The Supreme Court of India, in the case of M/s Vidyawati Construction Company v. Union of India (2025), provided clarity on the procedural aspect of challenging the jurisdiction of an arbitral tribunal. The judgment, delivered by a bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan, emphasized the legal constraints imposed by Section 16(2) of the Arbitration and Conciliation Act, 1996. This article discusses the case in detail, highlighting the court's observations and its implications.

Case Background

The dispute originated from a contract awarded to M/s Vidyawati Construction Company for constructing a building for the Railway Electrification Project in Allahabad. Following disagreements regarding payments, the matter was referred to arbitration under a clause that specified the appointment of three arbitrators.

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1. Initial Appointments:
   • Two arbitrators were appointed by the Chief Justice, with a directive to appoint an umpire.
   • Following the resignation of the appointed umpire, a retired High Court Chief Justice was appointed as the sole arbitrator.
2. Jurisdictional Objection:
   • Proceedings commenced before the sole arbitrator, during which the respondent filed a statement of defence.
   • Later, the respondent raised objections, arguing that the arbitration clause required three arbitrators, rendering the sole arbitrator's appointment invalid.
3. Decisions of Lower Courts:
   • The District Judge set aside the arbitral award on the grounds of improper tribunal composition.
   • The High Court upheld this decision, prompting the appellant to approach the Supreme Court.

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Key Observations by the Supreme Court

1. Jurisdictional Challenge Timing:
   • The Supreme Court reiterated that Section 16(2) of the Arbitration and Conciliation Act prohibits raising a jurisdictional challenge after submitting a statement of defence.
   • In this case, the respondent had unequivocally accepted the sole arbitrator's jurisdiction in proceedings dated December 5, 2003.
2. Impact of Conduct:
   • The respondent's agreement to proceed with the sole arbitrator and file a statement of defence underscored their acceptance of the tribunal's jurisdiction.
   • Raising objections at a later stage was deemed an attempt to undermine procedural fairness.
3. Final Ruling:
   • The Court ruled that the objections were invalid and upheld the sole arbitrator's jurisdiction.
   • However, it directed the District Judge to reconsider other challenges raised in the respondent’s petition under Section 34 of the Act.

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Understanding Section 16 of the Arbitration and Conciliation Act

This section outlines the tribunal's authority to rule on its jurisdiction.

1. Key Provisions:
   • Section 16(1): Empowers tribunals to determine their jurisdiction, even if the underlying contract is void.
   • Section 16(2): Mandates that jurisdictional challenges be raised before or at the time of submitting a defence.
2. Relevant Precedents:
   • Surender Kumar Singhal v. Arun Kumar Bhalothia (2021): Affirmed that objections under Section 16 should be addressed promptly.
   • National Aluminium Company Limited v. Subhash Infra Engineers (2019): Highlighted the tribunal's authority under the principle of Kompetenz-Kompetenz.

Significance of the Judgment

The ruling reinforces the importance of adhering to procedural timelines in arbitration. It discourages parties from raising jurisdictional objections as an afterthought, ensuring that arbitration proceedings are not delayed unnecessarily.

"After submitting to the jurisdiction of the sole arbitrator, the respondent could not have belatedly objected to its jurisdiction." — Justice Abhay S. Oka