General Manager Telecom District Bharat Sanchar Nigam Ltd vs Vichitra Constructions Pvt Ltd

$~78
* IN THE HIGH COURT OF DELHI AT NEW DELHI
# CNR No. DLHC010494732026
+ ARB. A. (COMM.) 74/2026, I.A. 28406/2026, I.A.
28407/2026, I.A. 28408/2026 & I.A. 28409/2026

GENERAL MANAGER TELECOM DISTRICT BHARAT
SANCHAR NIGAM LTD .....Petitioner
Through: Mr. M C Kochhar, Mr. Mohit
Kochhar and Ms. Nikaasha
Dogra, Advs.

versus

VICHITRA CONSTRUCTIONS PVT LTD .....Respondent
Through: Adv. (appearance not given).
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT(ORAL)
% 13.10.2026
1. The present appeal has been preferred by the Appellant under
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Section 37(2)(b) of the Arbitration and Conciliation Act, 1996
assailing the order dated 01.09.2025 passed by the learned Sole
Arbitrator.

2. By the impugned order, the learned Sole Arbitrator rejected the
Appellant’s preliminary objection challenging the jurisdiction of the
Arbitral Tribunal to adjudicate the disputes under the Micro, Small
2
and Medium Enterprises Development Act, 2006 .

3. The controversy arises out of an Agreement dated 24.01.2015

1
“Act” hereinafter
2
“MSMED Act” hereinafter
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executed between the parties for execution of works relating to optical
fibre cable network in Bunerheri Block, District Patiala. The scope of
work included trenching and pipe laying, optical fibre pulling, splicing
and termination, preparation of joint chambers, installation of
cabinets/ pillars, other allied activities necessary for establishing the
telecom infrastructure.

4. Disputes subsequently arose between the parties concerning
payments allegedly due under the contract.

5. The Respondent, who is registered under the MSMED Act,
approached the Micro, Small and Medium Enterprises Facilitation
Council alleging delayed payment of its dues. Upon failure of
conciliation, the dispute was referred to arbitration through the Delhi
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International Arbitration Centre , culminating in the appointment of
the learned Sole Arbitrator.

6. As recorded in the impugned order, the Respondent’s claim
included a sum of Rs.1,29,29,663.03/- towards interest on delayed
payments, quantified up to 31.07.2024, besides pendente lite interest
and costs.

7. Before the learned Sole Arbitrator, the Appellant raised a
preliminary objection to the maintainability of the proceedings under
the MSMED Act.

8. Appellants’ principal contention before the Tribunal was that
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the agreement constituted a composite works contract involving civil
constructions, installation and the creation of permanent telecom
infrastructure, rather than a contract simpliciter for the supply of
goods or rendering of service within the meaning and scope of
MSMED Act.

9. Reliance was placed, inter alia , on M/s P.L. Adke v. Wardha
4
Municipal Corporation/ Council (Bombay) .

10. By the impugned order, the learned Sole Arbitrator rejected the
preliminary objection.

11. The learned Sole Arbitrator distinguished M/s P.L. Adke
(supra) and took note of the provisions in the tendered documents
concerning concessions to MSME and the arbitration clause contained
therein and observed that the claim pertained to interest on delayed
payments under the MSMED Act.

12. The learned Arbitrator concluded that the nature of the
underlying contract, by itself, did not warrant a determination that the
MSMED Act was inapplicable. Consequently, the objection to
jurisdiction was rejected and the arbitral proceedings were permitted
to continue.


13. Aggrieved thereby, the Appellant has approached this Court
contending that the learned Arbitrator failed to appreciate the

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“DIAC” hereinafter
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distinction between the works contract and contract for the supply of
goods for rendering of services and did not properly consider the
judicial authorities relied upon by the Appellant, and erroneously
assumed jurisdiction to adjudicate the Respondent’s claim under the
MSMED Act.

14. Accordingly, the Appellant seeks setting aside of the impugned
order and declaration that the learned Arbitral Tribunal lacked
jurisdiction to adjudicate the claim under the said Act.

15. Having considered the submissions advanced and examined the
material on record, this Court is of the view that the issue requiring
determination at the threshold is whether an order rejecting a
jurisdictional objection raised before an Arbitral Tribunal is
appealable under Section 37 of the Act.

16. This question is anterior to and distinct from the merits of the
Appellant’s contentions that the underlying contract falls outside the
ambit of the MSMED Act.

17. Unless the impugned order is amenable to challenge under the
statutory framework, this Court cannot proceed to examine the
correctness of the findings recorded by the learned Arbitral Tribunal
on the substantive jurisdictional objection.

