News Citation : 2026 LN (HC) 162 | 2026:CGHC:9189-DB
February 23, 2026 : The High Court of Chhattisgarh has dismissed an appeal filed by the State of Chhattisgarh in a long-running arbitration dispute with SMEC International, holding that the matter qualifies as an international commercial arbitration and that no appeal lies against a procedural order returning a Section 34 petition for lack of jurisdiction.
The Division Bench of Justice Rajani Dubey and Justice Radhakishan Agrawal ruled that the Commercial Court at Raipur was right in declining jurisdiction and returning the State’s challenge to the arbitral award for presentation before the appropriate forum. The High Court held that such an order is procedural in nature and does not fall within the limited categories of appealable orders under Section 37 of the Arbitration and Conciliation Act, 1996.
The case arose from a consultancy contract executed on March 3, 2015, between the State’s Public Works Department and a joint venture comprising SMEC (India) Pvt. Ltd. and SMEC International Pty. Ltd., Australia. The agreement related to construction supervision, rehabilitation, and upgradation of Group ‘A’ roads in Raipur. The contract was valued at over ₹25 crore along with USD 3,16,822, inclusive of service tax at the applicable rate at the time.
A dispute later emerged over reimbursement of service tax and GST. SMEC claimed it was contractually entitled to reimbursement of these taxes, while the State denied liability. The matter was referred to arbitration after the High Court appointed a sole arbitrator under Section 11(6) of the Arbitration Act. The arbitral award was passed on July 18, 2022.
Aggrieved by the award, the State filed an application under Section 34 before the Commercial Court at Raipur. After hearing arguments, the Commercial Court held that it lacked jurisdiction because the dispute fell within the definition of “international commercial arbitration.” It returned the petition for presentation before the competent court.
Before the High Court, the State argued that the arbitration was essentially domestic in character, as the contract was executed and performed in India between entities operating in India. It contended that the Commercial Court had misread Sections 2(1)(e) and 2(1)(f) of the Arbitration Act and wrongly declined jurisdiction.
SMEC, on the other hand, raised a preliminary objection, arguing that the impugned order merely returned the petition and did not set aside or refuse to set aside the award. Therefore, it was not appealable under Section 37 of the Act. The company also maintained that since SMEC International Pty. Ltd. is incorporated in Australia, the arbitration automatically qualifies as an international commercial arbitration under the statute.
The High Court framed two key questions: whether an order returning a Section 34 petition for lack of jurisdiction is appealable under Section 37, and whether the arbitration in question qualifies as an international commercial arbitration.
The Bench noted that Section 37 exhaustively lists appealable orders and makes it clear that an appeal lies only against an order setting aside or refusing to set aside an arbitral award. The Commercial Court’s order, the Bench observed, did neither. It simply returned the petition after holding that it lacked jurisdiction. Such an order, the Court said, is similar to returning a plaint under Order VII Rule 10 of the Civil Procedure Code and does not determine any substantive rights.
On the issue of classification, the Court relied on the Supreme Court’s decision in Amway India Enterprises Pvt. Ltd. v. Ravindranath Rao Sindhia. The Supreme Court had clarified that if even one party to the arbitration agreement is a body corporate incorporated outside India, the arbitration assumes the character of an international commercial arbitration, regardless of whether the entity conducts business in India through an office or operational setup.
The High Court examined the joint venture documents and found that SMEC International Pty. Ltd., Australia, was designated as the lead consultant and authorized to enter into the contract on behalf of the joint venture. Given its foreign incorporation, the arbitration clearly met the statutory definition of international commercial arbitration under Section 2(1)(f) of the Act.
The Court concluded that the Commercial Court was correct in holding that it lacked jurisdiction. Since the order returning the Section 34 petition was procedural and not a decision on merits, it was not appealable under Section 37. The appeal was dismissed at the admission stage. However, the Bench clarified that the State remains free to present its Section 34 challenge before the appropriate forum in accordance with law.
Case Reference : In ARBA No. 42 of 2023, State of Chhattisgarh v. SMEC International Pty. Ltd., Mr. Anand Dadariya, Deputy Advocate General, along with Mr. Avinash Singh, Government Advocate, appeared for the appellant, while Mr. Anmol Singh, Advocate, appeared on behalf of Mr. Prakash Tiwari, Advocate, for the respondent.
