TaxTMI 
TaxTMI 
2025 (5) TMI 1449
X X X X Extracts X X X X
X X X X Extracts X X X X
....t and order passed by the High Court of Madhya Pradesh, Principal Seat at Jabalpur dated 07.01.2022 in Arbitration Appeal No. 79 of 2021 by which the appeal filed by the appellant herein under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, the "Act, 1996") came to be dismissed thereby affirming the order dated 20.12.2019 passed by the Commercial Court and 19th Additional Sessions Judge, Bhopal (M.P.) allowing application filed by the respondent herein under Section 34 of the Act, 1996. 3. It appears that the respondent herein suffered an award dated 08.07.2011 passed by the Arbitral Tribunal (for short, the "Tribunal"). The said award was challenged by the respondent Corporation under Section 34 of the Act, 1996. The appeal filed by the Corporation under Section 34 of the Act, 1996 came to be allowed on the ground that the Tribunal had no jurisdiction to pass the award in view of the provisions of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (for short, the "MP Act, 1983"). The order passed by the Commercial Court and 19th Additional Sessions Judge, Bhopal (M.P.) came to be challenged by way of appeal before the High Court under Section 37 of the Act, 199....
X X X X Extracts X X X X
X X X X Extracts X X X X
....RAL Arbitration Rules shall apply to the arbitration proceedings. (ii) Neither party shall be limited in the proceedings before such arbitrators to the evidence or arguments already put before the Engineer, for the purpose of obtaining his said decision. No such decision shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrators or any matter whatsoever relevant to the dispute. (iii) The reference to arbitration may proceed notwithstanding that the Works shall not then be or be alleged to be complete, provided always that the obligations of the Employer, the Engineer and the Contractor shall not be altered by the reason of the arbitration being conducted during the progress of the Works. Neither party shall be entitled to suspend the Works, and payment to the Contractor shall be continued to be made as provided by the Contract. (iv) If one of the parties fail to appoint its arbitrators in pursuance of sub para (i) and (ii) above, within 60 days after receipt of the notice of the appointment of its arbitrators by the other party, then the Secretary General of the Permanent Court of Arbitration, the Hague, in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal." 3. Subsequently, Parliament enacted the 1996 Act. The 1996 Act only applies where there is an arbitration clause but it does not apply where there is none. The 1996 Act covers all kinds of disputes including the dispute relating to work contracts. In our opinion, the 1983 Act and the 1996 Act can be harmonised by holding that the 1983 Act only applies where there is no arbitration clause but it stands impliedly repealed by the 1996 Act where there is an arbitration clause. We hold accordingly. Hence, the impugned judgment cannot be sustained and we hold that the application under Section 9 of the 1996 Act was maintainable. 4. The appeal is allowed accordingly. No costs." (vi) The disputes arose between the parties from 06.08.2010 onwards in relation to the appellant's right to be reimbursed additional cost incurred by it on account of introduction of subsequent legislation on increase in entry tax on High-Speed Diesel under Clause 70.8 of the Particular Conditions of Contract. (vii) The appellant invoked arbitra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....supra) to be per incuriam. The relevant para 42 reads as under: - "42. Therefore, the appeal is allowed and the judgment of the High Court which is based on the reasoning of Va Tech [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 that the decision in Va Tech [(2011) 13 SCC 261] has been rendered per incuriam. In that view of the matter the arbitration proceeding may proceed under the M.P. Act of 1983 and not under the AC Act, 1996." (xii) The Division Bench, however, differed on the point of applicability of the State Act to such works contracts which had been terminated, and this difference of opinion caused this matter to be referred to a larger bench in the follow terms: - "Order 60. In view of some divergence of views expressed in the two judgments delivered today by us, the matter may be placed before the Hon'ble the Chief Justice of India for constituting a larger Bench to resolve the divergence." (xiii) The appellant filed its reply dated 16.03.2012 before the Civil Court wherein each of the grounds raised by the respondent in its Section 34....