Holding

An arbitral award cannot be set aside solely on the ground of lack of jurisdiction where the jurisdictional objection was not raised at the appropriate stage, and the L.G. Chaudhary (II) decision is not per incuriam and coexists with Lion Engineering.

Summary

The appellant, Gayatri Project Ltd., entered into a works contract with the Madhya Pradesh Road Development Corporation and invoked arbitration under Clause 67.4 of the contract, resulting in a 2011 award in its favour. The respondent challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging that the arbitral tribunal lacked jurisdiction because the dispute should have been governed by the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983. The High Court set aside the award on that ground, but the Supreme Court examined whether such a jurisdictional plea could be raised for the first time under Section 34 when it was not raised before the tribunal under Section 16(2). The Court also considered whether its earlier decision in L.G. Chaudhary (II) was per incuriam for not referring to Lion Engineering. It held that where no objection to jurisdiction was made at the appropriate stage, an award cannot be annulled solely on that ground, and L.G. Chaudhary (II) does not conflict with Lion Engineering. Consequently, the Supreme Court set aside the High Court order and restored the Section 34 proceedings to the lower court for merits determination.

Issues considered

Whether an arbitral award rendered under the Arbitration and Conciliation Act, 1996, where the arbitration should have been governed by the M.P. Madhyastham Adhikaran Adhiniyam, 1983, can be set aside solely on the ground of lack of jurisdiction when no objection was raised under Section 16(2) of the Act.
Whether the decision in M.P. Road Development Authority v. L.G. Chaudhary Engineers & Contractors (II) is per incuriam for not considering Lion Engineering Consultants v. State of Madhya Pradesh, and whether there is a conflict between the two decisions on the stage at which a jurisdictional plea may be raised.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 16(2), s. 34, s. 37, s. 4
Constitution of Indias. Article 142, s. Article 227
M.P. Madhyastham Adhikaran Adhiniyam, 1983

Headnote

Issue for Consideration 1. Whether an arbitral award rendered under the Arbitration and Conciliation Act, 1996 (hereinafter “Act, 1996”), where the arbitration proceedings ought to have been governed by the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (hereinafter “MP set aside solely on the ground of lack of jurisdiction, even when no such plea was raised before the arbitral tribunal in terms of Section 16(2) of the Act, 1996? 2. Whether the decision of this Court in M.P. Road Development Authority & Anr v. L.G. Chaudhary Engineers & Contractors

Subjects

ArbitrationJurisdictionArbitral awardSection 34Section 16WaiverPer incuriamM.P. Madhyastham Adhikaran AdhiniyamArticle 227Article 142

Judgment

[2025] 5 S.C.R. 2534 : 2025 INSC 698

M/s Gayatri Project Limited
v.
Madhya Pradesh Road Development Corporation Limited
(Civil Appeal No. 6856 of 2025)
15 May 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]

Issue for Consideration
1. Whether an arbitral award rendered under the Arbitration
and Conciliation Act, 1996 (hereinafter “Act, 1996”), where
the arbitration proceedings ought to have been governed
by the M.P. Madhyastham Adhikaran Adhiniyam, 1983
(hereinafter “MP Act, 1983”), can be set aside solely on the
ground of lack of jurisdiction, even when no such plea was
raised before the arbitral tribunal in terms of Section 16(2)
of the Act, 1996?
2. Whether the decision of this Court in M.P. Road Development
Authority & Anr v. L.G. Chaudhary Engineers & Contractors
reported in (2018) 10 SCC 826 can be said to be per incuriam
for not considering the Court’s ruling in Lion Engineering?
In other words, is there a conflict between the decisions in
Lion Engineering and L.G. Chaudhary (II), particularly on
when a plea of lack of jurisdiction may be raised under the
Act, 1996?

Headnotes†
Arbitration and Conciliation Act, 1996 – M.P Madhyastham
Adhikaran Adhiniyam, 1983 – Arbitral award cannot be set
aside solely on the ground of jurisdiction if no objection was
raised under Section 16(2) of the Arbitration and Conciliation
Act, 1996:
The appellant executed a “works contract” dated 12.12.2005 with
the respondent for “Rehabilitation and Strengthening of Khargone-
Barwani Road (SH-26) Project Road No.19” & “Rehabilitation and
Strengthening of Khargone-Bistan Road (SH-31) Project Road
No.20” in the State of Madhya Pradesh – Clause 67.3 of the

* Author
[2025] 5 S.C.R. 2535

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

“General Conditions of Contract” read with Clause 67.4 of the
“Conditions of Particular Application” provided for arbitration as
the means for resolution of disputes between the Parties – The
arbitration agreement mandated that the tribunal shall comprise
of three members, one to be appointed by each party and the
two coarbitrators had to nominate the presiding arbitrator – The
disputes arose between the parties from 06.08.2010 onwards in
relation to the appellant’s right to be reimbursed additional cost
incurred by it on account of introduction of subsequent legislation
on increase in entry tax on High-Speed Diesel under Clause 70.8
of the Particular Conditions of Contract – The appellant invoked
arbitration under Clause 67.4 vide its notice dated 06.08.2010 and
the Tribunal stood constituted on 24.09.2010 – The Tribunal passed
a unanimous award dated 08.07.2011 in favour of the appellant
for a sum of Rs.1,03,55,187 (i.e. Rs.1.04 Crore) – As is evident
from Para 1.19 of the Award quoted above, the quantification of
this amount was in-fact recommended by the Engineer and had
been admitted by the respondent – The Tribunal also awarded
future interest at the rate of 10% p.a. from the date of the award
till the date of actual payment as per para 3.1 – As of 17.02.2025,
the amount payable by the respondent to the appellant stands at
Rs.2,44,63,775 – The respondent challenged the award before the
Civil Court under Section 34 of the Arbitration Act vide a petition
filed on 30.09.2011 – The same came to be allowed holding that
the Arbitral Tribunal did not jurisdiction in view of M.P Madhyastham
Adhikaran Adhiniyam, 1983 – The order passed by the Commercial
Court and 19th Additional Sessions Judge, Bhopal (M.P.) came
to be challenged by way of appeal before the High Court under
Section 37 of the Act, 1996 – The appeal came to be dismissed –
Hence, the present Appeal before this Court.
Held: It was noted that the decision in M.P. Road Development
Authority & Anr v. L.G. Chaudhary Engineers & Contractors
(2018) 10 SCC 826 elucidated how the courts are expected to
deal with the various issues that may arise insofar as the pending
proceedings that were inadvertently initiated under the Arbitration
and Conciliation Act, 1996 and any awards already passed
thereunder are concerned – M.P. Road Development Authority v.
L.G. Chaudhary, (2018) 10 SCC 826 was referred to wherein it was
held that an arbitral award cannot be set aside solely on the ground
of jurisdiction if no objection was raised under Section 16(2) of the
2536 [2025] 5 S.C.R.

Supreme Court Reports

Arbitration and Conciliation Act, 1996 – However, other challenges
may be raised under Section 34 of the Act. [Paras 14, 15]

Arbitration and Conciliation Act, 1996 – M.P Madhyastham
Adhikaran Adhiniyam, 1983 – Stage at which plea regarding
jurisdictional error has to be raised – Plea of jurisdiction can
be raised under Section 34 of the Act even if no such objection
was raised under Section 16:
Held: In Lion Engineering Consultants v. State of Madhya Pradesh
(2018) 16 SCC 758, it was held that any legal plea arising on
undisputed facts can be raised in the proceedings under Section
34 of the Act, 1996 even if they were never raised under Section
16 – It further held that, such plea being a question of law arising
from admitted facts, can be raised without seeking any amendment
of the pleadings – Accordingly, it held that there is no bar to plea
of jurisdiction being raised by way of an objection under Section
34 of the Act even if no such objection was raised under Section
16. [Para 16]

Arbitration and Conciliation Act, 1996 – M.P Madhyastham
Adhikaran Adhiniyam, 1983 – There is no conflict between
Lion Engineering Consultants v. State of Madhya Pradesh
(2018) 16 SCC 758 & M.P. Road Development Authority v.
L.G. Chaudhary (2018) 10 SCC 826 if either omission in
referring to previous decision does not amount to a non-
consideration of the ratio of an earlier decision or where
there is no palpable conflict or contradiction in the ratio of
both decisions:
Held: It was contended that there exists a conflict between the
decisions of this Court in Lion Engineering and L.G. Chaudhary (II),
insofar as the issue of when a plea of lack of jurisdiction on the
basis of applicability of a State law can be raised. It was submitted
that Lion Engineering clearly holds that an objection of lack of
jurisdiction is a legal plea that may be raised for the first time in
the proceedings under Section 34 of the Act, 1996, even if the
same was never raised before the arbitral tribunal, and being
a question of law, Section 16 sub-section (2) of the Act, 1996
would have no application – However, in L.G. Chaudhary (II) it
was held that no plea of lack of jurisdiction can be raised in the
proceedings under Section 34 – This was contended to be per
[2025] 5 S.C.R. 2537

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

incurium and a contradictory view since L.G. Chaudhary (II) did not
refer to Lion Engineering – It was held that merely because L.G.
Chaudhary (II) does not refer to the decision of Lion Engineering,
would not render it per incuriam, if either such omission in referring
to previous decision does not amount to a non-consideration
of the ratio of an earlier decision or where there is no palpable
conflict or contradiction in the ratio of both decisions – If L.G.
Chaudhary (II) was not conscious of the position of law laid in
Lion Engineering, then there was no need for it to clarify that
an award would not be annulled only on the ground of lack of
jurisdiction – As even without the aforesaid clarification, such
awards would not have been susceptible to annulment, if not for
the ratio of Lion Engineering – Thus, it was held that even if L.G.
Chaudhary (II) does not refer to the decision of Lion Engineering,
it cannot be termed to be per incuriam, as the very factum that
the aforesaid observations were made by L.G. Chaudhary (II) in
paras 16, 17 and 19, shows that this Court was well aware of
the decision of Lion Engineering, and accordingly chose to carve
out an exception to the ratio of Lion Engineering keeping in mind
the cleavage of judicial view that was prevailing earlier – Lion
Engineering does not address the question whether an award may
be annulled only on the ground of lack of jurisdiction or not – It
does not disturb the settled position of law as regards the scope
of Section 34 of the Act, 1996 i.e., an award may be set aside
only if such lack of jurisdiction goes to the root of the matter and
results in patent illegality – On the contrary, L.G. Chaudhary (II)
specifically addresses this question in the context of the issue of
applicability of MP Act, 1983 and explicitly states that any award
already passed shall not be annulled only on the ground of lack
of jurisdiction where such plea was not raised at the relevant
stage – Thus, the aforesaid ratio of Lion Engineering by no stretch
can be construed to mean that such a plea of jurisdiction would
automatically result in annulment of an award, de hors the fact
whether such lack of jurisdiction goes to the root of the award
rendered or not – The ratio of L.G. Chaudhary (II) unlike Lion
Engineering does not deal with whether it is permissible for such
plea of jurisdiction to be raised under Section 34 or not, and only
deals with the issue whether an award may be annulled only on the
ground of jurisdiction or not, which was never an issue before Lion
Engineering, hence there is no conflict or contradiction between
the ratios of the aforesaid two decisions. [Para 19]
2538 [2025] 5 S.C.R.

Supreme Court Reports

It was held that L.G. Chaudhary (II) carved out an exception to
the general rule that was laid in Lion Engineering, that although a
plea of lack of jurisdiction being a question of law can be raised
for the first time in the proceedings under Section 34 of the Act,
1996, yet insofar as the MP Act, 1983 is concerned, particularly the
state of flux in which the position of law regarding its applicability
stood, in cases where either the award has already been passed
or where the statement of defence is already been filed, and no
plea of lack of jurisdiction or applicability of the MP Act, 1983,
has been raised before the arbitral tribunal, then such a plea of
jurisdiction will no longer be available, and the award cannot be
annulled solely on such ground. [Para 20]
Sweta Construction v. Chhattisgarh State Power Generation
Company Ltd. (2022) SCC OnLine SC 1447 referred to where
it was held that the law expounded in L.G. Chaudhary (II)
insofar as those awards which have already been passed are
concerned, should be read as one made by this Court under
Article 142 of the Constitution to do substantive justice inter se
the parties, keeping in mind the cleavage of judicial view earlier
and to ensure that the objective of arbitration as an expeditious
and effective alternative dispute resolution mechanism is not
defeated. [Para 23]

Arbitration and Conciliation Act, 1996 – M.P Madhyastham
Adhikaran Adhiniyam, 1983 – The question of whether a failure
to raise a plea of jurisdiction at the relevant stage in terms
of Section 16 sub-section (2) of the Act, 1996 would amount
to a ‘waiver’ or not was never examined or looked into by
Lion Engineering – This question left to the Court exercising
jurisdiction under Section 34:
Held: The observations made by this Court in Lion Engineering
that “We do not see any bar to plea of jurisdiction being raised by
way of an objection under Section 34 of the Act even if no such
objection was raised under Section 16” cannot be singled out and
construed devoid of its context – The aforesaid observations have
to be construed in light of the settled position of law by a catena
of decisions of this Court – The decision of this Court in Pam
Development has held that where a plea of lack of jurisdiction is
not raised before the arbitral tribunal, such a plea cannot be raised
[2025] 5 S.C.R. 2539

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

later in the proceedings under Section 34 – Pam Development
says this, not because such a plea is barred from being raised
only by virtue of Section 16 sub-section (2), but rather says
this, because such a plea is deemed to have been waived on
account of the failure of the party in raising such a plea – Thus,
Pam Development in no manner lays down that a plea of lack
of jurisdiction cannot be raised in the proceedings under Section
34 due to the bar of Section 16 sub-section (2) of the Act, 1996,
and thus to this extent both the decisions of Pam Development
and Lion Engineering are in tune with each other – The variance
between the decisions of Pam Development and Lion Engineering
is only in respect of whether a failure to raise such a plea at the
relevant stage in terms of Section 16 sub-section (2) of the Act,
1996 would amount to a ‘waiver’ or not, and this issue was never
examined or looked into by Lion Engineering – The observations
that it will be open for the respondents therein to argue that such
an object could be raised even without a formal pleading and that
it will be open for the appellants therein to argue the contrary,
clearly shows that the very issue of whether such a plea can
be allowed to be raised or not i.e., issues such as whether it is
a purely legal plea or whether there was any waiver or not etc.
were never decided by this Court in Lion Engineering and rather
was left to be gone into by the court under Section 34 of the Act,
1996. [Paras 32, 33]

Arbitration and Conciliation Act, 1996 – M.P Madhyastham
Adhikaran Adhiniyam, 1983 – Plea of jurisdiction cannot be
raised for the first time in proceedings under Section 34 as
it is deemed to have been waived, unless the party makes
out a strong and good reason for its failure to take such a
plea before the arbitral tribunal as per Gas Authority of India
Ltd. v. Keti Construction (I) Ltd. reported in (2007) 5 SCC 38:
Held: Although a plea of lack of jurisdiction, being a question of
law, can be raised even for the first time in the proceedings under
Section 34 as held in Lion Engineering, yet such a plea ought not
to be allowed to be raised as it is deemed to have been waived
in view of Section 4 of the Act, 1996 as per Pam Development,
unless the party makes out a strong and good reason for its failure
to take such a plea before the arbitral tribunal as per Gas Authority
of India Ltd. v. Keti Construction (I) Ltd. reported in (2007) 5 SCC
2540 [2025] 5 S.C.R.

