STATE OF GUJARAT THRO SECRETARY vs M/S. NARAN DANA SORATHIA

C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16425 of 2012
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIRZAR S. DESAI
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Approved for Reporting Yes No
Yes
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STATE OF GUJARAT THRO SECRETARY & ANR.
Versus
M/S. NARAN DANA SORATHIA
=====================================================
Appearance:
MS NIRALI SARDA ASSISTANT GOVERNMENT PLEADER for the
Petitioner(s) No. 1,2
MR DHAVAL C DAVE SENIOR ADVOCATE WITH MR UDIT VYAS
AND MR JIGAR M PATEL(3841) for the Respondent(s) No.
1
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CORAM:HONOURABLE MR. JUSTICE NIRZAR S. DESAI

Date : 08/07/2026

JUDGMENT
1. Heard learned Assistant Government Pleader Ms.
Nirali Sarda appearing for the petitioners and
learned Senior Advocate Mr. D. C. Dave,
appearing with learned Advocate Mr. Udit Vyas
and learned Advocate Mr. Jigar Patel, for the
respondent.
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
2. By way of this petition, the petitioner has
prayed for quashing and setting aside the
proceedings pending before the learned Sole
Arbitrator, who is acting as the Arbitrator
under the Arbitration and Conciliation Act,
1996.
3. The petitioner is a department of State of
Gujarat, namely, Narmada Water Resources and
Water Supply Department, which awarded a
contract to the respondent, after inviting
tenders, for the construction of the Earthen
Dam, Waste Weir and Head Regulator for the Dholi
Irrigation Scheme. In April 1980, a work order
was issued in favour of the respondent, and the
same was executed by the parties vide Agreement
No. B/1 of 1980–1981. As per the work order, the
work was to be completed within the stipulated
period of three years from the date of issuance
of the work order. The work was to commence on
19.09.1980 and was to be completed on or before
18.09.1983.
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4. Upon disputes having arisen between the parties
in relation to the aforesaid work, the
respondent initially approached the District
Court, Bharuch, by filing Special Civil Suit
No.151 of 1992, seeking appointment of a Sole
Arbitrator, and the Civil Court, Bharuch, vide
order dated 30.10.1993, disposed of the suit and
appointed one Mr. M. C. Desai as the Sole
Arbitrator. However, the said Sole Arbitrator,
Mr. M. C. Desai, never commenced the arbitral
proceedings, and therefore, the respondent, vide
letter dated 26.06.2010, i.e., after a period of
almost seventeen years, requested the petitioner
to appoint a Sole Arbitrator to resolve the
dispute in question. Ultimately, vide order
dated 26.06.2011, the petitioner appointed one
Mr. R. D. Soni (Retired Secretary) as the Sole
Arbitrator, and till the filing of the petition,
six arbitration meetings were held.
5. Thereafter, in view of the judgment of the
Hon’ble Supreme Court in the case of Madhya
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
Pradesh Rural Road Development Authority and
Others v. L. G. Chaudhary Engineers and
Contractors, reported in (2012) 3 SCC 495,
wherein the Honourable Supreme Court held that
disputes pertaining to or arising out of the
execution of work contracts are mandatorily
required to be referred to the Special
Arbitration Tribunal constituted for that
purpose under the Gujarat Public Works Contracts
Disputes Arbitration Tribunal Act, 1992, and
therefore, the present petition came to be
preferred, whereby the petitioner has prayed for
quashing and setting aside the proceedings
pending before the learned Sole Arbitrator, and
though it is not stated in the petition, it was
orally contended by the learned Assistant
Government Pleader, Ms. Nirali Sharda, that the
arbitration proceedings be transferred to the
aforesaid Tribunal.
6. At the outset, the attention of the Court was
drawn to the fact that the aforesaid decision in
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the case of L. G. Chaudhary (Supra) was rendered
in the year 2012, and thereafter, in view of the
very recent judgment in the case of Gayatri
Projects Ltd. v. Madhya Pradesh Road Development
Corporation Ltd., reported in (2025) 10 SCC 750,
the Hon’ble Supreme Court considered the ratio
of the judgment in L. G. Chaudhary (Supra) and
held that if, at the stage of filing the reply
or at the stage of making an application under
Section 16, no such application raising
objection against the jurisdiction of learned
Sole Arbitrator is made and the arbitration
proceedings are already underway, then merely
because the ground of lack of jurisdiction was
introduced only after the decision in L. G.
Chaudhary (Supra), such ground cannot be said to
constitute a strong or exceptional ground, and
therefore, this Court, only on the basis of such
ground, may not transfer the arbitration
proceedings from the Sole Arbitrator to the
Works Contract Tribunal.
