The Supreme Court made it clear that as per Section 16(2) of the Arbitration & Conciliation Act, there is a clear bar on raising a plea of lack of jurisdiction of the Arbitral Tribunal after submission of the statement of defence.

The Apex Court was considering an appeal against the judgment of the High Court confirming the order of the District Judge whereby an arbitral award was set aside.

The Division Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan clarified, “After submitting to the jurisdiction of the sole Arbitrator, the respondent could not have belatedly objected to the jurisdiction of the sole Arbitrator on 24th April, 2004.”

Factual Background

The respondent executed a contract in favour of the appellant to construct a building for the office of the General Manager, Railway Electrification Project, Allahabad. There was a dispute regarding the amount to be paid to the appellant under the contract. The contract provided for appointing an Arbitral Tribunal consisting of three Arbitrators. An order was passed by the High Court appointing an Umpire since Arbitrators did not do so.

Subsequently, the said Umpire resigned and a retired Chief Justice of the High Court was appointed as the sole Arbitrator. An objection to the jurisdiction of the sole Arbitrator was raised on the ground that the arbitration clause in the contract provided for the appointment of three Arbitrators. This objection was rejected and an award was made which was challenged by the respondent on various grounds by filing a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) before the District Judge. The Award was accordingly set aside on the ground of jurisdiction. In an appeal preferred under Section 37 by the appellant, the High Court confirmed the judgment of the District Judge.

Reasoning

Referring to the meeting held in the year 2003 in the presence of the Advocates representing both the parties, the Bench said, “Thus, it is crystal clear that the respondent agreed in so many words that the Arbitrator appointed under the order dated 26th September, 2003 was to act as the sole Arbitrator.A specific agreement on the part of the respondent to that effect has been recorded in the proceedings dated 5th December, 2003.”

It was also noticed that time was granted to the respondent on more than one occasion to come out with an application for modification of the statement of defence filed before the previous arbitral tribunal. Notwithstanding the grant of time, the respondent did not come out with any application for modification of the statement of defence and straightaway filed an application objecting to the jurisdiction.

Referring to section 16(2), the Bench said, “Hence, there is a clear bar on raising a plea of the lack of jurisdiction of the Arbitral Tribunal after submission of the statement of defence. Therefore, after 14th February, 2004, the respondent could not have objected to the jurisdiction of the sole Arbitrator.” It was further explained by the Court that after submitting to the jurisdiction of the sole Arbitrator, the respondent could not have belatedly objected to the jurisdiction of the sole Arbitrator.

As per the Bench, in view of the respondent's conduct and sub-Section (2) of Section 16 as well as Sections 34 and 37 of the Arbitration Act, the Courts were not right in upholding the respondent's objection to the jurisdiction of the Arbitral Tribunal. Thus, setting aside the impugned judgment of the High Court and the District Judge, the Bench restored the Arbitration Case to the file of the District Judge, since the Court ruled only on jurisdiction. Directing the expeditious disposal of the matter, the Bench allowed the appeal.

Cause Title: M/s Vidyawati Construction Company v. Union of India (Neutral Citation: 2025 INSC 101)

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Supreme CourtJustice Abhay S OkaJustice Ujjal BhuyanArbitration and Conciliation Act

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.