Appellants: MSP Infrastructure Ltd. Vs. Respondent: M.P. Road Devl. Corp. Ltd.
Decided On: 05.12.2014, Bench- Hon'ble Justice Jasti Chelameswar, Hon'ble Justice S.A. Bobde
Facts: Arbitration - Amendment of petition - Addition of objection - Permission thereto - Sections 16 and 34 of Arbitration and Conciliation Act, 1996 - Present appeal filed against order allowing Respondent's application to amend original petition under Section 34 of Act to add additional grounds of objection - Whether a party to arbitration proceeding might be permitted to raise objections under Section 34 of Act concerning the jurisdiction of Arbitral Tribunal after the stage of submission of a written statement.
Held: The court observed, that in the event it is found that the newly added ground could not have been raised at this stage, i.e. the stage at which it was allowed to be raised, it is not necessary to go into the wider question as to which Act will prevail, the Central Act or the State Act. Thus, the only question that falls for consideration at this stage is whether, having regard to Section 16 of the Arbitration Act, 1996, the Respondent was entitled to introduce the ground that the Arbitration Tribunal constituted under the M.P. Act of 1983 would take precedence over the Tribunal constituted under the Arbitration Act, 1996, that too by way of an amendment to the petition Under Section 34.
It was also contended by the Respondent, that Section 16 undoubtedly empowers the Tribunal to rule on its jurisdiction and any objections to it must be raised not later than the submission of the statement of defense. In support, the learned senior Counsel relied on Clause (b) of Sub-section (2) of Section 34.
It is not possible to accept this submission; In the first place, there is nothing to guarantee the inference that all objections to the jurisdiction of the Tribunal can’t be raised under Section 16 of the act and that the Tribunal doesn’t have the power to rule upon its jurisdiction. Secondly, Parliament has employed a different phraseology in Clause (b) of Section 34. That phraseology is "the subject matter of the dispute is not capable of settlement by arbitration." This phrase does not necessarily refer to an objection to 'jurisdiction' as the term is well known. However, if one of the parties seeks to contend that the subject matter of the dispute is such as cannot be dealt with by arbitration, it may be dealt with Under Section 34 by the Court.
It was contended by respondent, that the newly added ground that the Tribunal under the Act had no jurisdiction to decide upon the dispute in question because the jurisdiction within the Tribunal under the M.P. Act of 1983, was a question which can be agitated Under Sub-clause (ii) of Clause (b) of Sub-section (2) of Section 34 of the Arbitration Act, 1996. Therefore, it is contended that the amendment had been rightly allowed and it cannot be said that what was raised was only a question which pertained to jurisdiction and ought to have been raised exclusively under Section 16 of the Arbitration Act, 1996, but was a question which could also have been raised under Section 34 before the Court, as has been done by the Respondent. This submission must be rejected.
In other words, it was submitted that it is the public policy of India that arbitrations should be held under the appropriate law. It was contended that unless the arbitration was held under the State Law i.e. the M.P. Act that it would be a violation of the public policy of India. This contention is misconceived since the intention of providing that the award should not conflict with the public policy of India which is referable to the public policy of India as a whole i.e. the policy of the Union of India and not merely the policy of an individual state. Though it cannot be said that the upholding of state law would not be part of the public policy of India, much depends on the context. Wherever the question arises out of a conflict between an action under a State Law and a Central Law, the term public policy of India must necessarily be referred to the policy of the Union.
The court has no hesitation in concluding that the amendment application raised a ground that was contrary to law and should not be allowed by the High Court. Thus, accordingly, the court set aside the judgment and order of the High Court.