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IN THE SUPREME COURT OF INDIA
CIVIL APPEAL NOS. 8984-8985 OF 201
M/S LION ENGINEERING CONSULTANTS
STATE OF M.P. & ORS. RESPONDENT(S)
JUDGMENT
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 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, B respondent sou │ hopal by the respondent-State ght to │
│ │ amend its objections after three years │
│ which was reje Article 227 of has │ of M.P. The cted by the trial Court. On │
│ allowed th 3. Learn amendment c │ a petition under the Constitution of │
│ limitation whi . ' │ India, the High Court e said amendment. │
│ │ ed counsel for the appellant submitted │
│ was also submitte raised under S │ that the ould not be allowed beyond the │
│ Arbitrator, could Act. In support │ period of ch affected the vested rights │
│ of this on MSP Infrastru │ of a party. It │
│ Development Corporation • 4. │ │
│ Learned submitted that the amen • │ 2 \ d that the objection having not been │
│ arising on undisputed 34(2)(b) of │ ection 16(2) of the Act before the not │
│ the Act. Ev is not raised under Sec │ be raised under Section 34 of the │
│ raised under Sec necessary to │ submission reliance has been placed │
│ consider t • is a legal plea, o │ cture Ltd. vs. Madhya Pradesh Road Ltd. │
│ any case. He thus submi is not │ reported in (2015) 13 sec 713 . Advocate │
│ pressed. • that observations in │ General for the State of M.P. dment │
│ particularly in Paragra correct │ sought is formal. Legal plea facts is │
│ law. │ not precluded by Section en if an │
│ │ objection to jurisdiction tion 16 of the │
│ 5. We find mer the state. We │ Act, the same can be tion 34 of the Act. │
│ proceed o being beyond l amendment │ It is not even he application for │
│ is not presse 6. we do not s │ amendment as it n admitted facts, which │
│ │ can be raised in ts the amendment being │
│ raised by way of an objecti even if │ unnecessary Learned Advocate General │
│ no such objection w 7. We may quote │ also submitted M/s MSP Infrastructure │
│ Infrastructure (supra}: "16. It is │ Ltd. phs 16 and 17 do not laid down │
│ not pos • submission. In the f │ │
│ warrant the inference jurisdiction │ (supra), it in the contentions raised on │
│ of the Tr - Section 16 and that th │ behalf of n the footing that the │
│ power to rule on its o Parliament │ amendment imitation is not to be allowed │
│ has employe Clause ( b} of Section │ as the d. ee any bar to plea of │
│ • subject matter of th settlement │ jurisdiction being 3 on under Section 34 │
│ by arbitrat necessarily refer to a │ of the Act as raised under Section 16. │
│ as the term is well kn situation │ the observations from M/s MSP │
│ where t arbitration, by reason │ │
│ capable of settlement Examples of │ sible to accept this irst place, there │
│ such cases Supreme Court in Booz │ is nothing to that all objections to the │
│ SB! Home Finance Limit • Court │ ibunal cannot be raised under e Tribunal │
│ observed as fo "36. The well │ does not have wn jurisdiction. Secondly, │
│ non-arbitrabl disputes │ d a different phraseology in 34. That │
│ │ phraseology is "the e dispute is not │
│ f liabilities w • arise out of │ capable of ion." This phrase does not n │
│ matrimonial divorce, restitution o │ objection to 'jurisdiction' own. In │
│ custody; (iii (iv} inso matters; │ fact, it refers to a he dispute referred │
│ (grants o administratio │ for of its subject matter is not by │
│ certificate}; tenancy matte │ arbitration at all. have been referred │
│ statutes wher statutory pro and │ to by the Allen and Hamilton Inc. V/s. │
│ only the conferred eviction or d │ ed (2011} 5 SCC 532. This llows:- - │
│ The scheme of the .. │ recognised examples of e relating │
│ │ disputes to are: rights and (i} │
│ objections to must be taken of the │ │
│ statem with under Se 1996. However │ hich give rise to or │
│ contend that is such as ca │ │
│ arbitration, by the court. •. • │ criminal offences; (ii} disputes │
│ . '""' 17. It was al the newly add │ relating to judicial separation, f │
│ the Arbitrati to decide the │ conjugal rights, child } guardianship │
│ jurisdiction M.P. Act of 1 • │ matters; lvency and winding-up (v} │
│ agitated unde of 'sub-secti │ testamentary matters f probate, letters │
│ Arbitration A the court to conflict │ of n and succession and (vi} eviction or │
│ with Therefore, it had been righ │ rs governed by special e the tenant │
│ that what was pertained to been │ enjoys tection against eviction │
│ raised e • the Arbitrati question │ specified courts are jurisdiction to │
│ whic under Section done by the R be │ grant ecide the disputes." Act is thus │
│ rejected. in conflict w cannot be │ clear. All │
│ equ • Tribunal un jurisdiction │ │
│ Act, has juri dispute. Furt │ 4 ' jurisdiction of whatever nature at │
│ contention mi head that the with │ the stage of the submission ent of │
│ the publ words, it was policy of │ defence, and must be dealt ction 16 of │
│ Ind held under th contended tha │ the Arbitration Act, , if one of the │
│ under the Sta would be a vi India. │ parties seeks to the subject matter of │