Supreme Court Reports

38, and as per the dictum of L.G. Chaudhary (II) any failure to raise
the issue of applicability of the MP Act, 1983 before the arbitral
tribunal is not a strong and good reason to permit raising such a
plea in the proceedings under Section 34 of the Act, 1996. [Para 35]

Arbitration and Conciliation Act, 1996 – M.P Madhyastham
Adhikaran Adhiniyam, 1983 – Stage of seeking transfer to MP
Arbitration Tribunal – Explained:
Held: Where the arbitration proceedings are still underway, but
no statement of defence has been filed, there it would be open
for the parties to raise an objection of lack of jurisdiction in view
of the applicability of MP Act, 1983 – The parties will also be
at liberty to approach the High Court by way of a petition under
Article 227 of the Constitution for seeking a transfer of the
arbitration proceedings to the M.P. State Arbitration Tribunal under
the MP Act, 1983 – Where the arbitration proceedings are still
underway, but statement of defence has already been filed i.e.,
the relevant stage for raising an issue of jurisdiction is already
crossed, there it would not be open for the parties to raise an
objection of lack of jurisdiction in view of the applicability of MP
Act, 1983 – Furthermore, in such scenarios since the arbitration
proceedings have already commenced and made substantial
progress, it would not be appropriate to transfer such proceedings
to the M.P. State Arbitration Tribunal under the MP Act, 1983,
and the better course of action would be to let the arbitration
proceedings conclude – As per L.G. Chaudhary (II) where the
arbitration proceedings have concluded and an award has been
passed, and if no objection to the jurisdiction in view of the
applicability of MP Act, 1983 was taken at the relevant stage then
such an award cannot be annulled only on the ground of lack of
jurisdiction – Any award passed by an arbitral tribunal under the
Act, 1996, where otherwise the MP Act, 1983 was applicable,
such an award may be challenged or assailed in terms of Section
34 and thereafter Section 37 of the Act, 1996 and other relevant
provisions thereunder. [Para 38]

Case Law Cited
M.P. Road Development Authority & Anr. v. L.G. Chaudhary
Engineers & Contractors (2018) 10 SCC 826 – relied on.
[2025] 5 S.C.R. 2541

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

Lion Engineering Consultants v. State of Madhya Pradesh [2018] 6
SCR 683 : (2018) 16 SCC 758; Union of India v. Pam Development
(P) Ltd. [2014] 1 SCR 1069 : (2014) 11 SCC 366 – explained.
VA Tech Escher Wyass Flovel Limited v. M.P. State Electricity
Board & Anr. (2011) 13 SCC 261; MP Rural Road Development
Authority & Anr v. L.G. Chaudhary Engineers& Contractors [2012] 2
SCR 162 : (2012) 3 SCC 495; JMC Projects (India) Ltd v. Madhya
Pradesh Road Development Corporation, 2020 SCC OnLine
SC 1452; M.P. v. Anshuman Shukla [2008] 8 SCR 349 : (2008)
7 SCC 487; Ravikant Bansal v. M.P. Rural Road Development
Authority (2012) 3 SCC 513; MSP Infrastructure Ltd. v. M.P. Road
Development Corpn. Ltd. [2014] 13 SCR 1331: (2015) 13 SCC
713; Sweta Construction v. Chhattisgarh State Power Generation
Company Ltd., 2022 SCC OnLine SC 1447; Modern Builders v.
State of Madhya Pradesh & Anr. (2024) 10 SCC 637; Gas Authority
of India Ltd. v. Keti Construction (I) Ltd. [2007] 6 SCR 439 : (2007)
5 SCC 38; AC Chokshi Share Broker (P) Ltd. v. Jatin Pratap Desai
[2025] 2 SCR 1545 : 2025 SCC OnLine SC 281 – referred to.
Viva Highways Ltd & Ors v. M.P. Road Development Corporation
Limited, AIR 2017 MP 103 – referred to.

List of Acts
M.P. Madhyastham Adhikaran Adhiniyam, 1983; Arbitration and
Conciliation Act, 1996; Constitution of India.
List of Keywords
Arbitration; Waiver; Plea of jurisdiction; Arbitral award; Tribunal;
Section 34.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6856 of 2025
From the Judgment and Order dated 07.01.2022 of the High Court
of Madhya Pradesh Principal Seat at Jabalpur in AA No.79 of 2021

Appearances for Parties
Advs. for the Appellant:
Kaushik Laik, Ashay Kaushik, Shashank Tiwari.
Advs. for the Respondent:
Saurabh Mishra, Sr. Adv., Harmeet Singh Ruprah, Kanishk Sharma,
Paras Bajpai.
2542 [2025] 5 S.C.R.

Supreme Court Reports

Judgment / Order of the Supreme Court

Judgment

J.B. Pardiwala, J.

For the convenience of the exposition, this judgment is divided in
the following parts: -

INDEX*

A. FACTUAL MATRIX ................................................................ 3
B. ISSUES FOR DETERMINATION ........................................... 16
C. ANALYSIS .............................................................................. 16
i. Can an Award passed under the Act, 1996 be annulled
on the ground of lack of jurisdiction where no plea of
applicability of MP Act, 1993 was raised before the
Arbitral Tribunal? ............................................................ 34
a. Is there a conflict between the decisions of L.G.
Chaudhary (II) and Lion Engineering?...................... 37
b. Whether a plea of lack of jurisdiction may be raised
for the first time under Section 34 of the Act, 1996
if no such objection was taken before the arbitral
tribunal? .................................................................... 51
D. CONCLUSION ........................................................................... 58

1. Leave Granted.
2. This appeal arises from the judgment and order passed by the
High Court of Madhya Pradesh, Principal Seat at Jabalpur dated
07.01.2022 in Arbitration Appeal No. 79 of 2021 by which the appeal
filed by the appellant herein under Section 37 of the Arbitration
and Conciliation Act, 1996 (for short, the “Act, 1996”) came to be
dismissed thereby affirming the order dated 20.12.2019 passed by
the Commercial Court and 19th Additional Sessions Judge, Bhopal
(M.P.) allowing application filed by the respondent herein under
Section 34 of the Act, 1996.

* Ed. Note: Pagination as per the original Judgment.
[2025] 5 S.C.R. 2543

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

3. It appears that the respondent herein suffered an award dated
08.07.2011 passed by the Arbitral Tribunal (for short, the “Tribunal”).
The said award was challenged by the respondent Corporation under
Section 34 of the Act, 1996. The appeal filed by the Corporation
under Section 34 of the Act, 1996 came to be allowed on the ground
that the Tribunal had no jurisdiction to pass the award in view of the
provisions of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 (for
short, the “MP Act, 1983”). The order passed by the Commercial
Court and 19th Additional Sessions Judge, Bhopal (M.P.) came to be
challenged by way of appeal before the High Court under Section 37
of the Act, 1996. The appeal came to be dismissed.

A. FACTUAL MATRIX
4. The facts giving rise to this appeal may be summarised as under:-
(i) The appellant executed a “works contract” dated 12.12.2005
with the respondent for “Rehabilitation and Strengthening of
Khargone - Barwani Road (SH-26) Project Road No. 19” &
“Rehabilitation and Strengthening of Khargone - Bistan Road
(SH-31) Project Road No. 20” in the State of Madhya Pradesh.
Clause 67.3 of the “General Conditions of Contract” read with
Clause 67.4 of the “Conditions of Particular Application” provided
for arbitration as the means for resolution of disputes between
the Parties.
(ii) The arbitration agreement mandated that the tribunal shall
comprise of three members, one to be appointed by each
party and the two co-arbitrators had to nominate the presiding
arbitrator.
(iii) Clause 67.4 of the Conditions of Particular Application – Part-II
reads thus: -
“Sub-Clause 67.4 : Arbitration
Any dispute in respect of which:
a) the decision, if any, of the Board has not become
final and binding pursuant to Sub-Clause 67.2,
and
b) amicable settlement has not been reached:
2544 [2025] 5 S.C.R.

Supreme Court Reports

(i) In the case of dispute arising between
the Employer and a domestic Contractor
or between the Employer and a foreign
Contractor who opts for the application
of the Indian Arbitration and Conciliation
Act, 1996 related to any matter arising
out of or connected with this Contract,
such dispute shall be referred to the
award of two Arbitrators (one each to be
appointed by each party) and an Umpire
to be appointed by the Arbitrators, or if
there is no agreement, to be appointed
by the Arbitration Committee of the Indian
Council of Arbitration. The Indian Arbitration
and Conciliation Act, 1996, the rules there
under and any statutory modification or
re-enactment thereof, shall apply to these
arbitration proceedings; or (2) in the case
of dispute arising between the Employer
and a foreign Contractor, by application of
the UNCITRAL Arbitration Rules related
to any matter arising out of or connected
with this Contract, such dispute shaft be
referred to the award of two Arbitrators
(one each to be appointed by each party)
and an Umpire to be appointed by the
Arbitrators, or if there is no agreement, to
be appointed by the International Centre
for Alternative Dispute Resolution (ICADR).
The UNCITRAL Arbitration Rules shall
apply to the arbitration proceedings.
(ii) Neither party shall be limited in the
proceedings before such arbitrators to the
evidence or arguments already put before
the Engineer, for the purpose of obtaining
his said decision. No such decision shall
disqualify the Engineer from being called
as a witness and giving evidence before
the arbitrators or any matter whatsoever
relevant to the dispute.
[2025] 5 S.C.R. 2545

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

(iii) The reference to arbitration may proceed
notwithstanding that the Works shall not
then be or be alleged to be complete,
provided always that the obligations of the
Employer, the Engineer and the Contractor
shall not be altered by the reason of the
arbitration being conducted during the
progress of the Works. Neither party
shall be entitled to suspend the Works,
and payment to the Contractor shall be
continued to be made as provided by the
Contract.
(iv) If one of the parties fail to appoint its
arbitrators in pursuance of sub para
(i) and (ii) above, within 60 days after
receipt of the notice of the appointment
of its arbitrators by the other party, then
the Secretary General of the Permanent
Court of Arbitration, the Hague, in the
case of foreign contractors opting for the
application of the UNCITRAL Arbitration
Rules, or the Ministry of Road Transport and
Highways in the case of Indian contractors,
and the foreign contractors who opt for
the application of Indian Arbitration and
Conciliation Act 1996, as the case may
be, shall appoint the arbitrator. A certified
copy of the Secretary General’s order or
Ministry of Road Transport and Highways
order, as the case may be, making such
an appointment shall be furnished to both
the parties.
(v) Arbitration proceedings shall be held at
Bhopal, India, and the language of the
arbitration proceedings and that of all
documents and communications between
the parties shall be English.
(vi) The decision of the majority of arbitrators
shall be final and binding upon both
2546 [2025] 5 S.C.R.

Supreme Court Reports

parties. The expenses of the arbitrators
as determined by the arbitrators shall
be shared equally by the Employer and
the Contractor, However, the expenses
incurred by each party in connection
with the preparation, presentation, etc.,
of its case prior to, during and after the
arbitration proceeding shall be borne by
each party itself.
(vii) All arbitration awards shall be in writing
and shall state the reasons for the award.”
(iv) This Court vide its judgment dated 14.01.2010 in the matter of
VA Tech Escher Wyass Flovel Limited v. M.P. State Electricity
Board & Anr. reported in (2011) 13 SCC 261, held that the
State Act would apply only to such works contracts which did
not have an arbitration clause.
(v) In VA Tech (supra), this Court held as under: -
“1. Heard the learned counsel for the parties. This
appeal has been filed against the impugned judgment
of the High Court of Madhya Pradesh dated 5-3-
2003. It appears that the appellant was awarded
a work contract by the respondents. There was
some dispute between the parties and there is an
arbitration clause in the agreement. The appellant
filed an application under Section 9 of the Arbitration
and Conciliation Act, 1996 (for short “the 1996 Act”)
which was rejected by the learned Additional District
Judge and that order has been upheld by the High
Court. Hence, this appeal.
2. Section 7(1) of the Madhya Pradesh Madhyastham
Adhikaran Adhiniyam, 1983 (for short “the 1983 Act”)
provides as follows:
“7. Reference to Tribunal.—(1) Either party
to a works contract shall irrespective of
the fact whether the agreement contains
an arbitration clause or not, refer in writing
the dispute to the Tribunal.”
[2025] 5 S.C.R. 2547

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

3. Subsequently, Parliament enacted the 1996 Act.
The 1996 Act only applies where there is an arbitration
clause but it does not apply where there is none. The
1996 Act covers all kinds of disputes including the
dispute relating to work contracts. In our opinion, the
1983 Act and the 1996 Act can be harmonised by
holding that the 1983 Act only applies where there is
no arbitration clause but it stands impliedly repealed
by the 1996 Act where there is an arbitration clause.
We hold accordingly. Hence, the impugned judgment
cannot be sustained and we hold that the application
under Section 9 of the 1996 Act was maintainable.
4. The appeal is allowed accordingly. No costs.”
(vi) The disputes arose between the parties from 06.08.2010
onwards in relation to the appellant’s right to be reimbursed
additional cost incurred by it on account of introduction of
subsequent legislation on increase in entry tax on High-Speed
Diesel under Clause 70.8 of the Particular Conditions of Contract.
(vii) The appellant invoked arbitration under Clause 67.4 vide its
notice dated 06.08.2010 and the Tribunal stood constituted on
24.09.2010.
(viii) The Tribunal passed a unanimous award dated 08.07.2011
in favour of the appellant for a sum of Rs. 1,03,55,187 (i.e.
Rs. 1.04 Crore). The relevant paras 1.19 and 3.1 respectively
of the Arbitral Award are as follows: -
“1.19 The valuation of the claim as assessed by the
Engineer in its letter dt 18.03.2009 (CD - 01 pages
20 & 21) and recommended for reimbursement is
Rs 1,03,55,187.00. This amount is agreed to by both
the parties as the valuation of the claim.
3.1 The Claimant has referred two claims for
arbitration before this AT. After careful examination
and consideration of the written/ oral submissions
and evidence presented by both the parties to the
extent relevant, AT awards amounts against each
claim as under:
2548 [2025] 5 S.C.R.

