Madhya Pradesh High Court
M/S S.B. Engineering Associates A … vs M/S Ssangyong Engineering And … on 22 April, 2026
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A.A. No. 14 of 2023 & 25 of 2023
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SANJEEV SACHDEVA,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VINAY SARAF
ARBITRATION APPEAL No. 14 of 2023
M/S SSANGYONG ENGINEERING AND CONSTRUCTION
COMPANY LTD
Versus
M/S S.B. ENGINEERING ASSOCIATES A PARTNERSHIP
FIRM
AND
ARBITRATION APPEAL No. 25 of 2023
M/S S.B. ENGINEERING ASSOCIATES A PARTNERSHIP
FIRM
Versus
M/S SSANGYONG ENGINEERING AND CONSTRUCTION
COMPANY LTD
Appearance:
Shri Ravindra Singh Chhabra - Senior Advocate with Ms. Praneesha
Nayyar, Ms. Rashmeet Kaur and Shri Jubin Prasad - Advocates for M/s.
SSANGYONG Engineering and Construction Company Limited Appellant
in A.A. no. 14 of 2023 & Respondent in A.A. No. 25 of 2023
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A.A. No. 14 of 2023 & 25 of 2023
Shri Om Prakash and Shri Devendra Singh - Advocates for respondent
M/s S. B. Engineering Associates and Appellant in A.A. no. 25 of 2023 &
Respondent in A.A. No. 14 of 2023
Reserved on - 17.12.2025
Pronounced on - 22.04.2026
ORDER
Per: Justice Sanjeev Sachdeva
1. These Arbitration Appeals filed under section 37 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the
Arbitration Act“) challenge a common order dated 13.12.2022 passed
by the Commercial Judge, Jabalpur in MJC (AV)/96/2016 and MJC
(AC)/90/2016 on separate applications filed by the respective
appellants under section 34 of the Arbitration Act, whereby the
learned Commercial Judge has dismissed both the applications and
upheld the Arbitration Award dated 31.01.2016 read with Correction
Award dated 28.04.2016 passed by the Sole Arbitrator Justice P.C.
Naik (Retd.), Jabalpur. Arbitration Appeal No. 14 of 2023 has been
filed by Appellant SSANGYONG Engineering and Construction
Company Limited (hereinafter referred to as “SSANGYONG”) and
Arbitration Appeal No. 25 of 2023 has been filed by S.B. Engineering
Associates (hereinafter referred to as “SBE”).
2. The core issue arising for determination in these appeals is as to
validity of the award passed by the Sole Arbitrator appointed by the
designate of the Chief Justice of the High Court in an International
Commercial Arbitration.
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3. On 12.04.2006 the National Highway Authority of India (NHAI
for short) awarded a contract for construction of 4 lane highway on
Jhansi-Lakhnadon Section between Km 351 to Km 405.7 on NH-26
of package ABD II/C-9 to SSANGYONG being the successful bidder
in the tender floated by NHAI. After execution of contract with
NHAI, SSANGYONG, on 03.11.2007, entered into a works contract
with SBE, a partnership firm, sub-contracting the work of
construction of major and minor business, fly-over including
construction of RE Wall C-9 package for contract value of Rs.
19,55,46,280/-. Some amendments were incorporated in the works
contract on 01.11.2008.
4. Due to certain disputes between the parties, SSANGYONG
terminated the said contract with SBE on 02.06.2009 on the ground
that SBE had failed to perform the work under the agreement.
5. On 10.06.2009, a Notice was issued by SBE invoking
arbitration in terms of Clause 19 of the works contract which
contained an Arbitration Clause. Said clause reads as under :-
“19. All disputes relating to this agreement will be settled
amicably by mutual discussion and in case of subsisting
differences, the same will be decided through arbitration by a sole
Arbitrator appointed by SSANGYONG, who shall adjudicate the
said differences and dispose of in accordance with the provisions
of the Arbitration and Conciliation Arbitration Act as amended
from time to time. The venue of arbitration shall be Jabalpur and
the Courts at Jabalpur shall have exclusive jurisdiction.”
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6. By its reply dated 30.06.2009 SSANGYONG offered to settle
the disputes as per the terms of the contract. As SSANGYONG did
not appoint a Sole Arbitrator as per term no. 19 of the contract, SBE,
on 16.07.2009, filed an application under section 11(6) of the
Arbitration Act read with section 151 of CPC before the Chief Justice
of this High Court for appointment of an Arbitrator. Said application
was registered as Arbitration Case No. 32/2009.
7. Although said arbitration application for appointment of
arbitrator by the person designated by the Chief Justice of this Court
was opposed by SSANGYONG, but objection with regard to lack of
jurisdiction of the Chief Justice of the High Court on the ground that
SSANGYONG was a Korean Company and an application to the
Chief Justice of the High Court was not maintainable was not taken.
Said application was allowed on 17.11.2009 and Justice P.C. Naik
(Retd.), former Judge of the Orissa and Chhattisgarh High Court was
appointed as the Sole Arbitrator.
8. SBE filed its claim before the learned Sole Arbitrator and
SSANGYONG also participated in the arbitration proceedings and
filed its counter claim. Before the sole Arbitrator, the jurisdictional
issue was not raised by SSANGYONG. The sole Arbitrator passed the
award on 31.01.2016 allowing the claim and counter-claim in part.
The Arbitrator directed SSANGYONG to pay Rs. 4,88,25,815/- along
with interest @ 18% per annum till the realisation of the amount by
SBE. By the same award, in the counter claim, SBE was directed to
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pay Rs. 1,52,97,930/- along with interest @ 18% per annum to
SSANGYONG.
9. An application was moved by SBE under section 33 of the
Arbitration Act for correction of the award, which was allowed and
the award amount was corrected to Rs. 7,62,19,367/- payable by
SSANGYONG to SBE and Rs. 2,38,51,311/- by SBE to
SSANGYONG.
10. SSANGYONG filed an application under section 34 of the
Arbitration Act before the Commercial Court, Jabalpur for setting
aside the arbitral award which was registered as MJC (MV)/96/2016.
SBE also filed an application under section 34 of Arbitration Act,
which was registered as MJC(AC)/90/2016.
11. SSANGYONG raised the objection, before the Commercial
Court, that in view of the provisions of section 2(1)(f) and section
2(1)(e) of the Arbitration Act, the Commercial Court at Jabalpur did
not have the territorial jurisdiction to entertain the application filed
under section 34 of the Arbitration Act.
12. Said objection of the SSANGYONG was turned down by the
Commercial Court holding that the amended provisions of the
definition of “Court” which came into force on 23.10.2015 were not
applicable to the case in hand as the proceedings were initiated prior
to the 2015 Amendment came into force. The Court held that in light
of the provisions of section 42 of the Arbitration Act, the Commercial
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Court at Jabalpur had the jurisdiction to hear the matter, as earlier the
parties had approached the said Court under section 9 of the
Arbitration Act prior to the 2015 amendment.
13. Before the Commercial Court, Jabalpur, the competency of the
Sole Arbitrator to decide the dispute was not raised by any of the
parties. The Commercial Court by its order dated 13.12.2022
dismissed the petition preferred by SSANGYONG on the ground that
the application had not been filed by an authorised person and was
time barred. At the same time, the application moved on behalf of
SBE was also dismissed by the Commercial Court.
14. Said order is under challenge in the instant Arbitration Appeals
filed under section 37 of the Arbitration Act by both the parties.
SSANGYONG has challenged the entire award whereas SBE has
challenged the award to the limited extent of award in favour of
SSANGYONG.
