Arbitrator's Final Decision On Jurisdiction Qualifies As Interim Award, Amenable To Challenge: MP High Court

The Division Bench of Chief Justice Alpesh Y. Kogje and Justice Deepak Khot held that the appropriate remedy against an order passed in Section 34 proceedings is an appeal under Section 37 and not a writ petition under Article 226 of the Constitution.

"The Court is of the considered opinion that as the application under section 16 of the Act of 1996 filed by the petitioner having been dismissed by the Arbitrator, which was subjected to challenge in a writ petition, which was finally decided by relegating the matter to the Arbitrator to decide the issue of jurisdiction as a preliminary issue, the Arbitrator has decided the said issue finally, hence such a decision shall be inferred as an interim award and is amenable to the challenge under section 34 of the Act of 1996"

The bench directed;

"application under section 34 is maintainable and as against section 34 the remedy of the appeal lies under section 37 to challenge the award passed under section 34 refusing to set aside an award on whatsoever the ground, therefore, in the considered opinion of this court, the present petition is not maintainable".

The court observed that the MP Road Development Corporation Limited was required to avail the statutory appellate remedy under Section 37 rather than invoking the jurisdiction of the High Court.

The dispute arose from a concession agreement of September 22, 2001, executed between MP Rajya Setu Nirman Nigam Ltd, the predecessor of MPRDC, and Viva Highways. The agreement concerned the widening, strengthening, and rehabilitation of a section of State Highway 27 along with its operation and maintenance on a Build, Operate, and Transfer basis.

After disputes arose, Viva Highway invoked the arbitration clause in January 2017. MPRDC opposed the appointment of a private arbitrator, contending that the dispute was required to be referred to a statutory tribunal constituted under the MP Madhyastham Adhikaran Adhiniyam, 1983.

Viva Highways subsequently approached the High Court under Section 11 of the Act seeking appointment of an arbitrator. On January 28, 2022, the High Court appointed an arbitrator while granting liberty to MPRDC to raise legal objections before the tribunal.

MPRDC thereafter filed an application under Section 16 of the 1996 Act, contending that the claim fell within the exclusive jurisdiction of the statutory tribunal under the 1983 Act. The sole arbitrator initially rejected the application on January 28, 2023, granting liberty to the parties to raise relevant points in their pleadings.

MPRDC subsequently approached the High Court, which, by an order dated January 21, 2025, directed the arbitrator to decide the preliminary issue of jurisdiction first, within the stipulated period.

Complying with this direction, the arbitrator passed an order on February 25, 2025, holding that the arbitral tribunal had jurisdiction to adjudicate the dispute and that the statutory tribunal under the 1983 Act lacked jurisdiction over the matter.

MPRDC challenged this decision before the Commercial Court under Section 34 of the Act. The court held that the arbitrator's decision rejecting the jurisdiction objection cannot be independently challenged under Section 34 before delivery of the final award.

Meanwhile, Viva Highways sought an extension of the arbitrator's mandate under Section 29A of the Act. The commercial court allowed the application on August 14, 2026, extending the mandate by six months.

MPRDC approached the High Court under Article 226 of the Constitution, challenging the commercial court's order. During the proceedings, the dispute centered on whether the arbitrator's decision on jurisdiction constituted an interim award and whether a writ petition was the appropriate remedy.

The High Court examined the statutory scheme governing challenges to arbitral awards, including Sections 2(1)(c), 31 and 34 of the Act, which define an arbitral award to include an interim award, prescribe the form and contents of an award and provide a mechanism for setting aside an arbitral award.

The bench noted that MPRDC's original application under Section 16 was dismissed by the arbitrator, but subsequently it was directed by the High Court to consider the jurisdiction issue as a preliminary issue.

"once the issue of jurisdiction is finally decided by the Arbitrator then it will amount to an interim award which is challengable under section 34 of the Act of 1996".

The court observed that the arbitral proceedings had reached the stage of final hearing, with both parties having filed their statements of claim and defence, as well as affidavits and evidence in support of their respective claims and counterclaims.

The court held that the arbitrator's decision of February 25, 2025 had conclusively determined the jurisdictional issue. Since the arbitrator could not consider the same issue during the final hearing, the decision was required to be treated as an interim award for the purpose of challenge under Section 34.

The bench relied on the Supreme Court decision in MCM Worldwide Private Ltd, which discussed the distinction between an arbitrator's decision on a preliminary issue and an order rejecting a jurisdictional plea under Section 16 of the Act.

Applying the distinction to the facts before it, the court held that the arbitrator's decision rendered pursuant to the earlier decision of the court and conclusively determining jurisdiction qualified as an interim award amenable to challenge under Section 34.

The bench consequently held that the Commercial Court had committed an error of law in rejecting MPRDC's Section 34 application as premature and not maintainable.

Having concluded that the arbitrator's decision constituted an interim award challengeable under Section 34, the bench considered whether MPRDC could nevertheless invoke the writ jurisdiction of the High Court against the Commercial Court's order.

The court examined Section 37 of the Act, which provides for appeals against specified orders, including an order setting aside or refusing to set aside an arbitral award under Section 34. The court consequently held that the Commercial Court committed an error of law in rejecting MPRDC's application under Section 34 as premature and not maintainable.

In the present case, the court concluded that the petition had an available statutory remedy under Section 37 and therefore the writ petition was not maintainable.

For Petitioner: Advocate General Prashant Singh with Additional Advocate General Nilesh Yadav and Deputy Government Advocate Kushagra Singh and Advocates Hitesh Gupta, Sahil Sharma and Aman Singh

For Respondent [Caveator]: Advocate Paresh Joshi

For Respondents: Advocates Sandeep Bajaj, Ayush Gupta and Mayank Biyani