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7. Learned Senior Advocate Mr. D. C. Dave relied
upon the aforesaid latest judgment, and learned
Assistant Government Pleader Ms. Nirali Sharda
could not dispute the aforesaid proposition of
law. In view of the facts stated hereinabove,
the observations made by the Hon’ble Supreme
Court in the case of Gayatri Projects Ltd. v.
Madhya Pradesh Road Development Corporation
Ltd., reported in (2025) 10 SCC 750, in
paragraphs 63, 66, 67, and 68, are reproduced as
under:
“63. Thus, what can be discerned from
the aforesaid is that although a plea of
lack of jurisdiction, being a question of
law, can be raised even for the first time
in the proceedings under Section 34 as
held in Lion Engineering (supra), yet such
a plea ought not to be allowed to be
raised as it is deemed to have been waived
in view of Section 4 of the 1996 Act as
per Pam Development (supra), unless the
party makes out a strong and good reason
for its failure to take such a plea before
the arbitral tribunal as per GAIL(supra),
and as per the dictum of L.G. Chaudhary
(2) (supra) any failure to raise the issue
of applicability of the M.P. Act, 1983
before the Arbitral Tribunal is not a
strong and good reason to permit raising
such a plea in the proceedings under
Section 34 of the 1996 Act.
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
XXX XXX XXX
66. In view of the above exposition of
law, what has been conveyed by this Court
in L.G. Chaudhary (2) (supra) in so many
words is that:
66.1. Where the arbitration proceedings
are still underway, but no statement of
defence has been filed, there it would be
open for the parties to raise an objection
of lack of jurisdiction in view of the
applicability of M.P. Act, 1983. The
parties will also be at liberty to
approach the High Court by way of a
petition under Article 227 of the
Constitution for seeking a transfer of the
arbitration proceedings to the M.P. State
Arbitration Tribunal under the M.P. Act,
1983.
66.2. Where the arbitration proceedings
are still underway, but statement of
defence has already been filed i.e., the
relevant stage for raising an issue of
jurisdiction is already crossed, there it
would not be open for the parties to raise
an objection of lack of jurisdiction in
view of the applicability of M.P. Act,
1983. Furthermore, in such scenarios since
the arbitration proceedings have already
commenced and made substantial progress,
it would not be appropriate to transfer
such proceedings to the M.P. State
Arbitration Tribunal under the M.P. Act,
1983, and the better course of action
would be to let the arbitration
proceedings conclude.
66.3. As per L.G. Chaudhary (II) (supra)
where the arbitration proceedings have
concluded and an award has been passed,
and if no objection to the jurisdiction in
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view of the applicability of M.P. Act,
1983 was taken at the relevant stage then
such an award cannot be annulled only on
the ground of lack of jurisdiction.
66.4. Any award passed by an arbitral
tribunal under the 1996 Act, where
otherwise the M.P. Act, 1983 was
applicable, such an award may be
challenged or assailed in terms of Section
34 and thereafter Section 37 of the 1996
Act and other relevant provisions
thereunder.
66.5. Any award passed by an arbitral
tribunal under the 1996 Act, where
otherwise the M.P. Act, 1983 was
applicable, such an award must be executed
in terms of the M.P. Act, 1983 and the
relevant provisions thereunder.
66.6. Where the objection based on
applicability of the M.P. Act, 1983 had
been raised in the written statement or
statement of defence, but the parties
never took steps towards challenging the
jurisdiction of the arbitral tribunal
under Section 16 of the 1996 Act or where
such plea of jurisdiction was turned down
in view of the position of law that was
prevailing prior to L.G. Chaudhary (II)
(supra) i.e., such challenge to the
jurisdiction was decided prior to the date
of pronouncement of L.G. Chaudhary (II)
(supra), then even in such cases, as per
the decision of this Court in Modern
Builders (supra), the award should not be
disturbed or set-aside only on the ground
of lack of jurisdiction.
67. In the present case at hand, we
take note of the following circumstances
emerging from the facts on record:
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
67.1. It is an admitted fact that at the
time of constitution of the arbitral
tribunal, the respondent never objected to
the invocation of arbitration under the
1996 Act and both the parties proceeded to
nominated their respective co-
arbitrators.
67.2. On the date of invocation of the
1996 Act, and commencement of arbitration
proceedings, as well as of the date when
the arbitration proceeding concluded and
the award in question passed, the
erstwhile decision of this Court in VA
Tech (supra) held the field.
