Arbitration jurisdiction and compensation awards: late objections are waived, and courts avoid interference absent perversity or jurisdictional error.

A jurisdictional objection to an arbitral tribunal must be raised at the earliest stage under the Arbitration and Conciliation Act, 1996; where a party participates in the proceedings without objecting, the plea is waived and cannot ordinarily be raised for the first time in appeal. The article also notes that an award granting overhead charges and loss of profits will not be interfered with where the claim is supported by evidence and applied legal principles, absent perversity or a clear jurisdictional error. On those principles, the belated challenge to the tribunal's jurisdiction and the objection to the compensation heads were rejected, and the award was sustained.

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Issues: (i) Whether the appellant could, for the first time in appeal, challenge the arbitral reference on the ground that the contract did not contain a valid arbitration clause and that the tribunal lacked jurisdiction. (ii) Whether the award of amounts towards overhead charges and loss of profits was illegal or unjustified.

Issue (i): Whether the appellant could, for the first time in appeal, challenge the arbitral reference on the ground that the contract did not contain a valid arbitration clause and that the tribunal lacked jurisdiction.

Analysis: Section 16 of the Arbitration and Conciliation Act, 1996 recognises the arbitral tribunal's power to rule on its own jurisdiction and requires a plea of lack of jurisdiction to be raised not later than the statement of defence. The statutory scheme also reflects the principle of kompetenz-kompetenz and the object of speedy finality in arbitration. Since the appellant participated in the arbitration without raising the objection at the threshold, and since the issue would in any event require construction of the contract and the arbitration clause, the belated challenge could not be entertained in appeal. The conduct of the appellant also attracted the waiver principle under Section 4.

Conclusion: The belated jurisdictional challenge was not maintainable and was rejected.

Issue (ii): Whether the award of amounts towards overhead charges and loss of profits was illegal or unjustified.

Analysis: The plea based on Clause 15(a) of the agreement was not specifically raised before the court below, and the objection taken there was only a general challenge to the damages award. On merits as well, the arbitrator's grant of compensation towards overhead charges and loss of profits was supported by the evidence and by the legal principles applied in analogous cases. The award did not disclose any jurisdictional error or perversity warranting interference.

Conclusion: The award on these heads was upheld and the challenge to it failed.

Final Conclusion: The arbitral award and the order refusing to set it aside were sustained, and no ground for appellate interference was made out.

Ratio Decidendi: A jurisdictional objection to an arbitral tribunal must be taken at the earliest stage before the tribunal, failing which it is waived and cannot ordinarily be raised for the first time in appellate proceedings; an arbitral award on compensation heads will not be interfered with absent perversity or a clear jurisdictional error.

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