Objection Regarding Jurisdiction Of Arbitral Tribunal To Be Raised Not Later Than Submission Of Defence; Tribunal Can Rule On Its Own Jurisdiction: Allahabad HC
The Writ Petition filed before the Allahabad High Court challenged an order of the Arbitrator and the subsequent recovery certificates.
The Allahabad High Court observed that, in terms of section 16(2) of the Arbitration & Conciliation Act, 1996 the plea challenging the jurisdiction of the Arbitral Tribunal should be raised not later than the submission of the defence.
The Writ Petition filed before the High Court challenged an order of the Arbitrator and the subsequent recovery certificates as well as the order restraining the petitioner from hulling of Custom Milled Rice (CMR) for the year 2024-25.
The Division Bench comprising Justice Y K Srivastava and Justice Siddhartha Varma explained, “Section 21 of CPC, in fact, gives statutory recognition to the principle that objection with regard to jurisdiction can be waived, and that subsequently, on account of this waiver, the party concerned would be precluded from taking any such objection.”
Advocate Sadhana Dubey represented the Petitioner while Chief Standing Counsel represented the Respondent.
Factual Background
The petitioner described itself as a firm engaged in the business of hulling paddy to convert it into rice. In respect of dues regarding CMR deficit, for the year 2018-19, recovery certificates were issued against the petitioner. Certain representations were moved and the petitioner preferred a writ petition. Liberty was granted to the petitioner to avail the remedy of arbitration by approaching the Arbitrator.
The Respondent No.2- arbitrator rejected the representation/claim of the petitioner. Consequent to the aforesaid order, recovery certificates and restraining orders had been issued. The Petitioner approached the High Court with the grievance that respondent no.2/Executive Director, U P State Employees’ Welfare Corporation, had issued the recovery certificates earlier, and therefore, he could not have been appointed as an Arbitrator in the case.
Reasoning
The Bench took note of the fact that the petitioner did not raise any objection concerning the appointment of the Executive Director as an Arbitrator in the case at the very first instance. The petitioner was also not able to point out what prejudice was caused to the petitioner by the fact that the Executive Director was appointed as an Arbitrator.
“The principles underlying in Section 21 of the CPC are to the effect that objection to jurisdiction, particularly in regard to territorial or pecuniary jurisdiction, are to be taken at the earliest possible opportunity and in any case, before settlement of issues”, the Bench said while also adding, “The law is well settled on the point that if such objection is not taken at the earliest, it cannot be allowed at a subsequent stage.”
Referring to section 16, the Bench explained, “In terms of sub-section (2) thereof, a plea that the arbitral tribunal does not have jurisdiction should be raised not later than the submission of the defence. If the excess of jurisdiction crops up during the proceedings, the objection should be made at that very time. In any case, objection on the question of jurisdiction has to be made before the arbitral tribunal itself, and the arbitral tribunal has the power to rule on its own jurisdiction.”
As per the Bench, the petitioner, having participated in the proceedings without any objection regarding the jurisdiction or any perceived bias of the Arbitrator, the same would dis-entitle the petitioner from raising any such objection in subsequent proceedings. Thus, the Bench refrained from interfering in the matter and dismissed the writ petition.
Cause Title: M/S. Arya Rice Mill v. State Of U.P. And 6 Others (Neutral Citation: 2025:AHC:7981-DB)
Appearance:
Petitioner: Advocates Sadhana Dubey,Shashi Kant Shukla
Respondent: Chief Standing Counsel