15. Before this Court for the first time SSANGYONG has raised
the issue with regard to the validity and legality of the appointment of
the Sole Arbitrator by this Court under section 11(6) of the Arbitration
Act on the ground that dispute between the parties under the contract
was between a foreign entity SSANGYONG having its registered
office in Korea and a partnership firm registered in India, therefore,
the arbitration was an “International Commercial Arbitration”, as
defined under Section 2(1)(f)(ii) of the Arbitration Act and, thus, the
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jurisdiction to appoint an Arbitrator was exclusively with the Chief
Justice of the Supreme Court of India under section 11(6) read with
11(9) and 11(12) of the Arbitration Act and consequently the
appointment of Sole Arbitrator was without jurisdiction and a nullity
and thus the whole proceedings and the award as well as the order
passed by the Commercial Court are vitiated.
16. Although other grounds have been also pleaded in the appeal
memos, but arguments were advanced by the parties only on issue of
jurisdiction. SBE preferred the appeal on several other grounds, but no
other ground was pressed in arguments by SBE also and arguments
were restricted to the question of validity of the award passed in an
“International Commercial Arbitration”.
17. The questions that arise for determination in these Appeals are:
(a) Whether the High Court of Madhya Pradesh had
jurisdiction to appoint an Arbitrator in a dispute,
where one of the parties is a company registered
outside India?
(b) Whether the award passed by the Sole Arbitrator
appointed by the High Court in an International
Commercial Arbitration is void ab initio and a
nullity and thus unenforceable?
(c) Whether the principles of waiver or acquiescence
can be made applicable or whether the objection
with regard to jurisdiction to appoint an Arbitrator
can be raised by a party to the proceedings for the
first time in an Arbitration Appeal preferred under
section 37 of the Arbitration Act?
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SUBMISSIONS ON BEHALF OF SSANGYONG :
18. Mr. Ravindra Singh Chhabra, learned Senior Advocate
appearing on behalf of appellant SSANGYONG submits that
appellant SSANGYONG is a Korean Company incorporated under
the laws of Republic of Korea, having its registered office in Korea,
therefore, the dispute between a Korean Company and a registered
Indian Partnership Firm falls under the definition of “International
Commercial Arbitration” (ICA) in view of the provisions of section
2(1)(f) of Arbitration Act.
19. He further contends that Section 11(9) of the Arbitration Act
provides that in the case of appointment of sole or third arbitrator in
an International Commercial Arbitration, the Chief Justice of India or
the person or institution designated by him will have the jurisdiction
to appoint the arbitrator.
20. Learned Senior Counsel for SSANGYONG relied on the
judgment of the Supreme Court of India in Amway India Enterprises
Private Limited Vs. Ravindranath Rao Sindhia and another (2021) 8
SCC 465 to contend in that terms of Section 2(1)(f) of Arbitration Act,
whatever be the transaction between the parties, if it happens to be
entered into between persons, at least one of whom is either a foreign
national, or habitually resident in, any country other than India or by a
body corporate, which is incorporated in any country other than India
or by the government of a foreign country, the arbitration becomes an
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International Commercial Arbitration notwithstanding the fact that the
individual, body corporate, or government of a foreign country
referred to in section 2(1)(f) carries on business in India through a
business office in India.
21. Mr. Chhabra, learned senior counsel further submits that the
power to appoint Sole Arbitrator was vested in the Chief Justice of the
Supreme Court of India and no such power was conferred on the
Chief Justice of the High Court for appointment of arbitrator in
International Commercial Arbitration. Thus he submits that the
appointment of the Arbitrator by this Court was without jurisdiction
and the Arbitrator had no authority to conduct the arbitration
proceedings or pass the arbitral award.
22. He further submits that failure on the part of SSANGYONG to
raise the question of jurisdiction in proceedings initiated under section
11(6) of the Arbitration Act; during the arbitration proceedings and
the application under section 34 of the Arbitration Act has no effect as
the same cannot be treated as acquiescence or waiver. Even if a party
chooses not to object to the composition of arbitral tribunal, it, ipso
facto, would not confer jurisdiction on the arbitral tribunal to conduct
the proceedings contrary to the mandatory provisions of the Act. He
submits that it is a settled position of law that even by mere
agreement, parties cannot confer jurisdiction to a Court or Forum,
which otherwise does not having jurisdiction.
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23. He relied on the judgment of the Delhi High Court in Suresh
Shah Vs. Tata Consultancy Services, (2024) SC Online Delhi 8552
wherein it has been held that section 2(1)(f) of the Arbitration Act,
being a definition provision, is not derogable. He relies upon the
provisions of UNCITRAL Model Law on International Commercial
Arbitration 1985 and submits that the High Court could not have
entertained the application filed under section 11(6) of the Arbitration
Act by SBE for appointment of an Arbitrator in International
Commercial Arbitration and thus the appointment of the Sole
Arbitrator by the High Court by its order dated 17.11.2009 was ex
facia illegal and void ab initio and all proceedings thereafter are
vitiated. He submits that such a jurisdictional error is incurable and
objection in respect of the jurisdictional error can be raised at any
stage of the litigation between the parties.
24. He relies upon the judgments delivered by the Supreme Court
in Hindustan Zinc Ltd.(HZL) Vs. Ajmer Vidyut Vitran Nigam Ltd.,
(2019) 17 SCC 82, and Chief Engineer, Hydel Project Vs. Ravinder
Nath, (2008) 2 SCC 350, and Lion Engineering Consultants vs. State
of Madhya Pradesh and ors. (2018) 16 SCC 758 to contend that if an
award is passed by a Tribunal having lack of jurisdiction, such a plea
can be raised at any stage and even in the collateral proceedings.
25. Learned Counsel submits that the Supreme Court in those cases
permitted the parties to the proceedings to raise a jurisdictional issue
even in proceedings initiated under section 34 of Arbitration Act for
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the first time. He further submits that the issue of lack of jurisdiction
goes to the very root of the matter. If an award is passed by an arbitral
tribunal having no jurisdiction, it is nullity in the eye of law. It is
immaterial as to whether any objection was raised by party to the
proceedings or not.
26. Mr. Chhabra, further submits that if a party fails to raise an
objection of jurisdiction before the Arbitrator or during Section 34
proceedings, such an objection can be raised at any stage and the
failure to raise such a plea, will not attract the provisions of Section 4
of the Arbitration Act as the provisions of Section 11 of the
Arbitration Act are mandatory and non-derogable, thus, cannot be
waived. Reliance is placed on the judgment of the Supreme Court in
Central Organization for Railway Electrification v. ECI SPIC SMO
MCML (JV) A Joint Venture Co. (2024) SCC OnLine SC 3219, to
contend that the provisions of Section 11(6) of the Arbitration Act are
not derogable and even in the absence of objection raised by the party
to the proceedings, the Chief Justice of India or his designate alone
can appoint an arbitrator and the designate of the Chief Justice of the
High Court had no jurisdiction to appoint an arbitrator.
27. Further reliance is placed on the judgment of the High Court of
Judicature at Bombay in Soham Shah vs. Indian Film Company Ltd.
and another, 2016 (3) MHLJ 476, wherein a similar issue was raised
and the order of appointment of an arbitrator by the High Court was
recalled on the ground that the then designate Judge of the Chief
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Justice had no jurisdiction to appoint an arbitrator in International
Commercial Arbitration and merely because the objection was not
raised at the time of appointment of arbitrator by a party to the
proceedings, it would not amount to waiver under Section 4 of the
Arbitration Act as the same is non-derogable.
