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A High Court exercising writ jurisdiction cannot decide the arbitrability of ‘excepted matters’ under a works contract
The Supreme Court of India (“Supreme Court”), in GVV Constructions Private Limited vs. Union of India and Ors.[1], has held that the question of whether a particular claim is covered by or falls outside an ‘excepted matters’ clause of a works contract is a matter squarely within the competence of an arbitral tribunal under Section 16[2] of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), and over which a writ court has no jurisdiction.
Brief facts
South Central Railway (“Respondent No. 2”) and GVV Constructions Private Limited (“Appellant”) entered into a Contract (“Contract”) for certain works relating to the doubling of a track between the Guntur-Guntakal section. Respondent No. 2 subsequently terminated the Contract under Clause 62 of the Indian Railways Standard General Conditions of Contract (“GCC”).
The Appellant filed a writ petition before the Telangana High Court (“Telangana HC”) seeking quashing of the termination order since it contravened the procedure under the GCC. The learned single judge of the Telangana HC dismissed the writ petition, inter alia, on the ground that serious and complicated questions of fact could not be adjudicated under Article 226[3] of the Constitution of India, 1950 (“Constitution”). The learned single judge further held that, having already invoked the arbitration clause, the Appellant, could raise all its defenses before the arbitral tribunal (“Arbitral Tribunal”). The learned single judge also recorded that the termination order suffered from no irregularity.
Being aggrieved, the Appellant preferred an appeal before the Division Bench of the Telangana HC. The Division Bench set aside the learned single judge’s finding that the Contract had been validly terminated, since the same was without assigning any reasons and would leave no scope for the Arbitral Tribunal or any other forum to decide the dispute in favour of the Appellant. Accordingly, the Division Bench granted the Appellant liberty to raise all its claims before the Arbitral Tribunal for adjudication strictly in accordance with the terms of the Contract (“Impugned Order”). Following the Impugned Order, the Arbitral Tribunal was constituted and framed issues, including on the validity of the termination order and the arbitrability of the claims in light of the ‘excepted matters’ clause in the Contract.
The Appellant preferred a special leave petition before the Supreme Court against the Impugned Order.
Issue
Whether the observation in the Impugned Order that “the Arbitrator is at liberty to decide the claim of the Appellant strictly in accordance with the terms of the contract agreed upon between the parties” exceeded the jurisdiction of a court exercising judicial review under Article 226 of the Constitution and impinged upon the jurisdiction of the Arbitral Tribunal under Section 16 of the Arbitration Act?
Findings and analysis
The Supreme Court granted leave to appeal and allowed the Civil Appeal inter alia observing and holding that:
- Section 5 of the Arbitration Act prescribes the extent of judicial intervention and begins with a non-obstante clause providing that “no judicial authority shall intervene except where so provided in this part”. Sub-section (1) of Section 16 of the Arbitration Act empowers the Arbitral Tribunal to rule on its own jurisdiction and incorporates the principle of kompetenz-kompetenz, which is the foundation of the Arbitration Act;
- the decisions of the Supreme Court have reinforced that the scope of enquiry under Section 11[4] of the Arbitration Act is limited to a prima facie determination of the existence of an arbitration agreement;
- the question whether a particular claim is covered by or falls outside an ‘excepted matters’ clause in a works contract is a matter squarely within the competence of an arbitral tribunal under Section 16 of the Arbitration Act. Therefore, it is not a question for determination by a court exercising even the wider, appointment-stage jurisdiction under Section 11, much less a court exercising jurisdiction under Article 226 of the Constitution;
- the Division Bench’s direction that the Arbitral Tribunal “is at liberty to decide the claim of the Appellant strictly in accordance with the terms of the contract agreed upon between the parties” inevitably circumscribes the scope of the Arbitral Tribunal’s enquiry, including its authority under Section 16 of the Arbitration Act to rule upon the scope of its own jurisdiction over the dispute relating to termination; and
- the Division Bench’s direction issued to the Arbitral Tribunal to decide the Appellant’s claims strictly in accordance with the terms of the Contract should not be construed as impinging upon the jurisdiction of the Arbitral Tribunal to adjudicate the issue of termination of the Contract.
Conclusion
This ruling of the Supreme Court of India emphasises that an arbitral tribunal, rather than a court exercising referral or writ jurisdiction, is the appropriate forum to determine whether a claim falls within an ‘excepted matters’ clause. The judgement reinforces the limited scope of judicial intervention in arbitration proceedings and the pro-arbitration approach adopted by courts.
This Prism is prepared by:
|
Farhad Sorabjee |
Pratik Pawar |
Shanaya Cyrus Irani |
Siddhesh S. Pradhan |
Meher Mistri |
Ayushi Yelimineti |
For more details, please contact km@jsalaw.com.
[1] 2026 SCC OnLine SC 1799 (decided on September 8, 2026)
[2] Section 16 of the Arbitration Act relates to the competence of arbitral tribunal to rule on its jurisdiction.
[3] Article 226 of the Constitution is related to the power of High Courts to issue certain writs.
[4] Section 11 – Appointment of arbitrators