18. Section 37 of the Act enumerates the orders against which the
appeal lies. The same is reproduced hereunder:
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“ 37. Appealable orders .—(1) [Notwithstanding anything
contained in any other law for the time being in force, an appeal]
shall lie from the following orders (and from no others) to the
Court authorised by law to hear appeals from original decrees of
the Court passing the order, namely:—
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[(a) refusing to refer the parties to arbitration under Section 8;]
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[(b) granting or refusing to grant any measure under Section 9;]
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[(c) setting aside or refusing to set aside an arbitral award under
Section 34.]
(2) Appeal shall also lie to a court from an order of the arbitral
tribunal—
(a) accepting the plea referred to in sub-section (2) or sub-section
(3) of Section 16; or
(b) granting or refusing to grant an interim measure under Section
17.
(3) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court.”


19. Under Section 37 (2)(a), an appeal lies against an order of the
Arbitral Tribunal accepting a plea referred to in Section 16(2) or
Section 16(3) of the Act.

20. Section 37 (2)(b), in contrast provides for an appeal against an
order of the Arbitral Tribunal granting or refusing to grant an interim
5
measure under Section 17 of the Act .

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[ 17. Interim measures ordered by arbitral tribunal .—(1) A party may, during the arbitral
38
proceedings [ *], apply to the arbitral tribunal—
( i ) for the appointment of a guardian for a minor or person of unsound mind for the purposes of
arbitral proceedings; or
( ii ) for an interim measure of protection in respect of any of the following matters, namely—
( a ) the preservation, interim custody or sale of any goods which are the subject-matter of the
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21. The statutory scheme is, thus specific as to the categories of the
arbitral orders that may be challenged by way of an appeal. The right
of appeal is a creature of statute and cannot be enlarged merely
because the party considers the interlocutory determination legally
erroneous or prejudicial to its interest.

22. In the present case, the Appellant had raised a preliminary
objection challenging the jurisdiction of the learned Arbitral Tribunal
to entertain the Respondent’s claim under the MSMED Act. The
learned Arbitrator rejected the said objection and permitted the
proceedings to continue.

23. The impugned order, therefore, represented a rejection of the
jurisdictional plea and not its acceptance.

24. It does not bring the arbitral proceedings to an end on the
ground of lack of jurisdiction. The distinction is decisive.

arbitration agreement;
( b ) securing the amount in dispute in the arbitration;
( c ) the detention, preservation or inspection of any property or thing which is the subject-matter of
the dispute in arbitration, or as to which any question may arise therein and authorising for any of
the aforesaid purposes any person to enter upon any land or building in the possession of any
party, or authorising any samples to be taken, or any observation to be made, or experiment to be
tried, which may be necessary or expedient for the purpose of obtaining full information or
evidence;
( d ) interim injunction or the appointment of a receiver;
( e ) such other interim measure of protection as may appear to the arbitral tribunal to be just and
convenient,
and the arbitral tribunal shall have the same power for making orders, as the court has for the
purpose of, and in relation to, any proceedings before it.
(2) Subject to any orders passed in an appeal under Section 37, any order issued by the arbitral
tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be
enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were
an order of the Court.]

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25. Section 37(2)(a) of the Act expressly permits an appeal where
the learned Arbitral Tribunal accepts a plea under Section 16(2) or
Section 16(3). It does not provide for an appeal where such a plea is
rejected.

26. The impugned order however rejected the Appellant’s
objection, does not fall within the scope of Section 37(2)(a).

27. Equally since the impugned order neither grants nor refuses an
interim measure under Section 17, it does not fall within the ambit of
Section 37(2)(b), the provision under which the present appeal has
been instituted.

28. The consequences follow from the statutory language itself.

29. The order rejecting a plea of lack of jurisdiction cannot be
rendered appealable under Section 37 merely by describing it as a
jurisdictional determination or by emphasizing the significance of the
issue decided.

30. What matters is the nature of the order and whether it falls
within a category expressly made appealable by the legislature. In the
present case it does not.

31. This interpretation is re-enforced by the scheme of Section 16
of the Act. The same is reproduced herewith:

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“ 16. Competence of arbitral tribunal to rule on its jurisdiction .—
(1) The arbitral tribunal may rule on its own jurisdiction, including
ruling on any objections with respect to the existence or validity of
the arbitration agreement, and for that purpose,—
(a) an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the
contract; and
(b) a decision by the arbitral tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration
clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall
be raised not later than the submission of the statement of defence;
however, a party shall not be precluded from raising such a plea
merely because that he has appointed, or participated in the
appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its
authority shall be raised as soon as the matter alleged to be
beyond the scope of its authority is raised during the arbitral
proceedings.
(4) The arbitral tribunal may, in either of the cases referred to in
sub-section (2) or sub-section (3), admit a later plea if it considers
the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to in sub-
section (2) or sub-section (3) and, where the arbitral tribunal takes
a decision rejecting the plea, continue with the arbitral
proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in accordance
with Section 34.”