28. He submits that it was the duty of the Court to ensure that it
possessed the jurisdiction to entertain an application and it is
immaterial whether a party to the proceedings had raised the issue of
jurisdiction or not. He further submits that the appointment of the Sole
Arbitrator was without jurisdiction, consequently the proceedings
were void ab initio and thus, the award passed by learned Arbitrator is
a nullity and liable to be set aside.
SUBMISSIONS ON BEHALF OF SBE :
29. Mr. Om Prakash, learned counsel appearing for SBE submits
that undisputedly SSANGYONG did not raise any jurisdictional issue
in the Arbitration Case No. 32/2009 filed by SBE before the High
Court for appointment of an arbitrator under Section 11 of the
Arbitration Act. Not only SSANGYONG participated in the
arbitration proceedings without raising any jurisdictional objection
and submitted its counter claim also. Even in the proceedings initiated
by SBE under Section 9 of the Arbitration Act, no such plea was
raised by SSANGYONG. In Section 34 application, SSANGYONG
did not challenge the jurisdiction of the arbitrator and the challenge
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was only limited to the jurisdiction of the Commercial Court. At this
stage, for the first time under Section 37 of the Arbitration Act in an
appeal, SSANGYONG cannot be permitted to raise this issue and
failure to raise this issue at initial stage amounts to a waiver on behalf
of SSANGYONG.
29. He relies on the provisions of Section 4 of the Arbitration Act
to contend that as the objection was not raised by SSANGYONG, it is
deemed that they have waived their right to object.
30. Mr. Om Prakash learned counsel for SBE further submits that
as SSANGYONG is deemed to have waived its rights to object in
terms of Section 4 of the Arbitration Act, therefore an objection to the
composition and constitution of the Arbitral Tribunal cannot be
permitted to be raised particularly when SSANGYONG failed to
object before the learned Arbitrator under Section 16 of the
Arbitration Act. It amounted to acceptance of the appointment of the
Arbitrator by SSANGYONG unconditionally, and thus, as
SSANGYONG participated in the proceedings without any objection,
even if an Arbitral Tribunal was appointed irregularly, it amounts to
the acceptance of the party, who submits the case to the Arbitral
Tribunal.
31. He submits that Parties are having full authority to take a
decision even in respect of the procedure for appointment of the
arbitrator as provided under Section 11 (2) of the Arbitration Act, and
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the provisions of Sections 12, 13 and 16 of the Arbitration Act are
derogable in nature. Reliance is placed on the judgment of the
Supreme Court in Quippo Construction Equipment Limited vs
Janardan Nirman Private Limited 2020 (18) SCC 277.
32. He further submits that Section 2 (2) of Arbitration Act
provides that where the place of arbitration is in India then Part-I of
the Act shall apply to the arbitration proceedings. Section 2(7) of the
Arbitration Act provides that award made under Part-I shall be
considered as a domestic award and in view of the above provisions,
the award passed by the learned Sole Arbitrator cannot be treated as a
foreign award, even if, one of the parties to the arbitration agreement
is incorporated in any country other than India. He further submits
that the Sole Arbitrator was appointed in a fair, free and transparent
manner by this Court and the Supreme Court in Quippo Construction
(Supra) has held that, if a party fails to raise the objection, it has
waived the right to object.
33. He submits that the Supreme Court in the case of M.P. Rural
Road Development Authority v. L.G. Chaudhary Engineers and
Contractors, (2018) 10 SCC 826 has held that, after passing the
award, it cannot be set aside on the ground of jurisdiction. Reliance is
also placed on the judgments of the Supreme Court in Sweta
Construction v. Chhattisgarh State Power Generation Co. Ltd., (2024)
4 SCC 722; JMC Projects (India) Ltd v. Madhya Pradesh Road
Development Corporation (2024) 4 SCC 729 and AC Chokshi Share
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Broker (P) Ltd. v. Jatin Pratap Desai, (2025) SCC OnLine SC 281. He
contends that the scope of Section 37 of the Arbitration Act is very
limited and this Court cannot examine the material afresh.
34. Learned Counsel relies upon the judgment of the Supreme
Court in Gyatri Project Ltd. vs. M.P. Road Development Corporation
Ltd., (2025) SCC Online SC 1136, to contend that once the award has
been passed and no objection as to jurisdiction of the Arbitral
Tribunal has been taken at relevant stage, then the award could not
have been set aside by the High Court only on the ground of lack of
jurisdiction.
35. Reliance is also placed on the judgment of the Division Bench
of the Delhi High Court in Bhadra International India Pvt. Ltd. vs.
Airports Authority of India, (2025) SCC Online Delhi 698, to contend
that once a party had failed to raise the objection at the relevant stage
and no objection was raised under Section 16 and 34 of the
Arbitration Act, it cannot be permitted to be raised later on and the
appointment of arbitrator cannot be held ab initio illegal.
36. He submits that in the proceedings dated 21.12.2009 the learned
Arbitrator recorded that parties agreed to the proceedings to be held at
Jabalpur and to be conducted in English Language. He further submits
that said order was passed with the consent of the parties, and
therefore, parties had impliedly conferred authority to the learned Sole
Arbitrator by their conduct and consent and now SSANGYONG
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cannot be permitted to raise this issue at this stage. He further submits
that the objection raised by SSANGYONG in respect of lack of
jurisdiction is devoid of merit and is liable to be rejected.
37. Learned counsel further relied on the judgment of a single judge
of the High Court of judicature at Bombay in Zee Sports Ltd. vs
Nimbus Media Pte. Ltd. 2017 SCC OnLine Bom 1009, wherein an
application for amendment of the objections under section 34 of the
Arbitration Act to incorporate a similar challenge to the appointment
of the arbitrator by the High Court in International Commercial
Arbitration was disallowed as a new ground was sought to be
introduced after the period of limitation. It is contended that said order
has been upheld upto Supreme Court.
38. Learned counsel for SBE submits that in the case in hand also
no objection was raised by SSANGYONG earlier therefore no
permission can be granted to SSANGYONG to raise a new plea in
this appeal under Section 37 of the Arbitration Act.
CONSIDERATION AND CONCLUSION :
39. It is not in dispute that one of the parties to the arbitration
proceeding, Ssangyong Engineering & Construction Company
Limited is a Korean Company incorporated under the laws of
Republic of Korea, having its registered office at Korea and projects
of it in India.
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40. Section 2 (1) (f) of the Arbitration Act reads as under :-
“2. Definitions.-(1)(f) “international commercial arbitration”
means an arbitration relating to disputes arising out of legal
relationships, whether contractual or not, considered as
commercial under the law in force in India and where at least one
of the parties is–
(i) an individual who is a national of, or habitually resident in,
any country other than India; or
(ii) a body corporate which is incorporated in any country
other than India; or
(iii) a company or an association or a body of individuals
whose central management and control is exercised in any country
other than India; or
(iv) the Government of a foreign country;”
41. Section 2 (1) (f) of the Arbitration Act defines “International
Commercial Arbitration” to mean an arbitration relating to disputes
arising out of legal relationships considered as commercial inter alia
if one of the parties is a body corporate and is registered in any
country other than India.
42. In the application filed under Section 11 of the Arbitration by
SBE before this Court, it was mentioned that SSANGYONG is a
Korean Company incorporated under the laws of republic of Korea
and having its registered office in Korea and site office at
Narsinghpur. Clearly, it is not a dispute that SSANGYONG is a
Korean Company and as per the definition given in the Section 2(1)
(f) of the Arbitration Act, the arbitration between SSANGYONG and
SBE is an “International Commercial Arbitration”.
