Arbitral jurisdiction and delayed judicial review upheld as a valid classification under Article 14, with Babar Ali treated as binding.

Section 16(5) and (6) and section 37(2)(a) of the Arbitration and Conciliation Act were upheld as not violative of Article 14 because the legislative scheme validly distinguished between jurisdictional objections that terminate arbitral proceedings and those that only defer judicial review until the final award. The court held that postponing scrutiny in cases where the tribunal rejects a jurisdictional plea is not arbitrary, since review remains available at the statutory stage. It also treated the Supreme Court's speaking dismissal in Babar Ali as binding on the validity issue, following Kunhayammed, and concluded that the earlier ruling had already settled the challenge against the petitioners.

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Issues: (i) Whether sub-sections (5) and (6) of section 16 and clause (a) of sub-section (2) of section 37 of the Arbitration and Conciliation Act, 1996 are violative of Article 14 of the Constitution of India; (ii) whether the dismissal of the Special Leave Petition in Babar Ali had binding effect so as to conclude the challenge to the validity of section 16 and the related appellate scheme.

Issue (i): Whether sub-sections (5) and (6) of section 16 and clause (a) of sub-section (2) of section 37 of the Arbitration and Conciliation Act, 1996 are violative of Article 14 of the Constitution of India.

Analysis: The challenged provisions created a scheme under which the Arbitral Tribunal could rule on its own jurisdiction, continue the proceedings if the plea was rejected, and the aggrieved party could challenge the award later under section 34, while an appeal was provided only where the plea of lack of jurisdiction was accepted. This was held not to be arbitrary or discriminatory because the Legislature had permissibly differentiated between two distinct situations: one where the proceedings end immediately upon a finding of no jurisdiction, and another where judicial review is deferred until the final award. The scheme merely postponed scrutiny in one class of cases and did not deny it altogether.

Conclusion: The provisions were held not to violate Article 14 and were upheld as constitutionally valid.

Issue (ii): Whether the dismissal of the Special Leave Petition in Babar Ali had binding effect so as to conclude the challenge to the validity of section 16 and the related appellate scheme.

Analysis: The reasoning treated the Supreme Court's dismissal in Babar Ali as conclusive on the validity of section 16 because the dismissal was accompanied by reasons indicating that the arbitral ruling on jurisdiction remained subject to judicial scrutiny, albeit at the stage prescribed by the statute. The judgment further held that, even apart from the earlier Supreme Court order, the structure of the Act and the distinction between the two classes of jurisdictional orders justified the legislative choice. The distinction drawn in Kunhayammed was relied upon to hold that a speaking dismissal of an SLP can have binding effect on the reasons recorded.

Conclusion: The challenge was held to be concluded against the petitioners by the earlier Supreme Court ruling.

Final Conclusion: The petitions failed, and the statutory scheme governing arbitral jurisdiction and appeals was sustained.

Ratio Decidendi: Where the legislature provides judicial scrutiny at a later statutory stage and differentiates between orders that terminate proceedings and orders that merely defer review, the classification is not discriminatory under Article 14; moreover, reasons recorded in a speaking dismissal of an SLP may bind on the issue decided.

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