Supreme Court Reports

Amount Claimed Amount Awarded
Claim No. 1 Rs. 1,03,55,187.00 Rs. 1,03,55,187.00
Claim No. 2 Amount not specified Rs. Nil
................................. ...............................
Total Amount Rs. 1,03,55,187.00 Rs. 1,03,55,187.00
plus Interest.

(ix) As is evident from Para 1.19 of the Award quoted above, the
quantification of this amount was in-fact recommended by the
Engineer and had been admitted by the respondent. The Tribunal
also awarded future interest at the rate of 10% p.a. from the
date of the award till the date of actual payment as per para
3.1. As of 17.02.2025, the amount payable by the respondent
to the appellant stands at Rs. 2,44,63,775.
(x) The respondent challenged the award before the Civil Court
under Section 34 of the Arbitration Act vide a petition filed on
30.09.2011. However, the respondent in its petition admittedly
did not challenge the jurisdiction of the Tribunal. The respondent
has admitted this fact in Para 5 of its counter affidavit filed
before this Court. The respondent’s grounds for challenge
were essentially on matters of appreciation of evidence by the
Tribunal which grounds were, in any case, untenable given the
limited scope of Section 34 of the Arbitration Act.
(xi) A two Judge Bench of this Court delivered a judgment in the
matter titled MP Rural Road Development Authority & Anr v.
L.G. Chaudhary Engineers & Contractors, reported in (2012)
3 SCC 495, wherein it held VA Tech (supra) to be per incuriam.
The relevant para 42 reads as under: -
“42. Therefore, the appeal is allowed and the judgment
of the High Court which is based on the reasoning of
Va Tech [Va Tech Escher Wyass Flovel Ltd. v. M.P.
SEB, Misc. Appeal No. 380 of 2003, order dated
5-3-2003 (MP)] is set aside. This Court holds that the
decision in Va Tech [(2011) 13 SCC 261] has been
rendered per incuriam. In that view of the matter the
arbitration proceeding may proceed under the M.P.
Act of 1983 and not under the AC Act, 1996.”
[2025] 5 S.C.R. 2549

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

(xii) The Division Bench, however, differed on the point of applicability
of the State Act to such works contracts which had been
terminated, and this difference of opinion caused this matter
to be referred to a larger bench in the follow terms: -
“Order
60. In view of some divergence of views expressed in
the two judgments delivered today by us, the matter
may be placed before the Hon’ble the Chief Justice
of India for constituting a larger Bench to resolve
the divergence.”
(xiii) The appellant filed its reply dated 16.03.2012 before the Civil
Court wherein each of the grounds raised by the respondent
in its Section 34 petition were duly responded to.
(xiv) Relying on the judgment of this Court in L.G. Chaudhary (I)
(supra), the respondent moved an application dated 26.06.2012
before the Civil Court seeking to introduce the ground of lack
of jurisdiction in its Section 34 petition.
(xv) A Full-Bench of the High Court delivered a judgment dated
05.05.2017 in the matter of Viva Highways Ltd & Ors v.
M.P. Road Development Corporation Limited, reported in
AIR 2017 MP 103, which, in-effect, reiterated the ratio of L.G.
Chaudhary (I) (supra) insofar as this Court had held that the
State Act would apply to all work contracts in the State of
Madhya Pradesh notwithstanding the existing of an arbitration
agreement therein.
(xvi) Relying on the Full Bench decision of the High Court, referred to
above, the respondent moved yet one another application dated
15.01.2018 before the Civil Court wherein it again sought to
introduce additional grounds to its Section 34 petition contending
lack of jurisdiction of the Tribunal.
(xvii) A three-Judge Bench of this Court delivered a judgment on
22.03.2018, in the matter of Lion Engineering Consultants v.
State of Madhya Pradesh reported in (2018) 16 SCC 758,
taking the view that objections regarding lack of jurisdiction of
an arbitral tribunal, being a question of law, can be raised in
Section 34 proceedings even if no such objections had been
2550 [2025] 5 S.C.R.

Supreme Court Reports

raised during the arbitral proceedings. Para 4 thereof is to the
following effect: -
“4. 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. We do
not see any bar to plea of jurisdiction being raised by
way of an objection under Section 34 of the Act even
if no such objection was raised under Section 16.”
(xviii) A three-Judge Bench of this Court passed its judgment in M.P.
Road Development Authority & Anr v. L.G. Chaudhary
Engineers & Contractors reported in (2018) 10 SCC 826,
effectively stating that the State Act would prevail over the
Arbitration Act in light of Section 2(4) of the Arbitration Act.
The relevant para 14 is quoted below: -
“14. In view of the above, we are of the view that the
State law will prevail in terms of Section 2(4) of the
Central Act. The reference under the State law was
valid and could be decided in accordance with the
State. Accordingly, we set aside the impugned order
[Gammon India Ltd. v. State of M.P., WP No. 8375
of 2010, order dated 29-11-2010 (MP)] and restore
the proceedings before the Tribunal. The appeal is,
accordingly, allowed in above terms.”
(xix) In para 17 of the aforesaid judgment, however, this Court
categorically excluded such cases where awards had already
been made. It was held that “in such cases, if no objection to
the jurisdiction was taken at relevant stage, the award may
not be annulled on that ground”. It is necessary to quote para
17 as under: -
“17. We do not express any opinion on the applicability
of the State Act where award has already been made.
In such cases if no objection to the jurisdiction of the
arbitration was taken at relevant stage, the award
may not be annulled only on that ground.”
(xx) In the present case, the respondent had admittedly not raised
the issue of jurisdiction either before the Tribunal nor in its
[2025] 5 S.C.R. 2551

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

initial petition filed under Section 34. Clearly, therefore, the
instant case fell within the ambit of Para 17 of LG Choudhary-
II referred to above.
(xxi) The Civil Court passed its judgment dated 20.12.2019 allowing
the respondent’s Section 34 petition on the ground that the
Tribunal lacked jurisdiction to adjudicate the disputes. The Court
observed, albeit erroneously, that para 17 of L.G. Chaudhary
(II) (supra) did not save the instant case, inasmuch as the
issue of jurisdiction could have been raised in the Section
34 proceeding even though no such objection had been ever
raised during the arbitral proceedings. The paras 12 and 13
respectively read as follows: -
“12. The relevant part of the Hon’ble Supreme Court’s
precedent- “M.P. Rural Road Road Development
Authority & Ors. Vs. M/s L.G. Chaudhary Engineering
and Construction Civil Appeal No. 974/12 dated 13-
03-2018” is as follows:
“We do not express any opinion on the
applicability of the State Act where award
has already been made. In such cases if no
objection to the jurisdiction of the arbitration
was taken at relevant stage, the award may
not be annulled only that ground.”
13. It is also observable that as far as the question
of non-objection of the Applicants on the point
of jurisdiction of the arbitrator is concerned, the
provisions under Section 34 (2) (B) confers special
jurisdiction to the Courts, where it does not need
to rely on the objections or non-objections of either
party. Under Section 34 (2) (B) (i) if the Court is
aware that the subject matter of the dispute is not
arbitrable under the said act, then such an arbitral
award can be set aside by the Court. Apart from this,
it is also observable that Clause 28 of the Contract
also regards such provisions as void, which confers
jurisdiction to Courts not having jurisdiction. It has
been clarified by the Hon’ble Supreme Court in M/s
L.G. Choudhary with regards to the above precedent
2552 [2025] 5 S.C.R.

Supreme Court Reports

that wherever award has been passed, even in those
cases, the above objection can be raised at the time
of application under Section 34 of the Central Act.
It is for this reason the argument made by the Non-
Applicant in this context is not just.”
(xxii) This Court in JMC Projects (India) Ltd v. Madhya Pradesh
Road Development Corporation reported in (2020) SCC
OnLine SC 1452 took note of the exception carved out in
L.G. Chaudhary (II) (supra). In a case based on similar facts,
this Court held that the award should not be set aside on
the ground of jurisdiction alone. The order dated 10.01.2020
passed by this Court is as follows: -
“Leave granted.
Mr. K. V. Vishwanathan, learned senior counsel
appearing for the appellant, has shown us our order
dated 08.03.2018 in Madhya Pradesh Rural Road
Development Authority & Anr. v. M/s. L. G. Chaudhary
Engineers and Contractors (Civil Appeal No. 974 of
2012) (being the lead case) and has pointed out
paragraph Nos. 22 to 27 thereof which are quoted
hereinbelow:
“C.A. No. 2751 of 2018 @ SLP (C)No.
11615/2012, C.A. No. 2753 of 2018 @ SLP
(C)No. 11617/2012, C.A. No. 2754 of 2018
@ SLP (C)No. 11618/2012, C.A. No. 2755
of 2018 @ SLP (C)No. 11619/2012, C.A.
Nos. 2756-2757 of 2018 @ SLP (C)Nos.
11633-11634/2012, C.A. Nos. 2758-2759
of 2018 @ SLP (C)Nos. 11631-11632/2012
& C.A. Nos. 2760-2761 of 2018 @ SLP
(C)No. 11628- 11629/2012:
22. We do not express any opinion on the
applicability of the State Act where award
has already been made. In such cases if no
objection to the jurisdiction of the arbitration
was taken at relevant stage, the award
may not be annulled only on that ground.
[2025] 5 S.C.R. 2553

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

23. The appeals are, accordingly, disposed
of.
C.A. No. 2616@ SLP (C)No. 35641/2011:
24. Leave granted.
25. In view of order passed in C.A. No.
2751 of 2018 @ SLP (C)No. 16615/2012,
no objection having been raised by the
respondents in terms of Section 16(2) of
the Arbitration and Conciliation Act, 1996 at
appropriate stage within the time stipulated,
the award could not have been annulled.
26. Accordingly, this appeal is allowed, the
impugned judgment is set aside and the
award is restored.
27. It is, however make it clear that
this order will not debar proceedings
under Section 34 of the Arbitration and
Conciliation Act, 1996.”
It is clear that in the present case, an Award has
already been passed which is dated 07.01.2011.
This being the case, and following the aforesaid
judgment of this Court, the impugned judgment dated
24.10.2018 is set aside. The Section 34 proceedings
will continue with all objections that may be raised
but excluding the objection as to the applicability
of the Madhya Pradesh Madhyastham Adhikaran
Adhiniyam, 1983.
The matter stands disposed of accordingly.”
(xxiii) The High Court passed the impugned judgment dated
07.01.2022 under Section 37 of the Act of 1996. The High
Court held that the Tribunal lacked jurisdiction to adjudicate
the disputes between the parties. The High Court, in effect,
held that the exception carved out in L.G. Chaudhary (II)
(supra), as reiterated in JMC Projects (supra), could not be
relied upon as JMC Projects (supra) had not considered the
2554 [2025] 5 S.C.R.

Supreme Court Reports

law laid down by this Court in Lion Engineering (supra).
Paras 21, 22 and 23 respectively of the impugned judgment
dated 07.01.2022 are as under: -
“21. Now, we shall consider the specific objection of
the appellant regarding lack of objection on jurisdiction
under Section 16(2) of the Act of 1996 before the
arbitral tribunal in view of order dated 13.03.2018 in
C.A. No. 2616 of 201810 and in M/s. JMC Projects
(India) Ltd.
22. It is true that the Hon’ble Supreme Court in its
order dated 13.03.2018 in C.A.No.2616 of 2018 has
held that award cannot be annulled on the ground
of lack of jurisdiction if the objection under Section
16(2) was not taken before the arbitral tribunal. This
view was based on a decision of two judge bench
of the Hon’ble Supreme Court in MSP Infrastructure
Ltd. Vs. M.P. Road Development Corp. Ltd.
23. However, a bench of three-judges of the Hon’ble
Supreme Court in a subsequent decision in Lion Engg.
Consultants Vs. State of M.P. partly overruled MSP
Infrastructure Ltd and held that the objection regarding
lack of jurisdiction can be taken under Section 34 of
the Act of 1996, even if no objection under Section
16(2) was taken before the arbitral tribunal. Thus, in
view of the subsequent decision of the larger bench,
this Court is of the view that the objection regarding
lack of jurisdiction could have been taken before the
learned trial Court under Section 34 of the Act of 1996,
even though no such objection was taken before the
arbitral tribunal under Section 16(2) of the Act. The
Hon’ble Supreme Court in the matter of M/s. JMC
Projects (India) Ltd. has not referred to the decision in
the matter of Lion Engineers which was subsequent
to the decision of C.A. No. 2616 of 2018. Hence,
The learned trial Court acted in accordance with law
while entertaining the objection under Section 34 of
the 1996 Act and setting aside the arbitral award on
the ground of lack of jurisdiction.”
[2025] 5 S.C.R. 2555

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

B. ISSUES FOR DETERMINATION
5. Having heard the learned counsels appearing for the parties and
having gone through the materials on record, the two pivotal questions
that fall for our consideration are as under: -
I. Whether an arbitral award rendered under the Act, 1996 where
the arbitration proceedings was to be governed by the MP Act,
1983, can be set-aside or annulled solely on the ground of lack
of jurisdiction, even when no such plea was raised before the
arbitral tribunal in terms of Section 16 sub-section (2) of the
Act, 1996?
II. Whether the decision of this Court in LG Choudhary (II) (supra)
could be said to be per incuriam for not having taken into
consideration the decision of this Court in Lion Engineering
(supra)? In other words, whether there is any conflict between
the decisions of this Court in Lion Engineering (supra) and LG
Choudhary (II) (supra), insofar as the observations pertaining
to the stage at which a plea of lack of jurisdiction may be raised
under the Act, 1996, are concerned?