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld be decided in accordance with the State. Accordingly, we set aside the impugned order [Gammon India Ltd. v. State of M.P., WP No. 8375 of 2010, order dated 29-11-2010 (MP)] and restore the proceedings before the Tribunal. The appeal is, accordingly, allowed in above terms." (xix) In para 17 of the aforesaid judgment, however, this Court categorically excluded such cases where awards had already been made. It was held that "in such cases, if no objection to the jurisdiction was taken at relevant stage, the award may not be annulled on that ground". It is necessary to quote para 17 as under: - "17. We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground." (xx) In the present case, the respondent had admittedly not raised the issue of jurisdiction either before the Tribunal nor in its initial petition filed under Section 34. Clearly, therefore, the instant case fell within the ambit of Para 17 of LG Choudhary-II referred to above. (xxi) The Civil Court p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 passed by this Court is as follows: - "Leave granted. Mr. K. V. Vishwanathan, learned senior counsel appearing for the appellant, has shown us our order dated 08.03.2018 in Madhya Pradesh Rural Road Development Authority & Anr. v. M/s. L. G. Chaudhary Engineers and Contractors (Civil Appeal No. 974 of 2012) (being the lead case) and has pointed out paragraph Nos. 22 to 27 thereof which are quoted hereinbelow: "C.A. No. 2751 of 2018 @ SLP (C)No. 11615/2012, C.A. No. 2753 of 2018 @ SLP (C)No. 11617/2012, C.A. No. 2754 of 2018 @ SLP (C)No. 11618/2012, C.A. No. 2755 of 2018 @ SLP (C)No. 11619/2012, C.A. Nos. 2756-2757 of 2018 @ SLP (C)Nos. 11633-11634/2012, C.A. Nos. 2758-2759 of 2018 @ SLP (C)Nos. 11631- 11632/2012 & C.A. Nos. 2760-2761 of 2018 @ SLP (C)No. 11628- 11629/2012: 22. We do not express any opinion on the applicability of the State Act where award has already been made. In such cases if no objection to the jurisdiction of the arbitration was taken at relevant stage, the award may not be annulled only on that ground. 23. The appeals are, accordingly, disposed of. C.A. No. 2616@ SLP (C)No. 35641/2011: 24. Leave ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in a subsequent decision in Lion Engg. Consultants Vs. State of M.P. partly overruled MSP Infrastructure Ltd and held that the objection regarding lack of jurisdiction can be taken under Section 34 of the Act of 1996, even if no objection under Section 16(2) was taken before the arbitral tribunal. Thus, in view of the subsequent decision of the larger bench, this Court is of the view that the objection regarding lack of jurisdiction could have been taken before the learned trial Court under Section 34 of the Act of 1996, even though no such objection was taken before the arbitral tribunal under Section 16(2) of the Act. The Hon'ble Supreme Court in the matter of M/s. JMC Projects (India) Ltd. has not referred to the decision in the matter of Lion Engineers which was subsequent to the decision of C.A. No. 2616 of 2018. Hence, The learned trial Court acted in accordance with law while entertaining the objection under Section 34 of the 1996 Act and setting aside the arbitral award on the ground of lack of jurisdiction." B. ISSUES FOR DETERMINATION 5. Having heard the learned counsels appearing for the parties and having gone through the materials on record, the two pivotal ques....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "Act, 1940") and the Act, 1996 would have no application to arbitrations governed by the MP Act, 1983 or any award passed thereunder. The relevant observations read as under : - "3. Before embarking on the said question we may notice the statutory provisions of the Act for resolution of the legal issue. 4. The Act came into force with effect from 1-3-1985. It was enacted to provide for the establishment of a tribunal to arbitrate on disputes to which the State Government or a public undertaking (wholly or substantially owned or controlled by the State Government), is a party, and for matters incidental thereto or connected therewith. 5. The Arbitral Tribunal is constituted in terms of Section 3 of the Act for resolving all disputes and differences pertaining to works contract or arising out of or connected with execution, discharge or satisfaction of any such works contract. 6. Section 7 provides for reference to the Tribunal. Such reference may be made irrespective of the fact as to whether the agreement contains an arbitration clause or not. Section 7- A provides for the particulars on the basis whereof the reference petition is to be filed. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay be passed by the High Court. (Emphasis supplied) 7. In VA Tech (supra) the short point that fell for the consideration of this Court was whether, an application under Section 9 of the Act, 1996 could be said to be maintainable, where the arbitration proceedings were governed by the MP Act, 1983. In other words, where the dispute had to be resolved by way of arbitration in terms of the MP Act, 1983, more particularly Section 7(1), thereof, could the Act, 1996 be said to also be applicable simultaneously or alternatively for such disputes. This Court held that since both the MP Act, 1983 and the Act, 1996 respectively were similar in nature inasmuch as both provided frameworks for resolution of dispute by way of arbitration, any potential conflict or overlap in their application ought to be construed harmoniously. This Court observed that the gravamen of Section 7 of the MP Act, 1983 which provided for reference to arbitral tribunal was only to make arbitration compulsory for resolving disputes arising out of work contracts involving either the State Government or a Public Undertaking of Madhya Pradesh. As per VA Tech (supra) what has been conveyed in so many words by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he arbitration will be by the Madhya Pradesh Arbitration Tribunal. Hence, in this case arbitration has to be done by the Tribunal." 10. In view of the conflict between Anshuman Shukla (supra) and VA Tech (supra), and that between VA Tech (supra) and Ravikant Bansal (supra), the issue as regards the applicability of the MP Act, 1983 viz- à-viz the Act, 1996 once again fell for the consideration of this Court in L.G. Chaudhary (I) (supra). In L.G. Chaudhary (I) (supra) the question before this Court was whether the MP Act, 1983 and the arbitral tribunal statutorily established thereunder, would continue to have jurisdiction over disputes pertaining to work contracts as mentioned in Section(s) 2(d) and 2(i) thereunder, in view of the subsequent enactment of the Act, 1996. 11. In L.G. Chaudhary (I) (supra), A.K. Ganguly J. (as he then was) held that the MP Act, 1983 is a special law providing for statutory arbitration in the State of Madhya Pradesh. The opinion of A.K. Ganguly J. is in two parts: - (i) First, placing reliance on the decision of Anshuman Shukla (supra), it was held that the MP Arbitral Tribunal established thereunder had distinct features from an o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the Tribunal and their qualification is statutorily provided [ ] 21. The term of office and salaries and allowances are also statutorily provided under Sections 5 and 6 of the M.P. Act. Section 8 provides for the procedure to be followed by the Tribunal on receipt of reference and Section 9 provides for the constitution of Benches and the Chairman's power of distribution of business. Under Section 16(2) of the M.P. Act there is a time-limit for giving the award which is absent in the AC Act, 1996. 22. Section 17-A of the M.P. Act confers inherent power on the Arbitral Tribunal to make orders as may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal. Section 17-B also provides for power conferred on the Tribunal for correction of clerical or arithmetical mistakes. No such power is given to an Arbitral Tribunal under the AC Act, 1996. Section 19 of the M.P. Act gives the High Court the suo motu power of revision. The High Court has also been given the power of revision to be exercised on an application made by an aggrieved party within three months of the award. While doing so, the High Court is to act like a Revisional ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 1983 yet there is nothing to indicate that the Act, 1996 either expressly or impliedly has repealed the MP Act, 1983. The aforesaid is reinforced from Section 2 sub-section (5) of the Act, 1996 which contains a saving clause for other laws being already in force in India. On the contrary, Section 85 of the Act, 1996 when read with Section 2 sub-section(s) (4) and (5) shows that the legislature had no such intention to repeal the MP Act, 1983. Even otherwise, the subject- matter of the MP Act, 1983 falls within the concurrent list, and the said Act had received the assent of the President while the erstwhile Arbitration Act, 1940 was in force. Both the Acts operated in view of Section 46 of the 1940 Act. The relevant observations read as under: - "16. If this Court looks at Section 2(4) of the AC Act, 1996, it will appear that Part I of the AC Act, 1996 which is from Section 2 to Section 43, shall, except sub-section (1) of Section 40 and Sections 41 and 43, apply to every arbitration under any other enactment for the time being in force where the arbitration was pursuant to an arbitration agreement except insofar as the provisions of this Part i.e. Part I are inconsisten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom Sections 2(4) and 2(5) of the AC Act, 1996. Therefore, there