunal (GPWCDAT) was in
existence when the matter was
referred to this Tribunal and the
same was constituted pursuant to the
agreement between the parties and
both the parties had appeared before
the Tribunal and have filed their
Statement of Claim, reply to the
Statement of Claim, Rejoinder,
Counter-Claim, interim applications
by both the sides and after hearing
the interim applications, when the
Tribunal had called upon to produce
the Accounts, at that time, this
point is raised. This is nothing but
to delay the proceedings and in our
considered view, the Issue is
squarely covered by our earlier
decision and this cannot be decided
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as a preliminary Issue in view of
the agreement between the parties.
12.0 In light of the above
discussion, no case is made out for
framing the issue of lack of
inherent jurisdiction as a
preliminary issue as prayed for in
the application. The application,
therefore, fails and is accordingly
rejected.
13.0 In view of the above, this
application dated 29.8.2022 stands
disposed of. It is clarified that
the earlier application dated
8.8.2022 also stands disposed of."
12. The aforesaid observations made by the
Tribunal in the impugned order are not
required to be interfered at this stage in
view of settled legal position that this
Court would not exercise its writ
jurisdiction in the arbitration proceedings
as held by the Apex Court in the following
decisions:
1) In case of GTPL Hathway Ltd. (supra),
wherein it is held as under:
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"14. In view of aforesaid conspectus
of law, and considering the provisions
of the Act, 1996, the order passed by
the Arbitration Tribunal during the
course of Arbitration cannot be
challenged by the petitioner under
Articles 226 and/or 227 of the
Constitution of India when the
constitution bench of the Apex Court
in case of M/s. S.B.P. and Co. v. M/s.
Patel Engineering Ltd. and Anr.(supra)
has disapproved the stand that any
order passed by the Arbitral Tribunal
is capable of being corrected by the
High Court under Articles 226 and 227
of the Constitution of India and has
categorically held that such
intervention by the High Court is not
permissible. The Apex Court in case of
M/s. Deep Industries Limited v. Oil
and Natural Gas Corporation (supra)
has held that it is also important
to notice that the seven-Judge Bench
has referred to the object of the Act
being that of minimizing judicial
intervention and that this important
object should always be kept in the
forefront when a 227 petition is being
disposed of against proceedings that
are decided under the Act,1996 and
that the policy of the Act is speedy
disposal of arbitration cases as the
Act,1996 is 'self-contained' Code and
deals with all the cases.
15. In view of aforesaid settled legal
proposition, considering the policy,
object and the provisions of the
Act,1996, an order passed during
arbitration proceedings by the
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Arbitration Tribunal cannot be
challenged under Articles 226 and 227
of the Constitution of India as the
Act,1996 is a special act and a self-
contained code dealing with
arbitration. Therefore, the impugned
order of the Arbitration Tribunal
deciding the preliminary objection
raised by the petitioner cannot be
challenged under Article 226 or 227
of the Constitution of India."
2) In case of Narmada Clean-Tech and
another (supra), wherein it is held as under:
"54 It is apparent on plain reading
of the para 12 quoted above that the
learned Single Judge rejected the
petition without entering into the
merits of the matter only on the
ground that the order passed during
the course of the arbitration
proceedings cannot be challenged
under Articles 226 and/or 227 of the
Constitution of India and it would
be open for both the sides to raise
all the contentions on merits before
appropriate forum in appropriate
proceedings at an appropriate time
in accordance with law. The learned
Single Judge saying so held that the
petitions were not maintainable in
law."
3) In case of Deep Industries Limited
(supra) wherein it is held as under:
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"16) Most significant of all is the
non-obstante clause contained in
Section 5 which states that
notwithstanding anything contained
in any other law, in matters that
arise under Part I of the
Arbitration Act, no judicial
authority shall intervene except
where so provided in this Part.
Section 37 grants a constricted
right of first appeal against
certain judgments and orders and no
others. Further, the statutory
mandate also provides for one bite
at the cherry, and interdicts a
second appeal being filed (See
Section 37(2) of the Act)
17) This being the case, there is no
doubt whatsoever that if petitions
were to be filed under Articles
226/227 of the Constitution against
orders passed in appeals under
Section 37, the entire arbitral
process would be derailed and would
not come to fruition for many years.
At the same time, we cannot forget
that Article 227 is a constitutional
provision which remains untouched by
the non-obstante clause of Section 5
of the Act. In these circumstances,
what is important to note is that
though petitions can be filed under
Article 227 against judgments
allowing or dismissing first appeals
under Section 37 of the Act, yet the
High Court would be extremely
circumspect in interfering with the
same, taking into account the
statutory policy as adumbrated by us
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herein above so that interference is
restricted to orders that are passed
which are patently lacking in
inherent jurisdiction."
4) In case of Bhaven Construction Through
Authorised Signatory Premjibhai K. Shah
(supra), wherein it is held as under:
"23. Respondent No. 1 did not take
legal recourse against the
appointment of the sole arbitrator,
and rather submitted themselves
before the tribunal to adjudicate on
the jurisdiction issue as well as on
the merits. In this situation, the
Respondent No. 1 has to endure the
natural consequences of submitting
themselves to the jurisdiction of
the sole arbitrator, which can be
challenged, through an application
under Section 34. It may be noted
that in the present case, the award
has already been passed during the
pendency of this appeal, and the
Respondent No. 1 has already
preferred a challenge under Section
34 to the same. Respondent No. 1 has
not been able to show any
exceptional circumstance, which
mandates the exercise of
jurisdiction under Articles 226 and
227 of the Constitution.
