Gujarat High Court Rules Against Retrospective Application of Arbitration Tribunal Act Notifications
Disputes to be resolved under Arbitration Act, 1996; Notifications dated 2024 and 2025 held to be prospective
In a significant ruling, the Gujarat High Court, presided by Justice D.N. Ray, delivered a judgment on September 19, 2025, addressing the applicability of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 to disputes involving municipal corporations. The judgment was pronounced in a batch of petitions led by GPC Infrastructure Ltd. against Gandhinagar Municipal Corporation.
The court examined whether the notifications issued on December 16, 2024, and May 14, 2025, which included municipalities under the definition of "public undertakings," applied retrospectively to disputes arising from works contracts executed before their issuance. Justice Ray held that these notifications do not have retrospective effect, emphasizing that disputes arising prior to their issuance are not governed by the Tribunal provisions under the Arbitration Tribunal Act, 1992.
The petitioner, GPC Infrastructure Ltd., contended that the permissible Floor Space Index (FSI) applied to the entire plot area, not just Parcel A designated for slum rehabilitation. Disputes emerged over the additional construction costs and betterment charges levied by the respondent. Invoking the arbitration clause under the Arbitration Act, 1996, the petitioner sought resolution by a sole arbitrator, objecting to unilateral appointment by the respondent.
The judgment clarified that invocation of arbitration under the Arbitration Act, 1996 prior to the issuance of the notifications preserves the right to arbitrate under the 1996 Act. The court further highlighted the inefficiencies of the Tribunal system and the advantages of institutional arbitration, including faster resolution and better adherence to timelines.
Justice Ray underscored that the relevant date for the applicability of the Tribunal jurisdiction is the date of dispute invocation, not contract execution. Consequently, the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992, does not apply to disputes arising before the notifications. The petitioners were directed to approach the Tribunal within eight weeks for arbitration under Section 8 of the Arbitration Tribunal Act, 1992, with the time spent in litigation excluded from the limitation period.
Bottom Line:
Arbitration Tribunal Act, 1992 - Applicability of notifications issued under the Act to disputes arising from works contracts executed prior to their issuance.
Statutory Provision(s): Arbitration Tribunal Act, 1992 Sections 2(1)(i)(iii), 2(1)(k), 8, 21
