Jurisdictional objections to arbitration are waived once the statement of defense is filed without raising such pleas.

The petitioner (State of Gujarat) awarded a contract in 1980 to the respondent for irrigation work under Agreement No. B/1 of 1980–1981.

Disputes arose, and in 1993, a Civil Court appointed an arbitrator who never commenced proceedings.

In 2011, the petitioner appointed a new Sole Arbitrator, Mr. R. D. Soni, under the Arbitration and Conciliation Act, 1996.

After the proceedings reached an advanced stage—including the filing of a statement of defense and six meetings—the petitioner filed this writ petition seeking to quash the private arbitration.

The petitioner contended that the dispute must be transferred to the Special Arbitration Tribunal under the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992, relying on the Supreme Court’s decision in L. G. Chaudhary.

1. Whether the arbitration proceedings pending before a Sole Arbitrator under the 1996 Act should be quashed or transferred to the Works Contract Tribunal solely on the basis of a subsequent change in the legal position regarding jurisdiction.

2. Whether a party can challenge the jurisdiction of an arbitrator after having filed a statement of defense and participating in the proceedings without prior objection under Section 16 of the 1996 Act.

The Court primarily applied the principles of waiver under Section 4 and jurisdictional challenges under Section 16 of the Arbitration and Conciliation Act, 1996.

The core rule established is that if a statement of defense is filed without objecting to jurisdiction, the right to object is deemed waived, and the intervening judgment in L. G. Chaudhary does not constitute a "strong or exceptional ground" to transfer proceedings at an advanced stage.

The Court relied heavily on the precedent set in Gayatri Projects Ltd. v. Madhya Pradesh Road Development Corporation Ltd. (2025) 10 SCC 750, which interpreted and refined the earlier ruling in L. G. Chaudhary v. Engineers and Contractors (2012) 3 SCC 495.

The Court observed that the petitioner participated in the arbitration by filing a statement of claim and a reply without raising any jurisdictional objections.

Under the law clarified in Gayatri Projects Ltd., once the "relevant stage" (filing the statement of defense) has passed, the door to challenge jurisdiction based on the applicability of a State-specific Works Contract Act is closed.

The Court noted that the petitioner’s sole ground for the petition was the decision in L. G. Chaudhary, but Gayatri Projects Ltd. specifically holds that such a ground cannot rectify a failure to raise the issue before the Arbitral Tribunal.

Furthermore, the Court highlighted that the arbitration had reached an advanced stage, with the respondent's oral arguments already concluded.

Consequently, transferring the matter at this junction would be inappropriate and contrary to the current legal position.

The Court ruled that the proceedings before the Sole Arbitrator shall continue as they have reached an advanced stage.

The interim relief previously granted to the State was vacated, and the rule was discharged.