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43. As per SSANGYONG no arbitrator could have been appointed
by the Chief Justice of the Madhya Pradesh High Court or any person
designated by him in respect of the subject disputes as Section 11 (6)
read with 11 (9) and 11(12) of the Arbitration Act did not empower
the Chief Justice of a High Court to appoint an arbitrator in an
“International Commercial Arbitration” and only the Chief Justice of
India or any person designated by him could have appointed an
Arbitrator.
44. Reference may be had to the judgment of the three judge bench
of the Supreme Court in Hindustan Zinc (Supra), wherein the
Supreme Court has held that an award passed by an Arbitration
Tribunal where there is inherent lack of jurisdiction is a nullity and
such plea can be taken at any stage and also in collateral proceedings.
45. The Supreme Court in Hindustan Zinc (Supra) has held as
under:
“17. We are of the view that it is settled law that if there is an
inherent lack of jurisdiction, the plea can be taken up at any stage
and also in collateral proceedings. This was held by this Court
in Kiran Singh v. Chaman Paswan 1 as follows: (SCR p. 121: AIR
p. 342, para 6)“6. … It is a fundamental principle well-established
that a decree passed by a court without jurisdiction is a
nullity, and that its invalidity could be set up whenever and
wherever it is sought to be enforced or relied upon, even at
the stage of execution and even in collateral proceedings. A
defect of jurisdiction, whether it is pecuniary or territorial,
or whether it is in respect of the subject-matter of the1
Kiran Singh v. Chaman Paswan, (1955) 1 SCR 117 : AIR 1954 SC 340
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action, strikes at the very authority of the Court to pass any
decree, and such a defect cannot be cured even by consent
of parties. If the question now under consideration fell to
be determined only on the application of general principles
governing the matter, there can be no doubt that the
District Court of Monghyr was coram non judice, and that
its judgment and decree would be nullities.”
18. Therefore, it is a little difficult to countenance Shri
Vaidyanathan’s argument that having consented, the respondent
cannot now turn around and challenge the very appointment of the
arbitrator as being invalid and without jurisdiction.
***** ***** *****
23. This being the case, the High Court is right in stating that
the arbitrator could not, in law, have been appointed by the State
Commission under Section 86 of the Electricity Act. The award
based on such appointment would be non est in law.”
46. The Supreme Court in Hindustan Zinc (supra) has held that if
there is an inherent lack of jurisdiction, the plea can be taken up at any
stage and also in collateral proceedings. A decree passed by a court
without jurisdiction is a nullity, and that its invalidity could be set up
whenever and wherever it is sought to be enforced or relied upon,
even at the stage of execution and even in collateral proceedings. A
defect of jurisdiction, whether it is pecuniary or territorial, or whether
it is in respect of the subject-matter of the action, strikes at the very
authority of the Court to pass any decree, and such a defect cannot be
cured even by consent of parties. The Supreme Court negated the
argument that after having consented the party could not turn around
and challenge the very appointment of the arbitrator as being invalid
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and without jurisdiction. The award based on an appointment by the
High Court without jurisdiction would be non est in law.
47. Reference may also be had to the Judgment of the five judges
Bench of the Supreme Court in Central Organization for Railway
Electrification (supra) wherein the Supreme Court has held that
though parties are free to agree on the procedure to be followed by
arbitral tribunal, the place of arbitration, the date of commencement of
arbitral proceedings, the language to be used in arbitral proceedings,
the procedure for hearing and written proceedings, consequence of
default by a party, appointment of experts and the manner of decision
making by the arbitral tribunal, but mandatory provisions of the Act
cannot be waived by the parties.
48. The Supreme Court in Central Organization for Railway
Electrification (supra) has held as under:
“25. Additionally, the parties are free to agree on the
procedures to be followed by the Arbitral Tribunal,2 the place of
arbitration, 3 the date of commencement of arbitral proceedings,
4
the language to be used in the arbitral proceedings, 5 procedure
for hearings and written proceedings, 6 consequence of a default by
a party, 7 appointment of experts 8 , and the manner of decision-
making by the Arbitral Tribunal. 9 Thus, the Arbitration Act
recognises and enforces mutual commercial bargains and
understanding between the parties at all stages of the arbitration2
Section 19, Arbitration Act.
3
Section 20, Arbitration Act.
4
Section 21, Arbitration Act.
5
Section 22, Arbitration Act.
6
Section 24, Arbitration Act.
7
Section 25, Arbitration Act.
8
Section 26, Arbitration Act.
9
Section 29, Arbitration Act.
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proceedings. However, the autonomy of the parties under the
Arbitration Act is not without limits. It is limited by certain
mandatory provisions of the Arbitration Act.
(ii) Mandatory provisions
26. Part I of the Arbitration Act applies where the place of
arbitration is in India10. Section 4 deals with a waiver of the right
of a party to object in the following terms:
“4. Waiver of right to object.–A party who knows that–
(a) any provision of this Part from which the parties
may derogate, or
(b) 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 or, if a time-limit is
provided for stating that objection, within that period of
time, shall be deemed to have waived his right to so
object.”
27. Section 4 is a deeming provision.11 It deems that a party
has waived its right to object if it proceeds with the arbitration
without stating its objection to non-compliance of any provisions
from which the parties may derogate or of any requirement under
the arbitration agreement. 12 Importantly, Section 4 distinguishes
between derogable (non-mandatory) and mandatory provisions. 13
28. Section 4 is based on Article 4 of the Model Law. 14 The
purpose of incorporating Section 4 is to inform the arbitrators of
10
Section 2(2), Arbitration Act.
11
Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal Baradia, (2005) 10 SCC 704 : (2005) 124 Comp
Cas 811, para 9
12
BSNL v. Motorola India (P) Ltd., (2009) 2 SCC 337, p. 349, para 39 : (2009) 1 SCC (Civ) 524″39.
Pursuant to Section 4 of the Arbitration and Conciliation Arbitration Act, a party which knows
that a requirement under the arbitration agreement has not been complied with and still
proceeds with the arbitration without raising an objection, as soon as possible, waives their right
to object.”
13
A/CN.9/246 (44)
14
Article 4, Model Law. It reads:
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the principle of waiver.15 Peter Binder suggests that Article 4 aims
to prohibit the adoption of delay tactics by parties and contribute
to the fluency of the proceedings 16. A party to arbitration has a
right to object to any non-compliance with procedural
requirements. Section 4 implies a waiver of this right under certain
conditions based on the principle of waiver or estoppel. 17 The
procedural default at issue must be stipulated either in the
arbitration agreement or a non-mandatory provision under Part I
of the Arbitration Act. If the arbitration agreement is silent on a
procedural point, the provisions of the Arbitration Act take effect.
According to Section 4, a party cannot insist on compliance with
non-mandatory provisions of the Arbitration Act if it fails to make
a timely objection. 18 Section 4 of the Arbitration Act necessarily
implies that the parties cannot proceed with arbitration in
derogation of a mandatory provision.
29. The initial draft of Article 4 of the Model Law did not make
an exception for mandatory provisions. Therefore, suggestions
were made to “soften” the provision by limiting “the waiver rule
to non-compliance with non-mandatory provisions”. 19 Further, a
proposal was also made to include a list of mandatory provisions
under the Model Law. It was suggested that such a list “would
make it unnecessary to include in the non-mandatory provisions
such wording as “unless otherwise agreed by the parties”. 20 The
Secretariat considered it unnecessary to include a list of
mandatory provisions given the overall scheme of the Model Law.