C. ANALYSIS
6. The MP Act, 1983 was first looked into by this Court in the case of
State of M.P. v. Anshuman Shukla reported in (2008) 7 SCC 487.
This Court speaking through S.B. Sinha J. (as he then was) after
going through the various provisions of the MP Act, 1983, observed
that the said legislation was a special Act that was enacted for
providing compulsory arbitration on disputes to which the State
Government or a public undertaking (wholly or substantially owned
or controlled by the State Government), is a party, and for matters
incidental thereto or connected therewith. It observed that the MP
Act, 1983 postulates creation of a separate forum for the purpose of
determination of disputes arising inter alia out of the works contract.
The Madhya Pradesh Arbitration Tribunal established thereunder, is
not a domestic or an ad hoc arbitral tribunal, by virtue of the unique
scheme of provisions that govern its framework. The members of the
MP Arbitral Tribunal are not nominated by the parties, the Tribunal
has the power to reject a reference for arbitration; it has the power to
suo-motu summon records; take note of evidence; award costs and
2556 [2025] 5 S.C.R.

Supreme Court Reports

interests. The Chairperson of the M.P. State Arbitration Tribunal has
the power to refer disputes to another bench. It contains provisions,
prescribing a special time-limit and procedure for the passing of an
award and for its subsequent challenge, respectively. Accordingly,
this Court held that the provisions of the Arbitration Act, 1940 (for
short, the “Act, 1940”) and the Act, 1996 would have no application
to arbitrations governed by the MP Act, 1983 or any award passed
thereunder. The relevant observations read as under: -
“3. Before embarking on the said question we may notice
the statutory provisions of the Act for resolution of the
legal issue.
4. The Act came into force with effect from 1-3-1985. It
was enacted to provide for the establishment of a tribunal
to arbitrate on disputes to which the State Government
or a public undertaking (wholly or substantially owned or
controlled by the State Government), is a party, and for
matters incidental thereto or connected therewith.
5. The Arbitral Tribunal is constituted in terms of Section
3 of the Act for resolving all disputes and differences
pertaining to works contract or arising out of or connected
with execution, discharge or satisfaction of any such works
contract.
6. Section 7 provides for reference to the Tribunal. Such
reference may be made irrespective of the fact as to
whether the agreement contains an arbitration clause or
not. Section 7-A provides for the particulars on the basis
whereof the reference petition is to be filed. Section 7-B
provides for limitation for filing an application [...]
7. Chapter IV of the Act contains Sections 16 to 18. Section
16 deals with passing of an award by the Tribunal and/or
its Benches. Section 17 gives finality to the award made
thereunder. Such awards made, in terms of Section 18
would be deemed to be a decree within the meaning of
Section 2(2) of the Code of Civil Procedure, 1908. Section
19 confers a power of revision on the High Court [...]

xxx xxx xxx
[2025] 5 S.C.R. 2557

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

14. The Act is a special Act. It provided for compulsory
arbitration. It provides for a reference. The Tribunal has the
power of rejecting the reference at the threshold. It provides
for a special limitation. It fixes a time-limit for passing an
award. Section 14 of the Act provides that proceeding and
the award can be challenged under special circumstances.
Section 17, as noticed hereinbefore, provides for finality
of the award, notwithstanding anything to the contrary
contained in any other law relating to arbitration.

xxx xxx xxx
28. The provisions of the Act referred to hereinbefore
clearly postulate that the State of Madhya Pradesh has
created a separate forum for the purpose of determination
of disputes arising inter alia out of the works contract. The
Tribunal is not one which can be said to be a domestic
tribunal. The Members of the Tribunal are not nominated
by the parties. The disputants do not have any control over
their appointment. The Tribunal may reject a reference
at the threshold. It has the power to summon records. It
has the power to record evidence. Its functions are not
limited to one Bench. The Chairman of the Tribunal can
refer the disputes to another Bench. Its decision is final. It
can award costs. It can award interests. The finality of the
decision is fortified by a legal fiction created by making an
award a decree of a civil court. It is executable as a decree
of a civil court. The award of the Arbitral Tribunal is not
subject to the provisions of the Arbitration Act, 1940 and
the Arbitration and Conciliation Act, 1996. The provisions
of the said Acts have no application.
29. We are, therefore, of the opinion that the Tribunal for all
intent and purport is a court. The Tribunal has to determine
a lis. There are two parties before it. Its proceedings are
judicial proceedings subject to the revisional order which
may be passed by the High Court.
(Emphasis supplied)

7. In VA Tech (supra) the short point that fell for the consideration
of this Court was whether, an application under Section 9 of the
2558 [2025] 5 S.C.R.

Supreme Court Reports

Act, 1996 could be said to be maintainable, where the arbitration
proceedings were governed by the MP Act, 1983. In other words,
where the dispute had to be resolved by way of arbitration in
terms of the MP Act, 1983, more particularly Section 7(1), thereof,
could the Act, 1996 be said to also be applicable simultaneously
or alternatively for such disputes. This Court held that since both
the MP Act, 1983 and the Act, 1996 respectively were similar in
nature inasmuch as both provided frameworks for resolution of
dispute by way of arbitration, any potential conflict or overlap in
their application ought to be construed harmoniously. This Court
observed that the gravamen of Section 7 of the MP Act, 1983 which
provided for reference to arbitral tribunal was only to make arbitration
compulsory for resolving disputes arising out of work contracts
involving either the State Government or a Public Undertaking of
Madhya Pradesh. As per VA Tech (supra) what has been conveyed
in so many words by the plain language of Section 7 of the MP
Act, 1983 is only to mandate arbitration in respect of such work
contracts, and the said provision by no means in the opinion of
this Court was intended to override any legislation enacted by the
Parliament, be it the Act, 1996 (sic or the Arbitration Act, 1940).
As per VA Tech (supra), Section 7 of the MP Act, 1983 cannot be
construed to oust the application of Act, 1996 to the arbitration
clauses which are otherwise governed by the provisions of the said
Act. Accordingly, it held that the MP Act, 1983 would apply only to
the disputes pertaining to work contracts as aforementioned which
do not contain an arbitration clause i.e., where the Act, 1996 is
otherwise inapplicable. In all other disputes, where the work contract
contains an arbitration clause, the Act, 1996 would be applicable
and the MP Act, 1983 inapplicable.
8. Remarkably, the decision of this Court in VA Tech (supra) inadvertently
failed to take into consideration and refer to its earlier decision in
Anshuman Shukla (supra).
9. However, interestingly in the subsequent decision of Ravikant
Bansal v. M.P. Rural Road Development Authority reported in
(2012) 3 SCC 513, a coordinate bench of this Court comprising of
one of the judges (Markandey Katju J.) who had earlier delivered the
decision of VA Tech (supra), held that the ratio of VA Tech (supra)
would not be applicable where the arbitration clause itself expressly
stipulates that the arbitration would take place before the Madhya
[2025] 5 S.C.R. 2559

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

Pradesh Arbitration Tribunal in terms of the MP Act, 1983. In other
words, Ravikant Bansal (supra) held that where the arbitration
clause stipulates that the arbitration proceedings have to take place
in terms of the MP Act, 1983 or by the arbitral tribunal established
thereunder, then the Act, 1996 would have no application. The
relevant observations read as under: -
“2. This petition has been filed against the judgment
and order dated 11-3-2011 passed by the High Court of
Madhya Pradesh at Gwalior Bench in Ravikant Bansal
v. M.P. Rural Road Development Authority. The learned
counsel for the petitioner has relied on a decision of this
Court in Va Tech Escher Wyass Flovel Ltd. v. M.P. SEB2
decided on 14-1-2010.
3. We are of the opinion that the aforesaid decision is
distinguishable because in the present case the arbitration
clause itself mentions that the arbitration will be by the
Madhya Pradesh Arbitration Tribunal. Hence, in this case
arbitration has to be done by the Tribunal.”
10. In view of the conflict between Anshuman Shukla (supra) and VA
Tech (supra), and that between VA Tech (supra) and Ravikant
Bansal (supra), the issue as regards the applicability of the MP Act,
1983 viz- à-viz the Act, 1996 once again fell for the consideration
of this Court in L.G. Chaudhary (I) (supra). In L.G. Chaudhary
(I) (supra) the question before this Court was whether the MP Act,
1983 and the arbitral tribunal statutorily established thereunder,
would continue to have jurisdiction over disputes pertaining to work
contracts as mentioned in Section(s) 2(d) and 2(i) thereunder, in
view of the subsequent enactment of the Act, 1996.
11. In L.G. Chaudhary (I) (supra), A.K. Ganguly J. (as he then was)
held that the MP Act, 1983 is a special law providing for statutory
arbitration in the State of Madhya Pradesh. The opinion of A.K.
Ganguly J. is in two parts: -
(i) First, placing reliance on the decision of Anshuman Shukla
(supra), it was held that the MP Arbitral Tribunal established
thereunder had distinct features from an ordinary arbitral
tribunal constituted in terms of the Act, 1996. It observed
that the structure of the M.P. State Arbitration Tribunal, the
2560 [2025] 5 S.C.R.

Supreme Court Reports

manner of appointment and term of office of its members was
significantly at variance from that under the Act, 1996. Unlike
the Act, 1996, the MP Act, 1983 vests the MP Arbitral Tribunal
with inherent powers that may be necessary for the ends of
justice or to prevent abuse of the process of the Tribunal.
Even the procedure for making a reference to arbitration, for
passing an award thereunder, thereafter challenging it and
the limitation period thereof, was in stark contrast to the Act,
1996. Accordingly, it held that in view of the unique statutory
provisions governing the framework of arbitration under the
MP Act, 1983 that are either absent or at variance with the
Act, 1996, shows that there is inconsistency between the
two legislations, and that the M.P. State Arbitration Tribunal
as held in Anshuman Shukla (supra) is akin to a statutory
forum for adjudication of disputes in contrast to an arbitral
tribunal under the Act, 1996 whose edifice is party autonomy.
Accordingly, it held VA Tech (supra) to be per incuriam. The
relevant observations read as under: -
“18. If this Court compares the provisions of the M.P.
Act with the AC Act, 1996 then the Court finds that
the provisions of the M.P. Act are inconsistent with
the provisions of the AC Act, 1996. The M.P. Act is
a special law providing for statutory arbitration in
the State of Madhya Pradesh even in the absence
of arbitration agreement. Under the provisions of
the AC Act, 1996 in the absence of an arbitration
agreement, arbitration is not possible. There is also
difference in the formation of the Arbitration Tribunal
as is clear from Section 2(1)(d) of the AC Act, 1996.
Again, under the AC Act, 1996, “Arbitral Tribunal” is
defined under Section 2(1)(d) as a sole arbitrator or
a panel of arbitrators. But under the M.P. Act such
a Tribunal is created under Sections 3 and 4 of the
Act. And under the M.P. Act “dispute” has a special
meaning as defined under Section 2(d) of the Act
whereas “dispute” has not been defined under the
AC Act, 1996.

xxx xxx xxx
[2025] 5 S.C.R. 2561

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

20. The structure of the Tribunal under the M.P. Act
is also different from the structure of a Tribunal under
the AC Act, 1996. It is clear from Section 4 of the
M.P. Act that the composition of the Tribunal and their
qualification is statutorily provided [...]
21. The term of office and salaries and allowances
are also statutorily provided under Sections 5 and 6
of the M.P. Act. Section 8 provides for the procedure
to be followed by the Tribunal on receipt of reference
and Section 9 provides for the constitution of Benches
and the Chairman’s power of distribution of business.
Under Section 16(2) of the M.P. Act there is a time-
limit for giving the award which is absent in the AC
Act, 1996.
22. Section 17-A of the M.P. Act confers inherent
power on the Arbitral Tribunal to make orders as may
be necessary for the ends of justice or to prevent
abuse of the process of the Tribunal. Section 17-B
also provides for power conferred on the Tribunal
for correction of clerical or arithmetical mistakes. No
such power is given to an Arbitral Tribunal under the
AC Act, 1996. Section 19 of the M.P. Act gives the
High Court the suo motu power of revision. The High
Court has also been given the power of revision to be
exercised on an application made by an aggrieved
party within three months of the award. While doing
so, the High Court is to act like a Revisional Court
under Section 115 CPC.
23. It is clear from the aforesaid enumeration of
the statutory provisions that under the M.P. Act the
parties’ autonomy in the choice of Arbitral Tribunal
is not there.
24. In State of M.P. v. Anshuman Shukla this Court
while referring to the M.P. Act and dealing with the
nature of the Arbitral Tribunal constituted under the
said Act held that the said Act is a special Act and
provides for compulsory arbitration. It provides for
a reference and the Tribunal has been given the
2562 [2025] 5 S.C.R.