67.3. The respondent herein never raised
any objection to the arbitral tribunal’s
lack of jurisdiction during the
arbitration proceedings either in its
statement of defence or by way of an
application under Section 16 of the 1996
Act.
67.4. Even when the award was challenged
by the respondents, the initial petition
filed by them under Section 34 of the 1996
Act also did not contain any objection as
regards the lack of jurisdiction of the
arbitral tribunal.
67.5. The ground of lack of jurisdiction
was introduced by the respondents herein
only after the decision of L.G. Chaudhary
(II) (supra) by way of an application for
amending the grounds of its petition under
Section 34 of the 1996 Act, i.e., after
the award had been passed.
68. Thus, the present case is squarely
covered by the decision of this Court in
L.G. Chaudhary (II) (supra), more
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
particularly the observations made in
paras 6 to 9 thereunder, and as such once
the award had been passed and no objection
as to the jurisdiction of the arbitral
tribunal had been taken at the relevant
stage, then the award could not have been
annulled by the High Court only on the
ground of lack of jurisdiction.”
(emphasis supplied)
8. In the instant case, it is an admitted position
that upon filing of the statement of claim,
reply has also been filed by the petitioner-
State, and no objection with respect to the
jurisdiction of the Arbitration Tribunal has
been raised by the State Government. Not only
that, the State has also not filed any
application under Section 16 of the Act in the
ongoing arbitration proceedings, and even in the
petition, a specific averment has been made that
the petitioner has preferred the present
petition only after the judgment in the case of
L. G. Chaudhary (Supra). In fact, upon perusal
of the memo of the petition, the Court finds
that the entire petition has been filed only on
the basis of the decision in the case of L. G.
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
Chaudhary (Supra), and no other ground has been
canvassed.
9. In view of the fact that the decision in the
case of L. G. Chaudhary (Supra) has been
considered by the Honourable Supreme Court in
its latest judgment in the case of Gayatri
Project Ltd. v. Madhya Pradesh Road Development
Corporation Ltd., reported in (2025) 10 SCC 750,
the relevant paragraphs of which have already
been reproduced in the foregoing paragraphs.
Learned Assistant Government Pleader Ms. Nirali
Sharda could not point out anything from the
record to suggest that the petition was
preferred on any other basis than relying upon
the judgment in the case of L. G. Chaudhary
(Supra).
10. As can be seen from the observations made
by the Honourable Supreme Court in the case of
Gayatri Project Ltd. v. Madhya Pradesh Road
Development Corporation Ltd., reported in (2025)
10 SCC 750, it is reported that in paragraph 63
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of the said judgment, any failure to raise the
issue regarding the applicability of the M.P.
Act, 1983, before the Arbitration Tribunal is
not a strong or good reason to permit raising
such a plea in proceedings under Section 34 of
the Arbitration and Conciliation Act, 1996.
Thereafter, the Honourable Supreme Court has
observed in paragraph 66.2 that, where the
arbitration proceedings are still underway, but
the statement of defence has already been filed,
the relevant stage for raising an issue
regarding jurisdiction has already closed. It is
not open for the parties to raise an objection
of lack of jurisdiction in view of the
applicability of the M.P. Act, 1983 (in the
instant case, the Gujarat Public Works Contracts
Disputes Arbitration Tribunal Act, 1992).
11. In view of the above, as the prayer made by
the petitioner in the present petition is
squarely covered by the decision of the
Honourable Supreme Court in the case of Gayatri
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
Project Ltd. v. Madhya Pradesh Road Development
Corporation Ltd. reported in (2025) 10 SCC 750,
which is against the petitioner, the present
petition fails and hence the same is required to
be dismissed and same is dismissed accordingly.
12. At this stage, it was pointed out by
learned Senior Advocate Mr. D. C. Dave that the
arbitration proceedings before the Sole
Arbitrator are at the stage where the oral
arguments on behalf of the respondents (original
claimants) have been concluded, and the matter
is only pending for the purpose of oral
arguments on behalf of the petitioner, which
indicates that the arbitration proceedings have
reached an advanced stage. Therefore,
considering the overall facts and circumstances,
as well as the settled legal position laid down
by way of the judgment in the case of Gayatri
Project Ltd. (supra), the present petition is
required to be dismissed and is accordingly
dismissed. Rule is discharged. No order as to
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C/SCA/16425/2012 JUDGMENT DATED: 08/07/2026
costs. The interim relief granted earlier vide
order dated 07.01.2013 in favour of the
petitioner stands vacated.
(NIRZAR S. DESAI,J)
Pallavi
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