1 2026:CGHC:26088-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ARBA No. 78 of 2021 M/s. Dev Interiors, 310, 3rd Floor, Gore Parisar, Civil Lines, Raipur, Chhattisgarh --- Appellant versus State Of Chhattisgarh Through The Executive Engineer, Public Works Department , Division No. 01, Raipur, Chhattisgarh --- Appellant (Cause title is taken from CIS system) For Appellant : Mr. Kshitij Sharma, Advocate For Respondent : Mr. Atanu Ghosh, Govt. Advocate Division Bench Hon'ble Shri Parth Prateem Sahu, Judge Hon'ble Shri Sachin Singh Rajput, Judge Order On Board (25.06.2026) Per Parth Prateem Sahu, Judge 1. This arbitration appeal is filed challenging the impugned order dated 02.11.2021, passed by the Commercial Court (District Level), Nava Raipur, Atal Nagar, District – Raipur in Arb. M.J.C. No.11 of 2020, whereby the learned Commercial Court has allowed the application filed under Section 34 of the Arbitration and Conciliation Act,1996 (Hereinafter referred to as ‘the Act of 1996’) and set-aside the award BALRAM PRASAD DEWANGAN Digitally signed by BALRAM PRASAD DEWANGAN 2 dated 10.01.2020, passed by the Arbitrator holding the award to be null and void. 2. Facts relevant for disposal of this appeal in nutshell are that appellant was awarded a contract for the work of “renovation, auditory and air conditioning system arrangement, electrification and allied work at Balbir Juneja Indoor Stadium, Budhapara, Raipur” of value of Rs.7,62,64,482.50. Contract agreement was executed on 25.04.2016. Dispute having arisen between the parties with regard to execution of work, Shri P.K. Janawade, Retired Engineer-in-Chief was appointed as Arbitrator to adjudicate the dispute. Arbitrator passed an award on 10.01.2020 in favour of contractor. Award passed by the Arbitrator was challenged before the Commercial Court District Level by filing an application U/s. 34 of the Act of 1996. Learned Commercial Court while considering the pleadings and argument raised, has allowed the application filed under Section 34 of the Act of 1996 only on the ground that the contract awarded to the contractor falls within the definition of “works contract”, therefore, jurisdiction to adjudicate the dispute was exclusive with the Arbitral Tribunal constituted under the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983 (Hereinafter referred to as “the Adhiniyam, 1983”) only. Appointment of the Arbitrator by the State Government was not valid under the law, allowed the application U/s. 34 of the Act of 1996, declared the award null and void and set-aside the same. 3. Learned counsel for appellant would submit that after having arisen the dispute between the parties, appellant has submitted an application requesting the respondents to appoint Arbitrator vide letter 3 dated 27.03.2018. Respondent considering the request letter of the appellant, had appointed Mr. P.K. Janawade, retired Engineer in Chief of Public Works Department as sole Arbitrator vide letter dated 18.04.2018. Appellant submitted claim statement on 11.06.2018 thereafter, respondent herein filed the statement of defence on 11.03.2019. Based on the pleadings Arbitrator framed 7 issues for its determination. He contended that during the period of proceedings before the Arbitrator, no objection with regard to jurisdiction of the Arbitrator to adjudicate the dispute was raised nor there is any pleading in the application filed under Section 34 of the Act of 1996 by respondent before the Commercial Court objecting jurisdiction of sole Arbitrator, in view of the provisions under the Act of 1983. He contended that no objection was ever raised by way of filing an application U/s. 16 (2) of the Act of 1996 before the sole Arbitrator, therefore, the respondent could not be permitted to take benefit of its own wrong when sole Arbitrator was also appointed by respondent herein. He contended that when respondent has waived their right to object on the appointment of Arbitrator or continuation of arbitration proceedings, then award passed by the Arbitrator following due process of law cannot be annulled on the ground that sole Arbitrator was not having jurisdiction to adjudicate the dispute. In support of his contention he placed reliance upon the decision of Hon’ble Supreme Court in case of Sweta Construction Vs. Chhattisgarh State Power Generation Company Limited, reported in (2024) 4 SCC 722. He contended that in view of the decision as referred above, appeal be allowed, order passed by Commercial Court be set-aside. 4 4. Learned State counsel supports the impugned order and would submit that Commercial Court while considering the case/application filed under Section 34 of the Act of 1996 in particular the arguments raised of jurisdiction of sole Arbitrator and contract to be works contract has rightly given finding that dispute could be adjudicated only by Arbitral Tribunal constituted under the Act of 1983. 5. We have heard learned counsel for parties and perused the documents placed on record. 6. Before this Court during the course of argument, learned counsel for appellant has not disputed the finding recorded by learned Commercial Court that work awarded to the appellant under the contract will fall within the definition of ‘works contract’ as defined under the Act of 1983, but made submission that if once respondent/State on application submitted by appellant for referring the dispute to the Arbitrator, appointed sole Arbitrator, who concluded the proceedings of arbitration and passed award, without there being any objection with regard to jurisdiction of the Arbitrator, then the learned Commercial Court could not have considered such objection annulling the award on the ground of jurisdiction only. 7. Facts as discussed above with regard to work, date of execution of contract agreement, application for appointment of Arbitrator to the respondent and appointment of Arbitrator by respondent on the date as mentioned, is not in dispute. The only question which is to be considered in this appeal is whether Commercial Court justified in annulling the award passed by the Arbitrator only on the ground of jurisdiction of sole Arbitrator. 