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power of rejecting the reference at the threshold.
It also held that the M.P. Act provides for a special
limitation and fixes a time-limit for passing an award.
It has also been held that Section 14 of the M.P. Act
provides that the award can be challenged under
special circumstances and Section 17 provides for
finality of the award, notwithstanding anything to
the contrary contained in any other law relating to
arbitration. All these features of the Act were pointed
out by this Court in Anshuman Shukla to show that
there is inconsistency between the provisions of the
AC Act, 1996 and those of the M.P. Act.

xxx xxx xxx
26. It is clear, therefore, that in view of the aforesaid
finding of a coordinate Bench of this Court on the
distinct features of an Arbitral Tribunal under the said
M.P. Act in Anshuman Shukla case5 the provisions of
the M.P. Act are saved under Section 2(4) of the AC
Act, 1996. This Court while rendering the decision in
Va Tech has not either noticed the previous decision
of the coordinate Bench of this Court in Anshuman
Shukla or the provisions of Section 2(4) of the AC
Act, 1996. Therefore, we are constrained to hold that
the decision of this Court in Va Tech was rendered
per incuriam.”
(Emphasis supplied)

(ii) Secondly, A.K. Ganguly J. negativing the argument of there
being a repugnancy between the Act, 1996 and the MP Act,
1983, observed that since the Act, 1996, more particularly
Section 2 sub-section (4) clearly stipulates that Part I of the
Act, 1996 shall apply insofar as the provisions thereunder are
not inconsistent with the other enactment or with any other
rule made thereunder, the MP Act, 1983 respectively and its
provisions will have precedence and continue to apply over an
above the Act, 1996. It further observed that although the Act,
1996 came into force after the MP Act, 1983 yet there is nothing
to indicate that the Act, 1996 either expressly or impliedly has
[2025] 5 S.C.R. 2563

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

repealed the MP Act, 1983. The aforesaid is reinforced from
Section 2 sub-section (5) of the Act, 1996 which contains a
saving clause for other laws being already in force in India. On
the contrary, Section 85 of the Act, 1996 when read with Section
2 sub-section(s) (4) and (5) shows that the legislature had no
such intention to repeal the MP Act, 1983. Even otherwise, the
subject-matter of the MP Act, 1983 falls within the concurrent
list, and the said Act had received the assent of the President
while the erstwhile Arbitration Act, 1940 was in force. Both
the Acts operated in view of Section 46 of the 1940 Act. The
relevant observations read as under: -
“16. If this Court looks at Section 2(4) of the AC Act,
1996, it will appear that Part I of the AC Act, 1996 which
is from Section 2 to Section 43, shall, except sub-section
(1) of Section 40 and Sections 41 and 43, apply to every
arbitration under any other enactment for the time being in
force where the arbitration was pursuant to an arbitration
agreement except insofar as the provisions of this Part i.e.
Part I are inconsistent with the other enactment or with
any other rule made thereunder.
17. Similar provision relating to statutory arbitration was
also there in Section 46 of the Arbitration Act, 1940. [...]

xxx xxx xxx
36. In reply the learned counsel for the respondent only
submitted that the M.P. Act is repugnant to the AC Act,
1996 since the same is a later Act made by Parliament.
The learned counsel referred to the provisions of Article
254 of the Constitution. The learned counsel also urged
that in view of the provision of Section 85 of the AC Act,
1996, the M.P. Act stands impliedly repealed.
37. The said argument cannot be accepted. The provision
for repeal under Section 85 of the AC Act, 1996 does not
show that there is any express repeal of the M.P. Act.
Apart from that, the provision of Section 2(4) of the AC
Act clearly militates against the aforesaid submissions.
38. The argument of repugnancy is also not tenable. Entry
13 of the Concurrent List in the Seventh Schedule of the
2564 [2025] 5 S.C.R.

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Constitution runs as follows [...] In view of the aforesaid
entry, the State Government is competent to enact laws
in relation to arbitration.
39. The M.P. Act of 1983 was made when the previous
Arbitration Act of 1940 was in the field. That Act of 1940
was a Central law. Both the Acts operated in view of
Section 46 of the 1940 Act. The M.P. Act, 1983 was
reserved for the assent of the President and admittedly
received the same on 17-10-1983 which was published
in the Madhya Pradesh Gazette Extraordinary dated 12-
10-1983. Therefore, the requirement of Article 254(2) of
the Constitution was satisfied. Thus, the M.P. Act of 1983
prevails in the State of Madhya Pradesh. Thereafter, the
AC Act, 1996 was enacted by Parliament repealing the
earlier laws of arbitration of 1940. It has also been noted
that the AC Act, 1996 saves the provisions of the M.P.
Act, 1983 under Sections 2(4) and 2(5) thereof. Therefore,
there cannot be any repugnancy. [...]

xxx xxx xxx
41. It is clear from the aforesaid observations that in the
instant case the latter Act made by Parliament i.e. the AC
Act, 1996 clearly showed an intention to the effect that the
State law of arbitration i.e. the M.P. Act should operate in
the State of Madhya Pradesh in respect of certain specified
types of arbitrations which are under the M.P. Act, 1983.
This is clear from Sections 2(4) and 2(5) of the AC Act,
1996. Therefore, there is no substance in the argument
of repugnancy and is accordingly rejected.”
(Emphasis supplied)

12. However, Gyan Sudha Misra J. in her dissenting opinion in L.G.
Chaudhary (I) (supra) held that where the nature of the dispute
does not fall within the definition of work contract under Section
2(i) of the MP Act, 1983, such disputes can be resolved by way of
arbitration under the Act, 1996, notwithstanding the fact that such work
contract is otherwise governed by the MP Act, 1983. She observed
that a reference to arbitration under the MP Act, 1983 postulates
two requirements, namely; (i) the existence of a ‘works contract’
[2025] 5 S.C.R. 2565

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

involving either the State Government or a Public Undertaking of
Madhya Pradesh and (ii) that such contract pertains to the execution
of any of the work enumerated in Section 2(i) thereof. Section 2(i) in
turn lays down in explicit terms as to the nature and scope of “works
contract” by enumerating the specific nature of disputes that would
be covered, i.e., “work relating to construction, repair or maintenance
... supply of goods or material and all other matters relating to the
execution of any of the said works”. However, since Section 2(i) of
the MP Act, 1983 only covers specific and well-defined ‘works’ and is
applicable only in respect of disputes pertaining to its execution, and
does not include disputes of repudiation, cancellation or termination
of such works, the legal and logical consequence of the aforesaid
would be that, insofar as the dispute is not of the nature enumerated
in Section 2(i) of the MP Act, 1983, such dispute would be outside
the jurisdiction of the M.P. State Arbitration Tribunal, and can be
decided by an arbitral tribunal in terms of the Act, 1996, irrespective
of whether arbitration clause requires the dispute to be referred to
arbitration under the MP Act, 1983. The relevant observations read
as under: -
“46. On perusal of the aforesaid provision enumerated
under Section 7, it is explicitly clear that the matter in the
event of existence of a dispute between the parties in
certain categories of cases where the State of Madhya
Pradesh is a contracting party, the dispute shall be referred
in writing to the Tribunal irrespective of the fact whether
the agreement contains an arbitration clause or not. From
this provision it is clearly apparent that reference of any
dispute to the Tribunal postulates an existence of a works
contract and in the definition of “works contract” under
Section 2(i) of the M.P. Arbitration Tribunal Act, 1983, it
has clearly and unequivocally been specified as to what
is a “works contract” in relation to which the dispute is
required to be referred in writing to the Tribunal.

xxx xxx xxx
48. Thus, on a perusal of the definition of “works contract”,
it is manifestly clear that while the “works contract” means
an agreement pertaining to matters relating to the execution
of any of the work enumerated in the definition of “works
2566 [2025] 5 S.C.R.

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contract”, the same does not include the dispute pertaining
to termination, cancellation or repudiation of works contract
and the entire nature of transaction laid down therein
relates to disputes which arise out of execution of the
nature of work specified in the “works contract”. However,
the question whether the “works contract” has been legally
repudiated and rightly cancelled or not is the question or
dispute pertaining to termination of works contract and has
not been incorporated even remotely within the definition
of “works contract”.
49. In view of this, the legal and logical consequence
which can be reasonably drawn from the definition of
“works contract” would be, that if there is a dispute
between the contracting parties for any reason relating
to works contract which include execution of any work
relating to construction, repair or maintenance of any
building or superstructure, dam, weir, canal, reservoir,
tank, lake, road, well, bridge, culvert, factory, workshop,
powerhouse, transformers or such other works of the
State Government or public undertaking including an
agreement for the supply of goods or material and all other
matters relating to the execution of any of the said works,
the same would fall within the ambit of the definition of
“works contract” and hence all disputes pertaining to or
arising out of execution of the works contract will have
to be referred to the M.P. State Arbitration Tribunal as
envisaged under Section 7 of the 1983 Act. Hence, in
addition to the reasons assigned in the judgment and
order of learned Brother Ganguly, J. disputes arising
out of execution of works contract have to be referred
to the M.P. State Arbitration Tribunal and not under the
Arbitration and Conciliation Act, 1996.

xxx xxx xxx
51. [...] But the same cannot be allowed to be raised
under the M.P. Act of 1983 since the definition of “works
contract” unambiguously lays down in explicit terms as
to what is the nature and scope of “works contract” and
further enumerates the specific nature of disputes arising
[2025] 5 S.C.R. 2567

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

out of the execution of works contract which would come
within the definition of a “works contract”. However, the
same does not even vaguely include the issue or dispute
arising out of cancellation and termination of contract due
to which this question, in my considered opinion, would
not fall within the jurisdiction of the M.P. State Arbitration
Tribunal so as to be referred for adjudication arising out
of its termination.
52. As already stated, fallout certainly would be otherwise
if the matter were to be adjudicated by an arbitrator
appointed under the Arbitration and Conciliation Act, 1996
and that would be in view of the ratio of the decisions of
the Supreme Court referred to hereinbefore which has
held it permissible for the arbitrator to adjudicate even
the dispute arising out of cancellation or termination of an
agreement or contract. This however, cannot be allowed
to broaden or expand the ambit and scope of the M.P.
Act of 1983 where the State Legislature has passed a
specific legislation in respect of certain specified types of
arbitration determining as to what is the nature of disputes
to be referred to the M.P. State Arbitration Tribunal and
that specifically permits the reference of dispute arising out
of execution of contract but clearly leaves out any dispute
arising out of termination, cancellation or repudiation of
“works contract”.
53. In order to clarify the point further, what needs to be
emphasised is that if the nature of dispute referred to
the arbitrator like the instant matter, related to a dispute
pertaining to construction, repair, maintenance of any
building or superstructure, dam or for the reasons stated
within the definition of “works contract”, the matter may be
referred to the M.P. Tribunal in view of the fact that if there
is a dispute in relation to execution of a works contract,
then irrespective of the fact whether the agreement
contains an arbitration clause or not, the dispute is
required to be referred to the M.P. State Arbitration Tribunal
for adjudication. But when the contract itself has been
terminated, cancelled or repudiated as it has happened
in the instant case, then the nature of dispute does not
2568 [2025] 5 S.C.R.

Supreme Court Reports

fall within the definition of “works contract” for the sole
reason that it does not include any dispute pertaining to
cancellation of a works contract implying that when the
works contract itself is not in existence by virtue of its
cancellation, the dispute cannot be referred to the M.P.
State Arbitration Tribunal but may have to be decided by an
arbitrator appointed under the Arbitration and Conciliation
Act, 1996.
54. Hence, if the nature of the dispute is such which falls
within the definition of “works contract” under Section 2(i)
of the M.P. Act, 1983 and one of the contracting parties to
the agreement is the State of M.P., then irrespective of an
arbitration agreement the dispute will have to be referred
to the Tribunal in terms of Section 7 of the Act of 1983.
But if the works contract itself has been repudiated and
hence not in existence at all by virtue of its cancellation/
termination, then in my considered view, the dispute will
have to be referred to an independent arbitrator to be
appointed under the Arbitration and Conciliation Act, 1996
since the M.P. Act, 1983 envisages reference of a dispute
to the State Tribunal only in respect of certain specified
types of arbitration enumerated under Section 2(i) of the
M.P. Act, 1983.

xxx xxx xxx
57. Thus, the sum and substance of what I wish to
emphasise is that the question as to whether the dispute
would be referred to the M.P. Tribunal in terms of Section
7 of the M.P. Act of 1983 or to an independent arbitrator
under the Arbitration and Conciliation Act, 1996 will
depend upon the factum whether the works contract is
existing between the parties or not out of which the dispute
has arisen. In case, the works contract itself has been
repudiated/cancelled, then, in view of its non-existence,
Section 7 of the M.P. Act pertaining to reference of dispute
to the Tribunal would not come into play at all by virtue
of the fact that the dispute relating to execution of works
contract alone can be referred to the Tribunal in view of
the specific nature of works contract enumerated within
[2025] 5 S.C.R. 2569

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

the definition of works contract under the Act of 1983.
However, when the works contract itself becomes non-
existent as a consequence of its cancellation, the matter
will have to be referred to an independent arbitrator under
the Arbitration and Conciliation Act, 1996 and not to the
M.P. State Arbitration Tribunal.
58. Thus, while holding that the M.P. Act, 1983 should
operate in the State of M.P. in respect of certain specified
types of arbitration, the appointment of an independent
arbitrator by the High Court under the Arbitration and
Conciliation Act, 1996 needs to be sustained since the
works contract itself is not in existence by virtue of its
cancellation and hence this part of the dispute could not
have been referred to the M.P. State Tribunal.”
(Emphasis supplied)

13. In view of the cleavage of opinion expressed by this Court in L.G.
Chaudhary (I) (supra), the issue of applicability of the MP Act, 1983
viz- à-viz the Act, 1996 came to be referred to a three-Judge Bench
of this Court, culminating into the decision of L.G. Chaudhary (II)
(supra). Answering the aforesaid reference, L.G. Chaudhary (II)
(supra) held that the definition of “dispute” under Section 2(d) of
the sic Act, 1996 (which due to an inadvertent typographical error in
para 5 of L.G. Chaudhary (II) (supra) was written as the Act, 1996
instead of MP Act, 1983) would cover and include any dispute that
arises after the termination, repudiation or cancellation of the contract
or pertains thereto. It observed that the dissenting opinion of Gyan
Sudha Misra J. in L.G. Chaudhary (I) (supra) failed to notice the said
provision i.e. Section 2(d) of the MP Act, 1983, and accordingly, it
held that the view expressed by A.K. Ganguly J. in L.G. Chaudhary
(I) (supra) that reference to arbitration for disputes covered under the
MP Act, 1983 would mandatorily lie before the M.P. State Arbitration
Tribunal in terms of the said Act and would not be governed the
provisions of the Act, 1996, is the correct interpretation, and the
law laid down by VA Tech (supra) was held to be per incuriam. The
relevant observations read as under: -
“4. When the matter was considered by a Bench of this
Court on 24-1-2012 (order in M.P. Rural Road Development
2570 [2025] 5 S.C.R.