“4. Waiver of right to object.–A party who knows that any provision of this Law from which
the parties may derogate or 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 or, if a time-limit is provided therefor, within such period of
time, shall be deemed to have waived his right to object.”
15
Howard Holtzmann and Joseph Neuhaus, A Guide to the Uncitral Model Law on International
Commercial Arbitration, p. 196.
16
Peter Binder, International Commercial Arbitration and Conciliation in Uncitral Model Law
Jurisdiction, (2nd Edn., 2005) p. 49.
17
A/CN.9/264 (17)
18
Howard Holtzmann and Joseph Neuhaus, A Guide to the Uncitral Model Law on International
Commercial Arbitration, (Kluwer Law) p. 197.
19
A/CN.9/245 [178]
20
Composite draft text of a Model Law on international commercial arbitration: some comments
and suggestions for consideration, A/CN.9/WG.II/WP.50.
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21
It was also of the opinion that mandatory provisions could be
discerned from the content of such provisions.
30. Holtzmann and Neuhaus give the following examples of
mandatory provisions under the Model Law:
“Examples of provisions that appear to be mandatory and
therefore cannot be waived under Article 4 are the
following : the requirement that the arbitration agreement
be in writing [Article 7(2)]; the requirement that the
parties be treated with equality and that each party be
given a full opportunity of presenting his case (Article 18);
the requirement that a party be given notice of any hearing
and be sent any materials supplied to the Arbitral Tribunal
by the other party [Articles 24(2), (3)]; the requirement
that an award-including an award on agreement terms-be
in writing, that it state its date and place, and that it be
delivered to the parties [Articles 30(2), 31(1), (3), (4)].” 22
31. The above extract suggests that an arbitration agreement
entered into by the parties is subject to certain well-defined and
mandatory legal principles. For instance, Section 34(2)(a)(v)
allows for refusal of enforcement of arbitral awards if the
composition of the Arbitral Tribunal or arbitral procedure was not
following the agreement of the parties unless such agreement
conflicts with the mandatory provisions of the law 23 . The
21
Composite draft text of a Model Law on international commercial arbitration: some comments
and suggestions for consideration: note by the Secretariat (A/CN.9/WG.II/WP.50) [The
Secretariat gave the following reasons for not providing a list of mandatory provisions in the
Model Law itself: “Firstly, a considerable number of provisions are obviously by their content of a
mandatory nature. Secondly, there are a number of provisions granting freedom to the parties,
accompanied by suppletive rules failing agreement by the parties; here the question of
mandatory nature seems to be a philosophical one and equally redundant. Thirdly, with respect
to some draft articles only a part of the provisions (e.g. a time-limit) is non-mandatory. Fourthly,
in respect of some of the provisions already decided to be non-mandatory, the Working Group
was of the view that this should, for the sake of emphasis, be expressed in the individual
provision, despite the general listing in Article 3. Fifthly, it is suggested that, in addition to the
provisions already decided to be non-mandatory and drafted accordingly, […] there are only few
further provisions which may be regarded as non-mandatory and, if so, could be easily marked as
such by adding the words “unless otherwise agreed by the parties;”]
22
Howard Holtzmann and Joseph Neuhaus, A Guide to the Uncitral Model Law on International
Commercial Arbitration, p. 198.
23
Section 34(2)(a)(v), Arbitration Act. It reads: “34. (2)(a)(v) the composition of the Arbitral
Tribunal or the arbitral procedure was not in accordance with the agreement of the parties,
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composition of the Arbitral Tribunal or the arbitral procedure
must not only be in accordance with the agreement of the parties
but also be consistent with the mandatory standards laid down
under the Arbitration Act. 24 In case of a conflict, mandatory
provisions of the Arbitration Act prevail over the arbitration
agreement between the parties.25
32. Under the Arbitration Act, the mandatory provisions must
be deduced from their content. For instance, the use of the phrase
“unless otherwise agreed by the parties” is an indicator of the fact
that the provision is derogable because it gives priority to the
agreement of the parties. In contrast, the use of the word “shall”
in a provision is an indicator that the legislature intended to give it
a mandatory effect. However, the use of “shall” is not the sole
indicator to determine the mandatory nature of a provision. The
provision must be interpreted by having regard to its text and the
context to determine its nature.26
33. As opposed to the Indian approach, the UK Arbitration Act
lists the mandatory provisions under Schedule I. 27 In this context,
Section 4 provides that the mandatory provisions have effect
notwithstanding any agreement to the contrary. 28 It further
unless such agreement was in conflict with a provision of this Part from which the parties cannot
derogate, or failing, such agreement, was not in accordance with this Part;”
24
Report of the United Nations Commission on International Trade Law on the work of its
Eighteenth Session (3-6-1985 to 21-6-1985) Supplement No. 17 (A/40/17) [290]. The Report
states: “290. As regards the standards set forth in the sub-paragraph, it was understood that
priority was accorded to the agreement of the parties. However, where the agreement was in
conflict with a mandatory provision of “this Law” or where the parties had not made an
agreement on the procedural point at issue, the provisions of “this Law”, whether mandatory or
not, provided the standards against which the composition of the Arbitral Tribunal and the
arbitral procedure were to be measured.”
25
A/CN.9/246, para 135.
26
State of U.P. v. Babu Ram Upadhya, 1960 SCC OnLine SC 5, para 29 : AIR 1961 SC 751 : (1961) 2
SCR 679, para 29; Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur, 1964 SCC OnLine SC
119, para 8
27
Schedule I, UK Arbitration Arbitration Act. [Section 33 which imposes a legal duty on the
tribunal to act fairly and impartially is one of the mandatory provisions under the UK legislation.]
28
Section 4, UK Arbitration Act. It reads:
“4. Mandatory and non-mandatory provision.–(1) The mandatory provisions of this Part
are listed in Schedule 1 and have effect notwithstanding any agreement to the contrary.(2) The
other provisions of this Part (the “non-mandatory provisions”) allow the parties to make their
own arrangements by agreement by provide rules which apply in the absence of such
agreement.(3) The parties may make such arrangements by agreeing to the implication of
institutional rules or providing any other means by which a matter may be decided.(4) It is
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provides that the non-mandatory provisions allow the parties to
make their arrangements by agreement. Lord Mustill and Stewart
Boyd term Section 4 as one of the “four pillars” of the UK
Arbitration Act. 29 They observe that the provision is one of the
instances indicating the influence of the State on the internal law
of arbitration.30
(iii) Appointment of arbitrator
34. Section 10 provides that “parties are free to determine the
number of arbitrators, provided that such number shall not be an
even number”. 31 If parties fail to determine the number of
arbitrators, the Arbitral Tribunal shall consist of a sole arbitrator.
Section 11 pertains to the appointment of arbitrators. Section 11(2)
provides that subject to Section 11(6), the parties “are free to
agree on a procedure for appointing the arbitrator or arbitrators”.
Section 11 provides recourse to the following contingencies if the
parties fail to adhere to the agreed procedure for the appointment
of an arbitrator or arbitrators:
“11. (3) Failing any agreement referred to in sub-section
(2), in an arbitration with three arbitrators, each party
shall appoint one arbitrator, and the two appointed
arbitrators shall appoint the third arbitrator who shall act
as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3)
applies and–
immaterial whether or not the law applicable to the parties’ agreement is the law of England and
Wales or, as the case may be, Northern Ireland.(5) The choice of law other than the law of
England and Wales or Northern Ireland as the applicable law in respect of a matter provided for
by a non-mandatory provision of this Part is equivalent to an agreement making provision about
that matter. For this purpose an applicable law determined in accordance with the parties’
agreement, or which is objectively determined in the absence of any express or implied choice,
shall be treated as chosen by the parties.”
