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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,
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│ 1996 ("the Act") │ before the Seventh Additional District │
├─────────────────────────────────────┼──────────────────────────────────────────┤
│ • Judge, respondent s │ Bhopal by the respondent-State ought to │
│ │ amend its objections after three years │
│ which was re Article 227 has │ of M.P. The jected by the trial Court. │
│ allowed 3. Lea amendment limitation │ On a petition under of the Constitution │
│ w . ' │ of India, the High Court the said │
│ │ amendment. rned counsel for the │
│ was also submitted raised under Se │ appellant submitted that the could not │
│ Arbitrator, could n Act. In support │ be allowed beyond the period of hich │
│ of this on MSP Infrastruc │ affected the vested rights of a party. │
│ Development Corporation • 4. │ It │
│ Learned submitted that the amend │ │
│ • arising on undisputed 34(2)(b) │ 2 \ that the objection having not been │
│ of the Act. Eve is not raised under │ ction 16(2) of the Act before the ot be │
│ Sect raised under Sect necessary to │ raised under Section 34 of the │
│ consider th • is a legal plea, on │ submission reliance has been placed ture │
│ any case. He thus submit is not │ Ltd. vs. Madhya Pradesh Road Ltd. │
│ pressed. • that observations in M │ reported in (2015) 13 sec 713 . Advocate │
│ particularly in Paragrap correct │ General for the State of M.P. ment │
│ law. │ sought is formal. Legal plea facts is │
│ │ not precluded by Section n if an │
│ 5. We find meri the state. We │ objection to jurisdiction ion 16 of the │
│ proceed on being beyond li │ Act, the same can be ion 34 of the Act. │
│ amendment is not pressed 6. we do │ It is not even e application for │
│ not se │ amendment as it admitted facts, which │
│ │ can be raised in s the amendment being │
│ raised by way of an objectio even │ unnecessary Learned Advocate General │
│ if no such objection wa 7. We may │ also submitted /s MSP Infrastructure │
│ quote t Infrastructure (supra}: │ Ltd. hs 16 and 17 do not laid down │
│ "16. It is not poss • submission. │ │
│ In the fi warrant the inference t │ (supra), t in the contentions raised on │
│ jurisdiction of the Tri - Section │ behalf of the footing that the amendment │
│ 16 and that the power to rule on │ mitation is not to be allowed as the . e │
│ its ow Parliament has employed │ any bar to plea of jurisdiction being 3 │
│ Clause ( b} of Section • subject │ n under Section 34 of the Act s raised │
│ matter of the settlement by │ under Section 16. he observations from │
│ arbitrati necessarily refer to an │ M/s MSP │
│ as the term is well kno situation │ │
│ where th arbitration, by reason │ ible to accept this rst place, there is │
│ capable of settlement b Examples of │ nothing to hat all objections to the │
│ such cases Supreme Court in Booz A │ bunal cannot be raised under Tribunal │
│ SB! Home Finance Limite • Court │ does not have n jurisdiction. Secondly, │
│ observed as fol "36. The well- │ a different phraseology in 34. That │
│ non-arbitrable disputes r │ phraseology is "the dispute is not │
│ │ capable of on." This phrase does not │
│ f liabilities wh • arise out of c │ objection to 'jurisdiction' wn. In fact, │
│ matrimonial divorce, restitution of │ it refers to a e dispute referred for of │
│ custody; (iii} (iv} insol matters; │ its subject matter is not y arbitration │
│ ( (grants of administration │ at all. have been referred to by the │
│ certificate}; tenancy matter │ llen and Hamilton Inc. V/s. d (2011} 5 │
│ statutes where statutory prot and │ SCC 532. This lows:- recognised examples │
│ only the s conferred eviction or de │ of │
│ The scheme of the .. │ │
│ │ elating disputes to are: rights and (i} │
│ objections to' must be taken of the │ │
│ stateme with under Sec 1996. │ ich give rise to or │
│ However, contend that t is such as │ │
│ can arbitration, i by the court. │ riminal offences; (ii} disputes relating │
│ •. • . '""' 17. It was als the │ to judicial separation, conjugal rights, │
│ newly adde the Arbitratio to decide │ child guardianship matters; vency and │
│ the jurisdiction l M.P. Act of 19 │ winding-up v} testamentary matters │
│ • agitated under of 'sub-sectio │ probate, letters of and succession and │
│ Arbitration Ac the court to s │ (vi} eviction or s governed by special │
│ conflict with Therefore, it had │ the tenant enjoys ection against │
