Jurisdictional Objections after the Award: Supreme Court Restricts Section 34 Challenges where MP Act 1983 Was Not Pleaded

1. Introduction

The Supreme Court of India in M/s Gayatri Project Ltd. v. Madhya Pradesh Road Development Corporation Ltd. (2025 INSC 698) has delivered a detailed pronouncement on the perennial tug-of-war between:

• the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (“MP Act 1983”, a State statute establishing a compulsory arbitration tribunal for “works contracts” with the State); and
• the Arbitration and Conciliation Act, 1996 (“A&C Act 1996”), India’s principal law on domestic and international commercial arbitration.

The judgment arises out of a Rs 1.04 crore arbitral award rendered under the A&C Act. The respondent-Corporation succeeded before the Commercial Court and High Court by arguing (for the first time) that, because the contract was a works contract, the State Tribunal had exclusive jurisdiction and the private arbitral tribunal lacked competence. The Supreme Court reverses those decisions and clarifies, with finality, when a party may invoke the MP Act in post-award proceedings.

2. Summary of the Judgment

1. Appeal allowed. The award dated 08-07-2011 is restored.
2. High Court order set aside. The plea that the arbitrators lacked jurisdiction—never raised before them—cannot, by itself, annul the award.
3. Section 34 proceedings are remitted to the Commercial Court only on the remaining grounds (e.g. patent illegality, public policy) but excluding the jurisdictional defence under the MP Act 1983.
4. The Court harmonises apparently competing precedents—L.G. Chaudhary (II) (2018), Lion Engineering (2018) and others—holding there is in fact no conflict.
5. A copy of the decision is to be circulated to all High Courts, signalling nationwide importance.

3. Detailed Analysis

3.1 Precedents Explored

3.2 Court’s Legal Reasoning

1. Stage-specific waiver. Section 16(2) of the A&C Act obliges parties to raise jurisdictional pleas no later than the statement of defence. Read with Section 4 (waiver), silence equals acquiescence.
2. Reconciling Lion Engineering. That decision merely allowed parties to present a legal plea without amending pleadings; it did not hold that an award can automatically be set aside on that plea. Therefore, no real conflict exists.
3. Exception from L.G. Chaudhary (II). When parties intentionally arbitrated under the A&C Act and an award exists, permitting a belated MP Act objection would defeat finality and the objective of speedy dispute resolution. Hence such objection is barred unless raised in time.
4. Article 142 discretion. The Court emphasises that previous orders saving awards were passed to secure complete justice amid shifting jurisprudence; the present ratio has general application without invoking Article 142.

3.3 Impact Assessment

• Predictability restored. Contractors and public authorities now know that once they submit to an arbitral forum and an award issues, jurisdictional ambushes under the MP Act are unavailable.
• Section 34 narrowed. High Courts in Madhya Pradesh (and States with pari-materia statutes) must filter out MP-Act objections unless the party raised them before or during arbitration.
• Contract drafting. State agencies may still stipulate MP-Tribunal arbitration, but if they proceed under the A&C Act without protest, they are bound.
• National relevance. Other states (e.g., Chhattisgarh, Karnataka, Himachal Pradesh) with similar legislation will likely cite this judgment to quell post-award challenges.

4. Simplifying Complex Concepts

• Kompetenz-Kompetenz (Section 16): The arbitral tribunal’s power to rule on its own jurisdiction. But the party must raise such plea early.
• Waiver (Section 4): If a party knows of a procedural defect yet participates without protest, it loses the right to object later.
• Per Incuriam: A judgment delivered in ignorance of a binding precedent or statutory provision; not binding.
• Article 142: Constitutional power enabling the Supreme Court to pass any order necessary for “complete justice” between parties.

5. Conclusion & Key Takeaways

1. The MP Act 1983 remains the governing statute for works-contract disputes with the State of Madhya Pradesh, but:
2. An arbitral award rendered under the A&C Act will not be annulled merely because the tribunal lacked jurisdiction under the MP Act, if the objecting party stayed silent during arbitration.
3. Lion Engineering does not entitle parties to spring jurisdictional traps post-award; it only clarifies pleading requirements.
4. Parties must raise jurisdictional objections at the earliest, ideally in their Section 16 application; otherwise they waive them.
5. High Courts must henceforth refuse Section 34/37 challenges that rely only on a belated MP-Act jurisdiction argument.
6. The decision promotes finality, reduces satellite litigation, and reinforces India’s pro-arbitration stance.