Supreme Court Reports

Authority v. L.G. Chaudhary Engineers and Contractors),
this Court held that the judgment in VA Tech Escher Wyass
Flovel Ltd. was per incuriam insofar as it held that the M.P.
Act stands impliedly repealed by the Central Act. While
Hon’ble Ganguly, J., held that the State Act will cover a
dispute even after termination of the “works contract”,
Hon’ble Gyan Sudha Mishra, J. took a different view [...]
5. We find from the definition under Section 2(d) of the
Arbitration and Conciliation Act, 1996 that even after a
contract is terminated, the subject-matter of dispute is
covered by the said definition. The said provision has not
been even referred to in the judgment rendered by Hon’ble
Gyan Sudha Mishra, J.
6. In view of the above, we are of the opinion that the
view expressed by Hon’ble Ganguly, J. is the correct
interpretation and not the contra view of Hon’ble Gyan
Sudha Mishra, J. Reference stands answered accordingly.
7. Taking up appeal on merits, we find that the High Court
proceeded on the basis of the judgment of this Court in
VA Tech Escher Wyass Flovel Ltd. which has been held
to be per incuriam. The M.P. Act cannot be held to be
impliedly repealed.
8. We are, thus, in agreement with the proposed opinion
of Hon’ble Ganguly, J. [...]”
(Emphasis supplied)

i. Can an Award passed under the Act, 1996 be annulled on the
ground of lack of jurisdiction where no plea of applicability
of MP Act, 1993 was raised before the Arbitral Tribunal?
14. It is worthwhile to note, that the decision of L.G. Chaudhary (II)
(supra) did not merely decide the aforesaid reference arising from
L.G. Chaudhary (I) (supra), but also elucidated how, the courts are
expected to deal with the various issues that may arise therefrom
insofar as the pending proceedings that were inadvertently initiated
under the Act, 1996 and any awards already passed thereunder
are concerned.
[2025] 5 S.C.R. 2571

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

15. In the entire batch of matters that had been referred to this Court in
L.G. Chaudhary (II) (supra), this Court in few of the civil appeals
where the reference to arbitration under the Act, 1996 had been
challenged, while the matters were still at the pre-award stage,
however the statement of defence had already been filed without
raising a plea of lack of jurisdiction, held that in such instances, the
plea of lack of jurisdiction cannot be allowed to be now raised in
terms of Section 16 sub-section (2) of the Act, 1996 and as such the
award cannot be annulled only on such ground. Similarly, in a batch
of matters where the award had already been passed but no objection
of jurisdiction was raised in terms of Section 16(2) of the Act, 1996,
there L.G. Chaudhary (II) (supra) whilst restoring the award again
reiterated that the award could not have been annulled only on the
ground of jurisdiction, but clarified that, all other challenges to the
award may be made in appropriate proceedings under Section 34 of
the Act, 1996. Lastly, in one of the civil appeals, where the execution
proceedings for the award passed were pending, this Court in view
of the prolonged nature of the litigation, directed that the award be
treated to have been rendered under the MP Act, 1983 and transferred
the execution proceedings to the High Court of Madhya Pradesh at
Jabalpur. The relevant observations read as under: -
“CA No. 2751 of 2018 arising out of SLP (C) No. 11615
of 2012, CA No. 2753 of 2018 arising out of SLP (C) No.
11617 of 2012, CA No. 2754 of 2018 arising out of SLP
(C) No. 11618 of 2012, CA No. 2755 of 2018 arising out
of SLP (C) No. 11619 of 2012, CAs Nos. 2756-57 of 2018
arising out of SLPs (C) Nos. 11633-34 of 2012, CAs Nos.
2758-59 of 2018 arising out of SLPs (C) Nos. 11631-32
of 2012 & CAs Nos. 2760-61 of 2018 arising out of SLPs
(C) Nos. 11628-29 of 2012
15. Leave granted. In view of order passed in Civil Appeal
No. 2615 of 2018 [arising out of SLP (C) No. 16889 of 2012],
the impugned order is set aside and the application(s) filed
by the respondent(s) under Section 11 of the Arbitration
and Conciliation Act, 1996 are dismissed.
16. However, since it is stated that proceedings are pending
before the arbitrator in pursuance of the impugned order,
the same will stand transferred to the State Tribunal and
2572 [2025] 5 S.C.R.

Supreme Court Reports

the State Tribunal may proceed further taking into account
the proceedings which have already been taken. The
learned counsel for the respondent(s) pointed out that in
view of Section 16(2), the objection to the jurisdiction could
not be raised after statement of defence was filed. This
contention cannot be accepted in view of the fact that the
SLP was filed prior to the filing of statement of defence
wherein this objection was raised.
17. We do not express any opinion on the applicability
of the State Act where award has already been made.
In such cases if no objection to the jurisdiction of the
arbitration was taken at relevant stage, the award may
not be annulled only on that ground.

xxx xxx xxx
CA No. 2616 arising out of SLP (C) No. 35641 of 2011
19. Leave granted. In view of the order passed in CA No.
2751 of 2018 arising out of SLP (C) No. 16615 of 2012,
no objection having been raised by the respondents in
terms of Section 16(2) of the Arbitration and Conciliation
Act, 1996 at appropriate stage within the time stipulated,
the award could not have been annulled.
20. Accordingly, this appeal is allowed, the impugned
judgment is set aside and the award is restored. It
is, however, made clear that this order will not debar
proceedings under Section 34 of the Arbitration and
Conciliation Act, 1996.

xxx xxx xxx
Civil Appeal No. 4261 of 2018
34. The Division Bench vide order dated 5-7-2012 directed
that the enforceability of the decree will depend upon the
fate of another appeal which was pending between the
parties. The said appeal, FAO (OS) No. 23 of 1998, is still
pending but the High Court has deferred the same pending
decision of the larger Bench of this Court in pursuance of
the judgment of this Court in M.P. Rural Road Development
[2025] 5 S.C.R. 2573

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

Authority v. L.G. Chaudhary Engineers and Contractors. It
may be noted that the larger Bench has decided the matter
on 8-3-2018. In terms of the said decision, the dispute
between the parties has to be settled in accordance with the
provisions of the M.P. Madhyastham Adhikaran Adhiniyam,
1983 (the M.P. Act). However, since in the present case
the award has been rendered long back which was not
challenged by the respondents and the matter is pending
at the stage of execution, we direct that the award to be
treated to have been rendered under the M.P. Act.
35. In view of the above, we transfer pending proceedings
before the Delhi High Court being FAO (OS) No. 23 of
1998 and connected matters to the High Court of Madhya
Pradesh at Jabalpur to be treated as revision petition
under the M.P. Act.
(Emphasis supplied)

a. Is there a conflict between the decisions of L.G. Chaudhary
(II) and Lion Engineering?
16. At this stage, it is apposite to note, that prior to the decision of
L.G. Chaudhary (II) (supra), this Court in one another decision of
Lion Engineering (supra) had looked into the issue as to at what
stage a plea of lack of jurisdiction or applicability of any State Act
may be raised. The facts of Lion Engineering (supra) were that
the respondent State therein had sought to amend its pleadings
in the proceedings under Section 34 of the Act, 1996 to raise the
objection of a lack of jurisdiction on the ground of applicability of
the MP Act, 1983. The said amendment application was rejected
by the trial court as being barred by limitation. The High Court
however, in exercise of its supervisory jurisdiction under Article 227
of the Constitution allowed the said amendment. In appeal, before
this Court it was inter-alia contended by the appellant therein,
that the amendment ought not to have been allowed, since the
objection of lack of jurisdiction had never been raised before the
arbitral tribunal and hence was barred by Section 16 sub-section
(2) of the Act, 1996. This Court held that any legal plea arising on
undisputed facts can be raised in the proceedings under Section
34 of the Act, 1996 even if they were never raised under Section
2574 [2025] 5 S.C.R.

Supreme Court Reports

16. It further held that, such plea being a question of law arising
from admitted facts, can be raised without seeking any amendment
of the pleadings. Accordingly, it held that there is no bar to plea of
jurisdiction being raised by way of an objection under Section 34
of the Act even if no such objection was raised under Section 16.
The relevant observations read as under: -
“3. The 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. The learned Advocate General also submitted
that observations in MSP Infrastructure Ltd., particularly
in paras 16 and 17 do not lay down correct law.
4. 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. We do not see any bar to plea of jurisdiction
being raised by way of an objection under Section 34 of the
Act even if no such objection was raised under Section 16.
(Emphasis supplied)

17. Lion Engineering (supra) expressing disagreement with the view
taken in MSP Infrastructure Ltd. v. M.P. Road Development Corpn.
Ltd., reported in (2015) 13 SCC 713, further held that the ground of
‘public policy of India’ in Section 34 of the Act, 1996 would include
violation of not only a Central law but also a State law, and hence,
it would be open for the parties to argue the aspect of applicability
of the MP Act, 1983 even without a formal pleading, being purely
a legal plea in the proceedings under Section 34 of the Act, 1996.
The relevant observations read as under: -
“6. Both stages are independent. Observations in paras
16 and 17 in MSP Infrastructure Ltd. do not, in our view,
lay down correct law. We also do not agree with the
[2025] 5 S.C.R. 2575

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

observation that the public policy of India does not refer
to a State law and refers only to an all-India law.
7. 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
paras 16 and 17 of the judgment in MSP Infrastructure Ltd.
9. 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 court concerned.
(Emphasis supplied)

18. It is in this aforesaid context, that the respondent herein has contended
before us that there exists a conflict between the decisions of this
Court in Lion Engineering (supra) and L.G. Chaudhary (II) (supra),
insofar as the issue of when a plea of lack of jurisdiction on the basis
of applicability of a State law can be raised. It was submitted that
Lion Engineering (supra) clearly holds that an objection of lack of
jurisdiction is a legal plea that may be raised for the first time in the
proceedings under Section 34 of the Act, 1996, even if the same
was never raised before the arbitral tribunal, and being a question
of law, Section 16 sub-section (2) of the Act, 1996 would have no
application. It was further canvassed on behalf of the respondents
herein that the decision of L.G. Chaudhary (II) (supra) to the extent
that it holds that no plea of lack of jurisdiction can be raised in the
proceedings under Section 34, if it was never raised before the arbitral
tribunal, could be said to be per incuriam, as it failed to refer and
advert to the earlier binding decision of Lion Engineering (supra),
which as per the respondents herein, lays down a contradictory view.
19. We are however, not impressed by the aforesaid submission that
has been canvassed on behalf of the respondents herein, primarily
for the following three reasons: -
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(i) First, that merely because L.G. Chaudhary (II) (supra) does
not refer to the decision of Lion Engineering (supra), would
not render it per incuriam, if either such omission in referring
does not amount to a non-consideration of the ratio of an earlier
decision or where there is no palpable conflict or contradiction
in the ratio of both decisions. Lion Engineering (supra) holds
that a plea of lack of jurisdiction being a question of law may
be raised for the first time under Section 34 of the Act, 1996
even if it was never raised before the arbitral tribunal. Whereas,
L.G. Chaudhary (II) (supra) holds that where such plea of
lack of jurisdiction was not taken before the arbitral tribunal,
then an award that has been so passed by the tribunal will not
be annulled only on the ground of lack of jurisdiction. If L.G.
Chaudhary (II) (supra) was not conscious of the position of
law laid in Lion Engineering (supra), then there was no need
for it to clarify that an award would not be annulled only on
the ground of lack of jurisdiction. As even without the aforesaid
clarification, such awards would not have been susceptible to
annulment, if not for the ratio of Lion Engineering (supra).
Thus, in our opinion, even if L.G. Chaudhary (II) (supra)
does not refer to the decision of Lion Engineering (supra), it
cannot be termed to be per incuriam, as the very factum that
the aforesaid observations were made by L.G. Chaudhary
(II) (supra) in paras 16, 17 and 19, shows that this Court was
well aware of the decision of Lion Engineering (supra), and
accordingly chose to carve out an exception to the ratio of Lion
Engineering (supra) keeping in mind the cleavage of judicial
view that was prevailing earlier.
(ii) Secondly, the decision of Lion Engineering (supra) only dealt
with the question whether an amendment of pleadings was
required or not, to raise a plea of jurisdiction. It was in this
aforesaid context, that this Court held that such objection being
a question of law can be raised by way of an objection in the
proceedings under Section 34 of the Act, 1996 even if no such
objection was raised under Section 16 of the Act, 1996. Thus,
the aforesaid observations could be said to be confined only
to the issue of requirement to amend the pleadings for raising
such an objection, and cannot be stretched to apply blanketly
in all cases.
[2025] 5 S.C.R. 2577

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

(iii) Thirdly, even otherwise, the ratio of Lion Engineering (supra)
in paras 6 to 9 only goes so far as to hold that where a plea
of jurisdiction involves purely a question of law and is based
on undisputed facts, then such a plea may be raised for the
first time in the proceedings under Section 34 of the Act, 1996,
notwithstanding the bar of Section 16 sub-section (2) or whether,
such plea was taken before the arbitral tribunal or not. However,
Lion Engineering (supra) does not address the question
whether an award may be annulled only on the ground of lack
of jurisdiction or not. It does not disturb the settled position of
law as regards the scope of Section 34 of the Act, 1996 i.e., an
award may be set aside only if such lack of jurisdiction goes to
the root of the matter and results in a patent illegality. On the
contrary, L.G. Chaudhary (II) (supra) specifically addresses
this question in the context of the issue of applicability of MP
Act, 1983 and explicitly states that any award already passed
shall not be annulled only on the ground of lack of jurisdiction
where such plea was not raised at the relevant stage. Thus,
the aforesaid ratio of Lion Engineering (supra) by no stretch
can be construed to mean that such a plea of jurisdiction would
automatically result in annulment of an award, de hors the fact
whether such lack of jurisdiction goes to the root of the award
rendered or not. The ratio of L.G. Chaudhary (II) (supra)
unlike Lion Engineering (supra) does not deal with whether
it is permissible for such plea of jurisdiction to be raised under
Section 34 or not, and only deals with the issue whether an
award may be annulled only on the ground of jurisdiction or not,
which was never an issue before Lion Engineering (supra),
hence there is no conflict or contradiction between the ratios
of the aforesaid two decisions.
20. What can be discerned from the aforesaid is that L.G. Chaudhary
(II) (supra) carved out an exception to the general rule that was
laid in Lion Engineering (supra), that although a plea of lack of
jurisdiction being a question of law can be raised for the first time
in the proceedings under Section 34 of the Act, 1996, yet insofar as
the MP Act, 1983 is concerned, particularly the state of flux in which
the position of law regarding its applicability stood, in cases where
either the award has already been passed or where the statement
of defence is already been filed, and no plea of lack of jurisdiction or
2578 [2025] 5 S.C.R.