is no substance in the argument of repugnancy and is accordingly rejected." (Emphasis supplied) 12. However, Gyan Sudha Misra J. in her dissenting opinion in L.G. Chaudhary (I) (supra) held that where the nature of the dispute does not fall within the definition of work contract under Section 2(i) of the MP Act, 1983, such disputes can be resolved by way of arbitration under the Act, 1996, notwithstanding the fact that such work contract is otherwise governed by the MP Act, 1983. She observed that a reference to arbitration under the MP Act, 1983 postulates two requirements, namely; (i) the existence of a 'works contract' involving either the State Government or a Public Undertaking of Madhya Pradesh and (ii) that such contract pertains to the execution of any of the work enumerated in Section 2(i) thereof. Section 2(i) in turn lays down in explicit terms as to the nature and scope of "works contract" by enumerating the specific nature of disputes that would be covered, i.e., "work relating to construction, repair or maintenance ... supply of goods or material and all other matters relating to the executio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 49. In view of this, the legal and logical consequence which can be reasonably drawn from the definition of "works contract" would be, that if there is a dispute between the contracting parties for any reason relating to works contract which include execution of any work relating to construction, repair or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory, workshop, powerhouse, transformers or such other works of the State Government or public undertaking including an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works, the same would fall within the ambit of the definition of "works contract" and hence all disputes pertaining to or arising out of execution of the works contract will have to be referred to the M.P. State Arbitration Tribunal as envisaged under Section 7 of the 1983 Act. Hence, in addition to the reasons assigned in the judgment and order of learned Brother Ganguly, J. disputes arising out of execution of works contract have to be referred to the M.P. State Arbitration Tribunal and not under the Arbitration and Conci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act itself has been terminated, cancelled or repudiated as it has happened in the instant case, then the nature of dispute does not fall within the definition of "works contract" for the sole reason that it does not include any dispute pertaining to cancellation of a works contract implying that when the works contract itself is not in existence by virtue of its cancellation, the dispute cannot be referred to the M.P. State Arbitration Tribunal but may have to be decided by an arbitrator appointed under the Arbitration and Conciliation Act, 1996. 54. Hence, if the nature of the dispute is such which falls within the definition of "works contract" under Section 2(i) of the M.P. Act, 1983 and one of the contracting parties to the agreement is the State of M.P., then irrespective of an arbitration agreement the dispute will have to be referred to the Tribunal in terms of Section 7 of the Act of 1983. But if the works contract itself has been repudiated and hence not in existence at all by virtue of its cancellation/termination, then in my considered view, the dispute will have to be referred to an independent arbitrator to be appointed under the Arbitration and Conciliation A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, 1983) would cover and include any dispute that arises after the termination, repudiation or cancellation of the contract or pertains thereto. It observed that the dissenting opinion of Gyan Sudha Misra J. in L.G. Chaudhary (I) (supra) failed to notice the said provision i.e. Section 2(d) of the MP Act, 1983, and accordingly, it held that the view expressed by A.K. Ganguly J. in L.G. Chaudhary (I) (supra) that reference to arbitration for disputes covered under the MP Act, 1983 would mandatorily lie before the M.P. State Arbitration Tribunal in terms of the said Act and would not be governed the provisions of the Act, 1996, is the correct interpretation, and the law laid down by VA Tech (supra) was held to be per incuriam. The relevant observations read as under: - "4. When the matter was considered by a Bench of this Court on 24-1-2012 (order in M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors), this Court held that the judgment in VA Tech Escher Wyass Flovel Ltd. was per incuriam insofar as it held that the M.P. Act stands impliedly repealed by the Central Act. While Hon'ble Ganguly, J., held that the State Act will cover a dispute ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 1996, there L.G. Chaudhary (II) (supra) whilst restoring the award again reiterated that the award could not have been annulled only on the ground of jurisdiction, but clarified that, all other challenges to the award may be made in appropriate proceedings under Section 34 of the Act, 1996. Lastly, in one of the civil appeals, where the execution proceedings for the award passed were pending, this Court in view of the prolonged nature of the litigation, directed that the award be treated to have been rendered under the MP Act, 1983 and transferred the execution proceedings to the High Court of Madhya Pradesh at Jabalpur. The relevant observations read as under: - "CA No. 2751 of 2018 arising out of SLP (C) No. 11615 of 2012, CA No. 2753 of 2018 arising out of SLP (C) No. 11617 of 2012, CA No. 2754 of 2018 arising out of SLP (C) No. 11618 of 2012, CA No. 2755 of 2018 arising out of SLP (C) No. 11619 of 2012, CAs Nos. 2756-57 of 2018 arising out of SLPs (C) Nos. 11633-34 of 2012, CAs Nos. 2758-59 of 2018 arising out of SLPs (C) Nos. 11631-32 of 2012 & CAs Nos. 2760-61 of 2018 arising out of SLPs (C) Nos. 11628-29 of 2012. 15. Leave granted. In view of order passed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the said decision, the dispute between the parties has to be settled in accordance with the provisions of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (the M.P. Act). However, since in the present case the award has been rendered long back which was not challenged by the respondents and the matter is pending at the stage of execution, we direct that the award to be treated to have been rendered under the M.P. Act. 35. In view of the above, we transfer pending proceedings before the Delhi High Court being FAO (OS) No. 23 of 1998 and connected matters to the High Court of Madhya Pradesh at Jabalpur to be treated as revision petition under the M.P. Act. (Emphasis supplied) a. Is there a conflict between the decisions of L.G. Chaudhary (II) and Lion Engineering? 16. At this stage, it is apposite to note, that prior to the decision of L.G. Chaudhary (II) (supra), this Court in one another decision of Lion Engineering (supra) had looked into the issue as to at what stage a plea of lack of jurisdiction or applicability of any State Act may be raised. The facts of Lion Engineering (supra) were that the respondent State therein had sought to amend its pleading....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Infrastructure Ltd. v. M.P. Road Development Corpn. Ltd., reported in (2015) 13 SCC 713, further held that the ground of 'public policy of India' in Section 34 of the Act, 1996 would include violation of not only a Central law but also a State law, and hence, it would be open for the parties to argue the aspect of applicability of the MP Act, 1983 even without a formal pleading, being purely a legal plea in the proceedings under Section 34 of the Act, 1996. The relevant observations read as under: - "6. Both stages are independent. Observations in paras 16 and 17 in MSP Infrastructure Ltd. 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 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 paras 16 and 17 of the judgment in MSP Infrastructure Ltd. 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 respo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ral tribunal, then an award that has been so passed by the tribunal will not be annulled only on the ground of lack of jurisdiction. If L.G. Chaudhary (II) (supra) was not conscious of the position of law laid in Lion Engineering (supra), then there was no need for it to clarify that an award would not be annulled only on the ground of lack of jurisdiction. As even without the aforesaid clarification, such awards would not have been susceptible to annulment, if not for the ratio of Lion Engineering (supra). Thus, in our opinion, even if L.G. Chaudhary (II) (supra) does not refer to the decision of Lion Engineering (supra), it cannot be termed to be per incuriam, as the very factum that the aforesaid observations were made by L.G. Chaudhary (II) (supra) in paras 16, 17 and 19, shows that this Court was well aware of the decision of Lion Engineering (supra), and accordingly chose to carve out an exception to the ratio of Lion Engineering (supra) keeping in mind the cleavage of judicial view that was prevailing earlier. (ii) Secondly, the decision of Lion Engineering (supra) only dealt with the question whether an amendment of pleadings was required or not, to raise a plea of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that L.G. Chaudhary (II) (supra) carved out an exception to the general rule that was laid in Lion Engineering (supra), that although a plea of lack of jurisdiction being a question of law can be raised for the first time in the proceedings under Section 34 of the Act, 1996, yet insofar as the MP Act, 1983 is concerned, particularly the state of flux in which the position of law regarding its applicability stood, in cases where either the award has already been passed or where the statement of defence is already been filed, and no plea of lack of jurisdiction or applicability of the MP Act, 1983, has been raised before the arbitral tribunal, then such a plea of jurisdiction will no longer be available, and the award cannot be annulled solely on such ground. 