25. The Gujarat Act was enacted in
1992 with the object to provide for
the constitution of a tribunal to
arbitrate disputes particularly
arising from works contract to which
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the State Government or a public
undertaking is a party. A works
contract is defined under Section
2(k) of the Gujarat Act. The
definition includes within itself a
contract for supply of goods
relating to the execution of any of
the works specified under the
section. However, a plain reading of
the contract between the parties
indicates that it was for both
manufacturing as well as supply of
bricks. Importantly, a contract for
manufacture simpliciter is not a
works contract under the definition
provided under Section 2(k). The
pertinent question therefore is
whether the present contract, which
is composite in nature, falls within
the ambit of a works contract under
Section 2(k) of the Gujarat Act.
This is a question that requires
contractual interpretation, and is a
matter of evidence, especially when
both parties have taken
contradictory stands regarding this
issue. It is a settled law that the
interpretation of contracts in such
cases shall generally not be done in
the writ jurisdiction. Further, the
mere fact that the Gujarat Act might
apply may not be sufficient for the
writ courts to entertain the plea of
Respondent No. 1 to challenge the
ruling of the arbitrator under
Section 16 of the Arbitration Act."
5) In case of Sweta Construction (supra),
wherein it is held as under:
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"15. However, as pointed by learned
counsel for the respondent, there
appears to be some lack of clarity
on the issue raised in the present
petition on account of the same
three Judge Bench having opined in
another order passed in Lion
Engineering Consultants v. State of
Madhya Pradesh3 on 22.03.2018 i.e.,
about three weeks after that. The
issue however, raised was whether
there was any bar to the plea of
jurisdiction being raised by way of
an objection under Section 34 of the
1996 Act even if no objection was
raised under Section 16 of that Act.
It was opined that public policy of
India refers to law enforced in
India i.e., both Central law as well
as the State law. The respondent
State was given liberty to argue
before the trial Court its
objections that 1996 Act stood
excluded by the State Adhiniyam even
without formal pleadings being a
pure legal plea. This was in the
context of an amendment sought being
beyond limitation. In that context
there is an observation in one
sentence, "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 objection was
raised under Section 16 of that Act.
16. If we appreciate the aforesaid
observation and that too emerging
from identical Bench in the two
matters, we would have to construe
as what is meant by this sentence
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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 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. This Court in the context of
the 1996 Act and the Adhiniyam,
keeping in mind the cleavage of
judicial view earlier and expounding
on the law in that judgment has in
succinct terms set out that the
objections under Section 34 of the
said Act, where no such plea of
jurisdiction was raised in
proceedings before the Arbitrator,
should not be dealt with "alone" on
the plea of jurisdiction i.e., it
should be considered on merits. One
can say that possibly this part of
the order can also be read as one
made under Article 142 of the
Constitution of India to do
substantive justice inter se the
parties, more so, when arbitration
as an alternative dispute resolution
mechanism presupposes an expeditious
disposal of commercial disputes and
that objective would stand nullified
if a contrary view was taken.
17. We are also of the view that in
particular facts of the present
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case, the position is even more
gross because when the appellant
claimed arbitration, the respondent
accepted invocation of arbitration,
suggested a panel of Arbitrators,
the appellant chose one of the
Arbitrators out of the two suggested
and the Arbitrator was so appointed
as the sole Arbitrator. Thus, the
arbitration proceedings commenced in
pursuance to the acts of the
respondent and it cannot be
permitted to get away to say that
the whole process was gone through
because of some misconception or
inappropriate legal advice.
Arbitration by consent is always
possible. The mode and manner of
conduct of arbitration is possible
and how those arbitration
proceedings would be governed is
also a matter of consent. If at all
there were any rights of the
respondent to have claimed
arbitration under the Adhiniyam,
that right was never exercised or
waived. The respondent cannot be
permitted to 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."
13. Therefore, in view of above settled
legal position, this Court has examined the
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matter on merits also and is in agreement
with the observations made by the Tribunal as
reproduced here-in-above that the point with
regard to the lack of inherent jurisdiction
can be decided with all other issues and
question of deciding the same as a
preliminary issue would not arise as it would
amount to doing action indirectly by the
petitioner company which it could not do it
by filing an application under section 16(2)
of the Act, 1996 as the order dated
14.07.2022 passed by the Tribunal has
remained as it is rejecting the application
to decide its jurisdiction under section
16(2) of the Act, 1996.
14. Even otherwise this Court would not like
to entertain the petition under Article 227
of the Constitution of India in view of
aforesaid legal position.
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15. The petition therefore, being devoid of
any merit is hereby dismissed. Rule is
discharged.
(BHARGAV D. KARIA, J)
After pronouncement of the Judgment, learned
advocate Mr.Premal Joshi submitted that the same
may be stayed.
As no stay was granted by this Court during
the pendency of the petition, the request is
rejected.
(BHARGAV D. KARIA, J)
RAGHUNATH R NAIR