29
Lord Mustill and Stewart Boyd, Commercial Arbitration (2nd Edn., Butterworths, 2001) p. 23.
30
Id, p. 57.
31
Section 10, Arbitration Act. It reads:
“10. Number of arbitrators.–(1) The parties are free to determine the number of arbitrators,
provided that such number shall not be an even number.(2) Failing the determination referred to
in sub-section (1), the Arbitral Tribunal shall consist of sole arbitrator.”
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(a) a party fails to appoint an arbitrator within thirty
days from the receipt of a request to do so from the
other party; or
(b) the two appointed arbitrators fail to agree on the
third arbitrator within thirty days from the date of
their appointment,
the appointment shall be made, on an application of a
party, by the Supreme Court or, as the case may be, by the
High Court or any person or institution designated by such
Court.
(5) Failing any agreement referred to in sub-section
(2), in an arbitration with a sole arbitrator, if the parties
fail to agree on the arbitrator within thirty days from
receipt of a request by one party from the other party to so
agree the appointment shall be made, upon request of a
party, by the Supreme Court or, as the case may be, the
High Court or any person or institution designated by such
Court.
(6) Where, under an appointment procedure agreed
upon by the parties–
(a) a party fails to act as required under that
procedure; or
(b) the parties, or the two appointed arbitrators, fail to
reach an agreement expected of them under that
procedure; or
(c) a person, including an institution, fails to perform
any function entrusted to him or it under that
procedure,
a party may request the Supreme Court or, as the case may
be, the High Court or any person or institution designated
by such Court to take the necessary measure, unless the
agreement on the appointment procedure provides other
means for securing the appointment.”
35. In terms of the legislative scheme in Section 11, parties are
free to agree on a procedure for appointing the arbitrator or
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arbitrators. The procedure for appointment agreed by the parties
is subject to the power of the Supreme Court or the High Courts
under Section 11(6) to appoint an arbitrator in cases where the
parties do not agree on a procedure or if the parties or the
arbitrator fail to act following the agreed procedure. Thus, Section
11(6) allows judicial involvement as a default mechanism and not
as an independent basis for choosing the arbitrators irrespective of
the parties’ agreement. Further, the parties can invoke Sections
11(3), 11(4) or 11(5), as the case may be, only upon the failure of
the agreed procedure for appointment of arbitrators.”
49. In Central Organization for Railway Electrification (supra) the
Supreme Court has held that parties are free to agree on the
procedures to be followed by the Arbitral Tribunal, the place of
arbitration, the date of commencement of arbitral proceedings, the
language to be used in the arbitral proceedings, procedure for hearings
and written proceedings, consequence of a default by a party,
appointment of experts, and the manner of decision-making by the
Arbitral Tribunal. The Arbitration Act recognises and enforces mutual
commercial bargains and understanding between the parties at all
stages of the arbitration proceedings. However, the autonomy of the
parties under the Arbitration Act is not without limits. It is limited by
certain mandatory provisions of the Arbitration Act.
50. With regard to Section 4 of the Arbitration Act, i.e. waiver to
object, the Supreme Court in Central Organization for Railway
Electrification (supra) has held that Section 4 is a deeming provision.
It deems that a party has waived its right to object if it proceeds with
the arbitration without stating its objection to non-compliance of any
provisions from which the parties may derogate or of any requirement
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under the arbitration agreement. Pursuant to Section 4 of the
Arbitration and Conciliation Arbitration Act, a party which knows that
a requirement under the arbitration agreement has not been complied
with and still proceeds with the arbitration without raising an
objection, as soon as possible, waives their right to object. It has
further been held that Section 4 distinguishes between derogable (non-
mandatory) and mandatory provisions.
51. The Supreme Court in Central Organization for Railway
Electrification (supra) noticed that Section 4 of the Arbitration Act is
based on Article 4 of the UNCITRAL Model Law on International
Commercial Arbitration. The Supreme Court held that a party to
arbitration has a right to object to any non-compliance with procedural
requirements. Section 4 implies a waiver of this right under certain
conditions based on the principle of waiver or estoppel. The
procedural default at issue must be stipulated either in the arbitration
agreement or a non-mandatory provision under Part I of the
Arbitration Act. If the arbitration agreement is silent on a procedural
point, the provisions of the Arbitration Act take effect. According to
Section 4, a party cannot insist on compliance with non-mandatory
provisions of the Arbitration Act if it fails to make a timely objection.
Section 4 of the Arbitration Act necessarily implies that the parties
cannot proceed with arbitration in derogation of a mandatory
provision.
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52. If one were to examine the language of Section 4 of the
Arbitration Act, it talks of party knowing (a) that any provision of Part
1 from which parties may derogate or (b) any requirement of under
the arbitration agreement has not been complied with and proceeds
with the arbitration without objecting then it is deemed to have
waived its right to object. The two situations are: provisions of part 1
of the Arbitration Act that are non mandatory from which parties may
derogate and noncompliance of any clause which parties have agreed
to in the agreement.
53. The key expression used in the first clause is ‘may derogate’.
The expression ‘may derogate’ when used in conjunction with the
expression ‘any provision of this part’ implies those provisions in
respect of which parties have the autonomy to negotiate and agree
upon. Such provisions must not be mandatory and are such in respect
of which parties have the autonomy to agree to the contrary for
example: the procedures to be followed by the Arbitral Tribunal, the
place of arbitration, the date of commencement of arbitral
proceedings, the language to be used in the arbitral proceedings,
procedure for hearings and written proceedings, consequence of a
default by a party, appointment of experts, and the manner of
decision-making by the Arbitral Tribunal. However, clauses of the
Arbitration Act that are mandatory and in respect of which parties do
not have autonomy to negotiate or agree upon cannot be considered to
be covered in the clause ‘may derogate’.
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54. The Supreme Court in Central Organization for Railway
Electrification (supra) has held that an arbitration agreement entered
into by the parties is subject to certain well-defined and mandatory
legal principles. Some of the instances given by the Supreme Court
for refusal of enforcement of arbitral awards is if the composition of
the Arbitral Tribunal or arbitral procedure was not following the
agreement of the parties unless such agreement conflicts with the
mandatory provisions of the law; the composition of the Arbitral
Tribunal or the arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement was in conflict with a
provision of this Part from which the parties cannot derogate; the
composition of the Arbitral Tribunal or the arbitral procedure must not
only be in accordance with the agreement of the parties but also be
consistent with the mandatory standards laid down under the
Arbitration Act. In case of a conflict, mandatory provisions of the
Arbitration Act prevail over the arbitration agreement between the
parties.
55. The Supreme Court in Central Organization for Railway
Electrification (supra) has further held that under the Arbitration Act,
the mandatory provisions must be deduced from their content. For
instance, the use of the phrase “unless otherwise agreed by the
parties” is an indicator of the fact that the provision is derogable
because it gives priority to the agreement of the parties. In contrast,
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the use of the word “shall” in a provision is an indicator that the
legislature intended to give it a mandatory effect.
