The Supreme Court of India, in a significant judgment dated May 15, clarified that an arbitral award under the Arbitration and Conciliation Act, 1996, cannot be set aside solely on the grounds of lack of jurisdiction if no timely objection was raised before the arbitral tribunal.

The judgment was delivered by a bench of Justices JB Pardiwala and R Mahadevan while hearing an appeal filed by the Appellant-contractor against the Madhya Pradesh Road Development Corporation (MPRDC). The dispute revolved around whether the arbitration should have been governed by the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (MP Act) instead of the Arbitration Act, 1996.

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• The Court emphasized that any objection to the arbitral tribunal’s jurisdiction must be raised at the appropriate stage of the proceedings, specifically before the tribunal itself.
• If a party fails to object at the relevant stage, they may still challenge the award under Section 34 of the Arbitration and Conciliation Act. However, such a challenge cannot solely be based on jurisdictional grounds.
• "Once an arbitral award is 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 only on the ground of lack of jurisdiction," the Court stated.

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Case Background:

• The MPRDC participated in the arbitration proceedings under the Arbitration Act, 1996, without raising any jurisdictional objection.
• After an adverse award, MPRDC challenged it under Section 34 of the Arbitration Act, arguing that the dispute should have been governed by the MP Act, 1983.
• The High Court accepted this argument and set aside the award, leading the Appellant-contractor to approach the Supreme Court.

• The Supreme Court overruled the High Court’s decision, clarifying that arbitral awards cannot be set aside solely due to lack of jurisdiction if the objecting party did not raise this issue at the proper time before the arbitral tribunal.
• The Court relied on its earlier decision in M.P. Rural Road Development Authority v. L.G. Chaudhary (II), (2018) 10 SCC 826, which emphasized the importance of raising jurisdictional objections at the initial stage of arbitration.

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1. If arbitration proceedings are ongoing and no statement of defense has been filed, parties can still raise jurisdictional objections.
2. If a statement of defense has been filed, the right to raise jurisdictional objections is lost.
3. Once the arbitration is concluded and an award is passed, it cannot be challenged solely on the ground of lack of jurisdiction if no objection was raised earlier.
4. Even if the MP Act, 1983, is the correct governing law, an award passed under the 1996 Act cannot be set aside on jurisdictional grounds if no timely objection was raised.

Case Title: M/S GAYATRI PROJECT LIMITED VERSUS MADHYA PRADESH ROAD DEVELOPMENT CORPORATION LIMITED

Appearance:

For Petitioner(s) Mr. Kaushik Laik, AOR Mr. Ashay Kaushik, Adv. Mr. Shashank Tiwari, Adv.

For Respondent(s) Mr. Saurabh Mishra, Sr. Adv. Mr. Harmeet Singh Ruprah, AOR Mr. Kanishk Sharma, Adv. Mr. Paras Bajpai, Adv.