│ been right that what was pertained │ eviction pecified courts are │
│ to j been raised ex • the │ jurisdiction to grant cide the │
│ Arbitratio question which under │ disputes." Act is thus clear. All │
│ Section done by the Re be rejected. │ │
│ T in conflict wi cannot be equa • │ 4 jurisdiction of whatever nature at the │
│ Tribunal und jurisdiction a Act, │ stage of the submission nt of defence, │
│ has juris dispute. Furth contention │ and must be dealt tion 16 of the │
│ mig head that the with the publi │ Arbitration Act, if one of the parties │
│ words, it was policy of Indi held │ seeks to he subject matter of the │
│ under the contended that under the │ dispute not be dealt with by t may be │
│ Stat would be a vio India. This co │ dealt under Section 34 │
│ the intention should not be policy │ │
│ of Indi policy of Indi the Union of │ o contended by Shri Divan, that d ground │
│ I │ that the Tribunal under n Act, 1996 had │
│ │ no jurisdiction dispute in question │
│ of an individual s said that the │ because the ay with the Tribunal under │
│ upho not be part of the much │ the 83, was a question which can be │
│ depends on th question arises ou │ │
│ action under a Sta central Law, the │ sub-clause (ii) of clause (b) n (2) of │
│ t must necessarily b referable to │ Section 34 of the t, 1996. This │
│ the p well known, vi Constitution, │ provision enables et- aside an award │
│ the • 8. the Union of State │ which is in the public policy of India. │
│ include those of t Both stages │ is contended that the amendment ly │
│ Paragraphs 16 and 17 in MSP • in │ allowed and it cannot be said raised was │
│ our view, lay d with the │ only a question which urisdiction and │
│ observation that th not refer to a │ ought to have clusively under Section 16 │
│ State law and law . • 9. refers │ of │
│ In our considered v to law in f │ │
│ Central law. Accordingly, we • │ n Act, 1996, but in fact was a could │
│ the contrary in Paragraphs │ also have been raised 34 before the │
│ Infrastructures Ltd. 10. Since │ Court, as has been spondent. This │
│ amendment appeal is rendered │ submission must he contention that an │
│ infructuo aside. 11. The matter may │ award is th the public policy of India │
│ now for consideration of objecti │ ted with the contei~ that er the Central │
│ Central Act. It will be open • ' │ Act does not ·have nd the Tribunal │
│ that its objection M.P. Madhyastham │ under the State diction to decide upon │
│ Adhikar even without a formal pl It │ th~ ermore, it was stated that this ht │
│ will also be o contrary. We leave │ have been raised under the Arbitral │
│ concerned court . • The appeals │ Award is in conflict c policy of India. │
│ ar │ In other submitted that it is the public │
│ │ a that arbitrations should be │
│ • │ appropriate law. It was unless the │
│ │ arbitration was held e Law i.e. the M.P. │
│ • NEW DELHI, MARCH 22, 2018 • │ Act that it lation of the public policy │
│ │ of ntentiOfl is misconceived since of │
│ │ providing that the award in conflict │
│ │ with the public a is referable to the │
│ │ public a as a whole i.e. the policy __ │
│ │ of ndia and not merely the policy · 5 │
│ │ tate. Though, it cannot be lding of a │
│ │ state law would public policy of India, │
│ │ e context. Where the t of a conflict │
│ │ between an te Law and an action under a │
│ │ erm public policy of India e understood │
│ │ as being olicy of the Union. It is de │
│ │ Article 1 of the name 'India' is the │
│ │ name of │
│ │ │
│ │ s and its territories he States." are │
│ │ independent. Observations in │
│ │ Infrastructure (supra) do not, own │
│ │ correct law. We also do not agree e │
│ │ Public policy of India does refers only │
│ │ to an All India │
│ │ │
│ │ iew, the public policy of India orce in │
│ │ India whether State law or overrule the │
│ │ observations to 16 and 17 of the │
│ │ judgment in MSP (supra) . application is │
│ │ not pressed, the us. The impugned order │
│ │ is set │
│ │ │
│ │ be taken up by the trial court ons under │
│ │ Section 34 of the for the respondents to │
│ │ argue │
│ │ │
│ │ 6 that the Act stands excluded by the an │
│ │ Adhiniyam, 1983 could be raised eading, │
│ │ being purely a legal plea. pen to the │
│ │ appellant to argue to the the question │
│ │ to be gone into by the │
│ │ │
│ │ e 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 2018 INSC 1222.' • 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)