Supreme court: Arbitral tribunal alone can decide whether termination dispute falls within ‘excepted matters’, writ court cannot circumscribe its section 16 jurisdiction

Supreme Court clarifies that only an arbitral tribunal can resolve if a termination dispute falls under 'excepted matters,' maintaining its authority under section 16 and limiting writ court's jurisdiction.

Case Name: GVV Constructions Pvt. Ltd. v. Union of India and Ors.

Coram: Justices P.S. Narasimha and Alok Aradhe

Citation: (2026) ibclaw.in 631 SC | Civil Appeal No. 12525 of 2026 | Decided on 08.09.2026

The Supreme Court has held that a writ appellate court cannot, while disposing of a challenge to termination of a works contract, direct the Arbitral Tribunal to decide claims strictly in accordance with the terms of the contract, since such a direction has the effect of circumscribing the Tribunal’s own jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996 to rule on whether a dispute falls within an “excepted matters” clause.

Background

The appellant, a construction company, had been awarded a railway doubling work contract by South Central Railway in 2017. The contract was terminated in 2022 under Clause 62 of the General Conditions of Contract (GCC), and the performance guarantee and security furnished by the appellant were forfeited. The appellant challenged the termination in a writ petition, which the Single Judge dismissed on the ground that the disputed questions of fact were not amenable to adjudication under Article 226 of the Constitution, while also recording, without assigning reasons, that there was no irregularity in the termination.

On appeal, the Division Bench of the High Court set aside this unreasoned finding and granted the appellant liberty to raise all its claims before the Arbitral Tribunal, directing that the Tribunal decide the claims strictly in accordance with the terms of the contract agreed upon between the parties.

Before the Supreme Court, the appellant’s sole grievance was that this direction travelled beyond the scope of judicial review under Article 226 and impinged on the Arbitral Tribunal’s jurisdiction under Section 16 to decide whether the termination dispute was an “excepted matter” under Clause 63 of the GCC, and hence outside the scope of arbitration.

Findings

Tracing the evolution of the scope of judicial scrutiny at the referral stage, from Konkan Railway Corpn. Ltd. v. Mehul Construction Co. through SBP & Co. v. Patel Engineering Ltd., National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., the insertion of Section 11(6A), Duro Felguera, S.A. v. Gangavaram Port Ltd., Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, and Vidya Drolia and Others v. Durga Trading Corporation, the Court reiterated that the applicable standard today is that a court should decline reference only where it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid, or the dispute is non-arbitrable, and that short of that, the governing maxim is “when in doubt, do refer,” as reaffirmed in SBI General Insurance Company Ltd. v. Krish Spinning.

The Bench held that whether a claim falls within an “excepted matters” clause of a works contract is a matter squarely within the competence of the Arbitral Tribunal under Section 16, and not a question for a court exercising jurisdiction under Section 11, much less for a court exercising writ jurisdiction under Article 226. A writ appellate court, whose task was confined to testing the correctness of the Single Judge’s disposal of the writ petition impugning the termination notice, had no jurisdiction to pre-determine the touchstone by which the Tribunal was to adjudicate the termination dispute.

The Court also distinguished the appellant’s reliance on ABS Marine Services v. Andaman and Nicobar Administration, noting that the clause considered in that case ousted the jurisdiction of courts as well as arbitration, whereas Clause 63 of the GCC only excludes “excepted matters” from the purview of arbitration, without ousting the jurisdiction of civil courts to examine the validity of decisions on such matters.

Accordingly, the Court clarified that the Division Bench’s direction shall not be construed to impinge upon the jurisdiction of the Arbitral Tribunal to adjudicate the dispute regarding termination of the contract, and that it had not expressed any opinion on the merits of the case. The appeal was disposed of with no order as to costs.