Jun 01, 2018

New Plea of Jurisdiction permitted to be raised for the first time during Set-Aside Proceedings for an Arbitration Award

In M/s Lion Engineering Consultants v. State of Madhya Pradesh & Ors., the respondent  had filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) against an award passed in favour of the appellant. The respondent sought to belatedly amend this petition, which was rejected by the trial court, but was allowed by the High Court of Madhya Pradesh. The petitioner approached the Supreme Court contending, inter alia, that the amendment should not have been permitted as it introduced new grounds at the stage of the petition under Section 34 of the Arbitration Act, which had not been raised under Section 16 of the Arbitration Act before the tribunal. The appellant relied on MSP Infrastructure Ltd. v. MPRDC Ltd. (‘MSP Infrastructure’).The Supreme Court overruled the MSP Infrastructure judgement to hold that there is no bar to the plea of jurisdiction being raised by way of an objection under Section 34 of the Arbitration Act, even if no such objection was raised under Section 16, as both stages are independent of one another. The MSP Infrastructure judgement had also held that public policy of India means the policy of the Union i.e., central law and not State law. The Supreme Court overruled the same to hold that ‘public policy of India’ refers to law in force in India, whether State law or central law.

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