In Municipal Corporation of Greater Mumbai v. M/s R.V. Anderson Associates Limited, the Hon’ble Supreme Court of India has clarified that a belated jurisdictional challenge cannot be raised after a party has actively participated in arbitral proceedings without objection.
The dispute arose from a consultancy agreement between the Municipal Corporation of Greater Mumbai and M/s R.V. Anderson Associates Limited in relation to upgradation of sewerage operations under a World Bank-funded project. Upon completion of the contractual work, disputes arose between the parties regarding outstanding payments, which led to invocation of arbitration in terms of the agreement.
During the arbitral proceedings, both parties appointed their nominee arbitrators, and multiple presiding arbitrators were appointed over time. The Municipal Corporation of Greater Mumbai participated in the proceedings, including attending preliminary meetings and engaging with the arbitral tribunal, without raising any objection to the constitution of the tribunal at the appropriate stage.
Subsequently, the appellant raised a jurisdictional challenge under Section 16 of the Arbitration and Conciliation Act, 1996, contending that the appointment of the presiding arbitrator was contrary to the terms of the agreement and therefore invalid. The arbitral tribunal rejected the challenge and proceeded to pass an award in favour of the respondent.
The challenge to the arbitral award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 was dismissed by the Hon’ble High Court. Aggrieved thereby, the appellant approached the Hon’ble Supreme Court of India.
The Hon’ble Supreme Court of India, upon consideration of the conduct of the parties and the arbitral record, made the following observations:
A party which participates in arbitral proceedings without raising a timely objection to jurisdiction is deemed to have waived such objection.
Jurisdictional challenges must be raised at the earliest stage in accordance with Section 16 of the Arbitration and Conciliation Act, 1996.
The conduct of a party, including acquiescence and participation in the arbitral process, is a relevant factor in determining the validity of such objections.
Permitting belated jurisdictional challenges would undermine the efficacy and finality of arbitration proceedings.
The Hon’ble Court observed that a party cannot reserve a jurisdictional objection and raise it only after an adverse award has been passed, as such conduct is contrary to the principles governing arbitration.
Accordingly, the Hon’ble Supreme Court of India upheld the arbitral award and dismissed the appeal, holding that the belated jurisdictional challenge raised by the appellant was not maintainable.
The judgment reiterates that parties must raise jurisdictional objections at the appropriate stage in arbitral proceedings, failing which such objections stand waived, thereby ensuring certainty and finality in arbitration.
