The Supreme Court, in M/s Lion Engineering Consultants v State of MP, has made an observation that the ‘public policy of India’ refers to law in force in India whether state law or Central law.
A bench headed by Justice Adarsh Kumar Goel was dealing with an appeal related to proceedings of setting aside of award delivered by the arbitral tribunal in a dispute in the execution of a works contract was referred to the arbitrator.
The question that arose was whether the objection, having not been raised under Section 16(2) of the Act before the arbitrator, could be raised under Section 34 of the Act.
The court, referring to its earlier decision in MSP Infrastructure Ltd v Madhya Pradesh Road Development Corporation Ltd, observed that both stages were independent. “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.”
While going through the judgment in MSP Infrastructure Ltd case, the bench noted that there is an observation therein that the public policy of India does not refer to a state law and refers only to an all-India law. In the said case, the two-judge bench had observed thus: “Where the question arises out of a conflict between an action under a State Law and an action under a Central Law, the term public policy of India must necessarily be understood as being referable to the policy of the Union. It is well known, vide Article 1 of the Constitution, the name 'India' is the name of the Union of States and its territories include those of the States.”
Referring to this, the bench said these observations do not lay down the correct law. “In our considered view, the public policy of India refers to law in force in India whether State law or Central law. Accordingly, we overrule the observations to the contrary in paragraphs 16 and 17 of the judgment in MSP Infrastructures Ltd,” the bench said.