M/s. Vidyawati Construction Company Vs. Union of India [Civil Appeal No(s). 215 of 2025 arising out of SLP (Civil) No(s). 6053/2021]

The Supreme Court of India, in M/s Vidyawati Construction Company vs. Union of India [Civil Appeal No. 215 of 2025 arising out of SLP (Civil) No. 6053/2021], delivered a landmark judgment on January 7, 2025, reaffirming the principle that a party cannot challenge the jurisdiction of an arbitral tribunal after submitting its statement of defence, as mandated by Section 16(2) of the Arbitration and Conciliation Act, 1996.

Facts and Background
The dispute arose from a contract between Vidyawati Construction Company (appellant) and the Union of India (respondent) for constructing a building for the General Manager, Railway Electrification Project, Allahabad. The contract stipulated that disputes would be resolved by a three-member arbitral tribunal.

Initially, two arbitrators were appointed and directed to nominate an umpire, but they failed to do so. Subsequently, the High Court appointed Shri P.K. Sharma as umpire, who later resigned. Thereafter, the High Court appointed a retired Chief Justice as the sole arbitrator. Both parties accepted this appointment, and arbitration commenced.

The respondent filed its statement of defence on February 14, 2004, participating fully in the arbitration. However, on April 24, 2004, the respondent raised a jurisdictional objection, arguing that the sole arbitrator’s appointment violated the arbitration agreement requiring three arbitrators. The sole arbitrator rejected this objection and passed an award in favor of Vidyawati Construction Company on February 21, 2008.

The respondent challenged the award under Section 34 of the Arbitration Act before the District Court, which set aside the award on the ground of improper tribunal composition. The Allahabad High Court upheld this decision, leading to the appeal before the Supreme Court.

Legal Issue
Whether a party can raise a jurisdictional challenge to the arbitral tribunal after submitting its statement of defence, contrary to Section 16(2) of the Arbitration Act.

Supreme Court’s Findings
The Supreme Court, through a bench of Justices Abhay S. Oka and Ujjal Bhuyan, held that the respondent, by filing the statement of defence and participating in arbitration, waived its right to object to the tribunal’s jurisdiction later. Section 16(2) bars raising jurisdictional objections after the statement of defence is filed.

The Court set aside the District Court and High Court judgments that invalidated the arbitral award on jurisdictional grounds. It clarified that the issue of the sole arbitrator’s jurisdiction was conclusively settled and could not be re-agitated.

The Court remanded the matter to the District Court to consider other challenges to the award, excluding jurisdiction.

Conclusion
The Supreme Court’s judgment:

Reinforces strict adherence to procedural timelines in arbitration.

Bars parties from belatedly challenging tribunal jurisdiction after defence submission.

Upholds the validity of arbitral awards where parties have acquiesced to tribunal constitution.

Promotes finality and efficiency in arbitration proceedings.

This ruling strengthens arbitration jurisprudence by emphasizing the importance of timely objections and discouraging procedural gamesmanship.