The Supreme Court has upheld a Bombay High Court decision setting aside an arbitral award, reaffirming foundational principles of arbitration law: jurisdiction cannot be unilaterally imposed, participation in defective proceedings does not cure jurisdictional nullity, and state authorities lack power to foist arbitration on parties governed by concluded contracts. The judgment in M/s Bharat Udyog Ltd. v. Ambernath Municipal Council offers critical guidance on the interpretation of dispute resolution clauses, the limits of statutory intervention, and the doctrine of estoppel in arbitration.
Factual Background
In March 1994, the Ambernath Municipal Council (Municipal Council), a statutory body constituted under the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965, issued a tender for the collection of octroi for one year commencing 1 April 1994. The tender specified a reserve price of Rs. 6,74,00,000, below which offers would not be considered.