56. Reliance placed by learned counsel appearing for SBE on the
judgments of the Supreme Court in Quippo Construction Equipment
Limited (supra), L.G. Chaudhary Engineers and Contractors, (supra),
Sweta Construction (supra), JMC Projects (India) Ltd (supra), AC
Chokshi Share Broker (P) Ltd. (supra) and Gyatri Project Ltd.(supra)
is misplaced as none of the cases pertain to International Commercial
Arbitration and the disputes pertain to domestic arbitration.
57. Further reliance placed by learned Counsel for SBE on the
judgment of the Delhi High Court in Bhadra International India Pvt
Ltd (supra) to contend that once a party had failed to raise the
objection at the relevant stage and no objection was raised under
Section 16 and 34 of the Arbitration Act, it cannot be permitted to be
raised later on and the appointment of arbitrator cannot be held ab
initio illegal is misplaced. Firstly because that case also was of
domestic arbitration and secondly and more importantly said
judgment has already been set aside by the Supreme Court in Bhadra
International India Pvt. Ltd. vs. Airports Authority of India 2026 SCC
onLine SC 7.
58. We may note that the judgment of the Supreme Court
overruling the view of the Delhi High Court was passed after the case
was reserved for judgment. Normally a judgment that has been passed
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by a court after the case is reserved for judgment is not to be referred
without giving an opportunity to a party against whom that judgment
is applied. However in the present case, as the Supreme Court has
reiterated the principles laid down in Hindustan Zinc Ltd (supra),
which has also been referred to by us hereinabove, we are of the view
that no purpose would be served in listing the case for a rehearing on
this aspect.
59. In light of the above, we may now examine the provisions of
Section 11 of the Arbitration Act. Since in the present case, the
appointment of arbitrator by the High Court happened prior to the
amendment of Section 11 of the Arbitration Act, we are referring to
the unamended provisions, which prior to its amendment read as
under:
“11. Appointment of arbitrators.–(1) A person of any
nationality may be an arbitrator, unless otherwise agreed by the
parties.
(2) Subject to sub-section (6), the parties are free to agree on a
procedure for appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an
arbitration with three arbitrators, each party shall appoint one
arbitrator, and the two appointed arbitrators shall appoint the
third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies
and–
(a) a party fails to appoint an arbitrator within thirty days
from the receipt of a request to do so from the other party;
or
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(b) the two appointed arbitrators fail to agree on the third
arbitrator within thirty days from the date of their
appointment,
the appointment shall be made, upon request of a party, by the
Chief Justice or any person or institution designated by him.
(5) Failing any agreement referred to in sub-section (2), in an
arbitration with a sole arbitrator, if the parties fail to agree on the
arbitrator within thirty days from receipt of a request by one party
from the other party to so agree the appointment shall be made,
upon request of a party, by the Chief Justice or any person or
institution designated by him.
(6) Where, under an appointment procedure agreed upon by
the parties,–
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach
an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any
function entrusted to him or it under that procedure,
a party may request the Chief Justice or any person or institution
designated by him to take the necessary measure, unless the
agreement on the appointment procedure provides other means for
securing the appointment.
(7) A decision on a matter entrusted by sub-section (4) or sub-
section (5) or sub-section (6) to the Chief Justice or the person or
institution designated by him is final.
(8) The Chief Justice or the person or institution designated by
him, in appointing an arbitrator, shall have due regard to–
(a) any qualifications required of the arbitrator by the
agreement of the parties; and
(b) other considerations as are likely to secure the appointment
of an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an
international commercial arbitration, the Chief Justice of India or
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the person or institution designated by him may appoint an
arbitrator of a nationality other than the nationalities of the parties
where the parties belong to different nationalities.
(10) The Chief Justice may make such scheme as he may deem
appropriate for dealing with matters entrusted by sub-section (4)
or sub-section (5) or sub-section (6) to him.
(11) Where more than one request has been made under sub-
section (4) or sub-section (5) or sub-section (6) to the Chief
Justices of different High Courts or their designates, the Chief
Justice or his designate to whom the request has been first made
under the relevant sub-section shall alone be competent to decide
on the request.
(12) (a) Where the matters referred to in sub-sections (4),
(5), (6), (7), (8) and (10) arise in an international commercial
arbitration, the reference to “Chief Justice” in those sub-sections
shall be construed as a reference to the “Chief Justice of India”.
(b) Where the matters referred to in sub-sections (4), (5), (6),
(7), (8) and (10) arise in any other arbitration, the reference to
“Chief Justice” in those sub-sections shall be construed as a
reference to the Chief Justice of the High Court within whose local
limits the principal Civil Court referred to in clause (e) of sub-
section (1) of Section 2 is situate and, where the High Court itself
is the Court referred to in that clause, to the Chief Justice of that
High Court.”
60. In terms of Section 11 of the Arbitration Act (as it stood prior to
its amendment) inter alia parties are free to agree on a procedure for
appointment of arbitrator. Failing any such agreement in an arbitration
with three arbitrators, each party shall appoint one arbitrator, and the
two appointed arbitrators shall appoint the third arbitrator who shall
act as the presiding arbitrator. If a party fails to appoint an arbitrator
within thirty days from the receipt of a request to do so from the other
party or if the two appointed arbitrators fail to agree on the third
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arbitrator within thirty days from the date of their appointment, the
appointment shall be made, upon request of a party, by the Chief
Justice or any person or institution designated by him.
61. Section 11(5) provides that if there is no agreement for
appointment of arbitrator, in an arbitration with a sole arbitrator, if
parties fail to agree on the arbitrator within thirty days from receipt of
a request by one party from the other party the appointment shall be
made, by the Chief Justice or any person or institution designated by
him. Section 11(6) inter alia stipulates that if there is an procedure
agreed upon by the parties and if a party fails to act as required under
that procedure or the parties, or the two appointed arbitrators, fail to
reach an agreement expected of them under that procedure a party
may request the Chief Justice or any person or institution designated
by him to take the necessary measure.
62. Section 11(9) stipulates that in the case of appointment of sole
or third arbitrator in an international commercial arbitration, the Chief
Justice of India or the person or institution designated by him may
appoint an arbitrator of a nationality other than the nationalities of the
parties where the parties belong to different nationalities. Section
11(12) stipulates that in an “International Commercial Arbitration”,
the reference to “Chief Justice” in those sub-sections shall be
construed as a reference to the “Chief Justice of India” and in any
other arbitration, the reference to “Chief Justice” in those sub-sections
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shall be construed as a reference to the Chief Justice of the High
Court.
63. Thus the intention of the legislature is clear, in International
Commercial Arbitrations, in case appointment of the arbitrator or the
umpire is to be made by an intervention of the Court then it is only the
Chief Justice of India or any person or institution designated by him
who alone has the power to appoint the arbitrator. The Supreme Court
in Amway India Enterprises Private Limited Vs. Ravindranath Rao
Sindhia and another (supra) has held that whatever be the transaction
between the parties, if the is an International Commercial Arbitration
the High Court has no jurisdiction to appoint an arbitrator.
64. The Bombay High Court in Soham Shah (Supra) considered the
appointment of an arbitrator by the designate of the Chief Justice the of
Bombay High Court by consent of parties in a matter falling under the
definition of International Commercial Arbitration and held as under :
“7. A perusal of the application filed under section 11 by the
original applicant clearly indicates that the original applicant No.
1 was a company incorporated in Cyprus i.e. in a country other
than India. A perusal of the statement of claim filed by the
applicant before the learned arbitrator also indicates that even
today it is the claim of the applicant No. 1 that the applicant No. 1
company was incorporated in Cyprus i.e. country other than India.
It is not in dispute that the review petitioner however did not raise
any objection before the learned designate while opposing the
Arbitration Application No. 166 of 2013.