5 8. Perused the record of learned Commercial Court, which is record of proceedings on an application U/s. 34 of the Act of 1996. Perusal of the pleadings made in the application U/s. 34 of the Act of 1996, would show that in an application U/s. 34 of the Act of 1996, there is no pleading with regard to maintainability of the arbitration proceedings before the sole Arbitrator on the ground of jurisdiction. Copy of the award passed by the Arbitrator is also available in record of the Commercial Court, which is dated 10.01.2020. Respondent appeared through Executive Engineer Mr. R.K. Gaur (OIC) before the sole Arbitrator. From perusal of the issues framed by the sole Arbitrator as appearing from the copy of the award forming part of the record of the Commercial Court, it is appearing that no objection is raised with regard to jurisdiction of the Arbitrator as no issue have been framed in this regard. 9. From the contents of the award it is not appearing that any objection is raised before the Arbitrator by way of filing application/objection U/s. 16 (2) of the Act of 1996 and further in the application U/s. 34 of the Act of 1996, there is no specific pleading raising the objection that the award is to be set-aside on the ground that sole Arbitrator was not having jurisdiction because the work awarded to the appellant was works contract and the dispute is to be adjudicated by the Arbitral Tribunal constituted under the Act of 1983. Learned Commercial Court while allowing the application U/s. 34 of the Act of 1996 has taken note of the order of this Court in ARBA No. 37 of 2018 M/s. Sweta Construction Vs. Chhattisgarh State Power General Company Limited decided on 07.02.2021, wherein this Court has referred the decision in case of M/s. Lion Engineering Consultants Vs. State of 6 Madhya Pradesh, reported in (2018) 16 SCC 758 and decision in case of MP Rural Development Authority Vs. L.G. Chaudhary, reported in (2018) 10 SCC 826. 10. Learned Commercial Court failed to take note of the paragraph No.15 to 19 of decision of Hon’ble Supreme Court in case of MP Rural Development Authority Vs. L.G. Chaudhary, reported in (2018) 10 SCC 826. 11. Hon’ble Supreme Court has considered the opinion of one of the Hon’ble Judge Ganguly J. in its decision in case of M.P. Rural Road Development Authority Vs. L.G. Chaudhary Engineers and Contractors, (2012) 3 SCC 495, which was also observed in para-8 of the reference case of L.G. Choudhary Engineers and Contractors (2018) 10 SCC 826.. 12. Hon’ble Supreme Court has taken note of the situation of passing of award by the Arbitral Tribunal not having jurisdiction in absence of any objection raised by parties in categorical terms and held that if objection is not raised in terms of Section 16 (2) of the Act of 1996 at appropriate stage within stipulated time, award could not have been annulled. This dictum of Larger Bench of Hon’ble Supreme Court in case of L.G. Chaudhary Engineers & Contractors escaped consideration of learned Commercial Court. 13. It appears that learned Commercial Court considering the decision in case of Lion Engineering Consultants (supra), wherein Hon’ble Supreme Court has observed that “we do not see any bar to plea of jurisdiction being raised by way of an objection under Section 34 of the Act even if no such objection was raised under Section 16 of the Act of 7 1996”. This observation of Hon’ble Supreme Court is in the case where interim order of proceedings under Section 34 of the Act of 1996 was put to challenge whereby the amendment sought of raising objection in terms of Section 16 (2) of the Act of 1996 in proceedings under Section 34 of the Act of 1996 was rejected and in the said decision liberty was granted to raise an objection. In case of Lion Engineering Consultants (supra), Hon’ble Supreme Court has only decided as to whether in proceedings under Section 34 of the Act of 1996 objection with regard to jurisdiction of Arbitral Tribunal can be raised or not, is answered. 14. In case of L.G. Chaudhary Engineers and Contractors (in reference case), Hon’ble Supreme Court in categorical terms ruled, that no objection having been raised by respondent in terms of Section 16 (2) of the Act of 1996 at appropriate stage within time stipulated, the award could not have been annulled. 