21. In JMC Projects (supra) this Court reiterated the aforesaid exception carved out in L.G. Chaudhary (II) (supra) and held that since the award had already been passed, all objections except the plea of lack of jurisdiction and the applicability of the MP Act, 1983 may be raised in the proceedings under Section 34 of the Act, 1996. 22. In Sweta Construction v. Chhattisgarh State Power Generation Company Ltd. reported i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rced 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 the 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"." (Emphasis supplied) (ii) Secondly, that the decision of Lion Engineering (supra) was only an order unlike the decision of L.G. Chaudhary (II) (supra) which was a substantive judgment, and thus, the observations of Lion Engineering (supra) would by no means detract or take away the law laid down in L.G. Chaudhary (II) (supra) as regards the maintainability of the plea of jurisdiction where awards have already been passed, and no such objection was raised before the arbitral tribunal at the relevant stage. The relevant observations read as under: - "16. If we appreciate the aforesaid observation in Lion E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the respondent therein cannot be now permitted to approbate and reprobate a right it failed to exercise on it own, and that too in a manner which would defeat the entire object of arbitration. The relevant observations read as under: - "18. 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 1983 Adhiniyam, that right was never exercised or waived. The respondent cannot....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the contract, the 1983 Act will have no application and the appellant will have to take recourse to the Arbitration Act. In view of this order, the appellant invoked the jurisdiction of the High Court under Section 11(6) of the Arbitration Act by filing a petition for the appointment of an arbitrator. 7. The order dated 22-7-2011 passed by the High Court on the said petition shows that the respondents' opposition was only on the merits of the claim. The objection based on the applicability of the 1983 Act was not raised. The respondents did not challenge the order of appointment of the arbitrator passed by the High Court under Section 11(6) of the Arbitration Act. Even before the learned arbitrator, Section 16(1) of the Arbitration Act was not invoked to raise the jurisdiction issue. However, in the written statement filed before the arbitrator, the contention regarding the applicability of the 1983 Act was raised. 9. As noted earlier, in the facts of the case, before taking recourse to the Arbitration Act, the appellant had taken recourse to Section 7 of the 1983 Act. The order of the Arbitration Tribunal, holding that the Arbitration Act will apply, led ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld be apposite to first look into the interplay between Section(s) 16 and 34 of the Act, 1996, respectively. These two provisions, although distinct in form and function, yet are intrinsically linked in the broader scheme of the Act, insofar as the stage at which issues pertaining to the jurisdiction of the arbitral tribunal may be validly raised. 28. In Union of India v. Pam Development (P) Ltd. reported in (2014) 11 SCC 366 this Court held that where a party does not raise a plea of jurisdiction before the arbitral tribunal, then such a plea is deemed to have been waived in view of the provisions contained in Section 4 read with Section 16 of the Arbitration Act, 1996, and in consequence cannot be raised for the first time in the proceedings under Section 34. The relevant observations read as under: - "16. As noticed above, the appellant not only filed the statement of defence but also raised a counterclaim against the respondent. Since the appellant has not raised the objection with regard to the competence/jurisdiction of the Arbitral Tribunal before the learned arbitrator, the same is deemed to have been waived in view of the provisions contained in Section 4 read....