8. Under section 11(9) of the Arbitration and Conciliation
Arbitration Act, if any application for appointment of a sole or
third arbitrator is required to be made in any international
commercial arbitration, the Chief Justice of India or the person or
37NEUTRAL CITATION NO. 2026:MPHC-JBP:31454
A.A. No. 14 of 2023 & 25 of 2023
institution designated by him only is empowered to appoint an
arbitrator of a nationality other than the nationalities of the parties
where the parties belong to different nationalities. The power of
the Chief Justice of High Court under section 11(6) of the
Arbitration and Conciliation Arbitration Act can be exercised only
in case of a domestic arbitration. Admittedly, one of the parties to
the arbitration agreement was a body incorporated in the country
other than India. The arbitration relating to disputes between such
two parties would fall within the definition of the international
commercial arbitration defined under section 2(1)(f) of the
Arbitration and Conciliation Arbitration Act. In my view the
learned designate of the Hon’ble Chief Justice of this Court thus
has no jurisdiction to appoint an arbitrator in the facts of this case.
9. In my view even if the party did not bring these facts to the
notice of the learned designate of the Hon’ble Chief Justice when
application under section 11 of the Arbitration Act was heard,
even by consent of parties, the learned designate of the Chief
Justice of this Court could not have appointed an arbitrator in
case of international commercial arbitration. The question of
waiver will thus not apply to the facts of this case in view of there
being inherent lack of jurisdiction.”
(underlining supplied)
65. In the present case, it was clearly mentioned in the application
filed under section 11(6) of the Arbitration Act that one of the parties
to the agreement was incorporated under the laws of republic of
Korea. Despite the failure on the part of SSANGYONG to raise a
competence issue the designated person of the Chief Justice of this
Court was under an obligation to examine the same before appointing
a sole arbitrator. Though parties may appoint any arbitrator out of
court by consent or agreement, but where one of the parties has sought
an intervention of the Court, it was obligatory on the part of the Court
to examine the matter suo motu as to whether the request could be
considered by the Court or not and whether it had the competence and
38
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A.A. No. 14 of 2023 & 25 of 2023
jurisdiction to appoint an arbitrator. Section 11(6) of the Arbitration
Act does not empower the person designated by the Chief Justice of
High Court to appoint an arbitrator in International Commercial
Arbitration but only empowers the Chief Justice of the Supreme Court
of India. The provisions are mandatory in nature and cannot be
waived.
66. It is a settled position of law that if the Court or forum is corum
non judice, parties cannot confer jurisdiction on the said court or
forum even by consent or acquiescence. In the case in hand, the main
objection of the respondent SBE is that SSANGYONG did not raise
the objection in the proceedings of Section 11(6) of the Arbitration
Act, and it is deemed to have been waived and thus the appointment
of the arbitrator was valid.
67. We are unable to accept said arguments advanced by learned
counsel for SBE as no provision of the Arbitration Act confers
jurisdiction upon the Chief Justice of a High Court to appoint an
arbitrator in International Commercial Arbitration. Therefore the
appointment order dated 17.11.2009 itself was without jurisdiction
and was non est. Consequently, the arbitrator had no authority to
conduct the arbitration proceedings as he was appointed by an
incompetent authority and was corum non judice and thus the award
passed by him is a nullity.
39
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A.A. No. 14 of 2023 & 25 of 2023
68. A conjoint reading of Sections 2(1)(f), 4 and 11 of the
Arbitration Act, shows that the jurisdiction to appoint the sole or third
arbitrator in an International Commercial Arbitration lies only with
the Chief Justice of India or the person or institution designated by
him and it is a mandatory provision and is not derogable. A party can
derogate from something, which is within the discretionary power of
said party. One cannot derogate from a provision which is mandatory
and binding in law on the party. Section 11 contemplates a forum, i.e.
the Chief Justice of India alone to be approached, in case of
“International Commercial Arbitration”. It does not give any
discretion to the parties to either approach the Chief Justice of India or
the Chief Justice of a High Court. Derogation was permissible if there
was any discretion with a party and not where there is no option and
the forum is mandatorily prescribed by the statute.
69. Thus neither by consent nor by acquiescence jurisdiction can be
conferred on the Chief Justice of a High Court or a person or
institution designated by him to appoint a sole or third arbitrator in the
“International Commercial Arbitration”. Lack of jurisdiction hits at
the very root of the case and cannot be waived even by consent or
merely because of participation in the arbitral proceedings without
any demur. Failure of a party to raise any objection of jurisdiction in
the proceedings under Section 11; before the Arbitrator during
arbitration proceedings or under Section 34 of the Arbitration Act
would not validate an otherwise non est proceedings. Objection to
40
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A.A. No. 14 of 2023 & 25 of 2023
such a non est proceedings can be raised at any stage and failure of
not raising such objection will not amount to waiver in terms of
Section 4 of the Arbitration Act as the provisions of Section 11 are
non-derogable and mandatory and cannot be waived.
70. The appointment of the sole Arbitrator by the designate of the
Chief Justice of the High Court cannot be treated valid as said
designated person was not competent to appoint the Arbitrator in
“International Commercial Arbitration”. If proceedings are initiated
before an authority, which has not been appointed in accordance with
law, such proceedings are void ab initio and any order or award
passed by such authority is a nullity.
71. The entire proceedings suffer from a patent illegality. If the
very seed of the arbitration proceedings is tainted then the tree would
be tainted. If the very appointment of the Arbitral Tribunal was
without jurisdiction then the entire proceedings and the result of the
proceedings would be without any jurisdiction, non est and void ab
inito.
72. The questions that arose for consideration are thus answered as
under:
(a) It is held that the High Court of Madhya Pradesh had no
jurisdiction to appoint the Arbitrator as the subject
dispute is an International Commercial Arbitration
41NEUTRAL CITATION NO. 2026:MPHC-JBP:31454
A.A. No. 14 of 2023 & 25 of 2023
because one of the parties is a company registered
outside India. The arbitrator was coram non judice.
(b) The award passed by the Sole Arbitrator appointed by the
High Court in the subject International Commercial
Arbitration is non est and void ab initio and a nullity and
thus unenforceable.
(c) The principles of waiver or acquiescence cannot be made
applicable in respect of the mandatory provisions of the
Arbitration Act and the objection with regard to
jurisdiction to appoint an Arbitrator can be raised by a
party to the proceedings at any time even in an
Arbitration Appeal preferred under section 37 of the
Arbitration Act.
73. In view of the above, Arbitration Appeal 14 of 2023 filed by
SSANGYONG is allowed and the Arbitration Appeal 25 of 2023 filed
by SBE is dismissed. Consequently, the Arbitral Award passed by the
Sole Arbitrator is set aside. No order as to costs.
(SANJEEV SACHDEVA) (VINAY SARAF) CHIEF JUSTICE JUDGE TG/Irfan/P PREETI Digitally signed by PREETI TIWARI DN: c=IN, o=HIGH COURT OF MADHYA PRADESH JABALPUR, 2.5.4.20=4a0b570f240ede8f685b7d95edf2bd 7f3fe2118773f3d1bd909308cd6f3e7b14, ou=HIGH COURT OF MADHYA PRADESH TIWARI JABALPUR,CID - 7060750, postalCode=482001, st=Madhya Pradesh, serialNumber=d5973e76c56cfe4364460f54e 493659d44e46325b6d2929821982e09f8db9 c70, cn=PREETI TIWARI Date: 2026.04.22 18:31:19 +05'30'