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applicability of the MP Act, 1983, has been raised before the arbitral
tribunal, then such a plea of jurisdiction will no longer be available,
and the award cannot be annulled solely on such ground.
21. In JMC Projects (supra) this Court reiterated the aforesaid exception
carved out in L.G. Chaudhary (II) (supra) and held that since the
award had already been passed, all objections except the plea of
lack of jurisdiction and the applicability of the MP Act, 1983 may be
raised in the proceedings under Section 34 of the Act, 1996.
22. In Sweta Construction v. Chhattisgarh State Power Generation
Company Ltd. reported in (2022) SCC OnLine SC 1447, while
dealing with an issue pertaining to the applicability of the Chhattisgarh
Madhyastham Adhikaran Adhiniyam, 1983, which is pari materia to
the MP Act, 1983, this Court followed the ratio laid down in L.G.
Chaudhary (II) (supra), and reiterated that where awards have
already been made and if no objection to the jurisdiction was taken
at the relevant stage, then the award may not be annulled “only” on
that ground. The relevant observations read as under: -
12. [...] Thus what was opined was that where awards have
already been made and if no objection to the jurisdiction
was taken at the relevant stage, the award may not be
annulled “only” on that ground and the appeals dealing with
those aspects were granted a favourable consideration.
13. [...] It was however, clarified in the very next paragraph
that the order would not debar proceedings under Section
34 of the 1996 Act.
23. Furthermore, this Court in Sweta Construction (supra), taking note
of the ostensible conflict between the decisions of L.G. Chaudhary
(II) (supra) and Lion Engineering (supra), made the following
pertinent observations: -
(i) First, that, in Lion Engineering (supra) the controversy before
the court was different inasmuch as it was dealing with the issue
of an amendment in pleadings being sought beyond the period
of limitation. This Court observed that, it was in this context that
Lion Engineering (supra) held that no amendment of pleadings
was required to raise a plea of jurisdiction, and such objection
being a question of law can be raised by way of an objection
in the proceedings under Section 34 of the Act, 1996 even if no
[2025] 5 S.C.R. 2579

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

such objection was raised under Section 16 of the Act, 1996.
The relevant observations read as under: -
“15. However, as pointed by the learned counsel for
the respondent, there appears to be some lack of
clarity on the issue raised in the present petition on
account of the same three-Judge Bench having opined
in another order passed in Lion Engg. Consultants v.
State of M.P. on 22-3-2018 i.e. about three weeks after
that. The issue however, raised was whether there
was any bar to the plea of jurisdiction being raised
by way of an objection under Section 34 of the 1996
Act even if no objection was raised under Section 16
of that Act. It was opined that public policy of India
refers to law enforced in India i.e. both Central law as
well as the State law. The respondent State was given
liberty to argue before the trial court its objections that
the 1996 Act stood excluded by the State Adhiniyam
even without formal pleadings being a pure legal plea.
This was in the context of an amendment sought being
beyond limitation. In that context there is an observation
in one sentence, “we do not see any bar to plea of
jurisdiction being raised by way of an objection under
Section 34 of the Act even if no objection was raised
under Section 16 of that Act”.”
(Emphasis supplied)

(ii) Secondly, that the decision of Lion Engineering (supra) was
only an order unlike the decision of L.G. Chaudhary (II) (supra)
which was a substantive judgment, and thus, the observations
of Lion Engineering (supra) would by no means detract or
take away the law laid down in L.G. Chaudhary (II) (supra)
as regards the maintainability of the plea of jurisdiction where
awards have already been passed, and no such objection was
raised before the arbitral tribunal at the relevant stage. The
relevant observations read as under: -
“16. If we appreciate the aforesaid observation in
Lion Engg. Consultants and that too emerging from
identical Bench in the two matters, we would have to
2580 [2025] 5 S.C.R.

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construe as what is meant by this sentence extracted
aforesaid. We take note of the fact that this is an
order and not a judgment. The controversy before
the Court was something different as noticed by us
aforesaid. In that context, this sentence has been
inserted, but that does not take away the law laid
down in the substantive judgment (in M.P. Rural
Road Development Authority) dealing with the issue
at hand in respect of awards already made where
petitions were pending before the competent Court
under Section 34 of the said Act.”
(Emphasis supplied)

(iii) Thirdly, that the law expounded in L.G. Chaudhary (II) (supra)
insofar as those awards which have already been passed are
concerned, should be read as one made by this Court under
Article 142 of the Constitution to do substantive justice inter se
the parties, keeping in mind the cleavage of judicial view earlier
and to ensure that the objective of arbitration as an expeditious
and effective alternative dispute resolution mechanism is not
defeated. The relevant observations read as under: -
“17. This Court (in M.P. Rural Road Development
Authority) in the context of the 1996 Act and the
1983 Adhiniyam, keeping in mind the cleavage of
judicial view earlier and expounding on the law in
that judgment has in succinct terms set out that the
objections under Section 34 of the said Act, where
no such plea of jurisdiction was raised in proceedings
before the arbitrator, should not be dealt with “alone”
on the plea of jurisdiction i.e. it should be considered
on merits. One can say that possibly this part of the
order can also be read as one made under Article
142 of the Constitution of India to do substantive
justice inter se the parties, more so, when arbitration
as an alternative dispute resolution mechanism
presupposes an expeditious disposal of commercial
disputes and that objective would stand nullified if a
contrary view was taken.”
(Emphasis supplied)
[2025] 5 S.C.R. 2581

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

(iv) Lastly, it observed that even otherwise, the conduct of the
respondent therein of accepting the notice of invocation and
commencing arbitration under the Act, 1996 on their own volition
amounts to a waiver of their right to claim initiation of arbitration
under the State Act. In such circumstances it was held that the
respondent therein cannot be now permitted to approbate and
reprobate a right it failed to exercise on it own, and that too in
a manner which would defeat the entire object of arbitration.
The relevant observations read as under: -
“18. We are also of the view that in particular facts
of the present case, the position is even more gross
because when the appellant claimed arbitration,
the respondent accepted invocation of arbitration,
suggested a panel of arbitrators, the appellant chose
one of the arbitrators out of the two suggested and
the arbitrator was so appointed as the sole arbitrator.
Thus, the arbitration proceedings commenced in
pursuance to the acts of the respondent and it cannot
be permitted to get away to say that the whole process
was gone through because of some misconception or
inappropriate legal advice. Arbitration by consent is
always possible. The mode and manner of conduct
of arbitration is possible and how those arbitration
proceedings would be governed is also a matter
of consent. If at all there were any rights of the
respondent to have claimed arbitration under the 1983
Adhiniyam, that right was never exercised or waived.
The respondent cannot be permitted to approbate
and reprobate and that too in arbitration proceedings
and that too in dispute or resolution through the
method of arbitration defeating the very purpose of
an alternative dispute resolution to arbitration as an
expeditious remedy.”
(Emphasis supplied)

24. In yet another decision of this Court in Modern Builders v. State
of Madhya Pradesh & Anr. reported in (2024) 10 SCC 637, the
appellant contractor therein had approached the M.P. State Arbitration
Tribunal for initiation of arbitration in respect of certain disputes,
2582 [2025] 5 S.C.R.

Supreme Court Reports

however the reference was rejected by the State Tribunal in view
of the law laid down by VA Tech (supra) that held field at that time.
Accordingly, the appellant therein initiated arbitration under the Act,
1996, and consequently an award was passed. The aforesaid award
came to be challenged, wherein the High Court under Section 37
of the Act, 1996 set-aside the award only on the ground that the
arbitral tribunal had no jurisdiction in view of the MP Act, 1983. In
appeal, this Court setting aside the order of the High Court, held
that even though the objection based on applicability of the MP
Act, 1983 had been raised by the respondent therein in its written
statement filed before the arbitrator, nevertheless, in view of the
fact that the respondents therein neither raised this objection when
the Section 11 petition was filed by the appellant, nor did it take
recourse of Section 16 of the Act, 1996 to challenge the jurisdiction
of the arbitral tribunal, it would be unjust to set aside the award
only on the ground of the failure of the appellant to take recourse
to the MP Act, 1983. Furthermore, in light of the fact that the only
reason the appellant took recourse to the Act, 1996 was because
its earlier reference to the M.P. State Arbitration Tribunal had been
rejected in terms of the decision of VA Tech (supra), this Court held
that it is a fit case to exercise its jurisdiction under Article 142 of the
Constitution and restore the award to ensure complete justice. The
relevant observations read as under: -
“6. A few factual aspects will have to be noted. After
the contract granted to the appellant was rescinded, the
appellant invoked Section 7 of the 1983 Act by approaching
the Arbitration Tribunal. By the order dated 19-4-2010, the
Arbitration Tribunal held that in view of the arbitration clause
in the contract, the 1983 Act will have no application and the
appellant will have to take recourse to the Arbitration Act.
In view of this order, the appellant invoked the jurisdiction
of the High Court under Section 11(6) of the Arbitration
Act by filing a petition for the appointment of an arbitrator.
7. The order dated 22-7-2011 passed by the High Court
on the said petition shows that the respondents’ opposition
was only on the merits of the claim. The objection based
on the applicability of the 1983 Act was not raised. The
respondents did not challenge the order of appointment of
the arbitrator passed by the High Court under Section 11(6)
[2025] 5 S.C.R. 2583

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

of the Arbitration Act. Even before the learned arbitrator,
Section 16(1) of the Arbitration Act was not invoked to raise
the jurisdiction issue. However, in the written statement
filed before the arbitrator, the contention regarding the
applicability of the 1983 Act was raised.
9. As noted earlier, in the facts of the case, before taking
recourse to the Arbitration Act, the appellant had taken
recourse to Section 7 of the 1983 Act. The order of the
Arbitration Tribunal, holding that the Arbitration Act will
apply, led the appellant to file a petition under Section 11(6)
of the Arbitration Act, which was not objected to on the
grounds of the applicability of the 1983 Act. The objection
of the State Government was confined to the merits of the
claim. The award is only in the sum of Rs 6,52,235 with
interest. The award was made on 25-4-2014. Therefore,
in the facts of the case, it will be unjust to set aside the
award only on the ground of the failure of the appellant
to take recourse to the 1983 Act. In fact, the appellant
had taken recourse to the 1983 Act before seeking the
appointment of an arbitrator.
10. In this case, as can be seen from the impugned
judgment, the award has been set aside only on the ground
that the appellant ought to have invoked the provisions
of the 1983 Act. Even assuming that the observations in
para 17 of the decision in M.P. Rural Road Development
Authority, are not applicable, this is a fit case to exercise
jurisdiction under Article 142 of the Constitution of India to
ensure that complete justice is done. Therefore, by setting
aside the impugned judgment, the appeal under Section
37 of the Arbitration Act will have to be restored with a
request to the High Court to decide the same on merits.
(Emphasis supplied)

25. What can be discerned from the above is that, this Court has
consistently held that an exception has been carved out in L.G.
Chaudhary (II) (supra) whereby any awards that have already been
made and if no objection to the jurisdiction was taken at the relevant
stage, then the award may not be annulled “only” on that ground.
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Supreme Court Reports

b. Whether a plea of lack of jurisdiction may be raised for
the first time under Section 34 of the Act, 1996 if no such
objection was taken before the arbitral tribunal?
26. The aforesaid may be looked at from one another angle, with a
view to obviate the possibility of any confusion. The respondent
herein placed much emphasis on the observations made in Lion
Engineering (supra) to canvass that a plea of lack of jurisdiction
being a question of law may be raised at any stage. Even where
no such plea was raised at the time of filing of written submissions,
the same can be validly raised for the first time in the proceedings
under Section 34 of the Act, 1996, and the bar under Section 16
sub-section (2), would not come in the way.
27. Before adverting to the aforesaid submission, it would be apposite
to first look into the interplay between Section(s) 16 and 34 of the
Act, 1996, respectively. These two provisions, although distinct in
form and function, yet are intrinsically linked in the broader scheme
of the Act, insofar as the stage at which issues pertaining to the
jurisdiction of the arbitral tribunal may be validly raised.
28. In Union of India v. Pam Development (P) Ltd. reported in (2014)
11 SCC 366 this Court held that where a party does not raise a
plea of jurisdiction before the arbitral tribunal, then such a plea is
deemed to have been waived in view of the provisions contained in
Section 4 read with Section 16 of the Arbitration Act, 1996, and in
consequence cannot be raised for the first time in the proceedings
under Section 34. The relevant observations read as under: -
“16. As noticed above, the appellant not only filed the
statement of defence but also raised a counterclaim
against the respondent. Since the appellant has not raised
the objection with regard to the competence/jurisdiction
of the Arbitral Tribunal before the learned arbitrator, the
same is deemed to have been waived in view of the
provisions contained in Section 4 read with Section 16 of
the Arbitration Act, 1996.
17. Section 16 of the Arbitration Act, 1996 provides that the
Arbitral Tribunal may rule on its own jurisdiction. Section 16
clearly recognises the principle of kompetenz-kompetenz.
Section 16(2) mandates that a plea that the Arbitral Tribunal
[2025] 5 S.C.R. 2585

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

does not have jurisdiction shall be raised not later than
the submission of the statement of defence. Section 4
provides that a party who knows that any requirement
under the arbitration agreement has not been complied
with and yet proceeds with the arbitration without stating
his objection to such non-compliance without undue delay
shall be deemed to have waived his right to so object.
8. In our opinion, the High Court has correctly come to
the conclusion that the appellant having failed to raise the
plea of jurisdiction before the Arbitral Tribunal cannot be
permitted to raise for the first time in the Court. [...]
(Emphasis supplied)

29. In Gas Authority of India Ltd. v. Keti Construction (I) Ltd. reported
in (2007) 5 SCC 38 this Court held that where a party does not raise
a plea of lack of jurisdiction before the arbitral tribunal, he must
make out a strong case why he did not do so if he chooses to move
a petition for setting aside the award under Section 34 of the Act,
1996 on such ground. The relevant observations read as under: -
“25. Where a party has received notice and he does
not raise a plea of lack of jurisdiction before the Arbitral
Tribunal, he must make out a strong case why he did not
do so if he chooses to move a petition for setting aside
the award under Section 34(2)(a)(v) of the Act on the
ground that the composition of the Arbitral Tribunal was
not in accordance with the agreement of the parties. If
plea of jurisdiction is not taken before the arbitrator as
provided in Section 16 of the Act, such a plea cannot
be permitted to be raised in proceedings under Section
34 of the Act for setting aside the award, unless good
reasons are shown.”
(Emphasis supplied)

30. A similar view was reiterated in AC Chokshi Share Broker (P) Ltd. v.
Jatin Pratap Desai reported in (2025) SCC OnLine SC 281 wherein
it was held that when the jurisdictional issue has not been raised in
accordance with Section 16 of the Act, 1996, it is deemed that the
objecting party has waived his right, in terms of Section 4, and the
2586 [2025] 5 S.C.R.