15. The decision of this Court in ARBA No. 37 of 2018 (M/s. Sweta Construction Vs. CSPGCL) was further challenged before the Hon’ble Supreme Court in Sweta Construction Vs. Chhattisgarh State Power Generation Company Limited, reported in (2024) 4 SCC 722. Hon’ble Supreme Court while deciding the case has taken note of the decision in case of L.G. Chaudhary Engineers and Contractors, reported in (2018) 10 SCC 826 (supra), allowed case of contractor and set-aside the order passed by the Commercial Court as well as the order of Division Bench dated 07.02.2019 and remitted back the case to the Commercial Court to determine the case on merits and observed as as under :- 8 18. We are also of the view that in particular facts of the present case, the position is even more gross because when the appellant claimed arbitration, the respondent accepted invocation of arbitration, suggested a panel of arbitrators, the appellant chose one of the arbitrators out of the two suggested and the arbitrator was so appointed as the sole arbitrator. Thus, the arbitration proceedings commenced in pursuance to the acts of the respondent and it cannot be permitted to get away to say that the whole process was gone through because of some misconception or inappropriate legal advice. Arbitration by consent is always possible. The mode and manner of conduct of arbitration is possible and how those arbitration proceedings would be governed is also a matter of consent. If at all there were any rights of the respondent to have claimed arbitration under the 1983 Adhiniyam, that right was never exercised or waived. The respondent cannot be permitted to approbate and reprobate and that too in arbitration proceedings and that too in dispute or resolution through the method of arbitration defeating the very purpose of an alternative dispute resolution to arbitration as an expeditious remedy. 16. The issue with regard to validity of award passed by the Arbitrator in works contract in absence of any objection raised by way of filing an application U/s. 16 (2) of the Act of 1996 again came up for consideration before the Hon’ble Supreme Court in case of Gayatri Project Limited Vs. Madhya Pradesh Road Development Corporation Limited, reported in (2025) 10 SCC 750. The Hon’ble Supreme Court has formulated the question as under :- “Can an award passed under the 1996 Act be annulled on the ground of lack of jurisdiction where no plea of applicability of the M.P. Act,1993 was raised before the Arbitral Tribunal?” 9 17. The Hon'ble Supreme Court, in paragraphs 66.2, 66.3, 66.5, 66.6, and 68 of the said judgment, answered the aforesaid question as follows: “66.2. Where the arbitration proceedings are still underway, but statement of defence has already been filed i.e. the relevant stage for raising an issue of jurisdiction is already crossed, there it would not be open for the parties to raise an objection of lack of jurisdiction in view of the applicability of the M.P. Act, 1983. Furthermore, in such scenarios since the arbitration proceedings have already commenced and made substantial progress, it would not be appropriate to transfer such proceedings to the M.P. State Arbitration Tribunal under the M.P. Act, 1983, and the better course of action would be to let the arbitration proceedings conclude. 66.3. As per L.G. Chaudhary (2) [M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97] where the arbitration proceedings have concluded and an award has been passed, and if no objection to the jurisdiction in view of the applicability of the M.P. Act, 1983 was taken at the relevant stage then such an award cannot be annulled only on the ground of lack of jurisdiction. 66.4 x x x 66.5 Any award passed by an Arbitral Tribunal under the 1996 Act, where otherwise the M.P. Act, 1983 was applicable, such an award must be executed in terms of the M.P. Act, 1983 and the relevant provisions thereunder. 66.6 Where the objection based on applicability of the M.P. Act, 1983 had been raised in the written statement or statement of defence, but the parties never took steps towards challenging the jurisdiction of the Arbitral 10 Tribunal under Section 16 of the 1996 Act or where such plea of jurisdiction was turned down in view of the position of law that was prevailing prior to L.G. Chaudhary (2) [M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97] i.e. such challenge to the jurisdiction was decided prior to the date of pronouncement of L.G. Chaudhary (2) [M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97] , then even in such cases, as per the decision of this Court in Modern Builders [Modern Builders v. State of M.P., (2024) 10 SCC 637 : (2024) 4 SCC (Civ) 639] , the award should not be disturbed or set aside only on the ground of lack of jurisdiction. 68. Thus, the present case is squarely covered by the decision of this Court in L.G. Chaudhary (2) [M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers & Contractors, (2018) 10 SCC 826 : (2019) 1 SCC (Civ) 97] , more particularly the observations made in paras 6 to 9 thereunder, and as such once the award had been passed and no objection as to the jurisdiction of the Arbitral Tribunal had been taken at the relevant stage, then the award could not have been annulled by the High Court only on the ground of lack of jurisdiction. 18. 18. In the aforementioned facts of the case and the principles laid down by Hon’ble Supreme Court in the aforementioned decisions, we are of the considered view that as respondent has not raised objection with regard to jurisdiction of the sole Arbitrator at appropriate stage by filing an application U/s. 16 (2) of the Act of 1996, and further it is the respondent, who on the application submitted by appellant, has appointed sole Arbitrator, submitted itself before the Arbitrator and let 11 the proceedings of the arbitration go on till passing of an award, in the opinion of this Court, this appeal is squarely covered with the principles laid down by the Hon’ble Supreme Court in the aforementioned decisions, therefore, the impugned order passed by the learned Commercial Court in Arb. MJC No.11 of 2020 dated 02.11.2021 (Annexure A-1) is not sustainable and accordingly, it is set- aside. The case is remitted back to the Commercial Court for deciding the case on merits in accordance with law. 19. Accordingly, this arbitration appeal is allowed to the extent indicated here-in-above. Sd/- Sd/- (Parth Prateem Sahu) (Sachin Singh Rajput) Judge Judge Balram