The Conundrum Of Jurisdictional Objections In Arbitration: Analyzing The Supreme Court's Stance In The Gayatri Project Case

I. INTRODUCTION

Jurisdictional objections in arbitration represent a challenging procedural aspect, often stirring complex debates on party conduct, arbitral authority, and judicial intervention. The Supreme Court's ruling in M/s Gayatri Project Limited v. Madhya Pradesh Road Development Corporation Limited¹ holds significant importance in clarifying when and how such objections should be entertained. This article analyzes the Court's reasoned approach, contextualized within key precedents shaping Indian arbitration law.

Nature of Jurisdictional Objections in Arbitration

A jurisdictional objection in arbitration refers to a challenge raised by a party disputing the authority of the arbitral tribunal to hear and decide a particular dispute. Such objections question whether the tribunal has the legal power (jurisdiction) to adjudicate the matter, either in whole or in part.

Jurisdictional objections challenge the power of an arbitral tribunal to adjudicate disputes, usually asserting defects in the arbitration agreement or statutory bar. These objections are crucial because they can affect the validity of arbitral awards and the efficacy of arbitration as a dispute resolution mechanism. Courts have taken a calibrated approach to balance respect for arbitration autonomy with the need to ensure procedural fairness and accountability.

 Jurisdictional objections can be raised by a party on various grounds such as Non-existence or invalidity of the arbitration agreement, Scope of the arbitration agreement, non-arbitrability of the subject matter, Improper constitution of the arbitral tribunal, Lack of capacity or authority.

II. FACTUAL BACKGROUND OF THE JUDGEMENT

Gayatri Project Limited (“Contractor”) entered into a contract with Madhya Pradesh Road Development Corporation Limited (“MPRDCL” or “Employer”) for the construction of a road project. The dispute arose regarding the payment of additional costs and extension of time due to alleged delays and changes in the scope of work. The Arbitral Tribunal passed an award in favour of the Contractor and granted claims in the favour of the Contractor. MPRDCL challenged the award under Section 34 of the Act before the District Court, which set aside the award on the ground that the tribunal had misapplied the contract and ignored material evidence. The Contractor appealed to the High Court, which upheld the District Court's decision. The matter was then brought before the Supreme Court of India.

It is pertinent to note that during the arbitration proceedings, the respondent (MPRDC) participated fully without raising any jurisdictional objections. The objection to the tribunal's jurisdiction surfaced only after the arbitral award was passed, in a petition under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the award.

Supreme Court's Deliberations and Key Findings

The Supreme Court examined the issues through the lens of Sections 16 and 34 of the Act, emphasizing procedural discipline. It held that jurisdictional objections not raised before or at the time of submitting the statement of defence to the arbitral tribunal are generally waived. The Court ruled that belated pleas can only be entertained when the party gives a compelling reason for the delay. Mere failure to object due to oversight or tactical reasons does not qualify as a strong reason.

The Court concluded that the High Court erred in allowing the jurisdictional objection in this case at the post-award stage, reiterating the importance of raising such objections at the appropriate adjudicatory stage.

LANDMARK CASE LAWS REFERRED BY THE SUPREME COURT IN THE JUDGEMENT

The Supreme Court in the case of Union of India v. Pam Developments Pvt. Ltd²the court held that if the Parties fail to raise the objection with regard to competence/jurisdiction of Arbitral Tribunal before Arbitrator then the same is deemed to have been waived in view of provisions contained in Section 4 read with Section 16 of the Arbitration and Conciliation Act. However, in the year 2018, in the case of Lion Engineering Consultants v. State of Madhya Pradesh (2018)³  the court allowed raising jurisdictional objections for the first time in Section 34. The Apex Court held that a Plea of Jurisdiction is a legal plea, and it can be taken at the stage of challenge to award under Section 34 of the Act even when such plea was not raised under Section 16 of the Act.

III. IMPACT OF THE GAYATRI PROJECT CASE⁴ ON ARBITRATION PRACTICE IN INDIA

The authority of courts to intervene in decisions made by arbitral tribunals especially when jurisdictional objections are raised after an award has been issued remains a pivotal feature of arbitration law. This issue is governed by the principles of minimal judicial intervention, the doctrine of competence-competence, and statutory provisions such as Section 16 and Section 34 of the Arbitration and Conciliation Act, 1996 (the “Act”) in India, as well as similar provisions in the UNCITRAL Model Law⁵.

IV. CONCLUSION

The Supreme Court's ruling in the Gayatri Project case underscores the need for strict adherence to procedure when raising jurisdictional objections and discourages delaying tactics. This decision brings Indian arbitration law closer to global standards, which emphasize early and clear jurisdictional challenges to maintain efficiency and finality in arbitration.

Courts may interfere with the tribunal's decision on jurisdiction only at the stage of a challenge to the arbitral award under Section 34 of the Act. Objections with respect to the jurisdiction of the Arbitral Tribunal should be raised during the arbitration proceedings in its statement of defence. What emerges from the foregoing is that although Lion Engineering 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 Development⁶. The Gayatri Project Limited judgment stands as a significant milestone on jurisdictional objections, reinforcing the procedural discipline essential to safeguard arbitration's effectiveness and integrity. By drawing on established precedents, it streamlines India's arbitration framework to emphasize timely challenges, respect for party autonomy, and judicial restraint. This enhances predictability and expedites resolution in arbitration disputes, contributing positively to India's arbitration ecosystem.

Footnotes

1. 2025 INSC 698

2. (2014) 11 SCC 366

3. (2018) 16 SCC 758

4. 2025 INSC 698

5. UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006.

6. 2014 INSC 106

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