Supreme Court Reports

same cannot be raised at a later stage such as under Section 34 or
37 of the Act. The relevant observations read as under: -
“20. The High Court in the impugned order relied on this
rationale of a “private” transaction to hold that the arbitral
tribunal lacked inherent jurisdiction to decide the claim
against respondent no. 1, and such a jurisdictional plea
could be raised at any stage even if it was not raised before
the arbitral tribunal. From the above reasons, it is clear
that there is no inherent lack of jurisdiction. Consequently,
any issue regarding the scope of Bye-law 248(a) ought to
have been raised in accordance with Section 16 of the Act,
i.e. during the arbitration, not later than the submission
of statement of defence. Neither respondent has, in their
statements of defence or Section 34 petitions, raised an
objection to the arbitral tribunal›s jurisdiction in clear terms
beyond stating that there is a misjoinder of parties as they
are not jointly and severally liable. A clear jurisdictional
issue was only raised at the Section 37 appeal stage, as
has also been noted by the High Court in the impugned
order.
21. This Court has held, in several judgments, that when
the jurisdictional issue has not been raised in accordance
with Section 16, it is deemed that the objecting party
has waived his right, in terms of Section 4 of the Act to
raise the same at a later stage. Such objection cannot
be raised for the first time when the party is challenging
the award under Section 34. Here, respondent no. 1 not
only filed his statement of defence and participated in
the arbitral proceedings but also filed a counter-claim,
thereby submitting to the arbitral tribunal’s jurisdiction.
Hence, any jurisdictional objection must be rejected on
this ground as well.”
(Emphasis supplied)

31. The fallacy of the aforesaid argument of the respondent herein lies in
the very fact, that it has misconstrued the observations of this Court
in Lion Engineering (supra) by ignoring the very settled position of
law as regards the interplay between Section(s) 16 and 34 of the
Act, 1996, respectively.
[2025] 5 S.C.R. 2587

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

32. The observations made by this Court in Lion Engineering (supra)
that “We do not see any bar to plea of jurisdiction being raised by way
of an objection under Section 34 of the Act even if no such objection
was raised under Section 16” cannot be singled out and construed
devoid of its context. The aforesaid observations have to be construed
in light of the settled position of law by a catena of decisions of this
Court. The decision of this Court in Pam Development (supra) has
held that where a plea of lack of jurisdiction is not raised before the
arbitral tribunal, such a plea cannot be raised later in the proceedings
under Section 34. Pam Development (supra) says this, not because
such a plea is barred from being raised only by virtue of Section
16 sub-section (2), but rather says this, because such a plea is
deemed to have been waived on account of the failure of the party in
raising such a plea. Thus, Pam Development (supra) in no manner
lays down that a plea of lack of jurisdiction cannot be raised in the
proceedings under Section 34 due to the bar of Section 16 sub-
section (2) of the Act, 1996, and thus to this extent both the decisions
of Pam Development (supra) and Lion Engineering (supra) are
in tune with each other. The variance between the decisions of
Pam Development (supra) and Lion Engineering (supra) is only
in respect of whether a failure to raise such a plea at the relevant
stage in terms of Section 16 sub-section (2) of the Act, 1996 would
amount to a ‘waiver’ or not, and this issue was never examined or
looked into by Lion Engineering (supra).
33. On the contrary Lion Engineering (supra) specifically observed in para
9 that “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 court
concerned.” The observations that it will be open for the respondents
therein to argue that such an object could be raised even without a
formal pleading AND that it will be open for the appellants therein to
argue the contrary, clearly shows that the very issue of whether such
a plea can be allowed to be raised or not i.e., issues such as whether
it is a purely legal plea or whether there was any waiver or not etc.
were never decided by this Court in Lion Engineering (supra) and
rather was left to be gone into by the court under Section 34 of the
Act, 1996. The aforesaid observations clearly show, that although
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Supreme Court Reports

such a plea may be raised for the first time in the proceedings under
Section 34 of the Act, 1996, it may still nevertheless be rejected if it
is found that such a plea is not purely a question of law or that the
party raising the plea had waived it in terms of Pam Development
(supra). Whereas Gas Authority of India (supra) goes one step
ahead of Pam Development (supra) and lays down that where a
party makes out a strong and good reason for its failure to take a plea
of lack of jurisdiction before the arbitral tribunal, then there would be
no deemed waiver of such a plea, and the same may then be looked
into by the courts under Section 34 of the Act, 1996.
34. Thus, insofar as the manner in which the question of whether a plea
of lack of jurisdiction being raised for the first time under Section
34 of the Act, 1996 has to be decided, the decision of this Court
in Pam Development (supra) and Gas Authority of India (supra)
would be applicable, as Lion Engineering (supra) only decided
the limited issue of whether the bar under Section 16 sub-section
(2) would preclude raising of such a plea i.e., whether such a plea
is maintainable or not, and never decided or laid down when the
courts would entertain such a plea. It is in this aforesaid context that
the observations of this Court in L.G. Chaudhary (II) (supra), more
particularly at para 17 that “We do not express any opinion on the
applicability of the State Act where award has already been made.
In such cases if no objection to the jurisdiction of the arbitration
was taken at relevant stage, the award may not be annulled only
on that ground” assumes significance. What has been conveyed,
in so many words, by this Court in L.G. Chaudhary (II) (supra) is
that any failure to raise the issue of applicability of the MP Act, 1983
before the arbitral tribunal is not a strong and good reason in terms
of Gas Authority of India (supra) to permit raising such a plea in
the proceedings under Section 34 of the Act, 1996.
35. Thus, what can be discerned from the aforesaid is that although a
plea of lack of jurisdiction, being a question of law, can be raised
even for the first time in the proceedings under Section 34 as held in
Lion Engineering (supra), yet such a plea ought not to be allowed
to be raised as it is deemed to have been waived in view of Section
4 of the Act, 1996 as per Pam Development (supra), unless the
party makes out a strong and good reason for its failure to take such
a plea before the arbitral tribunal as per Gas Authority of India
(supra), and as per the dictum of L.G. Chaudhary (II) (supra) any
[2025] 5 S.C.R. 2589

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

failure to raise the issue of applicability of the MP Act, 1983 before
the arbitral tribunal is not a strong and good reason to permit raising
such a plea in the proceedings under Section 34 of the Act, 1996.

D. CONCLUSION
36. What emerges from the foregoing is that although Lion Engineering
(supra) affirms that a plea of lack of jurisdiction, being a question
of law, may be raised for the first time under Section 34 of the Act,
1996, yet such a plea is nevertheless subject to the waiver as held
in Pam Development (supra). Furthermore, as per Gas Authority
of India (supra), such a plea may only be entertained if the party
demonstrates a strong and sufficient reason for not raising it before
the arbitral tribunal. However, L.G. Chaudhary (II) (supra) makes it
clear that a failure to raise the issue of applicability of the MP Act,
1983 at the appropriate stage cannot be regarded as a sufficient
reason, and therefore the plea cannot be permitted at the stage of
Section 34 proceedings.
37. L.G. Chaudhary (II) (supra) carved out the aforesaid limited exception
to the general rule laid down in Lion Engineering (supra) that a plea
of lack of jurisdiction, being a pure question of law, may be raised for
the first time under Section 34 of the Act, 1996. The failure of L.G.
Chaudhary (II) (supra) to take into consideration the decision of this
Court in Lion Engineering (supra) does not render the former per
incuriam, as there exists no direct conflict between the two. While
Lion Engineering (supra) permits a jurisdictional plea to be raised
under Section 34 of the Act, 1996 even if not urged under Section
16, L.G. Chaudhary (II) (supra) merely clarifies that an arbitral award
will not be annulled solely on that ground, particularly where the issue
was not raised before the tribunal. On the contrary, the aforesaid
observations of L.G. Chaudhary (II) (supra) had been consciously
made by this Court keeping in mind the ratio of Lion Engineering
(supra), even though the latter was never explicitly referred to.
L.G. Chaudhary (II) (supra) cannot be termed to be per incuriam,
as the very factum that the aforesaid observations were made by
L.G. Chaudhary (II) (supra) in paras 16, 17 and 19 respectively
shows that this Court was well aware of the decision of this Court
in Lion Engineering (supra), and accordingly chose to carve out an
exception to the ratio of Lion Engineering (supra) keeping in mind
the cleavage of judicial view that was prevailing earlier.
2590 [2025] 5 S.C.R.

Supreme Court Reports

38. In view of the above exposition of law, what has been conveyed by
this Court in L.G. Chaudhary (II) (supra) in so many words is that: -
i. Where the arbitration proceedings are still underway, but no
statement of defence has been filed, there it would be open
for the parties to raise an objection of lack of jurisdiction in
view of the applicability of MP Act, 1983. The parties will also
be at liberty to approach the High Court by way of a petition
under Article 227 of the Constitution for seeking a transfer of
the arbitration proceedings to the M.P. State Arbitration Tribunal
under the MP Act, 1983.
ii. Where the arbitration proceedings are still underway, but
statement of defence has already been filed i.e., the relevant
stage for raising an issue of jurisdiction is already crossed,
there it would not be open for the parties to raise an objection
of lack of jurisdiction in view of the applicability of MP Act, 1983.
Furthermore, in such scenarios since the arbitration proceedings
have already commenced and made substantial progress,
it would not be appropriate to transfer such proceedings to
the M.P. State Arbitration Tribunal under the MP Act, 1983,
and the better course of action would be to let the arbitration
proceedings conclude.
iii. As per L.G. Chaudhary (II) (supra) where the arbitration
proceedings have concluded and an award has been passed,
and if no objection to the jurisdiction in view of the applicability
of MP Act, 1983 was taken at the relevant stage then such
an award cannot be annulled only on the ground of lack of
jurisdiction.
iv. Any award passed by an arbitral tribunal under the Act, 1996,
where otherwise the MP Act, 1983 was applicable, such an
award may be challenged or assailed in terms of Section 34
and thereafter Section 37 of the Act, 1996 and other relevant
provisions thereunder.
v. Any award passed by an arbitral tribunal under the Act, 1996,
where otherwise the MP Act, 1983 was applicable, such an
award must be executed in terms of the MP Act, 1983 and the
relevant provisions thereunder.
[2025] 5 S.C.R. 2591

M/s Gayatri Project Limited v.
Madhya Pradesh Road Development Corporation Limited

vi. Where the objection based on applicability of the MP Act,
1983 had been raised in the written statement or statement of
defence, but the parties never took steps towards challenging
the jurisdiction of the arbitral tribunal under Section 16 of the
Act, 1996 or where such plea of jurisdiction was turned down
in view of the position of law that was prevailing prior to L.G.
Chaudhary (II) (supra) i.e., such challenge to the jurisdiction was
decided prior to the date of pronouncement of L.G. Chaudhary
(II) (supra), then even in such cases, as per the decision of this
Court in Modern Builders (supra), the award should not be
disturbed or set-aside only on the ground of lack of jurisdiction.
39. In the present case at hand, we take note of the following
circumstances emerging from the facts on record: -
a. It is an admitted fact that at the time of constitution of the arbitral
tribunal, the respondent never objected to the invocation of
arbitration under the Act, 1996 and both the parties proceeded
to nominated their respective co-arbitrators.
b. On the date of invocation of the Act, 1996, and commencement
of arbitration proceedings, as well as of the date when the
arbitration proceeding concluded and the award in question
passed, the erstwhile decision of this Court in VA Tech (supra)
held the field.
c. The respondent herein never raised any objection to the arbitral
tribunal’s lack of jurisdiction during the arbitration proceedings
either in its statement of defence or by way of an application
under Section 16 of the Act, 1996.
d. Even when the award was challenged by the respondents,
the initial petition filed by them under Section 34 of the Act,
1996 also did not contain any objection as regards the lack of
jurisdiction of the arbitral tribunal.
e. The ground of lack of jurisdiction was introduced by the
respondents herein only after the decision of L.G. Chaudhary
(II) (supra) by way of an application for amending the grounds
of its petition under Section 34 of the Act, 1996, i.e., after the
award had been passed.
2592 [2025] 5 S.C.R.

Supreme Court Reports

40. Thus, the present case is squarely covered by the decision of
this Court in L.G. Chaudhary (II) (supra), more particularly the
observations made in paras 6 to 9 thereunder, and as such once
the award had been 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 by the High Court only on
the ground of lack of jurisdiction.
41. For all the foregoing reasons, we have reached the conclusion
that the High Court committed an egregious error in passing the
impugned judgment. We are left with no other option but to set aside
the impugned judgment and order passed by the High Court, and
restore the proceedings in Arbitration Case No. 48 of 2011 to the
court of Commercial Court and 19th Upper District Judge, Bhopal
(M.P.), for deciding all other issues on merit that may have been
raised by the respondent in its petition under Section 34 of the Act,
1996. We accordingly pass such order. Thus, the appeal is disposed
of in the above terms.
42. Pending application(s) if any, also stand disposed of.
43. We direct the Registry to circulate a copy of this judgment to all
High Courts.
Result of the case: Appeal disposed of.

†
Headnotes prepared by: Mukund P. Unny, Hony. Associate Editor
(Verified by: Liz Mathew, Sr. Adv.)