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Arbitration & Commercial LawSupreme Court of India

M/S Lion Engineering Consultants v. State of Madhya Pradesh

Civil Appeal · 2018 INSC 1222Decided 22 Mar 2018
Civil Appeal Nos. 8984-8985 of 2017
Justice Adarsh Kumar Goel · Justice Rohinton Fali Nariman

Background

An arbitrator had ruled in favour of Lion Engineering Consultants in a dispute over a works contract. The State of Madhya Pradesh challenged the award under Section 34 of the Arbitration Act before the trial court, and after three years sought to amend its objections: a request the trial court rejected but the High Court allowed under Article 227 of the Constitution. Lion Engineering appealed to the Supreme Court, arguing the amendment was time-barred and that a jurisdictional objection not raised before the arbitrator under Section 16 could not later be raised under Section 34.

Decision Breakdown

The State's counsel ultimately did not press the amendment, which the Court agreed should not be allowed as it was beyond limitation, rendering that specific issue moot. On the broader legal question, the Court held that a plea regarding jurisdiction can be raised as an objection under Section 34 even if it was not first raised under Section 16 of the Act. The Court also expressly overruled paragraphs 16 and 17 of its earlier decision in MSP Infrastructure Ltd. v. Madhya Pradesh Road Development Corporation Ltd., clarifying that "public policy of India" under the Act refers to law in force in India generally, State law as well as Central law, not only all-India law. Having decided these points, the Court set aside the High Court's impugned order and disposed of the appeal, while leaving the State's remaining Section 34 objections (including whether the Central Arbitration Act is excluded by a State tribunal law) to be argued before the trial court.

Lesson Learnt

A party challenging an arbitration award is not necessarily barred from raising a jurisdiction-related objection in court under Section 34 merely because it wasn't first raised before the arbitrator under Section 16, and "public policy of India," for arbitration purposes, covers State laws too, not just central legislation.

M/S Lion Engineering Consultants v. State of Madhya Pradesh – Legal Case Shots | LegalAware