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Lion Engineering Consultants vs. State of M.P. and Ors.

Appellants: Lion Engineering Consultants


Respondent: State of M.P. and Ors.

Decided On: 22.03.2018, Bench- Hon'ble Justice A.K. Goel, Hon'ble Justice R. F. Nariman & Hon'ble Justice U.U. Lalit

Facts: Matter arising out of a dispute in the execution of works contract was referred to Arbitrator by High Court. The arbitrator made his Award in favor of Appellant. It was challenged under Section 34 of Act by Respondent. The Respondent sought to amend its objections after three years which was rejected by Trial Court. High Court had allowed said amendment. Hence, the present appeal was filed by the Appellant.

Held: The court finds merit in the contentions raised on behalf of the State. The court proceeds on the footing that the amendment being beyond limitation is not to be allowed as the amendment is not pressed. The court does not see any bar to the plea of jurisdiction being raised by way of an objection under Section 34 of the Act even if no such objection was raised under Section 16.

It is not possible to accept this submission. Firstly, there is nothing to warrant the inference that all objections to the jurisdiction of the tribunal can’t be raised under Section 16 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 being “the subject-matter of the dispute isn’t capable of settlement by arbitration”. This phrase does not necessarily refer to an objection to “jurisdiction” as the term is well known. It refers to the situation where the dispute referred for arbitration, because of its subject-matter isn’t capable of settlement by arbitration.

The newly added ground that the tribunal under the Arbitration Act, 1996 had no jurisdiction to decide the dispute in question because the jurisdiction lay with 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 under Section 16 of the Act, but in fact, there was a question which should also be raised under Section 34 before the Court, has been done by the respondent. Thus, the submission must be rejected.

Furthermore, it was provided that the contention should have been raised under the topic that the arbitral award conflicts with the public policy of India. 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. 

In our considered view, the public policy of India alludes to law enforcement in India either State law or Central law. Accordingly, we overrule the observations to the contrary in the above paras of the judgment in MSP Infrastructure Ltd. The impugned order is set aside.


  • Section 16 of Arbitration and Conciliation Act
  • (2018) 16 SCC 758
  • Supreme Court Judgement Dated- 22.03.2018

BY : Shardul Srivastava

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