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cannot be raised at a later stage such as under Section 34 or 37 of the Act. The relevant observations read as under: - "20. The High Court in the impugned order relied on this rationale of a "private" transaction to hold that the arbitral tribunal lacked inherent jurisdiction to decide the claim against respondent no. 1, and such a jurisdictional plea could be raised at any stage even if it was not raised before the arbitral tribunal. From the above reasons, it is clear that there is no inherent lack of jurisdiction. Consequently, any issue regarding the scope of Bye-law 248(a) ought to have been raised in accordance with Section 16 of the Act, i.e. during the arbitration, not later than the submission of statement of defence. Neither respondent has, in their statements of defence or Section 34 petitions, raised an objection to the arbitral tribunal's jurisdiction in clear terms beyond stating that there is a misjoinder of parties as they are not jointly and severally liable. A clear jurisdictional issue was only raised at the Section 37 appeal stage, as has also been noted by the High Court in the impugned order. 21. This Court has held, in several judgment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-section (2) of the Act, 1996 would amount to a 'waiver' or not, and this issue was never examined or looked into by Lion Engineering (supra). 33. On the contrary Lion Engineering (supra) specifically observed in para 9 that "It will be open for the respondents to argue that its objection that the Act stands excluded by the M.P. Madhyastham Adhikaran Adhiniyam, 1983 could be raised even without a formal pleading, being purely a legal plea. It will also be open to the appellant to argue to the contrary. We leave the question to be gone into by the court concerned." The observations that it will be open for the respondents therein to argue that such an object could be raised even without a formal pleading AND that it will be open for the appellants therein to argue the contrary, clearly shows that the very issue of whether such a plea can be allowed to be raised or not i.e., issues such as whether it is a purely legal plea or whether there was any waiver or not etc. were never decided by this Court in Lion Engineering (supra) and rather was left to be gone into by the court under Section 34 of the Act, 1996. The aforesaid observations clearly show, that although such a plea may be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t a strong and good reason for its failure to take such a plea before the arbitral tribunal as per Gas Authority of India (supra), and as per the dictum of L.G. Chaudhary (II) (supra) any failure to raise the issue of applicability of the MP Act, 1983 before the arbitral tribunal is not a strong and good reason to permit raising such a plea in the proceedings under Section 34 of the Act, 1996. D. CONCLUSION 36. What emerges from the foregoing is that although Lion Engineering (supra) affirms that a plea of lack of jurisdiction, being a question of law, may be raised for the first time under Section 34 of the Act, 1996, yet such a plea is nevertheless subject to the waiver as held in Pam Development (supra). Furthermore, as per Gas Authority of India (supra), such a plea may only be entertained if the party demonstrates a strong and sufficient reason for not raising it before the arbitral tribunal. However, L.G. Chaudhary (II) (supra) makes it clear that a failure to raise the issue of applicability of the MP Act, 1983 at the appropriate stage cannot be regarded as a sufficient reason, and therefore the plea cannot be permitted at the stage of Section 34 proceedings. 37. L.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the applicability of MP Act, 1983. Furthermore, in such scenarios since the arbitration proceedings have already commenced and made substantial progress, it would not be appropriate to transfer such proceedings to the M.P. State Arbitration Tribunal under the MP Act, 1983, and the better course of action would be to let the arbitration proceedings conclude. iii. As per L.G. Chaudhary (II) (supra) where the arbitration proceedings have concluded and an award has been passed, and if no objection to the jurisdiction in view of the applicability of MP Act, 1983 was taken at the relevant stage then such an award cannot be annulled only on the ground of lack of jurisdiction. iv. Any award passed by an arbitral tribunal under the Act, 1996, where otherwise the MP Act, 1983 was applicable, such an award may be challenged or assailed in terms of Section 34 and thereafter Section 37 of the Act, 1996 and other relevant provisions thereunder. v. Any award passed by an arbitral tribunal under the Act, 1996, where otherwise the MP Act, 1983 was applicable, such an award must be executed in terms of the MP Act, 1983 and the relevant provisions thereunder. vi. ....