In M/s GVV Constructions Pvt. Ltd. v. Union of India (Civil Appeal arising out of SLP (C) No. 7338 of 2026, 2026 INSC 976, decided on 8 September 2026), the Supreme Court clarified a question that recurs in every government-contract arbitration: when a contract designates certain disputes as "excepted matters" outside arbitration, who decides whether a particular claim falls within that exception? The answer, grounded in Section 16 of the Arbitration and Conciliation Act, 1996, is the arbitral tribunal itself — not the referral court, and not a Division Bench framing the reference.
The Setting
A contractor\'s disputes with the railways — including a dispute over termination of the contract — were referred to arbitration, with the Division Bench directing that the claims be decided "strictly in accordance with the terms of the contract." The railways\' standard conditions, through Clauses 63 and 64, designate certain determinations as excepted matters outside arbitration. The contractor apprehended that the direction would be wielded before the tribunal as a pre-judgment that its termination claims were excepted and hence non-arbitrable.
The Clarification
The Supreme Court, through a Bench of Justices P. S. Narasimha and Alok Aradhe, held that the Division Bench\'s direction "shall not be construed to impinge upon the jurisdiction of the Arbitral Tribunal" to adjudicate the disputes regarding termination. Whether a termination dispute falls within the excepted-matters clause is squarely within the arbitrator\'s competence under Section 16.
The Doctrinal Structure
The Distinction That Decided It
The Court distinguished the line of cases where a contractual clause ousts the jurisdiction of both courts and arbitrators over certain decisions. Clause 63 of the railway conditions excludes excepted matters from arbitration; it does not exclude judicial review of the underlying administrative decisions. Because the clause operates on the forum of arbitration rather than on adjudication altogether, the classification of a given dispute — excepted or arbitrable — remains a jurisdictional question for the tribunal under Section 16, and a referral court\'s framing cannot foreclose it.
What This Means in Practice
- Objections that a claim is an excepted matter should be raised before the tribunal under Section 16, ordinarily not later than the statement of defence — not litigated at the Section 11 stage.
- Referral-stage orders, however worded, do not decide arbitrability; parties should resist reading contract-fidelity directions as jurisdictional rulings, and this judgment is the authority for that resistance.
- Drafters of government and infrastructure contracts should state with precision which decisions are final and excepted; ambiguity now reliably travels to the tribunal, not back to court.
- A tribunal\'s ruling accepting or rejecting an excepted-matters objection remains reviewable at the Section 34 stage, preserving ultimate judicial control.
This article is for general information only and is not legal advice or a solicitation. The cited judgment should be read in full from the official record.
Frequently Asked Questions
What are "excepted matters" in a contract?
They are categories of disputes the contract itself removes from arbitration — commonly decisions the contract makes final at the level of a named authority, such as certain determinations under the Indian Railways Standard General Conditions of Contract, whose Clause 63 was in issue here.
What had the Division Bench directed, and what was the difficulty?
The Division Bench had directed that the arbitrator decide the claims "strictly in accordance with the terms of the contract." Read broadly, that phrasing risked being used to argue the tribunal could not examine whether the termination dispute was arbitrable at all. The Supreme Court clarified the direction shall not be construed to impinge upon the tribunal's jurisdiction.
What is the referral court's role after this judgment?
Limited. Under Section 11(6A), the referral court confines itself to a prima facie examination of the existence of the arbitration agreement. Contested questions of arbitrability — including whether a claim is an excepted matter — are reserved by Section 16 to the tribunal's competence-competence.
How was earlier precedent distinguished?
The Court differentiated the situation where a clause ousts both court and arbitral consideration from the present Clause 63, which excludes arbitration for excepted matters but does not exclude judicial review of the underlying decisions — a distinction that kept the arbitrability question with the tribunal.