Objection To Arbitral Tribunal's Constitution Cannot Be Raised After Filing Defence: Bombay High Court

The Bombay High Court at Aurangabad has dismissed the State of Maharashtra's challenge to an arbitral award of Rs. 596.60 lakhs, holding that objections to the constitution of the arbitral tribunal cannot be raised after filing of the written statement, counter-claim and commencement of evidence.

A Division Bench of Justices Arun R. Pedneker and Vaishali Patil-Jadhav on February 16, 2026, upheld the Commercial Court's May 6, 2022, order refusing to set aside the award dated February 11, 2018.

“In such circumstances, the objection raised at a belated stage, after filing of the written statement, counter-claim and after commencement of evidence, is clearly not in consonance with Section 16(2) of the Arbitration and Conciliation Act, 1996, which mandates that a plea as to the lack of jurisdiction or improper constitution of the arbitral tribunal shall be raised not later than the submission of the statement of defence,” the court observed.

The dispute arose from a 2002 BOT contract for improvement and development of State Highways 155 and 156 in Beed district. After a notice dated June 30, 2014, directing stoppage of toll collection, toll collection was stopped on July 17, 2014.

The State settled the claim for Rs. 67.79 lakhs as a buy-back price on June 26, 2014, and paid the amount on June 27, 2014. Dissatisfied with the buy-back price, the contractor invoked arbitration.

An application under Section 11(6) of the Arbitration and Conciliation Act, 1996, was filed before the High Court, which was disposed of on March 2, 2015, after recording that the respondents had appointed Mr. C.D. Fakir as sole arbitrator.

The High Court clarified in the present judgment that it had not itself appointed the arbitrator under Section 11(6), but had merely recorded the communication placed before it.

Before the Division Bench, the State contended that Clause 3.4.17 of the agreement required disputes to be resolved by a panel of three arbitrators and that the sole arbitrator therefore lacked jurisdiction. However, the court noted that the State had participated in the arbitral proceedings, filed its written statement and counterclaim, and allowed evidence to commence before raising objection for the first time at the fifth meeting of the tribunal on July 22, 2017.

Holding that such a belated objection was contrary to the statutory mandate under Section 16(2), the court said that the appellant, having failed to raise a timely objection and having participated in the proceedings without protest, was deemed to have waived its right under Section 4 of the Act and was precluded from challenging the constitution of the tribunal at a later stage.

The appeal was dismissed with costs, and the arbitral award stood confirmed.