Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
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CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 8984-8985 OF 201
Digitally
signed by
VIJAYLAXMI
Date:
2019.12.19
16:13:29
+0530
APPELLANT(S)
M/S LION ENGINEERING CONSULTANTS
VIJAYLAXMI
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VERSUS
RESPONDENT(S)
STATE OF M.P. & ORS.
0 R D E R
1. We have heard learned counsel for the parties.
2. The matter arising out of a dispute in execution of
a works contract was referred to the Arbitrator by the High
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Court on 4. 09. 2008. The Arbitrator made his Award dated
10. 07. 2010 in favour of the appellant. It was challenged
under Section 34 of the Arbitration and Conciliation Act,
1996 ("the Act") before the Seventh Additional District
Judge, Bhopal by the respondent-State of M.P. The
respondent sought to amend its objections after three years
which was rejected by the trial Court. On a petition under
Article 227 of the Constitution of India, the High Court
has allowed the said amendment.
3. Learned counsel for the appellant submitted that the
amendment could not be allowed beyond the period of
limitation which affected the vested rights of a party. It
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was also submitted that the objection having not been
raised under Section 16(2) of the Act before the
Arbitrator, could not be raised under Section 34 of the
Act. In support of this submission reliance has been placed
on MSP Infrastructure Ltd. vs. Madhya Pradesh Road
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Development Corporation Ltd. reported in (2015) 13 sec 713 .
4. Learned Advocate General for the State of M.P.
submitted that the amendment sought is formal. Legal plea
arising on undisputed facts is not precluded by Section
34(2)(b) of the Act. Even if an objection to jurisdiction
is not raised under Section 16 of the Act, the same can be
raised under Section 34 of the Act. It is not even
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necessary to consider the application for amendment as it
is a legal plea, on admitted facts, which can be raised in
any case. He thus submits the amendment being unnecessary
is not pressed. Learned Advocate General also submitted
that observations in M/s MSP Infrastructure Ltd. (supra),
particularly in Paragraphs 16 and 17 do not laid down
correct law.
5. We find merit in the contentions raised on behalf of
the state. We proceed on the footing that the amendment
being beyond limitation is not to be allowed as the
amendment is not pressed.
6. we do not see any bar to plea of jurisdiction being
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raised by way of an objection under Section 34 of the Act
even if no such objection was raised under Section 16.
7. We may quote the observations from M/s MSP
Infrastructure (supra}:
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"16. It is not possible to accept this
submission. In the first place, there is nothing to
warrant the inference that all objections to the
jurisdiction of the Tribunal cannot be raised under
Section 16 and that the Tribunal does not have
power to rule on its own 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. In fact, it refers to a
situation where the dispute referred for
arbitration, by reason of its subject matter is not
capable of settlement by arbitration at all.
Examples of such cases have been referred to by the
Supreme Court in Booz Allen and Hamilton Inc. V/s.
SB! Home Finance Limited (2011} 5 SCC 532. This
Court observed as follows:-
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"36. The well- recognised examples of
non-arbitrable disputes are: (i}
disputes relating to rights and
liabilities which give rise to or
arise out of criminal offences; (ii}
matrimonial disputes relating to
divorce, judicial separation,
restitution of conjugal rights, child
custody; (iii} guardianship matters;
(iv} insolvency and winding-up
matters; (v} testamentary matters
(grants of probate, letters of
administration and succession
certificate}; and (vi} eviction or
tenancy matters governed by special
statutes where the tenant enjoys
statutory protection against eviction
and only the specified courts are
conferred jurisdiction to grant
eviction or decide the disputes."
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The scheme of the Act is thus clear. All
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objections to' jurisdiction of whatever nature
must be taken at the stage of the submission
of the statement of defence, and must be dealt
with under Section 16 of the Arbitration Act,
1996. 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 under Section 34
by the court.
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17. It was also contended by Shri Divan, that
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. This provision enables
the court to set- aside an award which is in
conflict with the public policy of India.
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 in fact 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. The contention that an award is
in conflict with the public policy of India
contentio~
cannot be equated with the that
Tribunal under the Central Act does not ·have
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jurisdiction and the Tribunal under the State
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Act, has jurisdiction to decide upon
dispute. Furthermore, it was stated that this
contention might have been raised under the
head that the Arbitral Award is in conflict
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. This contentiOfl is misconceived since
the intention of providing that the award
should not be in conflict with the public
policy of India 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 ·
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of an individual state. Though, it cannot be
said that the upholding of a state law would
not be part of the public policy of India,
much depends on the context. Where the
question arises out of a conflict between an
action under a State Law and an action under a
central Law, the term public policy of India
must necessarily be understood as being
referable to the policy of the Union. It is
well known, vide Article 1 of the
Constitution, the name 'India' is the name of
the Union of States and its territories
include those of the States."
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Both stages are independent. Observations in
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Paragraphs 16 and 17 in MSP Infrastructure (supra) 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 .
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9. 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 Paragraphs 16 and 17 of the judgment in MSP
Infrastructures Ltd. (supra) .
10. Since amendment application is not pressed, the
appeal is rendered infructuous. The impugned order is set
aside.
11. 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 respondents to argue
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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
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concerned court .
The appeals are disposed of accordingly .
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(ADARSH KUMAR GOEL)
J.
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(ROHINTON FALI NARIMAN)
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NEW DELHI,
MARCH 22, 2018