Whether public policy of India referred in arbitration Act refers to law in force in particular state of India?

It was contended that unless the arbitration was held under the State Law i.e. the M.P. Act that it would be a violation of the public policy of India. This contention is misconceived since the intention of providing that the award should not be in conflict with the public policy of India is referable to the public policy of India as a whole i.e. the policy of the Union of India and not merely the policy of an individual state. Though, it cannot be said that the upholding of a state law would not be part of the public policy of India, much depends on the context. 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.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 8984-8985 of 2017

Decided On: 22.03.2018

Lion Engineering Consultants  Vs. State of M.P. and Ors.

Hon'ble Judges/Coram:

A.K. Goel, Rohinton Fali Nariman and U.U. Lalit, JJ.

Citation: (2018) 16 SCC 758

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How to resolve inconsistency between laws made by parliament and laws by made state legislature in matters falling in concurrent list?

In such a situation arising in any case, if any inconsistency or/and repugnancy is noticed between the provisions of the Central and the State Act, which has resulted in their direct head on collusion with each other which made it impossible to reconcile both the provisions to remain in operation inasmuch as if one provision is obeyed, the other would be disobeyed, the State Act, if it has received the Assent of the President will prevail over the Central Act in the concerned State by virtue of Article 254(2) of the Constitution.

97. A fortiori, in such a situation, if the State Act has received the Assent of the Governor then the Central Act would prevail over the State Act by virtue of Article 254(1) of the Constitution.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 197 of 2018 (Arising out of S.L.P. (C) No. 29765 of 2016)

Decided On: 12.01.2018

K.A. Annamma Vs.  The Secretary, Cochin Co-operative Hospital Society Ltd.

Hon'ble Judges/Coram:

R.K. Agrawal and Abhay Manohar Sapre, JJ.

Citation: (2018) 2 SCC 729

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Whether public policy for purpose of arbitration proceeding means only law laid down by parliament?

It was also contended by Shri Divan, that
the newly added ground that the Tribunal under
the Arbitration Act, 1996 had no jurisdiction
to decide the dispute in question because the
jurisdiction lay with the Tribunal under the
M.P. Act of 1983, was a question which can be
agitated under sub-clause (ii) of clause (b)
of sub-section (2) of Section 34 of the
Arbitration Act, 1996. This provision enables
the court to set- aside an award which is in
conflict with the public policy of India.
Therefore, it is contended that the amendment
had been rightly allowed and it cannot be said
that what was raised was only a question which
pertained to jurisdiction and ought to have
been raised exclusively under Section 16 of
the Arbitration Act, 1996, but in fact was a
question which could also have been raised
under Section 34 before the Court, as has been
done by the Respondent. This submission must
be rejected. The contention that an award is
in conflict with the public policy of India
cannot be equated with the contention that
Tribunal under the Central Act does not have
jurisdiction and the Tribunal under the State
Act, has jurisdiction to decide upon the
dispute. Furthermore, it was stated that this
contention might have been raised under the
head that the Arbitral Award is in conflict
with the public policy of India. In other
words, it was submitted that it is the public
policy of India that arbitrations should be
held under the appropriate law. It was
contended that unless the arbitration was held
under the State Law i.e. the M.P. Act that it
would be a violation of the public policy of
India. This contention is misconceived since
the intention of providing that the award
should not be in conflict with the public
policy of India is referable to the public
policy of India as a whole i.e. the policy of
the Union of India and not merely the policy
of an individual state. Though, it cannot be
said that the upholding of a state law would
not be part of the public policy of India,
much depends on the context. 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.”
8. Both stages are independent. Observations in
Paragraphs 16 and 17 in MSP Infrastructure (supra) do not,
in our view, lay down correct law. We also do not agree
with the observation that the Public policy of India does
not refer to a State law and refers only to an All India
law.
9. 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. (supra).
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 8984-8985 OF 2017
 M/S LION ENGINEERING CONSULTANTS 
 Vs
 STATE OF M.P. & ORS. 
Dated:March 22, 2018.

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