│ This c the intention should not be │ the dispute nnot be dealt with by it may │
│ policy of Ind policy of Ind the │ be dealt under Section 34 │
│ Union of │ │
│ │ so contended by Shri Divan, that ed │
│ of an individual said that the uph │ ground that the Tribunal under on Act, │
│ not be part of th much depends on t │ 1996 had no jurisdiction dispute in │
│ question arises o action under a St │ question because the lay with the │
│ central Law, the must necessarily │ Tribunal under the 983, was a question │
│ referable to the well known, v │ which can be │
│ Constitution, the • 8. the Union │ │
│ of Stat include those of Both │ r sub-clause (ii) of clause (b) on (2) │
│ stages Paragraphs 16 and 17 in MSP │ of Section 34 of the ct, 1996. This │
│ • in our view, lay with the │ provision enables set- aside an award │
│ observation that t not refer to a │ which is in the public policy of India. │
│ State law an law . • 9. refers In │ is contended that the amendment tly │
│ our considered to law in Central │ allowed and it cannot be said raised was │
│ law. Accordingly, w • the │ only a question which jurisdiction and │
│ contrary in Paragraph │ ought to have xclusively under Section │
│ Infrastructures Ltd. 10. Since │ 16 of │
│ amendment appeal is rendered │ │
│ infructu aside. 11. The matter may │ on Act, 1996, but in fact was a h could │
│ now for consideration of object │ also have been raised 34 before the │
│ Central Act. It will be ope • ' │ Court, as has been espondent. This │
│ that its objection M.P. Madhyastham │ submission must The contention that an │
│ Adhika even without a formal p It │ award is ith the public policy of India │
│ will also be contrary. We leav │ ated with the contentio~ that der the │
│ concerned court . • The appeals a │ Central Act does not ·have and the │
│ │ Tribunal under the State sdiction to │
│ • │ decide upon th~ hermore, it was stated │
│ │ that this ght have been raised under the │
│ • NEW DELHI, MARCH 22, 2018 • │ Arbitral Award is in conflict ic policy │
│ │ of India. In other submitted that it is │
│ │ the public ia that arbitrations should │
│ │ be e appropriate law. It was t unless │
│ │ the arbitration was held te Law i.e. the │
│ │ M.P. Act that it olation of the public │
│ │ policy of ontentiOfl is misconceived │
│ │ since of providing that the award in │
│ │ conflict with the public ia is referable │
│ │ to the public ia as a whole i.e. the │
│ │ policy __ of India and not merely the │
│ │ policy · 5 state. Though, it cannot be │
│ │ olding of a state law would e public │
│ │ policy of India, he context. Where the │
│ │ ut of a conflict between an ate Law and │
│ │ an action under a term public policy of │
│ │ India be understood as being policy of │
│ │ the Union. It is ide Article 1 of the │
│ │ name 'India' is the name of │
│ │ │
│ │ es and its territories the States." are │
│ │ independent. Observations in │
│ │ Infrastructure (supra) do not, down │
│ │ correct law. We also do not agree he │
│ │ Public policy of India does d refers │
│ │ only to an All India │
│ │ │
│ │ view, the public policy of India force │
│ │ in India whether State law or e overrule │
│ │ the observations to s 16 and 17 of the │
│ │ judgment in MSP (supra) . application is │
│ │ not pressed, the ous. The impugned order │
│ │ is set │
│ │ │
│ │ be taken up by the trial court ions │
│ │ under Section 34 of the n for the │
│ │ respondents to argue │
│ │ │
│ │ 6 that the Act stands excluded by the │
│ │ ran Adhiniyam, 1983 could be raised │
│ │ leading, being purely a legal plea. open │
│ │ to the appellant to argue to the e the │
│ │ question to be gone into by the │
│ │ │
│ │ re disposed of accordingly . │
│ │ ............ ~~ (ADARSH KUMAR GOEL) │
│ │ ................0.qi2.. J. (ROHINTON │
│ │ FALI NARIMAN) │
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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.' • 2 \ 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 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 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 • - • • f • 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}: "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:-
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." The scheme of the Act is thus clear. All.. •. '""' • • • •. 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.
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 cannot be equated with the contentio~ that Tribunal under the Central Act does not ·have jurisdiction and the Tribunal under the State Act, has jurisdiction to decide upon th~ 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 · •
8. 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." Both stages are independent. Observations in 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.
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 ' • 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 concerned court. The appeals are disposed of accordingly. NEW DELHI, MARCH 22, 2018............ ~~ (ADARSH KUMAR GOEL)................0.qi[2]..J. (ROHINTON FALI NARIMAN)