32. Section 16 embodies the principle that an Arbitral Tribunal is
competent to rule on its own jurisdiction. Where a plea under Section
16(2) or Section 16(3) is rejected. Section 16(5) mandates that the
Arbitral Tribunal continue with the arbitral proceedings and make an
arbitral award. Section 16(6), in turn, preserves the right of a party
aggrieved by such an award to challenge it in accordance with Section
34 of the Act.


33. The statutory arrangement deliberately distinguishes between
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the acceptance and rejection of the jurisdiction plea. Acceptance of
such a plea terminates the arbitral proceedings on the ground that the
Arbitral Tribunal lacks jurisdiction and attracts the appellate remedy
expressly provided under Section 37(2)(a) of the Act.

34. Rejection of the plea on the other hand, requires the Arbitral
Tribunal to continue with the proceedings. The aggrieved party to may
pursue the remedy contemplated by the Act at the appropriate stage.

35. An immediate appeal against an order rejecting a jurisdictional
plea is, therefore, not contemplated under Section 37 of the Act.

36. The Supreme Court has authoritatively reaffirmed this
proposition recently in MCM Worldwide (P) Ltd. v. Construction
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Industry Development Council .

37. The Court clarified that an order rejecting a plea of lack of
jurisdiction under Section 16(2) or Section 16(3) is not independently
amenable to challenge under Section 34 or Section 37 of the Act at the
interlocutory stage.

38. The Supreme Court emphasised that Sections 16(5) and 16(6)
require the Arbitral Tribunal to continue with the proceedings and
make an arbitral award, while preserving the right of the aggrieved
party to challenge the rejection of the jurisdictional plea in accordance
with Section 34 of the Act after the final award. Section 37, on the
other hand, provides an immediate appeal where the Arbitral Tribunal
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accepts the jurisdictional plea under Section 16(2) or Section 16(3).

39. The Court further cautioned against adopting an interpretation
that would permit piecemeal challenges to interlocutory
determinations concerning jurisdiction, as such an interpretation
would be contrary to the statutory scheme and render Section 37(2)
otiose.

40. Thus, the law is clear that an order rejecting a jurisdictional plea
under Section 16 cannot be treated as an independently appealable
order or as an interim award so as to enable an immediate challenge
under Section 34 or Section 37 of the Act.

41. The principle laid down in MCM Worldwide (P) Ltd (Supra)
squarely governs the threshold issue arising in the present case.

42. In the present case, the learned Arbitrator rejected the
Appellant’s jurisdictional objection by order dated 01.09.2025, with
the result that the arbitral proceedings were permitted to continue.

43. The impugned order, therefore, does not fall within the
category of orders made appealable under Section 37(2)(a) of the Act.
Nor does it concern the grant or refusal of an interim measure under
Section 17 so as to attract Section 37(2)(b).

44. The fact that the objections raised by the Appellant concern the
applicability of the MSMED Act, rather than any other aspect of the

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jurisdiction of the Arbitral Tribunal, does not alter the statutory
character of the impugned order or create an exception to the scheme
prescribed under the Act.

45. Nor can reliance on Section 151 of the Code of Civil
Procedure, 1908, sustain the maintainability of the present appeal. The
inherent powers of a Court cannot be exercised to create a substantive
right of appeal where the governing statute does not provide for one.

46. The Act expressly prescribes the categories of orders of an
Arbitral Tribunal against which an appeal may be preferred. The
inherent powers of this Court cannot be invoked to circumvent the
express limitations imposed by the statutory scheme.

47. It follows that the present appeal is not maintainable under
Section 37 of the Act. This conclusion is confined to the availability
of an immediate appellate remedy against the impugned order. It does
not constitute an adjudication on the merits of the Appellant’s
jurisdictional objection or affirm the correctness of the findings
recorded by the learned Arbitrator.

48. The Appellant has raised substantial submissions concerning
the legal character of the underlying agreement and the applicability
of the MSMED Act thereto. However, in view of the conclusion on
maintainability, this Court refrains from examining the merits of those
submissions at this stage.

49. Accordingly, all questions concerning the applicability of the
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MSMED Act to the underlying contract, the legal effect of the
Respondent’s registration and the correctness of the findings recorded
in the impugned order are left open. The Appellant shall remain at
liberty to pursue such remedies as may be available in accordance
with law, subject to the statutory scheme governing challenges to
orders rejecting jurisdictional pleas under the Act.

50. In view of the foregoing, the present appeal is dismissed as not
maintainable.

51. Pending application(s), if any, also stand disposed of. There
shall be no order as to costs.


OM PRAKASH SHUKLA, J
OCTOBER 13, 2026/at/gunn




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